VICTORY PORTFOLIOS, 485BPOS, 1996-02-28

VICTORY PORTFOLIOS
485BPOS, 1996-02-28

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AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON FEBRUARY 28, 1996.
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. 28 [X]
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]

AMENDMENT NO. 29

THE VICTORY PORTFOLIOS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN TRUST INSTRUMENT)

3435 STELZER ROAD
COLUMBUS, OHIO 43219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

(800) 362-5365
(AREA CODE AND TELEPHONE NUMBER)

COPY TO:

GEORGE O. MARTINEZ, ESQ. CARL FRISCHLING, ESQ.
CONCORD HOLDING CORPORATION KRAMER, LEVIN, NAFTALIS,
3435 STELZER ROAD NESSEN, KAMIN & FRANKEL
COLUMBUS, OHIO 43219 919 THIRD AVENUE
(NAME AND ADDRESS OF AGENT FOR SERVICE) NEW YORK, NEW YORK 10022

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:

|_| IMMEDIATELY UPON FILING PURSUANT TO |X| ON MARCH 1, 1996 PURSUANT TO
PARAGRAPH (B) PARAGRAPH (B)

|_| 60 DAYS AFTER FILING PURSUANT TO |_| ( ) PURSUANT TO
PARAGRAPH (A)(1) PARAGRAPH (A)(1)

|_| 75 DAYS AFTER FILING PURSUANT TO |_| ON ( ) PURSUANT TO
PARAGRAPH (A)(2) PARAGRAPH (A)(2) OF 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 OCTOBER 31, 1995 FISCAL YEAR WAS FILED ON
DECEMBER 29, 1995, IN ACCORDANCE WITH RULE 24F-2.

<PAGE>

THE VICTORY PORTFOLIOS

THE VICTORY PORTFOLIOS
CROSS-REFERENCE SHEET

Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
<S> <C>
i. Cover Page Cover Page

ii. Synopsis Fund Expenses

iii. Condensed Financial Information Financial Highlights

iv. General Description of Registrant Investment Objective; Investment Policies and
Risk Factors; Limiting Investment Risks;
Fund Organization and Fees; Additional
Information

v. Management of the Fund Fund Organization and Fees

v.A. Management's Discussion of Fund Inapplicable
Performance

vi. Capital Stock and Other Securities How to Invest, Exchange and Redeem;
Dividends, Distributions and Taxes; Fund
Organization and Fees; Additional Information

vii. Purchase of Securities Being Offered How to Invest, Exchange and Redeem

viii. Redemption or Repurchase How to Invest, Exchange and Redeem

ix. Pending Legal Proceedings Inapplicable

<PAGE>

THE VICTORY PORTFOLIOS

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 Additional Information

xiii. Investment Objectives and Policies Investment Objective and Policies; Investment
Limitations and Restrictions

xiv. Management of the Fund Trustees and Officers

xv. Control Persons and Principal Additional Information
Holders of Securities

xvi. Investment Advisory and Other Advisory and Other Contracts
Services

xvii. Brokerage Allocation and Other Practices Advisory and Other Contracts

xviii. Capital Stock and Other Securities Valuation of Portfolio Securities; Additional
Purchase, Exchange and Redemption
Information; Additional Information

xix. Purchase, Redemption and Pricing Valuation of Portfolio Securities; Additional
of Securities Being Offered Purchase, Exchange and Redemption
Information; Performance; Additional
Information

xx. Tax Status Dividends and Distributions

xxi. Underwriters Advisory and Other Contracts

xxii. Calculation of Performance Data Performance; Additional Information

xxiii. Financial Statements
</TABLE>

<PAGE>

THE VICTORY PORTFOLIOS

PART A

<PAGE>

THE VICTORY FINANCIAL RESERVES FUND

MARCH 1, 1996

<PAGE>

THE
VICTORY
PORTFOLIOS
FINANCIAL RESERVES FUND

PROSPECTUS For current yield, purchase and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the FINANCIAL RESERVES FUND (the "Fund"), a diversified
portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment adviser to the Fund ("Key Advisers" or
the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"SubAdviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund seeks to obtain as high a level of current income as is consistent with
preserving capital and providing liquidity. The Fund pursues this investment
objective by investing primarily in a portfolio of high-quality U.S.
dollar-denominated money market instruments.

The Fund seeks to maintain a constant net asset value of $1.00 per unit of
beneficial interest, and shares of the Fund are offered at net asset value.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995, have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. This
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), at P.O. Box
9741, Providence, RI 02940-9741, or by calling 800-539-3863.

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER UNIT.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, OR SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR HAS
THE COMMISSION OR ANY SUCH STATE AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

TABLE OF CONTENTS PAGE
Fund Expenses................................................................ 4
Financial Highlights......................................................... 4
Investment Objective......................................................... 6
Investment Policies and Risk Factors.........................................6
How to Invest, Exchange and Redeem...........................................11
Dividends, Distributions and Taxes...........................................17
Performance..................................................................19
Fund Organization and Fees...................................................20
Additional Information.......................................................23

<PAGE>

FUND EXPENSES

The table below summarizes the expenses associated with the Fund. This standard
format was developed for use by all mutual funds to help an investor make
investment decisions. You should consider this expense information along with
other important information in this Prospectus, including the Fund's investment
objective , policies and risk factors.

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases
as a percentage of the offering price)............................none
Maximum Sales Charge Imposed on Reinvested Dividends..................none
Deferred Sales Charge................................................none
Redemption Fees.......................................................none
Exchange Fee..........................................................none

ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE WAIVERS AND REIMBURSEMENTS (as a
percentage of average daily net assets)

Management Fees(2).....................................................42%
Administration Fees....................................................15%
Other Expenses.........................................................08%
Total Fund Operating Expenses(2)........................................65%

(1) Investors may be charged a fee if they effect transactions in Fund
shares through a broker or agent, including affiliated banks and
non-bank affiliates of Key Advisers and KeyCorp. (See "How to Invest,
Exchange and Redeem").

(2) The Adviser has agreed to reduce its investment advisory fees for the
indefinite future. Absent the voluntary reduction of investment
advisory fees, "Management Fees" as a percentage of average daily net
assets would be .50%, and "Total Fund Operating Expenses" as a
percentage of average daily net assets would be .73% .

EXAMPLE: You would pay the following expenses on a $1,000 investment; assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Financial Reserves Fund...........$7 $21 $36 $81

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses. The foregoing example is based upon expenses for the
fiscal year ended October 31, 1995 and expenses that the Fund is expected to
incur during the current fiscal year. THE FOREGOING EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.

<PAGE>

FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect to the
financial highlights for the Fund and for the Financial Reserves Portfolio, the
immediate predecessor to the Fund (the "First Predecessor Fund") and for The
Victory Fund, the predecessor to the First Predecessor Fund (the "Second
Predecessor Fund," together with the First Predecessor Fund, the "Predecessor
Funds"), which have been audited by Coopers & Lybrand L.L.P. (for the fiscal
year ended October 31, 1995), by KPMG Peat Marwick LLP (for the fiscal year
ended October 31, 1994), and by Price Waterhouse LLP (for all earlier periods),
respectively. The information set forth below is for a share of the Fund and its
Predecessor Funds outstanding throughout each period indicated.

<TABLE>
<CAPTION>
THE VICTORY FINANCIAL RESERVES FUND

Year Ended October 31
--------------------------------------------------------------------------------------------------
1995(c) 1994(b) 1993(a)(b) 1992(a)(b) 1991(a)(b)
------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning Period $1.000 $1.000 $1.000 $1.000 $1.000
Investment Activities
Net investment income 0.054 0.035 0.030 0.040 0.060
Distributions
Net investment income (0.054) (0.035) (0.030) (0.040) (0.060)
Net Asset Value, End of Period $1.000 $1.000 $1.000 $1.000 $1.000
Total Return 5.50% 3.57% 2.81% 3.76% 6.28%

Ratios/Supplemental Data:
Net Assets, End of Period (000) $762,693 $433,266 $457,872 $523,889 $412,542
Ratio of expenses to
average net assets 0.60% 0.57% 0.55% 0.55% 0.55%
Ratio of net investment income to
average net assets 5.40% 3.48% 2.78% 3.67% 6.12%
Ratio of expenses to average net
assets(d) 0.76% 0.73% 0.70% 0.70% 0.62%
Ratio of net investment income to
average net assets(d) 5.24% 3.32% 2.63% 3.52% 6.05%

1990 1989 1988 1987 1986
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning Period $1.000 $1.000 $1.000 $1.000 $1.000
Investment Activities
Net investment income 0.080 0.090 0.070 0.060 0.070
Distributions
Net investment income (0.080) (0.090) (0.070) (0.060) (0.070
Net Asset Value, End of Period $1.000 $1.000 $1.000 $1.000 $1.000
Total Return 8.12% 9.14% 7.13% 6.19% 6.87%

Ratios/Supplemental Data:
Net Assets, End of Period (000) $432,905 $369,582 $409,440 $388,938 $231,823
Ratio of expenses to
average net assets 0.55% 0.56% 0.54% 0.56% 0.57%
Ratio of net investment income to
average net assets 7.84% 8.77% 6.92% 6.06% 6.55%
Ratio of expenses to average net
assets(d)
Ratio of net investment income to
average net assets(d)
</TABLE>

- -----------------

(a) Effective May 16, 1991, Ameritrust Company National Association became
investment adviser to the Fund. Effective March 16, 1992, Ameritrust
was acquired by Society Corporation and merged into Society National
Bank, a wholly-owned subsidiary of Society Corporation, on July 13,
1992. Effective January 7, 1993, Society Asset Management, Inc. a
wholly-owned subsidary of Society Corporation, was named investment
adviser to the Fund. Effective August 30, 1994, the Financial Reserves
Fund became the Victory Financial Reserves Portfolio.

(b) Audited by other auditors.

(d) During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had
not occurred, the ratios would have been as indicated.

<PAGE>

INVESTMENT OBJECTIVE

The Fund's investment objective is to seek to obtain as high a level of current
income as is consistent with preserving capital and providing liquidity . The
investment objective of the Fund is fundamental and therefore may not be changed
without a vote of the holders of a majority of the Fund's outstanding voting
securities (as defined in the Statement of Additional Information). There can be
no assurance that the Fund will achieve its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund will invest primarily in the following high-quality, U.S.
dollar-denominated money market instruments with remaining maturities of 397
days or less at the time of purchase by the Fund and average maturity, computed
on a dollar weighted basis, of 90 days or less:

o obligations of domestic and foreign financial institutions consisting
of certificates of deposit, bankers' acceptances and time deposits.

o obligations of foreign branches of U.S. banks (Eurodollars) consisting
of certificates of deposit, bankers' acceptances and time deposits.

o obligations of the U.S. government or any of its agencies or
instrumentalities which may be backed by the credit-worthiness of the
issuing agency.

o short-term corporate obligations, consisting of commercial paper,
notes, and bonds, with remaining maturities of one year or less of
domestic and foreign issuers.

o repurchase agreements with member banks of the Federal Reserve System
and primary dealers in U.S. government securities with respect to any
security in which the Fund is authorized to invest.

o other short-term debt obligations of domestic and foreign issuers
discussed in this prospectus.

The Fund may invest up to 25% of its total assets in U.S. dollar-denominated
instruments issued by foreign branches of U.S. banks (Eurodollars), foreign
banks and other foreign issuers (including American Depository Receipts).
Investments in foreign securities, certificates of deposit and demand and time
deposits of foreign banks and foreign branches of U.S. banks (including
Eurodollar Certificates of Deposit, Eurodollar Time Deposits, Canadian Time
Deposits, Yankee Certificates of Deposit, Canadian Commercial Paper and
Europaper) may subject the Fund to investment risks that differ in some respects
from those related to investments in obligations of U.S. domestic issuers. Such
risks include future adverse economic and political developments, the possible
imposition of withholding taxes on interest income, possible seizure,
nationalization or expropriation, or the imposition of other restrictions which
could adversely affect the payment of principal and interest on such
obligations. Certain provisions of federal law which govern the establishment
and operation of U.S. banks do not apply to foreign banks or to foreign branches
of U.S. banks. In addition, there is no limit on the amount of the Fund's
investments in any one

<PAGE>

type of instrument or in the securities of issuers located in any one particular
foreign country. The Fund will acquire such securities or financial instruments
only when Key Advisers or the Sub-Adviser believes that the risks associated
with them are minimal.

Available cash invested in the Fund earns income at current money market rates
while remaining conveniently liquid. In order to provide full liquidity, the
Fund will seek to maintain a stable $1.00 share price; limit portfolio average
maturity to 120 days or less (however, as a matter of nonfundamental policy and
in order to conform with applicable regulation, average weighted portfolio
maturity will be limited to 90 days or less); buy U.S. dollar-denominated
securities which mature in 397 days or less; and buy only high quality
securities with minimal credit risks. As required by Rule 2a-7 under the
Investment Company Act of 1940, as amended ("Rule 2a-7"), the Fund's Board of
Trustees (the "Trustees") will monitor the quality of the Fund's investments.

Of course, a $1.00 share price cannot be guaranteed, but these practices help to
minimize any price fluctuations that might result from rising or declining
interest rates. Accordingly, while the Fund invests in high quality securities,
investors should be aware that an investment is not without risk even if all
securities are paid in full at maturity. All money market instruments, including
U.S. government securities, can change in value when interest rates or an
issuer's creditworthiness changes.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

The following paragraphs provide a brief description of some of the types of
securities in which the Fund may invest in accordance with its investment
objective, policies and limitations, including certain transactions it may make
and strategies it may adopt. The following also contains a brief description of
certain risk factors. The Fund may, following notice to its shareholders, 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 this Prospectus.

O COMMERCIAL PAPER . The Fund may invest in short-term obligations issued by
banks, broker-dealers, corporations and other entities for purposes such as
financing their current operations.

O CERTIFICATES OF DEPOSIT. The Fund may invest in negotiable certificates
representing a commercial bank's obligations to repay funds deposited with it,
earning specified rates of interest over given periods.

O BANKERS' ACCEPTANCES. The Fund may invest in negotiable obligations of a bank
to pay a draft which has been drawn on it by a customer. These obligations are
backed by large banks and usually backed by goods in international trade.

O TIME DEPOSITS. Non-negotiable deposits in a banking institution earning a
specified interest rate over a given period of time.

<PAGE>

increase in the Fund's commitment. Prior to delivery of when-issued securities,
their value is subject to fluctuation and no income accrues until their receipt.
The Fund engages in when-issued and delayed delivery transactions only for the
purpose of acquiring portfolio securities consistent with its investment
objective and policies, and not for investment leverage. In when-issued and
delayed delivery transactions, the Fund relies on the seller to complete the
transaction; its failure to do so may cause the Fund to miss a price or yield
considered to be advantageous.

O VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase variable and
floating rate notes. The interest rates on these securities may be reset daily,
weekly, quarterly, or some other reset period, and may be subject to a floor or
ceiling. There is a risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. There may be no active
secondary market with respect to a particular variable or floating rate note.
Variable and floating rate notes for which no readily available market exists
will be purchased in an amount which, together with other illiquid securities
held by the Fund, does not exceed 10% of the Fund's total assets unless such
notes are subject to a demand feature that will permit the Fund to receive
payment of the principal within seven days after demand therefor. These
securities are included among those which are sometimes referred to as
"derivative securities."

O REPURCHASE AGREEMENTS . Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

O REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements . Pursuant to such
agreements, the Fund sells portfolio securities to financial institutions such
as banks and broker-dealers, and agrees to repurchase them at a mutually
agreed-upon date and price. At the time the Fund enters into a reverse
repurchase agreement, it must place in a segregated custodial account assets
having a value equal to the repurchase price (including 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").

O PARTICIPATION INTERESTS. The Fund may purchase interests in securities from
financial institutions such as commercial and investment banks, savings and loan
associations and insurance companies. These interests may take the form of
participation, beneficial interests in a trust, partnership interests or any
other form of indirect ownership. The Fund invests in these participation
interests in order to obtain credit enhancement or demand features that would
not be available through direct ownership of the underlying securities.

O EXTENDIBLE DEBT SECURITIES. The Fund may purchase extendible debt securities.
Extendible debt securities purchased by the Fund are securities that can be
retired at the option of a Fund at various dates prior to maturity. In
calculating average portfolio maturity, the Fund may treat extendible debt
securities as maturing on the next optional retirement date.

<PAGE>

O MASTER DEMAND NOTES. Master demand notes are unsecured obligations that permit
the investment of fluctuating amounts by the Fund at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and the issuer as
borrower.

O MORTGAGE-BACKED SECURITIES. Mortgage-backed securities purchased by the Fund
are securities issued or guaranteed by agencies or instrumentalities of the U.S.
government and non-government entities such as banks, mortgage lenders, or other
financial institutions. A mortgage-backed security may be an obligation of the
issuer backed by a mortgage or pool of mortgages or a direct interest in an
underlying pool of mortgages. Some mortgage-backed securities make payments of
both principal and interest at a variety of intervals; others make semiannual
interest payments at a predetermined rate and repay principal at maturity (like
a typical bond). Mortgage-backed securities are based on different types of
mortgages including those on commercial real estate or residential properties.
Other types of mortgage-backed securities will likely be developed in the
future, and the Fund may invest in them if Key Advisers or the Sub-Adviser
determines they are consistent with the Fund's investment objective and
policies. The Fund will not acquire "residual" interests in real estate mortgage
investment conduits ("REMICs") under current tax law in order to avoid certain
potential adverse tax consequences.

The value of mortgage-backed securities may change due to shifts in the market's
perception of issuers. In addition, regulatory or tax changes may adversely
affect the mortgage securities market as a whole. Non-government,
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment risk.
Prepayment, which occurs when unscheduled or early payments are made on the
underlying mortgages, may shorten the effective maturities of these securities
and may lower their total returns. The rate of prepayments is generally expected
to increase in periods of declining interest rates. Consequently, in such
periods, some of the Fund's higher-yielding securities may be converted to cash,
and the Fund will be forced to accept lower interest rates when that cash is
used to purchase additional securities.

O ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities and zero coupon corporate securities ("Zero Coupon
Bonds"). Zero Coupon Bonds are purchased at a discount from the face amount
because the buyer receives only the right to a fixed payment on a certain date
in the future and does not receive any periodic interest payments. The effect of
owning instruments which do not make current interest payments is that a fixed
yield is earned not only on the original investment but also, in effect, on
accretion during the life of the obligations. This implicit reinvestment of
earnings at the same rate eliminates the risk of being unable to reinvest
distributions at a rate as high as the implicit yields on the Zero Coupon Bond,
but at the same time eliminates the holder's ability to reinvest at higher
rates. For this reason, Zero Coupon Bonds are subject to substantially greater
price fluctuations during periods of changing market interest rates than are
comparable securities which pay interest periodically. The amount of price
fluctuations tends to increase as maturity of the security increases.

<PAGE>

instruments are issued by banks and brokerage firms and are created by
depositing Treasury notes and Treasury bonds into a special account at a
custodian bank; the custodian holds the interest and principal payments for the
benefit of the registered owners of the certificates or receipts. The custodian
arranges for the issuance of the certificates or receipts evidencing ownership
and maintains the register. Receipts include Treasury Receipts ("TRs"), Treasury
Investment Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury
Securities ("CATS").

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. [ The Fund will limit its investment in such instruments
to 20% of its total assets.]

O U.S. GOVERNMENT SECURITIES. The Fund may invest in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government National Mortgage Association ("GNMA") and 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 the Federal National
Mortgage Association ("FNMA") are supported by the right of the issuer to borrow
from the Treasury; others, such as those of the Student Loan Marketing
Association ("SLMA"), 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 the Federal Home Loan Mortgage Corporation
("FHLMC"), are supported only by the credit of the 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 or
instrumentalities only when Key Advisers or the Sub-Adviser believes that the
credit risk with respect thereto is minimal.

O INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios , and, to the extent required by
the laws of any state in which shares of the Fund are sold, Key Advisers or the
Sub-Adviser will waive its investment advisory fees 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, to the extent such fees are not
waived by Key Advisers or the Sub-Adviser.

<PAGE>

commercial paper, thus providing liquidity. The Fund believes that Section 4(2)
commercial paper and possibly certain other Restricted Securities (as defined in
the Statement of Additional Information) that meet the criteria for liquidity
established by the Trustees are quite liquid. The Fund intends, therefore, to
treat the restricted securities that meet the criteria for liquidity established
by the Trustees, including Section 4(2) commercial paper, as determined by Key
Advisers or the Sub-Adviser, as liquid and not subject to the investment
limitation applicable to illiquid securities. See "Investment Limitations"
below.

O SHORT-TERM FUNDING AGREEMENTS. The Fund may invest in short -term funding
agreements (sometimes referred to as "GICs") issued by insurance companies.
Pursuant to a short-term funding agreement, the Fund invests an amount of cash
with an insurance company and the insurance company credits such investment on a
monthly basis with guaranteed interest which is based on a index. Shortterm
funding agreements provide that this guaranteed interest will not be less than a
certain minimum rate. The Fund will purchase a short-term funding agreement only
when Key Advisers and the Sub-Adviser have determined, under guidelines
established by the Victory Portfolios' Board of Trustees, that the agreement
presents minimal credit risks to the Fund and is of comparable quality to
instruments that possess the highest short-term rating from an NRSRO not
affiliated with the issuer or guarantor of the instrument. The Fund may receive
all principal and accrued interest on a short-term funding agreement at any time
upon thirty days' written notice. Because the Fund may not receive the principal
amount of a short-term funding agreement from the insurance company on seven
days' notice or less, a short-term funding agreement is considered an illiquid
investment and, together with other instruments in the Fund which are not
readily marketable, will not exceed 10% of the Fund's total assets.

From time to time, the Fund, to the extent consistent with its investment
objective, policies and restrictions, may invest in securities of issuers with
which Key Advisers or the Sub-Adviser or its affiliates have a lending
relationship.

NOTE: The Statement of Additional Information contains additional information
about the investment practices of the Fund and risk factors. The investment
policies and limitations of the Fund may be changed by the Trustees without any
vote of shareholders unless (1) a policy is expressly deemed to be a fundamental
policy of the Fund or (2) a policy is expressly deemed to be changeable only by
such majority vote.

The investment policies and limitations of the Fund may be changed by the
Trustees without any vote of shareholders unless (1) a policy is expressly
deemed to be a fundamental policy of the Fund or (2) a policy is expressly
deemed to be changeable only by such majority vote.

INVESTMENT LIMITATIONS

The following summarizes some of the Fund's principal investment limitations.
The Statement of Additional Information contains a complete listing of the
Fund's investment limitations and provides additional information about
investment restrictions designed to reduce the risk of an investment in the
Fund.

1. The Fund will only purchase obligations that (i) are rated high quality
by two of the following four nationally recognized rating services:
Duff & Phelps Inc. ("Duff"), Fitch Investors Service, Inc. ("Fitch"),
Moody's Investors Service, Inc. ("Moody's"), and Standard & Poor's
Corporation ("S&P"), if rated by two or more services; (ii) are rated
high quality if rated by only one rating service; or (iii) if unrated,
are determined to be of equivalent quality pursuant to procedures
reviewed by the Trustees. Obligations that are not rated are not
necessarily of lower quality than

<PAGE>

those which are rated, but may be less marketable and therefore may
provide higher yields.

Currently, only obligations in the top two categories are considered to
be rated high quality for commercial paper. The two highest rating
categories of Duff, Fitch, Moody's and S&P are Duff 1 and Duff 2,
Fitch-1 and Fitch-2, Prime-1 and Prime-2, and A-1 and A-2,
respectively. Under Rule 2a-7, the Fund is not permitted to invest more
than 5% of its total assets in securities that would be considered to
be in the second highest rating category, and, subject to this
limitation, the Fund may not invest more than the greater of 1% of its
total assets or $1 million in such securities of any one issuer.
However, the Fund currently has a nonfundamental policy to purchase
only commercial paper which is rated in the single highest category by
the rating services as outlined above, or which, if unrated, is deemed
to be of equivalent quality pursuant to procedures reviewed by the
Trustees. The Fund may purchase an instrument rated below highest
quality by a rating service if two other services have given that
instrument a highest quality rating ("split rated" obligation), and if
Key Advisers or the Sub-Adviser considers that the instrument is of
highest quality and presents minimal credit risks.

For other corporate obligations, the two highest rating categories are
Duff 1 and Duff 2, AAA and AA by Fitch, Aaa and Aa by Moody's, and AAA
and AA by S&P. For a more complete description of these ratings see the
Appendix to the Statement of Additional Information.

2. The Fund will not purchase a security if, as a result, more than 10% of
its net assets would be invested in illiquid securities. Illiquid
securities are investments that cannot be readily sold within seven
days in the usual course of business at approximately the price at
which the Fund has valued them. Under the supervision of the Trustees,
Key Advisers or the Sub-Adviser determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and legal
expenses, and it may be difficult or impossible for the Fund to sell
them promptly at an acceptable price.

3. The Fund is "diversified" within the meaning of the 1940 Act. With
respect to 75% of its 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.

With respect to the remaining 25% of the Fund's total assets, the Fund
may invest up to 10% of its total assets in bankers' acceptances,
certificates of deposit and time deposits of a single bank; however, in
order to comply with Rule 2a-7, as a matter of nonfundamental policy,
the Fund will generally not invest more than 5% of its total assets in
the securities of any one issuer. (Note: In accordance with Rule 2a-7
under the 1940 Act, the Fund may invest up to 25% of its total assets
in securities of a single issuer for a period of up to three business
days.)

<PAGE>

5. The Fund may not borrow money other than (a) by entering 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 such
commitments do not exceed 33 1/3% of the Fund's total assets; and (b)
for temporary or emergency purposes in an amount not exceeding 5% of
the value of the Fund's total assets.

Each of the investment limitations indicated above in this subsection are
fundamental, except for the limitation pertaining to illiquid securities.
Non-fundamental limitations may be changed without shareholder approval.
Whenever an investment policy or limitation states a maximum percentage of the
Fund's assets that may be invested, such percentage limitation will be
determined immediately after and as a result of the investment and any
subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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). If the value of the Fund's 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 Trustees will consider
what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. An " Investment Professional "
is a salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets. Your
Investment Professional will place your order with the Transfer Agent (see "Fund
Organization and Fees--Transfer Agent") on your behalf. You may be required to
establish a brokerage or agency account. Your Investment Professional will
notify you whether subsequent trades should be directed to the Investment
Professional or directly to the Fund's Transfer Agent. Accounts established with
Investment Professionals may have different features, requirements and fees. In
addition, Investment Professionals may charge for their services. Information
regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone either through your bank trust department
or through your Investment Professional. Subsequent investments by telephone may
be made directly. See "Special Investor Services" for more information about
telephone transactions.

<PAGE>

a completed and signed application for the Fund which an investment is made.
Additional documents may be required from corporations, associations, and
certain fiduciaries. Any account information such as balances should be obtained
through your bank trust department. Additional purchases, exchanges or
redemptions should also be coordinated through your bank trust department.
Contact your bank trust department for instructions .

The services rendered by a bank trust department, including Key Trust Company of
Ohio, N.A. and other affiliates of Key Advisers or the Sub-Adviser are not
duplicative of any of the services for which Key Advisers or the Sub-Adviser as
the investment adviser or sub-adviser, respectively, is compensated for advising
the Fund. The charges paid by clients of bank trust departments, or their
affiliates, should also be considered by the investor in addition to the net
yield and return on the investment in the Fund, although such charges do not
affect the Fund's dividends or distributions.

O INVESTING THROUGH THE SYSTEMATIC INVESTMENT PLAN. You can use the Systematic
Investment Plan to purchase shares directly from your bank account. Please refer
to "The Systematic Investment Plan" for more details.

INVESTING DIRECTLY

The Victory Financial Reserves Fund Primary
Funds Service Corporation P.O. Box 9741
Providence, RI 02940-9741.

Subsequent purchases may be made in the same manner.

O BY WIRE. Call 800-539-3863 to set up your Fund account to accommodate wire
transactions. YOU MUST CALL THE TRANSFER AGENT BEFORE WIRING FUNDS. Federal
funds (monies transferred from one bank to another through the Federal Reserve
System with same -day availability) should be wired to:

Boston Safe Deposit & Trust Co.
ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Financial Reserves Fund.

You must include your account number, your name(s) and the control number
assigned by the Transfer Agent. The Fund does not impose a fee for wire
transactions, although your bank may charge you a fee for this service.

Shares are sold at the net asset value that is next determined after the
Transfer Agent receives the purchase order. The net asset value of each share of
the Fund is determined on each Business Day (as defined in "Shareholder Account
Rules and Policies -- Share Price") normally 2:00 p.m. (Eastern time) and all
net income of the Fund is declared as a dividend to the Fund's shareholders of
record as of that time. If you buy shares through an Investment Professional,
the Investment Professional must receive your order in a timely fashion on a
regular Business Day and transmit it to the Transfer Agent so that it is
received before the close of business that day. The Transfer Agent may reject
any purchase order for the Fund's shares, in its sole discretion. It is the
responsibility of your Investment Professional to transmit your order to
purchase shares to the Transfer Agent in a timely fashion in order for you to
begin earning dividends on the

<PAGE>

Business Day when the order to purchase such shares is deemed to have been
received as provided above.

INVESTMENT REQUIREMENTS

All purchases must be made in U.S. dollars. Checks must be drawn on U.S. banks.
No cash will be accepted. If you make a purchase with more than one check, each
check must have a value of at least $25, and the minimum investment requirement
still applies. The Fund reserves the right to limit the number of checks
processed at one time. If your check does not clear, your purchase will be
canceled and you could be liable for any losses or fees incurred. Payment for
the purchase is expected at the time of the order. If payment is not received
within three business days of the date of the order, the order may be canceled,
and you could be held liable for resulting fees and/or losses.

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front. If your bank account is jointly owned, be
sure that all owners sign. You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted.

Your account will be debited on the date you indicate on your Account
Application. Shares will be redeemed at the net asset value per share (the
"NAV") as determined on the debit date indicated on your Account Application.
You may cancel the Systematic Withdrawal Plan at any time without payment of a
cancellation fee. Each Systematic Withdrawal Plan transaction will appear as a
debit entry on your monthly account statement.

O TELEPHONE TRANSACTIONS. You can initiate most transactions by telephone. You
may call the Transfer Agent toll-free at 800-539-3863 or call your Investment

<PAGE>

Professional or bank trust department. Telephone transaction privileges for
purchases, redemptions or exchanges may be modified, suspended or terminated by
the Fund at any time. If an account has more than one owner, the Fund and the
Transfer Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer representative of
record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

Generally, neither the Fund, the bank trust department nor the Transfer Agent
will be responsible for any claims, losses or expenses for acting on telephone
instructions that they reasonably believe to be genuine. The Transfer Agent and
the Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine and if they do not employ reasonable
procedures they may be liable for any losses due to unauthorized or fraudulent
instructions. The identification procedures may include, but are not limited to,
the following: account number, registration and address, personalized security
codes, taxpayer identification number and other information particular to the
account. Your Investment Professional, bank trust department or the Transfer
Agent may also record calls, and you should verify the accuracy of your
confirmation statements immediately after you receive them.

O CHECK WRITING. Check writing service is available to shareholders of the Fund,
whereby a shareholder may write checks on his or her Fund account for $100 or
more. Shareholders must comply with minimum balance requirements in order to
maintain check writing privileges. A shareholder will receive a supply of checks
once a signature card is received by the Fund. The check may be made payable to
any person, and the shareholder's account will continue to earn dividends until
the check clears. Because of the difficulty of determining in advance the exact
value of an account, a shareholder may not use a check to close an account. The
shareholder's account will be charged a fee for stopping payment of a check upon
the shareholder's request, if the check cannot be honored because of
insufficient funds (or other valid reasons), or in accordance with any schedule
of fees set forth in the Account Application. Shareholders should call the
Transfer Agent at 800-539-3863 to inquire as to the availability of the check
writing service and to receive a check writing signature card.

O RETIREMENT PLANS. Retirement plans can be among the best tax-planning vehicles
available to individuals. Call your Investment Professional for more information
on the plans and their benefits, provisions and fees. Your Investment
Professional can set up your new account in the Fund under one of several
tax-sheltered plans. These plans let you invest for retirement and shelter your
investment income from current taxes. Plans include Individual Retirement
Accounts (IRAs) and Rollover IRAs. Other fees may be charged by the IRA
custodian or trustee.

HOW TO EXCHANGE

Shares of the Fund may be exchanged for shares of certain funds of the Victory
Group at net asset value per share at the time of exchange, without a sales
charge. To exchange shares, you must meet several conditions:

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

<PAGE>

(4) You must meet the minimum purchase requirements for the fund you
purchase by exchange.

(5) The registration and tax identification numbers of the two accounts
must be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH
TO PURCHASE BY EXCHANGE.

Exchanges into a fund with a sales charge will be processed at the offering
price, unless the shares of the Fund that you wish to exchange were acquired by
exchanging shares of a fund of the Victory Group that were originally purchased
subject to a sales charge; in that event, the shares will be exchanged on the
basis of current net asset values plus any difference in the sales charge
originally paid and the sales charge applicable to the shares you wish to
acquire through the exchange. Please refer to the Statement of Additional
Information for more details about this policy.

Telephone exchange requests may be made either by calling your Investment
Professional or the Transfer Agent at 800-539-3863 prior to the applicable
valuation time for both Funds involved in the exchange on any Business Day (See
"Shareholder Account Rules and Policies--Share Price" below).

You can obtain a list of eligible funds of the Victory Group by calling the
Transfer Agent at 800-539-3863. Exchanges of shares involve a redemption of the
shares of the Fund and a purchase of shares of the other fund of the Victory
Group.

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by the applicable valuation time that is in proper
form, but either fund may delay the issuance of shares of the fund into which
you are exchanging if it determines it would be disadvantaged by a same-day
transfer of the proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might create
excessive turnover in the Fund's portfolio and associated expenses
disadvantageous to the Fund.

o Because excessive trading can impede fund performance and harm shareholders,
the Victory Portfolios reserves the right to refuse any exchange request that
will impede the Fund's ability to invest effectively or otherwise have the
potential to disadvantage the Fund, or to refuse multiple exchange requests
submitted by a shareholder or dealer.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

Shareholders of the former Investors Preference Fund for Income, Inc. and
Investors Preference New York Tax-Free Fund, Inc. will not be subject to any
additional sales charge upon an exchange of shares attributable to an Investors
Preference Funds account for shares of other funds of the Victory Portfolios.

<PAGE>

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (See the definition of "Business Day" under "Shareholder Account
Rules and Policies--Share Price"). Shares will be redeemed at the NAV next
calculated after the Transfer Agent has received the redemption request.

You may redeem shares in several ways:

O BY MAIL. Send a written request to:

The Victory Financial Reserves Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Write a "letter of instruction" with your name, the Fund's name, your Fund
account number, the dollar amount or number of shares to be redeemed, and any
additional requirements that apply to each particular account. You will need the
letter of instruction signed by all persons required to sign for transactions,
exactly as their names appear on the Account Application. A signature guarantee
is required if: you wish to redeem more than $10,000 worth of shares; your Fund
account registration has changed within the last 60 days; the check is not being
mailed to the address on your account; the check is not being made out to the
account owner; or if the redemption proceeds are being transferred to another
Victory Group account with a different registration. The following institutions
should be able to provide you with a signature guarantee: banks, brokers,
dealers, credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature guarantee
may not be provided by a notary public. A signature guarantee is designed to
protect you, the Fund and its agents from fraud. The Transfer Agent reserves the
right to reject any signature guarantee if (1) it has reason to believe that the
signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

o BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before the valuation time (normally 2:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of
instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

O BY TELEPHONE. To redeem by telephone, you may call the Transfer Agent toll
free at 800-539-3863 or call your Investment Professional or bank trust
department. See "Special Investor Services" for more information about telephone
transactions.

O ADDITIONAL REDEMPTION REQUIREMENTS. The Fund may hold payment on redemptions
until it is reasonably satisfied that investments made by check have been
collected, which can take up to 15 days. Also, when the New York Stock Exchange
("NYSE") is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closings, or under any emergency circumstances as
determined by the Commission to merit such action, the right of redemption may
be suspended or the date of payment postponed for a period of time that may
exceed 7 days. In addition, the Fund reserves the right to advance the time on
that day by which purchase and redemption orders must be received.

<PAGE>

If you are unable to reach the Transfer Agent by telephone (for example, during
times of unusual market activity), consider placing your order by mail directly
to the Transfer Agent. In case of suspension of the right of redemption, you may
either withdraw your request for redemption or receive payment based on the NAV
next determined after the termination of the suspension. If your balance in the
Fund falls below $500, you may be given 60 days' notice to reestablish the
minimum balance (except with respect to officers, trustees, directors and
employees, including retired directors and employees, of the Victory Portfolios,
KeyCorp and its affiliates, and the Administrator and its affiliates (and family
members of each of the foregoing) participating in the Systematic Investment
Plan, to whom no minimum balance requirement applies). If you do not increase
your balance, your account may be closed and the proceeds mailed to you at the
address on record.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The Fund's NAV per share is calculated by adding the value of all
the Fund's investments, plus cash and other assets, deducting liabilities of the
Fund, and then dividing the result by the number of shares outstanding. The NAV
of the Fund is determined and its shares are priced as of 2:00 p.m. (Eastern
time) (the "Valuation Time") 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 its 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 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 and Christmas.

The Fund's assets are valued on the basis of amortized cost. This means
valuation assumes a steady rate of payment from the date of purchase until
maturity instead of looking at actual changes in market value. Although the Fund
seeks to maintain an NAV of $1.00, there can be no assurance that it will be
able to do so.

o The offering of shares may be suspended during any period in which the
determination of NAV is suspended, and the offering may be suspended by the
Trustees at any time the Trustees believe it is in the Fund's best interest to
do so.

o Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form. From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

o Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Victory Portfolios if the dealer performs any transaction erroneously.

o Payment for redeemed shares is made ordinarily in cash and forwarded by check
within three business days after the Transfer Agent receives redemption
instructions in proper form, except under unusual circumstances determined by
the Securities and Exchange Commission delaying or suspending such payments. The
Transfer Agent may delay forwarding a check for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as 15
days from the date the shares were purchased. That delay may be avoided if

<PAGE>

you arrange with your bank to provide telephone or written assurance to the
Transfer Agent that your purchase payment has cleared.

o If your account value has fallen below $500, you may be given 60 days' notice
to reestablish the minimum balance. If you do not increase your minimum balance,
your account may be closed and the proceeds mailed to you at the record address.
In some cases involuntary redemptions may be made to repay the Distributor for
losses from the cancellation of share purchase orders. Under unusual
circumstances, shares of the Fund may be redeemed "in kind," which means that
the redemption proceeds will be paid with securities from the Fund. Please refer
to the Statement of Additional Information for more details.

o "Backup Withholding" of Federal income tax may be applied at the rate of 31%
from dividends, distributions and redemption proceeds (including exchanges) if
you fail to furnish the Victory Portfolios with a certified Social Security or
taxpayer identification number when you sign your Account Application, or if you
violate Internal Revenue Service regulations on tax reporting of dividends.

o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

o The Distributor at its expense, may also provide cash compensation to dealers
in connection with sales of shares of the Fund. In addition the Distributor may,
from time to time and at its own expense, provide compensation, including
financial assistance, to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding one or more Victory Portfolios and/or other dealer-sponsored
special events including payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Compensation will include
the following types of non-cash compensation offered through sales contests: (1)
vacation trips including the provision of travel arrangements and lodging; (2)
tickets for entertainment events (such as concerts, cruises and sporting events)
and (3) merchandise (such as clothing, trophies, clocks and pens). Dealers may
not use sales of the Fund's shares to qualify for this compensation if
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

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 necessary to qualify for favorable federal tax
treatment. The Fund accrues and declares dividends from its net investment
income daily and pays such dividends on or around the second Business Day of the
succeeding month.

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and

<PAGE>

capital gain dividends will be reinvested at the net asset value of the
Fund as of the dividend payment date. If you do not indicate a choice
on your Account Application, you will be assigned this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than 7
days after the last day of the preceding month.

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund and have
your income dividends paid in cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain
dividends, or only capital gain dividends, automatically reinvested in
shares of another fund of the Victory Group. Shares will be purchased
as of the dividend payment date. If you are reinvesting dividends of
the Fund in shares of a fund sold with a sales charge, the shares will
be purchased at the public offering price for such other fund. If you
are reinvesting dividends of a fund sold with a sales charge in shares
of a fund sold with or without a sales charge, the shares will be
purchased at the net asset value of the fund. Dividend distributions
can be directed only to an existing account with a registration that is
identical to that of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital
gain dividends, or only your income dividends, automatically
transferred to your bank checking or savings account. The amount will
be determined on the dividend record date and will normally be
transferred to your account within 7 days of the dividend payment date.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account. Please
call or write the Transfer Agent to learn more about this dividend
distribution option.

Any election or revocation of any of the above dividend distribution options may
be made in writing to the Fund and sent to Primary Funds Service Corporation,
P.O. Box 9741, Providence, RI 02940-9741, or by calling the Transfer Agent at
800-539-3863, and will become effective with respect to dividends having record
dates after receipt of the Account Application or request by the Transfer Agent.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

O STATEMENTS AND REPORTS. You will receive a monthly statement reflecting all
transactions that affect the share balance or the registration of your Fund
account. You will receive a confirmation after every transaction that affected
the share balance of your Fund account, except for dividend reinvestment,
systematic investment and systematic withdrawal transactions. These transactions
will be detailed in your Fund account statement. Transactions that affect the
share balance of your Fund investment in an account established with an
Investment Professional or financial institution will be detailed in regular
statements or through confirmation procedures of the financial institution.
Certificates representing shares of the Fund will not be issued. An IRS Form
1099-DIV with federal tax information will be mailed to you by January 31 of
each tax year and also will be filed with the IRS. At least twice a year, you
will receive the Fund's financial reports.

<PAGE>

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES

The Fund intends to qualify as a regulated investment company by satisfying the
requirements under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "IRS Code"). The Fund contemplates the distribution of all of its net
investment income and capital gains, if any, in accordance with the timing
requirements imposed by the IRS Code, so that it will not be subject to federal
income taxes or the 4% excise tax on undistributed income.

It is anticipated that no part of any Fund distribution will be eligible for the
dividends received deduction for corporations.

Distributions by the Fund of its net investment income and the excess, if any,
of its net short-term capital gain are taxable to shareholders as ordinary
income. Distributions by the Fund of the excess, if any, of its net long-term
capital gains are designated as capital gain dividends and are taxable to
shareholders as a long-term capital gain, regardless of the length of time
shareholders have held their shares. The Fund does not expect to realize any
such capital gain.

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares.
Distributions received by shareholders of the Fund in January of a given year
will be treated as received on December 31 of the preceding year provided that
they were declared to shareholders of record on a date in October, November or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

The Fund's distributions may be exempt from state and local taxes to the extent
that they consist of interest from obligations of the U.S. Government and
certain of its agencies and instrumentalities. The Fund intends to advise
shareholders of the proportion of their dividend distributions which consist of
such interest. Shareholders are urged to consult their own tax advisers
regarding the possible exclusion of a portion of their dividend distributions
for state and local tax purposes in their respective jurisdictions.

o OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax , a shareholder may be
subject to state or local taxes on his or her investment in the Fund, depending
on the laws of the shareholder's jurisdiction. INVESTORS CONSIDERING AN
INVESTMENT IN THE FUND SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER
THE FUND IS SUITABLE TO THEIR PARTICULAR TAX SITUATION.

When investors sign their Account Application, they are asked to provide their
correct social security or taxpayer identification number and other required
certifications. If investors do not comply with IRS regulations, the IRS
requires the Fund to withhold 31% of amounts distributed to them by the Fund as
dividends or in redemption of their shares.

<PAGE>

PERFORMANCE

From time to time, the Fund's "yield" and "effective yield" may be presented in
advertisements, sales literature and in reports to shareholders. The "yield" is
based upon the income earned by the Fund over a seven-day period, which is then
annualized, i.e., the income earned in the period is assumed to be earned every
seven days over a 52-week period and is stated as a percentage of the
investment. The "effective yield" is calculated similarly, but when annualized,
the income earned by the investment is assumed to be reinvested in shares of the
Fund and thus compounded in the course of a 52-week period. The effective yield
will be higher than the yield because of the compounding effect of this assumed
reinvestment.

From time to time, performance information showing total return may also 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 of more than one year. Average annual total return is
measured by comparing the value of an investment in the Fund at the beginning of
the relevant period to the redemption value of the investment at the end of the
period (assuming immediate reinvestment of any dividends or capital gains
distributions) and annualizing that figure. Cumulative total return is
calculated similarly to average annual total return, except that the resulting
difference is not annualized.

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
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. and Standard & Poor's Corporation, in
publications issued by Lipper Analytical Services, Inc., and in the following
publications: IBC's Money Fund Reports, Value Line Mutual Fund Survey,
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 and local newspapers. In addition, general
information about the Fund that appears in publications such as those mentioned
above may also be quoted or reproduced in advertisements, sales literature or in
reports to shareholders.

Performance is a function of the type and quality of instruments held in the
Fund's portfolio, operating expenses, and market conditions. Consequently,
performance will fluctuate and is not necessarily representative of future
results. Any fees charged by service providers with respect to customer accounts
for investing in shares of the Fund will not be reflected in performance
calculations.

Additional information regarding the performance of each fund of the Victory
Portfolios is included in the Victory Portfolios' annual and semi-annual
reports, which are available free of charge by calling 800-539-3863.

FUND ORGANIZATION AND FEES

The Victory Portfolios, a business trust organized under the laws of Delaware,
is an open-end management investment company, commonly known as a mutual fund,
and currently consisting of twenty-eight series portfolios. The Victory
Portfolios has been operating continuously since 1986, when it was created under
Massachusetts law as a Massachusetts business trust, although certain of its
funds have a prior operating history from their predecessor funds. On February
29, 1996, the Victory Portfolios was converted from a Massachusetts business

<PAGE>

trust to a Delaware business trust. The Victory Portfolios' offices are located
at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolio's Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments .

Key Advisers was organized as an Ohio corporation on July 27, 1995 and is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended. 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 $66 billion for numerous clients including large corporate and
public retirement plans, Taft-Hartley plans, foundations and endowments, high
net worth individuals and mutual funds.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc. a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
subadvisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund of the act and omissions of such persons as they
are for their own acts and omissions.

For its services under the investment sub-advisory agreement, Key Advisers pays
the Sub-Adviser fees as a percentage of average daily net assets as follows:
.25% of the first $10 million of average daily net assets; .20% of the next $15
million of average daily net assets; .15% of the next $25 million of average
daily net assets; and .125% of average daily net assets in excess of $50
million.

<PAGE>

EFFECT OF BANKING LAWS

The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any affiliate thereof from sponsoring, organizing or controlling a registered,
open-end investment company continuously engaged in the issuance of its shares,
and from issuing, underwriting, selling or distributing securities in general.
Such laws and regulations do not prohibit such a holding company or affiliate
from acting as investment adviser, transfer agent, custodian or shareholder
servicing agent to such an investment company or from purchasing shares of such
a company as agent for and upon the order of their customers, nor should they
prevent Key Advisers, the Sub-Adviser or the Fund from compensating third
parties for performing such functions. Key Advisers, the Sub-Adviser and their
affiliates are subject to such banking laws and regulations.

Key Advisers and the Sub-Adviser believe that they may perform the investment
advisory services for the Fund contemplated by the Investment Advisory Agreement
without violating the Glass-Steagall Act or other applicable banking laws or
regulations and that they or their affiliates can perform the other services
indicated above. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of present or future statutes and regulations could prevent the
Key Advisers, the Sub-Adviser and their affiliates from continuing to perform
all or a part of the above services for their customers and/or the Fund. In such
event, changes in the operation of the Fund may occur, including the possible
alteration or termination of any service then being provided by Key Advisers,
the Sub-Adviser and their affiliates, and the Trustees would consider alternate
investment advisers and other means of continuing available services. It is not
expected that the Fund's shareholders would suffer any adverse financial
consequences (if other service providers are retained) as a result of any of
these occurrences.

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

The Administrator generally assists in all aspects of the Fund's administration
and operation. For expenses incurred and services provided as Administrator
pursuant to its management and administration agreement with the Victory
Portfolios, the Administrator receives a fee from the Fund, computed daily and
paid monthly, at an annual rate of fifteen one-hundredths of one percent (.15%)
of the Fund's average daily net assets. The Administrator may periodically waive
all or a portion of its administrative fee with respect to the Fund .

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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

Primary Funds Service Corporation, P.O. Box 9741, Providence, RI 02940-9741,
serves as the Fund's Transfer Agent pursuant to a Transfer Agency and
Shareholder Service Agreement with the Victory Portfolios and receives a fee for
such services based on various criteria, including assets, transactions and the
number of accounts.

<PAGE>

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A., an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Trustees, recordkeeping services, services rendered in connection with the
preparation of regulatory filings and other reports, and regulatory , compliance
and other administrative and support services.

For such services, the Sub-Adviser pays fees to Key Advisers at an annual rate
as follows: .20% on the first $10 million of average daily net assets; .15% of
the next $15 million of average daily net assets; .10% of the next $25 million
of average daily net assets; and .075% of average daily net assets in excess of
$50 million.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were .76% of the Fund's average daily net assets, including certain voluntary
fee reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts , the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not so held
in trust. The trustee will forward to these shareholders all communications
received by the trustee including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust. Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory

<PAGE>

Portfolios' outstanding shares may call a special meeting of shareholders for
the purpose of voting upon the question of removal of Trustees.

The Victory Portfolios' Board of Trustees may authorize the Victory Portfolios
to offer other Funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have adopted a Code of
Ethics ("the "Code") which requires investment personnel (a) to pre-clear all
personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub-Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

DELAWARE LAW

The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of personal liability
extended to stockholders of Delaware corporations and the Trust Instrument
provides that shareholders will not be personally liable for liabilities of the
Victory Portfolios. In light of Delaware law, the nature of the Victory
Portfolios' business, and the nature of its assets, management of Victory
Portfolios believes that the risk of personal liability to a Fund shareholder
would be extremely remote.

In the unlikely event a shareholder is held personally liable for the Victory
Portfolios' obligations, the Victory Portfolios will be required to use its
property to protect or compensate the shareholder. On request, the Victory
Portfolios will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Victory Portfolios. Therefore, financial loss
resulting from liability as a shareholder will occur only if the Victory
Portfolios itself cannot meet its obligations to indemnify shareholders and pay
judgments against them.

Delaware law authorizes electronic or telephone communications between
shareholders and the Victory Portfolios. Under Delaware law, the Victory
Portfolios has the flexibility to respond to future business contingencies. For
example, the Trustees will have the power to incorporate the Victory Portfolios,
to merge or consolidate it with another entity, to cause each fund to become a
separate trust, and to change the Victory Portfolio's domicile without a
shareholder vote. This flexibility could help reduce the expense and frequency
of future shareholder meetings for non-investment related issues.

<PAGE>

MISCELLANEOUS

As of the date of this Prospectus, the Fund offers only one class of shares.
Subsequent to the date of this Prospectus, the Fund may offer additional classes
of shares through a separate prospectus. Any such additional classes may have
different sales charges and other expenses, which would affect investment
performance. Further information may be obtained by contacting your Investment
Professional or by calling 800-539-3863.

Shareholders will receive Semi-Annual Reports, which are unaudited, and Annual
Reports, which are audited by independent public accountants ("Reports"),
describing the investment operations of the Fund. Each of these Reports, when
available for a particular fiscal year end or the end of a semi-annual period,
is incorporated herein by reference. The Victory Portfolios may include
information in their Reports to shareholders that (a) describes general economic
trends, (b) describes general trends within the financial services industry or
the mutual fund industry, (c) describes past or anticipated portfolio holdings
for the Fund or (d) describes investment management strategies for the Victory
Portfolios. Such information is provided to inform shareholders of the
activities of the Victory Portfolios for the most recent fiscal year or
semi-annual period and to provide the views of Key Advisers, the Sub-Adviser
and/or the Victory Portfolios' officers regarding expected trends and
strategies.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Report at no cost by writing to the Fund at the address listed on Page 1 of this
Prospectus or by calling 800-539-3863.

Inquiries regarding the Victory Portfolios or the Fund may be directed in
writing to the Victory Portfolios at Primary Funds Service Corporation, P.O. Box
9741, Providence, RI 02940-9741, or by telephone, toll-free, at 800-539-3863.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE VICTORY
PORTFOLIOS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE VICTORY PORTFOLIOS OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.

<PAGE>

THE
VICTORY
PORTFOLIOS
FUND FOR INCOME
PROSPECTUS For current yield, purchase and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the FUND FOR INCOME (the "Fund"), a diversified portfolio.
KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect subsidiary of
KeyCorp, is the investment adviser to the Fund ("Key Advisers" or the
"Adviser"). First Albany Asset Management Corporation is the investment
sub-adviser to the Fund (the "Sub-Adviser" or "First Albany"). Concord Holding
Corporation is the Fund's administrator (the "Administrator"). Victory
Broker-Dealer Services, Inc. is the Fund's distributor (the "Distributor").

The Fund seeks to provide a high level of current income consistent with
preservation of shareholders' capital. The Fund pursues this objective by
investing primarily in selected mortgage-related securities.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
period ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("COMMISSION"), OR ANY SECURITIES REGULATORY AUTHORITY OF
ANY STATE, NOR HAS THE COMMISSION OR ANY SUCH STATE AUTHORITY PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses.............................................................. 2
Financial Highlights.........................................................3
Investment Objective........................................................ 3
Investment Policies and Risk Factors.......................................4
How to Invest, Exchange and Redeem..........................................5
Dividends, Distributions and Taxes...........................................11
Performance..................................................................13
Fund Organization and Fees...................................................13
Additional Information.......................................................16

- 2 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases (as a percentage of
the offering price) .........................................2.00%
Maximum Sales Charge Imposed on Reinvested Dividends ........... none
Deferred Sales Charge .......................................... none
Redemption Fees ................................................none
Exchange Fee ................................................... none

ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE WAIVERS AND REIMBURSEMENTS (as a
percentage of average daily net assets)

Management Fees(2) ................................................. .20%
Administration Fees(3)............................................. .06%
Other Expenses(4) ................................................. .74%
Total Fund Operating Expenses(4)(5) ...............................1.00%

(2) The Adviser has agreed to reduce its investment advisory fees to the
extent necessary to maintain the Total Fund Operating Expense ratio of
the Fund at 1.20% until at least May 2, 1996. Absent the voluntary
reduction of investment advisory fees, "Management Fees" as a
percentage of a average daily net assets would be .50%.

(3) The Administrator has agreed to reduce its administration fee. Absent
the voluntary reduction of administration fees, the "Administration
Fees" as a percentage of average daily net assets would be .15%.

(4) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay (see "Fund Organization and Fees -- Shareholder
Servicing Plan").

(5) Absent the voluntary waivers, Total Fund Operating Expenses as a
percentage of average daily net assets would be 1.39%.

EXAMPLE: You would pay the following expenses on a $1,000 investment , assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR THREE YEARS FIVE YEARS 10 YEARS
-------- ----------- ---------- --------
Fund for Income ..........$ 30 $ 51 $ 74 $140

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

- 3 -

<PAGE>

FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect to the
financial highlights for the Fund for the periods indicated. The information
below has been derived from financial statements audited (except as indicated)
by Coopers & Lybrand L.L.P., independent accountants for the Victory Portfolios
(for fiscal year ended October 21, 1995), by KPMG Peat Marwick LLP (for the
period February 1, 1994 through October 31, 1994), and by LeMasters & Daniels
(for earlier periods), respectively, as auditors whose report thereon, together
with the financial statements of the Fund and the Predecessor Fund, are
incorporated by reference into the Statement of Additional Information. The
information set forth below is for a share outstanding for each period
indicated.

THE VICTORY FUND FOR INCOME

PERIOD FROM
FEBRUARY 1,
YEAR ENDED 1994 TO
OCTOBER 31, OCTOBER 31,
1995(D) 1994(C)
YEAR ENDED JANUARY 31,
-------------------------------------------------------------------
1994(C) 1993(C) 1992(C) 1991(C) 1990 1989 1988(F)
------- ------- ------- ------- ---- ---- ------
<S> <C> <C> <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 $ 9.95 $ 10.00
-------- -------- -------- -------- -------- -------- -------- -------- -------
Income from Investment Activities
Net investment income 0.73 0.52 0.80 0.80 0.85 0.91 0.93 0.94 0.66
Net realized and unrealized gains
(losses) on investments $ 0.43 (0.71) (0.41) 0.06 0.36 0.29 0.17 (0.22) (0.05)
-------- ---------- ------------------- ------------------ --------- --------- -------
Total from Investment Activities 1.16 (0.19 1.30 1.97 1.21 1.20 1.10 0.72 0.61
--------- --------- --------- --------- ------------------ --------- -------- -------
Distributions
Net investment income (0.59) (0.51) (0.80) (0.80) (0.85) (0.91) (0.93) (0.94) (0.66)
In excess of net investment income (0.07) (0.01) -- -- -- -- -- -- --
Net realized gains (0.02) (0.04) -- -- --
---------- ----------- ------------------------------------------------------------------
Total Distributions (0.66) (0.52) (0.82) (0.84) (0.85) (0.91) (0.93) (0.94) (0.66)
---------- ---------- ---------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 9.93 $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90 $ 9.73 $ 9.95
-------- -------- -------- -------- -------- -------- -------- -------- -------
Total Return (Excludes Sales Charge) 12.75% (1.99%)(b) 3.75% 8.45% 12.34% 12.75% 11.77% 7.58% --
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (ooo) $22,756 $29,358 $46,632 $55,075 $58,055 $44,097 $35,788 $22,664 $6,221
Ratio of expenses to average net assets 1.12% 1.12%(b) 1.13% 1.12% 0.92% 0.50% 0.29% 0.22% 0.12%
Ratio of net investment income to
average net assets 7.62% 7.21%(b) 7.65% 7.56% 8.18% 9.15% 9.34% 9.53% 6.72%
Ratio of expenses to average net asse
(e) ts 1.58% 1.26%(b)
Ratio of net investment income to
average net assets (e) 7.16% 7.07%(b)
Portfolio turnover 35.20% 18.00 % 47.00% 23.00% 24.00% 5.00% 5.40% 14.62% 19.88%

</TABLE>

- ----------------------

(a) Not annualized.
(b) Annualized.
(c) Audited by other auditors.
(d) Effective June 5, 1995, the Victory Fund for Income Portfolio became the
Fund For Income.
(e) During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(f) Information for the year ended January 31, 1988 is presented from May 8,
1987, the date registration became effective under the Investment Company
Act of 1940, as amended.

- 4 -

<PAGE>

INVESTMENT OBJECTIVE

The Fund seeks to provide a high level of current income, consistent with
preservation of shareholders' capital. The investment objective of the Fund is
fundamental and may not be changed without a vote of the holders of a majority
of its outstanding voting securities (as defined in the Statement of Additional
Information). There can be no assurance that the Fund will achieve its
investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OR PRINCIPAL INVESTMENT POLICIES

The Fund will invest primarily in selected mortgage-related securities. This
means that the Sub-Adviser generally will invest at least 65% of the Fund's
total assets in mortgage-related securities--which are rated AA or higher by a
nationally recognized statistical rating organization ("NRSRO")--and in unrated
mortgages and mortgage-related securities--which, in the opinion of the
Sub-Adviser, are of equivalent investment quality. This is a fundamental policy
which may not be changed without shareholder approval. This policy will limit
the Fund's ability to invest in lower-rated securities from which a higher
yield, but at a higher risk, may be derived. The mortgage-related securities in
which the Fund may invest consist of traditional pass-throughs (GNMAs, FNMAs and
FHLMCs, CMOs, and REMICs). (See "Collateralized Mortgage Obligations and Real
Estate Mortgage Investment Conduits".) It is the Sub-Adviser's opinion that
mortgage-related securities historically have provided the highest yield
available on high-quality investments; nevertheless, for defensive purposes, the
Sub-Adviser may, at certain times, decrease the percentage of the Fund's assets
invested in these instruments. In addition, the Fund bears the risk that
prepayment of underlying mortgages may occur at a higher or lower rate than the
assumed prepayment rate, which may adversely affect the Fund's yield. For a more
detailed discussion of mortgage-related securities and risks associated with
them, see "the Funds Investments".

Even though the Fund will invest in high-quality assets which are expected to
return 100% of their principal if held to maturity, there is risk to an
investor's principal because of price changes which result from changes in
interest rates. A rise in interest rates will result in a decline in the value
of fixed-rate securities held by the Fund. A similar decline in interest rates
would result in an increase in the value of the same assets. In general, the
longer the maturity of a fixed-rate asset, the more sensitive to interest rate
changes the price of the asset will be. An asset which has a fixed coupon rate
and which has a longer maturity has greater price risk than a similar asset
which either has a variable coupon rate or a shorter maturity.

The Sub-Adviser will consider interest rate risk as well as yield and safety of
principal in managing the Fund's assets. As part of the Fund's interest rate
strategy, except in unusual circumstances, the assets of the Fund as a whole
will have an expected average maturity not to exceed 10 years. Individual assets
may have expected average maturities which are shorter or longer than 10 years.
The contractual maturity of an asset may also be substantially longer than its
expected average maturity.

The Fund may invest up to 35% of the value of its total assets in (1) securities
issued or guaranteed by the United States government, its agencies, and
instrumentalities; (2) certificates of deposit, bankers' acceptances, and
interest-bearing savings deposits of banks having total assets of more than $1
billion and that are members of the Federal Deposit Insurance Corporation; (3)
commercial paper of prime quality rated A-1 or higher by Standard & Poor's
Ratings Group ("S&P") or Prime-1 or higher by Moody's Investors Service, Inc.
("Moody's") or, if not rated, issued by companies which have an outstanding debt
issue rated AA or higher by S&P or Aa or higher by Moody's; (4) privately issued
debt securities which, although not mortgage-related securities of the type
described

- 5 -

<PAGE>

above, are secured by mortgages on residential properties, provided such
securities are rated A or better by Moody's and S&P or, if not rated, are of
equivalent investment quality as determined by Key Advisers and the Sub-Adviser
(such securities may entitle the holder to participate in income derived from
the mortgaged properties or from sales thereof); and (5) corporate debt
obligations rated A or higher by Moody's and S&P. When business or financial
conditions warrant, the Fund may take a temporary defensive position and invest
without limit in the foregoing securities.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

The following paragraphs provide a brief description of some of the types of
securities in which the Fund may invest, in accordance with its investment
objective, policies and limitations, including certain transactions it may make
and strategies it may adopt. The following also contains a brief description of
certain risk factors. The Fund may, following notice to its shareholders, 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 legally permissible for the Fund. Such
investment practices, if they arise, may involve risks which exceed those
involved in the activities described in this Prospectus.

O MORTGAGE-RELATED SECURITIES. Mortgage-Related Securities include securities
which represent or are secured by interests in pools of residential or
commercial mortgage loans made by lenders such as thrift institutions, mortgage
bankers, commercial banks, and others. Pools of mortgage loans are assembled for
sale to investors (such as the Fund) by various governmental,
government-related, and private organizations.

Mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly, quarterly, or semiannual payment which generally
consists of both interest and principal payments. In effect, these payments are
a "pass-through" of the payments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Additional payments are caused by repayments of principal generally
resulting from the sale of the underlying property, refinancing, or foreclosure,
net of fees or costs which may be incurred. Some mortgage-related securities
(such as securities issued by the Government National Mortgage Association) are
described as "modified pass-through." These securities entitle the holder to
receive all interest and principal payments owed on the mortgage pool, net of
certain fees, regardless of whether or not the mortgagor actually makes the
payment. The average life of pass-through pools varies with the maturities of
the underlying mortgage instruments. In addition, a pool's term may be shortened
by early payments of principal and interest on the underlying mortgages. The
occurrence of mortgage prepayments is affected by factors including the level of
interest rates, general economic conditions, the location and age of the
mortgage, and other social and demographic conditions. As prepayment rates of
individual pools vary widely, it is difficult to predict accurately the average
life of a particular pool. For pools of fixed-rate mortgages, common industry
practice is to estimate the average life based on assumptions regarding
prepayments. An average life based on the prepayment characteristics of the
underlying mortgages will be assumed. Such assumptions will vary as a result of
the particular characteristics of each pool such as interest rates and
demographics.

Yields on traditional pass-through securities are typically quoted by investment
dealers based on the maturity of the underlying instruments and the associated
average life assumption. In periods of falling interest rates, the rate of
prepayment tends to increase, thereby shortening the actual average life of a
pool of mortgage-related securities.
Conversely, in periods of rising rates, the rate of prepayment tends to
decrease, thereby lengthening the actual average life of the pool of the
mortgage-related securities. Actual prepayment experience may cause the yield to

- 6 -

<PAGE>

differ from the assumed average life yield if the security is priced either
above or below the par amount. Reinvestment of prepayments may occur at higher
or lower interest rates than the original investment, thus reducing or
increasing the yield of the Fund.

O COLLATERALIZED MORTGAGE OBLIGATIONS AND REAL ESTATE MORTGAGE INVESTMENT
CONDUITS. Collateralized Mortgage Obligations known as "CMOs" and Real Estate
Mortgage Investment Conduits, known as "REMICs," are mortgage-related securities
which generally distribute principal and interest from an underlying pool of
mortgages monthly, quarterly, or semiannually. The distribution is made
sequentially rather than on a pro rata basis. Generally, with both the CMOs and
REMICs, there are multiple classes of ownership providing for successively
longer expected average maturities.

The Fund may invest in any class. The average maturity of a CMO or REMIC
interest will vary based on the maturity of the underlying mortgage instruments
and the rate of prepayment of such mortgages, the nature of the interest, and
the payment priority of the class. Because of the multi-class structure,
prepayments are more likely to shorten the average maturity of the shorter
maturity classes of CMOs and REMICs than would be the case for traditional
pass-through securities. As a consequence, investment in CMOs and REMICs may
involve greater investment risk than investment in traditional pass-through
securities.

The principal governmental guarantor of mortgage-related securities is the
Government National Mortgage Association ("GNMA"). GNMA is a wholly-owned United
States government corporation within the Department of Housing and Urban
Development. GNMA is authorized to guarantee, with the full faith and credit of
the United States government, the timely payment of principal and interest on
securities issued by institutions approved by GNMA and backed by pools of
FHA-insured or VA-guaranteed mortgages.

Government-related guarantors include the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("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 but are not backed
by the full faith and credit of the United States government. FHLMC issues
Participation Certificates ("PCs") which represent interests in mortgages from
FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and
ultimate collection of principal but PCs are not backed by the full faith and
credit of the United States government.

Commercial banks, thrift institutions, private mortgage insurance companies,
mortgage bankers, real estate developers, and other secondary market issuers
also create pass-through pools of mortgage loans. Such issuers, in addition, may
be the originators of the underlying mortgage loans as well as the guarantors of
the mortgage-related securities. Pools created by such non-governmental issuers
generally offer a higher rate of interest than government and government-related
pools because there are no direct or indirect government guarantees of payments
in the former pools; however, timely payment of interest and principal of these
mortgage pools often is supported by various forms of insurance or guarantees.
Such insurance and guarantees and the creditworthiness of the issuers thereof
will be considered by the Sub-Adviser in determining whether a mortgage-related
security meets the Fund's investment quality standards. The Fund may buy
mortgage-related securities without insurance or guarantees if, through an
examination of loan characteristics, payment history, and loan experience and
practices of the poolers, the Sub-Adviser determines that the securities meet
the Fund's quality standards.

The size of the primary issuance market, active participation in the secondary
market of securities dealers, and a diversity of investors make government and
government-related pass-through pools highly liquid. Private conventional pools
of mortgagees have also achieved broad market acceptance and consequently an
active secondary market has emerged; however, the market for conventional pools
is smaller and less liquid than the market for the government and
government-related mortgage pools. The Fund may purchase some mortgage-related
securities through private placement, in which case the secondary market is less
liquid; those securities are considered illiquid.

- 7 -

<PAGE>

The Fund will not purchase mortgage-related securities, other interests in
mortgages, or any other assets which, in the Sub-Adviser's opinion, are illiquid
if, as a result, more than 15% of the value of the Fund's net assets will be
illiquid.

The Fund expects that governmental, government-related, or private entities may
create mortgage loan pools offering pass-through investments in addition to
those described above. The mortgages underlying these securities may be
alternative mortgage instruments; that is, mortgage instruments whose principal
or interest payments may vary or whose terms to maturity may differ from
customary long-term fixed-rate mortgages. As new types of mortgage-related
securities are developed and offered to investors, the Sub-Adviser, consistent
with the Fund's investment objective, policies, and quality standards, will
consider making investments in such new types of securities.

O WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Fund purchases securities with payment and delivery
scheduled for a future time. When the Fund agrees to purchase securities on a
when-issued basis, the Fund's custodian must set aside cash or liquid portfolio
securities equal to the amount of that commitment in a separate account, and may
be required to subsequently place additional assets in the separate account to
reflect any increase in the Fund's commitment. Prior to delivery of when-issued
securities, their value is subject to fluctuation and no income accrues until
their receipt. The Fund engages in when-issued and delayed delivery transactions
only for the purpose of acquiring portfolio securities consistent with its
investment objective and policies, and not for investment leverage. In
when-issued and delayed delivery transactions, the Fund relies on the seller to
complete the transactions; its failure to do so may cause the Fund to miss a
price or yield considered to be advantageous.

However, if the Sub-Adviser were to forecast incorrectly the direction of
interest rate movements, the Fund might be required to complete such when-issued
or forward transactions at prices inferior to then-current market values. No
when-issued or forward transactions will be made by the Fund if, as a result,
more than 33-1/3% of the value of the Fund's total assets would be committed to
such transactions.

O LENDING OF FUND SECURITIES. The Fund may from time to time lend securities
from its portfolio to brokers, dealers, and financial institutions and receive
collateral in the form of cash or U.S. Government obligations. Under the Fund's
current practices (which are subject to change), the loan collateral must be
maintained at all times in an amount equal to at least 102% of the current
market value of the loaned securities. The Fund will not lend portfolio
securities in excess of 20% of the value of its total assets, nor will the Fund
lend its portfolio securities to any officer, director, employee, or affiliate
of the Fund, the Victory Portfolios, Key Advisers, the Sub-Adviser, or the
Distributor.

- 8 -

<PAGE>

received by the Victory Portfolios from the Commission, the Fund may invest in
the money market funds of the Victory Portfolios. Key Advisers or the
Sub-Adviser will waive its fee attributable to the Fund's assets invested in a
fund of the Victory Portfolios, and to the extent required by the laws of any
state in which shares of the Fund are sold, Key Advisers or the Sub-Adviser will
waive its investment advisory fees 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, to the extent such fees are not waived by Key Advisers
or the Sub-Adviser.

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal year ended October 31, 1995, the
portfolio turnover rate was 35.20% compared to 18.00% in the period from
February 1, 1994 to October 31, 1994.

- 9 -

<PAGE>

INVESTMENT LIMITATIONS

The following summarizes some of the Fund's principal investment limitations.
The Statement of Additional Information contains a complete listing of the Funds
investment limitations and provides additional information about investment
restrictions designed to reduce the risk of an investment in the Fund.

1. The Fund is "diversified" within the meaning of the 1940 Act. With respect
to 75% of its 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 Funds' 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.

2. The Fund may not borrow money, other than (a) by entering 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 such commitments
do not exceed 33-1/3% of the Fund's total assets; and (b) for temporary or
emergency purposes in an amount not exceeding 5% of the value of the
Fund's total assets .

3. The Fund will not purchase a security if, as a result, more than 15% of
its net assets would be invested in illiquid securities. Illiquid
securities are investments that cannot be readily sold within seven days
in the usual course of business at approximately the price at which the
Fund has valued them. Under the supervision of the Trustees, Key Advisers
or the Sub-Adviser determines the liquidity of the Fund's investments. The
absence of a trading market can make it difficult to ascertain a market
value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses, and it may be
difficult or impossible for the Fund to sell them promptly at an
acceptable price.

- 10 -

<PAGE>

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

o HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities brokers or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

O INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. An "Investment Professional"
is a salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets. Your
Investment Professional will place your order with the Transfer Agent on your
behalf (see "Fund Organization and Fees-Transfer Agent"). You may be required to
establish a brokerage or agency account. Your Investment Professional will
notify you whether subsequent trades should be directed to the Investment
Professional or directly to the Fund's Transfer Agent. Accounts established with
Investment Professionals may have different features, requirements and fees. In
addition, Investment Professionals may charge for their services. Information
regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone either through your bank trust department
or through your Investment Professional. Subsequent investments by telephone may
be made directly. See "Special Investor Services" for more information about
telephone transactions.

O INVESTING THROUGH YOUR BANK TRUST DEPARTMENT. Your bank trust department may
require a minimum investment and may charge additional fees. Fee schedules for
such accounts are available upon request and are detailed in the agreements by
which a client opens the desired account. Your bank trust department may require
a completed and signed application for the Fund in which an investment is made.
Additional documents may be required from corporations, associations, and
certain fiduciaries. Any account information, such as balances, should be
obtained through your bank trust department. Additional purchases, exchanges or
redemptions should also be coordinated through your bank trust department.
Contact your bank trust department for instructions.

The services rendered by a bank trust department, including Key Trust Company of
Ohio, N.A. and other affiliates of Key Advisers or the Sub-Adviser are not
duplicative of any of the services for which Key Advisers or the Sub-Adviser as
the investment adviser or sub-adviser, respectively, is compensated for advising
the Fund. The charges paid by clients of bank trust departments, or their
affiliates, should also be considered by the investor in addition to net yield
and return on the investment in the Fund, although such charges do not affect
the Fund's dividends or distributions.

INVESTING DIRECTLY

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<PAGE>

The Victory Fund for Income
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.
ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Fund for Income

You must include your account number, your name(s), and the control number
assigned by the Transfer Agent. The Fund does not impose a fee for wire
transactions, although your bank may charge you a fee for this service.

Shares are sold at the public offering price based on the net asset value that
is next determined after the Transfer Agent receives the purchase order. In most
cases, to receive that day's offering price, the Transfer Agent must receive
your order before the close of regular trading of the New York Stock Exchange
("NYSE") (normally 4:00 pm Eastern time) (the "Valuation Time") on each Business
Day (as defined in "Shareholder Account Rules and Policies--Share Price" below)
If you buy shares through an Investment Professional, the Investment
Professional must receive your order in a timely fashion on a regular Business
Day and transmit it to the Transfer Agent so that it is received before the
close of business that day. The Transfer Agent may reject any purchase order for
the Fund's shares, in its sole discretion. It is the responsibility of your
Investment Professional to transmit your order to purchase shares to the
Transfer Agent in a timely fashion in order for you to receive that day's share
price.

INVESTMENT REQUIREMENTS

Shares are sold at their offering price, which is normally net asset value plus
an initial sales charge. However, in some cases, described below, where
purchases are not subject to an initial sales charge, the offering price may be
net asset value. In some cases, reduced sales charges may be available, as
described below. When you invest, the Fund receives the net asset value for your
account. The sales charge varies depending on the amount of your purchase and a
portion may be retained by the Distributor and allocated to your Investment
Professional. The Victory Portfolios has a reinstatement policy which allows an
investor who redeems shares originally purchased with a sales charge to reinvest
within 90 days without incurring an additional sales charge. The current sales
charge rates and commissions paid to Investment Professionals are as follows:

- 12 -

<PAGE>

SALES SALES
CHARGES CHARGES DEALER
AS A % OF AS A % OF REALLOWANCE
OFFERING NET AMOUNT AS A % OF
INVESTMENT PRICE INVESTED OFFERING PRICE(1)

Less than $49,999...........2.00% 2.04% 1.50%
$50,000 to $99,999..........1.75 1.78 1.25
$100,000 to $249,999........1.50 1.52 1.00
$250,000 to $499,999........1.25 1.27 0.75
$500,000 to $999,999........1.00 1.01 0.50
$1,000,000 and above..........0.00 none (1)

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to .25%
on such purchases.

The Distributor may pay all or a portion of any applicable sales charges and
service fees to Investment Professionals who sell shares of the Fund and provide
ongoing sales support services or shareholder support services. For the
three-year period commencing April 30, 1994, for maintaining and servicing
accounts of customers invested in the Fund, First Albany Corporation ("First
Albany") and PFIC Securities Corporation ("PFIC") may receive payments from the
Distributor equal to two-thirds of the Dealer Retention (as defined below) on
any shares of the Fund (and other funds of the Victory Portfolios) sold by First
Albany or PFIC and their broker-dealer affiliates. "Dealer Retention" is an
amount equal to the difference between the applicable sales charge and such part
of the sales charge which is reallowed to broker-dealers.

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

O LETTER OF INTENT. An investor may obtain a reduced sales charge by means of a
written Letter of Intent which expresses the investor's intention to purchase
shares of the Fund at a specified total public offering price within a 13-month
period.

A Letter of Intent is not a binding obligation upon the investor to purchase the
full amount indicated. The minimum initial investment under a Letter of Intent
is 5% of the total amount. Shares purchased with the first 5% of such amount
will be held in escrow (while remaining registered in the name of the investor)
to secure payment of the higher sales charge applicable to the shares actually
purchased if the full amount indicated is not purchased, and such escrowed
shares will be involuntarily redeemed to pay the additional sales charge, if
necessary. Dividends (if any) on escrowed shares, whether paid in cash or
reinvested in additional shares, are not subject to escrow. The escrowed shares
will not be available for redemption, exchange or other disposal by the investor
until all purchases pursuant to the Letter of Intent have been made or the
higher sales charge has been paid. When the full amount indicated has been
purchased, the escrow will be released. A Letter of Intent may include purchases
of shares made not more than 90 days prior to the date the investor signs a
Letter of Intent; however, the 13-month period during which the Letter of Intent
is in effect will begin on the date of the earliest purchase to be included. An
investor may combine purchases that are made in an individual capacity with (1)
purchases that are made by members of the investor's immediate family and (2)
purchases made by businesses that the investor owns as sole proprietorships, for
purposes of obtaining reduced sales charges by means of a written Letter of
Intent. In order to accomplish this, however, investors must designate on the
Account Application the accounts that are to be combined for this purpose.
Investors can only designate accounts that are open at the time the Letter of
Intent is executed.

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<PAGE>

If an investor qualifies for a further reduced sales charge because the investor
has either purchased more than the dollar amount indicated on the Letter of
Intent or has entered into a Letter of Intent which includes shares purchased
prior to the date of the Letter of Intent, the difference in the sales charge
will be used to purchase additional shares of the Fund on behalf of the
investor; thus the total purchases (included in the Letter of Intent) will
reflect the applicable reduced sales charge of the Letter of Intent.

For further information about Letters of Intent, interested investors should
contact the Transfer Agent at 800-539-3863. This program, however, may be
modified or eliminated at any time without notice.

O RIGHT OF ACCUMULATION AND CONCURRENT PURCHASES. A shareholder may qualify for
a reduced sales charge on purchases of shares of the Fund, and other funds of
the Victory Portfolios, by combining a current purchase with purchases of
another fund(s), or with certain prior purchases of shares of the Victory
Portfolios. The applicable sales charge is based on the sum of (1) the
purchaser's current purchase plus (2) the current public offering price of the
purchaser's previous purchases of (a) all shares held by the purchaser in the
Fund and (b) all shares held by the purchaser in any other fund of the Victory
Portfolios (except money market funds).

To receive the applicable public offering price pursuant to the right of
accumulation, shareholders must provide the Transfer Agent with sufficient
information at the time of purchase to permit confirmation of qualification.
Accumulation privileges may be amended or terminated without notice at any time
by the Distributor. See "Combined Purchases" and "Rights of Accumulation" in the
Statement of Additional Information.

o WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to the
following categories of persons (which categories may be changed or eliminated
at any time):

(1) Current or retired Trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an "Affiliated
Provider" ("Affiliated Providers" refer to affiliates and subsidiaries of
KeyCorp and service providers to the Victory Portfolios and the Victory
Shares (collectively, the "Victory Group")), dealers having an agreement
with the Distributor and any trade organization to which Key Advisers, the
Sub-Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or certain
other advisory accounts established with KeyCorp or any of its affiliates;

(3) Investors who reinvest assets received in a distribution from a qualified,
non-qualified or deferred compensation plan, agency, trust or custody
account that was either (a) maintained by KeyCorp or an Affiliated
Provider, or (b) invested in a fund of the Victory Group;

(4) Investors who, within 90 days of redemption, use the proceeds from the
redemption of shares of another mutual fund complex for which they
previously paid a front end sales charge or sales charge upon redemption
of shares;

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<PAGE>

Group with a balance of $250,000 or more (investors with less than
$250,000 will pay any applicable sales charges);

(6) Investment advisers or financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; and clients of such investment
advisers or financial planners who place trades for their own accounts if
the accounts are linked to the master account of such investment adviser
or financial planner on the books and records of the broker or agent. Such
accounts include retirement and deferred compensation plans and trusts
used to fund those plans, including, but not limited to, those defined in
section 401(a), 403(b), or 457 of the Internal Revenue Code and "rabbi
trusts."

SPECIAL INVESTOR SERVICES

o THE SYSTEMATIC INVESTMENT PLAN. You can make regular investments in the Fund
with the Systematic Investment Plan by completing the appropriate section of the
Account Application and attaching a voided personal check with your bank's
magnetic ink coding number across the front. If your bank account is jointly
owned, be sure that all owners sign. You must first meet the Fund's initial
investment requirement of $500, then investments may be made monthly by
automatically deducting $25 or more from your bank checking account. For
officers, trustees, directors and employees, including retired directors and
employees, of the Victory Group, KeyCorp and its affiliates, and the
Administrator and its affiliates (and family members of each of the foregoing)
who participate in the Systematic Investment Plan, there is no minimum initial
investment required. You may change the amount of your monthly purchase at any
time. Your bank checking account will be debited on the date indicated on your
Account Application. Shares will be purchased at the offering price next
determined following receipt of the order by the Transfer Agent. You may cancel
the Systematic Investment Plan at any time without payment of a cancellation
fee. Your monthly account statement will reflect systematic investment
transactions, and a debit entry will appear on your bank statement.

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

O TELEPHONE TRANSACTIONS. You can initiate most transactions by telephone. You
may call the Transfer Agent toll-free at 800-539-3863 or call your Investment
Professional or bank trust department. Telephone transaction privileges for
purchases, redemptions or exchanges may be modified, suspended or terminated by
the Fund at any time. If an account has more than one owner, the Fund and the
Transfer Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer representative of
record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

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<PAGE>

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you purchase
by exchange.

(5) The registration and tax identification numbers of the two accounts must
be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH TO
PURCHASE BY EXCHANGE.

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange shares of
this Fund only for Class A shares of another fund. At present, not all of the
funds offer the same classes of shares. If a fund has only one class of shares
that does not have a class designation, they are "Class A" shares for exchange
purposes. In some cases, sales charges may be imposed on exchange transactions.
Certain funds offer Class A or Class B shares and a list can be obtained by
calling the Transfer Agent at 800-539-3863. Please refer to the Statement of
Additional Information for more details about this policy.

Telephone exchange requests may be made either by calling your Investment
Professional or the Transfer Agent at 800-539-3863 prior to the Valuation Time
on any Business Day (see "Shareholder Account Rules and Policies - Share
Price").

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<PAGE>

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally 4:00 p.m. Eastern time)
that is in proper form, but either fund may delay the issuance of shares of the
fund into which you are exchanging if it determines it would be disadvantaged by
a same-day transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy might
create excessive turnover in the Fund's portfolio and associated expenses
disadvantageous to the Fund.

o Because excessive trading can hurt fund performance and harm shareholders, the
Victory Portfolios reserves the right to refuse any exchange request that will
impede the Fund's ability to invest effectively or otherwise have the potential
to disadvantage the Fund, or to refuse multiple exchange requests submitted by a
shareholder or dealer.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (see the definition of "Business Day" under "Shareholder Account
Rules and Policies-Share Price") . Shares will be redeemed at the NAV next
calculated after the Transfer Agent has received the redemption request. If the
Fund account is closed, any accrued dividends will be paid at the beginning of
the following month.

You may redeem shares in several ways:

O BY MAIL. Send a written request to:

The Victory Fund for Income
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

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<PAGE>

not be provided by a notary public. A signature guarantee is designed to protect
you, the Fund, and its agents from fraud. The Transfer Agent reserves the right
to reject any signature guarantee if (1) it has reason to believe that the
signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

O BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before Valuation Time (normally 4:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of
instruction with a signature guarantee to the Transfer Agent at Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

O ADDITIONAL REDEMPTION REQUIREMENTS. The Fund may withhold payment on
redemptions until it is reasonably satisfied that investments made by check have
been collected, which can take up to 15 days. Also, when the New York Stock
Exchange ("NYSE") is closed (or when trading is restricted) for any reason other
than its customary weekend or holiday closings, or under any emergency
circumstances as determined by the Commission to merit such action, the right of
redemption may be suspended or the date of payment postponed for a period of
time that may exceed 7 days. In addition, the Fund reserves the right to advance
the time on that day by which purchase and redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the Fund's NAV may be affected on days when investors do not
have access to the Fund to purchase or redeem shares.

SHAREHOLDER ACCOUNT RULES AND POLICIES

o SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The NAV is calculated by adding the value of all of the Fund's
investments, plus cash and other assets, deducting liabilities of the Fund, and
then dividing the result by the number of shares outstanding. The NAV of the
Fund is determined and its shares are priced as of the close of regular trading
of the NYSE (normally 4:00 p.m. Eastern time) (the "Valuation Time") 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 its portfolio instruments that the Fund's net asset value per share
might be materially affected.

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<PAGE>

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 and Christmas .

The Fund's securities are valued primarily on the basis of market quotations or,
if quotations are not readily available, by a method that the Board of Trustees
believes accurately reflects fair value. Fair value of these portfolio
securities is determined by an independent pricing service based primarily upon
information concerning market transactions and dealers quotations for comparable
securities.

o Redemption or transfer requests will not be honored until the transfer agent
receives all required documents in proper form. From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

o The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

o Payment for redeemed shares is ordinarily made in cash and forwarded by check
within three business days after the Transfer Agent receives redemption
instructions in proper form, except under unusual circumstances determined by
the Securities and Exchange Commission delaying or suspending such payments. The
Transfer Agent may delay forwarding a check for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as 15
days from the date the shares were purchased. That delay may be avoided if you
arrange with your bank to provide telephone or written assurance to the Transfer
Agent that your purchase payment has cleared.

o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

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<PAGE>

o The Distributor, at its expense, may provide additional cash compensation to
dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is currently 1.50% of the offering
price. In addition, the Distributor may, from time to time and at its own
expense, provide compensation, including financial assistance, to dealers in
connection with conferences, sales or training programs for their employees,
seminars for the public, advertising campaigns regarding one or more Victory
Portfolios and/or other dealer-sponsored special events including payment for
travel expenses, including lodging, incurred in connection with trips taken by
invited registered representatives and members of their families to locations
within or outside of the United States for meetings or seminars of a business
nature. Compensation will include the following types of non-cash compensation
offered through sales contests: (1) vacation trips including the provision of
travel arrangements and lodging; (2) tickets for entertainment events (such as
concerts, cruises and sporting events) and (3) merchandise (such as clothing,
trophies, clocks and pens). Dealers may not use sales of the Fund's shares to
qualify for this compensation if prohibited by the laws of any state or any
self-regulatory organization, such as the National Association of Securities
Dealers, Inc. None of the aforementioned compensation is paid for by the Fund or
its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

The Fund ordinarily declares and pays dividends from its net investment income
monthly. The Fund may make distributions at least annually out of any realized
capital gains, and the Fund may make supplemental distributions of dividends and
capital gains following the end of its fiscal year.

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any, will
be automatically reinvested in additional shares of the Fund. Income and
capital gain dividends will be reinvested at the net asset value of the
Fund as of the day after the record date. If you do not indicate a choice
on your Account Application, you will be assigned this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than 7 days
after the dividend payment date which may be more than 7 days after the
dividend record date.

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at the NAV as
of the day after the record date and have your income dividends paid in
cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain
dividends, or only capital gain dividends, automatically reinvested in
shares of another fund of the Victory Group. Shares will be purchased at
the NAV as of the day after the record date. If you are reinvesting
dividends of a fund sold without a sales charge in shares of a fund sold
with a sales charge, the shares will be purchased at the public offering
price. If you are reinvesting dividends of a fund sold with a sales charge
in shares of a fund sold with or without a sales charge, the shares will
be purchased at the net asset value of the fund. Dividend distributions
can be directed only to an existing account with a registration that is
identical to that of your Fund account.

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<PAGE>

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital gain
dividends, or only your income dividends, automatically transferred to
your bank checking or savings account. The amount will be determined on
the dividend record date and will normally be transferred to your account
within 7 days of the dividend record date. Dividend distributions can be
directed only to an existing account with a registration that is identical
to that of your Fund account. Please call or write the Transfer Agent to
learn more about this dividend distribution option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

o STATEMENTS AND REPORTS. You will receive a monthly statement reflecting all
transactions that affect the share balance or the registration of your Fund
account. You will receive a confirmation after every transaction that affected
the share balance of your Fund account, except for dividend reinvestment,
systematic investment and systematic withdrawal transactions. These transactions
will be detailed in your Fund account statement. Transactions that affect the
share balance of your Fund investment in an account established with an
Investment Professional or financial institution will be detailed in regular
statements or through confirmation procedures of the financial institution.
Certificates representing shares of the Fund will not be issued. An IRS Form
1099-DIV with federal tax information will be mailed to you by January 31 of
each tax year and also will be filed with the IRS. At least twice a year, you
will receive the Fund's financial reports.

o REDEMPTION OR EXCHANGES. Investors may realize a gain or loss when redeeming
(selling) or exchanging shares. For most types of accounts, the Fund reports the
proceeds to the IRS annually. Because the shareholders' tax treatment also
depends on their purchase price and personal tax positions, shareholders should
keep their regular account statements to use in determining their tax. See
"Buying a Dividend."

o COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

o BUYING A DIVIDEND. On the record date for a distribution of ordinary income or
capital gains dividend, the net asset value of the Fund is reduced by the amount
of the distribution. An investor who buys shares just before the record date
("buying a dividend") will pay the full price for the shares and then receive a
portion of the purchase price back as a taxable distribution.

FEDERAL TAXES (to be revised by Tax Dept)

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<PAGE>

distributions declared in October, November or December and paid during the
following January are taxable as if paid and received on December 31. Dividends
received from the Fund by corporate shareholders are not entitled to the
dividends-received deduction. The Fund sends tax statements to its shareholders
(with copies to the Internal Revenue Service (the "IRS")) by January 31 showing
the amounts and tax status of distributions made (or deemed made) during the
preceding calendar year.

PERFORMANCE

From time to time, performance information for the Fund showing total return 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 of more than one year. Average annual total return is
measured by comparing the value of an investment 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 annualizing that figure.
Cumulative total return is calculated similarly to average annual total return,
except that the resulting difference is not annualized.

Yield will be computed by dividing the Fund's net investment income per share
earned during a recent thirty-day 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 and annualizing the result.

Performance is a function of the type and quality of instruments held in the
Fund's portfolio, operating expenses, and market conditions. Consequently,
performance will fluctuate and data reported are not necessarily representative
of future results. Any fees charged by service providers with respect to
customer accounts for investing in shares of the Fund will not be reflected in
performance calculations.

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<PAGE>

Additional information regarding the performance of each of the Victory
Portfolios is included in the Victory Portfolios' annual and semi-annual
reports, which are available free of charge by calling 800-539-3863.

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios is organized as a Delaware business trust. The Victory Portfolios'
offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISERS AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Funds assets, subject at all times to the
supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Funds investments.

Key Advisers was organized as an Ohio corporation on July 27, 1995 and is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended. 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 $66 billion for numerous clients including large corporate and
public retirement plans, Taft-Hartley plans, foundations and endowments, high
net worth individuals and mutual funds.

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<PAGE>

authorized officers of Key Advisers and the Sub-Adviser, respectively, and Key
Advisers and the Sub-Adviser, respectively, will be as fully responsible to the
Fund for the acts and omissions of such persons as they are for their own acts
and omissions.

For its services under the investment sub-advisory agreement, Key Advisers pays
the Sub-Adviser a subadvisory fee at an annual rate of .20% of the Fund's
average daily net assets.

Effective May 1, 1996, the Sub-Advisory agreement between Key Advisers and First
Albany will terminate and Key Advisers will serve as investment adviser to the
Fund.

The person primarily responsible for the investment management of the Fund as
well as his previous experience is as follows:

PORTFOLIO MANAGING PREVIOUS
MANAGER FUND SINCE EXPERIENCE

Robert T. Hennes, Jr. Since Inception Executive Vice President of
First Albany Asset
Management Corporation
since 1991; formerly
Executive Vice President
and Director of Dollar Dry
Dock Bank.

Robert H. Fernald May 1, 1996 Vice President and Portfolio
Manager for Society Asset
Management, Inc., beginning
in 1993 and for Society
National Bank since 1992;
Portfolio Manager for
Ameritrust Company National
Association from 1991 to
1992; formerly Vice President
of Fairfield Research
Corporation.

EFFECT OF BANKING LAWS

- 24 -

<PAGE>

banking laws or regulations and that they or their affiliates can perform the
other services indicated above. Changes in either federal or state statutes and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of present or future statutes and regulations could
prevent the Key Advisers, the Sub-Adviser and their affiliates from continuing
to perform all or a part of the above services for their customers and/or the
Fund. In such event, changes in the operation of the Fund may occur, including
the possible alteration or termination of any service then being provided by Key
Advisers, the Sub-Adviser and their affiliates, and the Trustees would consider
alternate investment advisers and other means of continuing available services.
It is not expected that the Fund's shareholders would suffer any adverse
financial consequences (if other service providers are retained) as a result of
any of these occurrences.

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

The Victory Portfolios has adopted a Shareholder Servicing Plan for the Fund. In
accordance with the Shareholder Servicing Plan, the Fund may enter into
Shareholder Service Agreements under which the Fund pays fees of up to .25% of
the average daily net assets for fees incurred in connection with the personal
service and maintenance of accounts holding the shares of the Fund. Such
agreements are entered into between the Victory Portfolios and various
shareholder servicing agents, including the Distributor, Key Trust Company of
Ohio, N.A. and its affiliates, and other financial institutions and securities
brokers (each, a "Shareholder Servicing Agent"). Each Shareholder Servicing
Agent generally will provide support services to shareholders by establishing
and maintaining accounts and records, processing dividend and distribution
payments, providing account information, arranging for bank wires, responding to
routine inquires, forwarding shareholder communication, assisting in the
processing of purchase, exchange and redemption requests, and assisting
shareholders in changing dividend options, account designations and addresses.
Shareholder Servicing Agents may periodically waive all or a portion of their
respective shareholder servicing fees with respect to the Fund .

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

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<PAGE>

CUSTODIAN

Key Trust Company of Ohio, N.A., an affiliate of the Adviser, serves as
custodian for the Fund and receives fees for the services it performs as
custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were 1.58% of the Fund's average net assets, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts established with affiliates of the
Adviser, the trustee will vote the shares at meetings of the Fund's shareholders
in accordance with the shareholder's instructions or will vote in the same
percentage as shares that are not held in trust. The trustee will forward to
these shareholders all communications received by the trustee, including proxy
statements and financial reports. The Victory Portfolios and the Fund are not
required to hold annual meetings of shareholders and in ordinary circumstances
do not intend to hold such meetings. The Trustees may call special meetings of
shareholders for action by shareholder vote as may be required by the 1940 Act
or the Victory Portfolios' Delaware Trust Instrument. Under certain
circumstances, the Trustees may be removed by action of the Trustees or by the
shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have each adopted a
Code of Ethics (the "Codes") which require investment personnel (a) to pre-clear
all personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Victory fund transaction involving the same security, and (iii)
transactions involving securities being considered for investment by a Victory
fund. The Codes also prohibit investment personnel from purchasing securities in
an initial public offering. Personal trading reports are reviewed periodically
by each of the advisers for their respective employees and the Board of Trustees
of the fund reviews their Codes and any substantial violations of the Code.
Violations of the Codes may result in censure, monetary penalties, suspension or
termination of employment.

DELAWARE LAW

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<PAGE>

provides that shareholders will not be personally liable for liabilities of the
Victory Portfolios. In light of Delaware law, the nature of the Victory
Portfolios' business, and the nature of its assets, management of the Victory
Portfolios believes that the risk of personal liability to a Fund shareholder
would be extremely remote.

In the unlikely event a shareholder is held personally liable for the Victory
Portfolios' obligations, the Victory Portfolios is required to use its property
to protect or compensate the shareholder. On request, the Victory Portfolios
will defend any claim made and pay any judgment against a shareholder for any
act or obligation of the Victory Portfolios. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Victory Portfolios itself
cannot meet its obligations to indemnify shareholders and pay judgments against
them.

Delaware law authorizes electronic or telephonic communications between
shareholders and the Victory Portfolios. Under Delaware law, the Victory
Portfolios has the flexibility to respond to future business contingencies. For
example, the Trustees will have the power to incorporate the Victory Portfolios,
to merge or consolidate it with another entity, to cause each fund to become a
separate trust, and to change the Victory Portfolios' domicile without a
shareholder vote. This flexibility could help reduce the expense and frequency
of future shareholder meetings for non-investment related issues.

MISCELLANEOUS

As of the date of this Prospectus, the Fund offers only the class of shares
offered by this Prospectus. Subsequent to the date of this Prospectus, the Fund
may offer additional classes of shares through a separate prospectus. Any such
additional classes may have different sales charges and other expenses, which
would affect investment performance. Further information may be obtained by
contacting your Investment Professional or by calling 800- 539-3863.

Shareholders will receive Semi-Annual Reports, which are unaudited, and Annual
Reports, which are audited by independent public accountants ( "Reports"),
describing the investment operations of the Fund. Each of these Reports, when
available for a particular fiscal year end or the end of a semi-annual period,
is incorporated herein by reference. The Victory Portfolios may include
information in their Reports to shareholders that (a) describes general economic
trends, (b) describes general trends within the financial services industry or
the mutual fund industry, (c) describes past or anticipated portfolio holdings
for the Fund or (d) describes investment management strategies for the Victory
Portfolios. Such information is provided to inform shareholders of the
activities of the Victory Portfolios for the most recent fiscal year or
semi-annual period and to provide the views of Key Advisers, the Sub-Adviser
and/or the Victory Portfolios' officers regarding expected trends and
strategies.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

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<PAGE>

THE
VICTORY
PORTFOLIOS
GOVERNMENT BOND FUND

PROSPECTUS For current yield, purchase and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the GOVERNMENT BOND FUND (the "Fund"), a diversified
portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment adviser to the Fund ("Key Advisers" or
the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund ("Society" or
the "Sub-Adviser"). Concord Holding Corporation is the Fund's administrator (the
"Administrator"). Victory Broker-Dealer Services, Inc. is the Fund's distributor
(the "Distributor").

The Fund offers two classes of shares: (1) Class A shares, which are offered at
net asset value plus the applicable sales charge (maximum of 4.75% of public
offering price) and (2) Class B shares, which are offered at net asset value
with a maximum contingent deferred sales charge ("CDSC") of 5.0% imposed on
certain redemptions. At the end of the sixth year after a purchase , the CDSC
will no longer apply to redemptions. Class B shares have higher ongoing expenses
than Class A shares, but automatically convert to Class A shares eight years
after purchase.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
period ended October 31, 1995 have been filed with the Securities and Exchange
Commission ("Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR HAS
THE COMMISSION OR ANY SUCH STATE AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- 1 -

<PAGE>

- 2 -

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses............................................................ 2
Financial Highlights..................................................... 3
Investment Objective
Investment Policies and Risk Factors................................... 3
How to Invest, Exchange and Redeem..................................... 7
Dividends, Distributions and Taxes...................................... 16
Performance............................................................. 17
Fund Organization and Fees.............................................. 18
Additional Information.................................................. 20

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<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

CLASS A CLASS B

Maximum Sales Charge Imposed
on Purchases (as a percentage of
the offering price)................... 4.75% none
Maximum Sales Charge Imposed on
Reinvested Dividends................ none none
Deferred Sales Charge................... none 5% in the first year,
declining to 1% in
the sixth year and
eliminated
thereafter
Redemption Fees......................... none none
Exchange Fee............................ none none

ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE WAIVERS AND REIMBURSEMENTS (as a
percentage of average daily net assets).

CLASS A CLASS B

Management Fees(2)...................... 0.28% 0.28%
Administration Fees..................... 0.15% 0.15%
Rule 12b-1 Distribution Fees.......... 0.00% 0.75%
Other Expenses(3)....................... 0.57% 0.71%
------ ----
Total Fund Operating Expenses (2)(3) 1.00% 1.89%
==== ====

(1) Investors may be charged a fee if they effect transactions in Fund
shares through a broker or agent, including affiliated banks and non-
bank affiliates of Key Advisers and KeyCorp. (See "How to Invest,
Exchange and Redeem.")

(2) The Adviser has agreed to reduce its incestment advisory fees for the
indefinite future. Absent the voluntary reduction of investment
advisory fees, "Management Fees" as a percentage of average daily net
assets would be .55% and "Total Fund Operating Expenses" as a
percentage of average daily net assets would be 1.27% for Class A
Shares and 2.16% for Class B Shares.

(3) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay . (See "Fund Organization and Fees - Shareholder
Servicing Plan.")

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<PAGE>

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Government Bond Fund - Class A Shares $57 $78 $100 $164
Government Bond Fund - Class B Shares $69 $89 $122 $198(1)

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal period ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

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<PAGE>

FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect to the
financial highlights for the periods indicated. The information below has been
derived from financial statements audited by Coopers & Lybrand L.L.P. (for the
fiscal period ended October 31, 1995) and by KPMG Peat Marwick LLP (for earlier
periods), respectively, as independent auditors for the Victory Portfolios,
whose reports thereon, together with the financial statements of the Fund and
the Predecessor Fund, are incorporated by reference into the Statement of
Additional Information. No Class B shares were publicly issued prior to
September 26, 1994, and therefore no information on Class B shares is reflected
in the table below for periods prior to September 26, 1994.

THE VICTORY GOVERNMENT BOND FUND
CLASS B CLASS A
-------------------------- -------------------------------------
SIX MONTHS SEPTEMBER 26, SIX MONTHS
ENDED 1994 ENDED YEAR ENDED MAY 3, 1993
OCTOBER 31, TO APRIL 30, OCTOBER 31, APRIL 30, TO APRIL 30,
1995 (E) 1995 (A) (D) 1995 (E) 1995 (D) 1994 (A) (D)
--------- ------------ -------- -------- ------------

<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING $ 9.43 $ 9.25 $ 9.44 $ 9.45 $ 10.00
OF PERIOD
0.25 0.31 0.33 0.55 0.45
Investment Activities
Net investment income
Net realized and unrealized gains (losses) 0.45 0.17 0.40 (0.02) (0.54)
from investments
0.70 0.48 0.73 0.53 (0.09)
==== ==== ==== ==== ======
Total from Investment Activities
Distributions

Net investments income (0.22) (0.30) (0.29) (0.54) (0.45)
In excess of net investment income (0.06) -- (0.01) -- --
Net realized gains -- -- -- -- (0.01)
Total Distributions (0.28) (0.30) (0.30) (0.54) (0.46)
----- ------ ------ ------ ------

NET ASSET VALUE, END OF PERIOD $ 9.85 $ 9.43 $ 9.87 $ 9.44 $ 9.45

Total Return (excludes sales charges) 7.47%(b) 5.26%(b) 7.86%(b) 5.87% (1.06%)
RATIOS/SUPPLEMENTAL DATA:

Net Assets, End of Period (000) $ 909 $ 155 $27,856 $ 84,567 $120,636
Ratio of expenses to average net assets 1.82%(c) 1.43%(c) 0.92%(c) 0.63% 0.38%(c)
Ratio of net investment income to average
net assets 4.98%(c) 5.03%(c) 6.04%(c) 5.97% 4.61%(c)
Ratio of expenses to average net assets(f) 2.12%(c) 1.60%(c) 1.06%(c) 0.98% 0.96%(c)
Ratio of net investment income to average
net assets (f) 4.68%(c) 4.86%(c) 5.90%(c) 5.62% 4.03%(c)
Portfolio turnover 68.82% 127.00% 68.82% 127.00% 121.00%

</TABLE>

(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Effective June 5, 1995, the Victory Government Bond Portfolio became the
Government Bond Fund.
(f) During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

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<PAGE>

INVESTMENT OBJECTIVE

The Fund seeks to provide as high a level of current income as is consistent
with preservation of capital by investing in U.S. Government securities. The
Fund's dollar-weighted average maturity is expected not to exceed ten years
under normal market conditions. The investment objective of the Fund is
fundamental and therefore may not be changed without a vote of the holders of a
majority of the Fund's outstanding voting securities (as defined in the
Statement of Additional Information). There can be no assurance that the Fund
will achieve its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its objective by investing primarily in a portfolio of U.S.
government securities. When Key Advisers or the Sub-Adviser believes market
conditions warrant a temporary defensive position, the Fund may invest up to
100% of its assets in short-term securities such as bankers' acceptances,
certificates of deposit and other bank obligations, repurchase agreements,
short-term government or government agency obligations, and commercial paper and
other short-term corporate obligations, having remaining maturities of one year
or less.

The value of the Fund's securities will fluctuate in response to market
conditions and the value of a share in the Fund may vary. Investors should
review the investment objective and policies of the Fund and carefully consider
the ability to assume any risk involved in purchasing shares of the Fund,
including the risk of possible loss of principal.

Generally, bond funds offer higher yields than money market funds although
unlike money market funds, the share price of bond funds fluctuates in response
to changes in prevailing interest rates and may be affected by other market and
credit factors. Fixed-income securities (except securities with floating or
variable interest rates) are generally considered to be interest rate sensitive,
which means that their value (and a Fund's share price) will tend to decrease
when interest rates rise and increase when interest rates fall. Securities with
shorter maturities, while offering lower yields, generally provide greater price
stability than longer-term securities and are less affected by changes in
interest rates. The share prices and yields of the Fund are not insured or
guaranteed by the U.S. Government.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

O MONEY MARKET INSTRUMENTS . The Fund may invest in money market instruments,
which are short-term, high-quality debt securities, including U.S. Government
obligations, commercial paper, certificates of deposit, bankers' acceptances,

- 7 -

<PAGE>

time deposits and short-term corporate obligations. Money market instruments may
carry fixed rates of return or have variable or floating interest rates. The
Fund may only invest in U.S. Government securities and money market instruments.

O COMMERCIAL PAPER. The Fund may invest in commercial paper, which consists of
short-term obligations issued by banks, broker-dealers, corporations and other
entities for purposes such as financing their current operations.

O CERTIFICATES OF DEPOSIT. The Fund may invest in certificates of deposit, which
are negotiable certificates representing a commercial bank's obligations to
repay funds deposited with it, earning specified rates of interest over given
periods.

O BANKERS' ACCEPTANCES. The Fund may invest in bankers' acceptances, which are
negotiable obligations of a bank to pay a draft which has been drawn on it by a
customer. These obligations are backed by large banks and usually backed by
goods in international trade.

O TIME DEPOSITS. The Fund may invest in time deposits, which are non-negotiable
deposits in a banking institution earning a specified interest rate over a given
period of time.

O WHEN-ISSUED SECURITIES. The Fund may purchase securities on a when-issued or
delayed delivery basis. These transactions are arrangements in which the Fund
purchases securities with payment and delivery scheduled for a future time. When
the Fund agrees to purchase securities on a when-issued basis, the Fund's
custodian must set aside cash or liquid portfolio securities equal to the amount
of that commitment in a separate account, and may be required to subsequently
place additional assets in the separate account to reflect any increase in the
Fund's commitment. Prior to delivery of when-issued securities, their value is
subject to fluctuation and no income accrues until their receipt. The Fund
engages in when-issued and delayed delivery transactions only for the purpose of
acquiring portfolio securities consistent with its investment objective and
policies, and not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction; its
failure to do so may cause the Fund to miss a price or yield considered to be
advantageous.

O REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

o ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities and zero coupon corporate securities ("zero coupon
bonds"). Zero coupon bonds are purchased at a discount from the face amount
because the buyer receives only the right to a fixed payment on a certain date
in the future and does not receive any periodic interest payments. The effect of
owning instruments which do not make current interest payments is that a fixed
yield is earned not only on the original investment but also, in effect, on
accretion during the life of the obligations. This implicit reinvestment of
earnings at the same rate eliminates the risk of being unable to reinvest
distributions at a rate as high as the implicit yields on the zero coupon bond,
but at the same time eliminates the holder's ability to reinvest at higher
rates. For this reason, zero coupon bonds are subject to substantially greater
price

- 8 -

<PAGE>

fluctuations during periods of changing market interest rates than are
comparable securities which pay interest currently, which fluctuation increases
in accordance with the length of the period to maturity.

O RECEIPTS. In addition to bills, notes and bonds issued by the U.S. Treasury,
the Fund may also purchase separately traded interest and principal component
parts of such obligations that are transferable through the Federal book entry
system, known as Separately Traded Registered Interest and Principal Securities
("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES"). These instruments
are issued by banks and brokerage firms and are created by depositing Treasury
notes and Treasury bonds into a special account at a custodian bank; the
custodian holds the interest and principal payments for the benefit of the
registered owners of the certificates or receipts. The custodian arranges for
the issuance of the certificates or receipts evidencing ownership and maintains
the register. Receipts include Treasury Receipts ("TRs"), Treasury Investment
Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury Securities
("CATS").

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. The Fund will limit its investment in such instruments to
20% of its total assets.

O MORTGAGE-BACKED SECURITIES. Mortgage-backed securities purchased by the Fund
are securities issued or guaranteed by agencies or instrumentalities of the U.S.
Government and non-government entities such as banks, mortgage lenders, or other
financial institutions. A mortgage-backed security may be an obligation of the
issuer backed by a mortgage or pool of mortgages or a direct interest in an
underlying pool of mortgages. Some mortgage-backed securities make payments of
both principal and interest at a variety of intervals; others make semiannual
interest payments at a predetermined rate and repay principal at maturity (like
a typical bond). Mortgage-backed securities are based on different types of
mortgages including those on commercial real estate or residential properties.
Other types of mortgage-backed securities will likely be developed in the
future, and the Fund may invest in them if Key Advisers or the Sub-Adviser
determines they are consistent with the Fund's investment objective and
policies. The Fund will not acquire "residual" interests in real estate mortgage
investment conduits (REMICs) under current tax law in order to avoid certain
potential adverse tax consequences.

Prepayment, which occurs when unscheduled or early payments are made on the
underlying mortgages, may shorten the effective maturities of these securities
and may lower their total returns.

O EXTENDIBLE DEBT SECURITIES . The Fund may purchase extendible debt securities
, which can be retired at the option of the Fund at various dates prior to
maturity.

- 9 -

<PAGE>

O INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios and to the extent required by the
laws of any state in which shares of a fund are sold, Key Advisers or the
Sub-Adviser will waive its 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, to the extent such fees are not waived by Key Advisers
and/or the Sub-Adviser. The Fund will invest only in the securities of money
market funds which invest only in securities of equal or higher short-term
ratings as the securities in which the Fund may invest.

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal period ended October 31, 1995, the
portfolio turnover rate was 68.82% compared to 127.00% in the fiscal year ended
April 30, 1995.

INVESTMENT LIMITATIONS

1. The Fund may not (a) invest more than 5% of its total assets in the
securities of any issuer (except U.S. Government securities, except that up
to 25% of the Fund's total assets may be invested without regard to this
limitation) and (b) invest more than 25% of the Fund's assets in securities
of companies having their principal business activities in the same
industry (except U.S. government securities).

2. The Fund may not borrow money except that the Fund may borrow money from
banks for temporary or emergency purposes (not for leveraging or
investment), and engage in reverse repurchase agreements in an amount not
exceeding 331/3% of its total assets, including the amount borrowed less
liabilities other than borrowings (any borrowings exceeding this amount
will be reduced within three days (not including Sundays and holidays) to
the

- 10 -

<PAGE>

extent necessary to comply with the 331/3% limitation), provided that any
such borrowings representing more than 5% of the Fund's total assets must
be repaid before the Fund may make additional investments.

3. The Fund will not purchase a security if, as a result, more than 15% of its
net assets would be invested in illiquid securities. Illiquid securities
are investments that cannot be readily sold within seven days in the usual
course of business at approximately the price at which the Fund has valued
them . Under the supervision of the Trustees, Key Advisers or the
Sub-Adviser determines the liquidity of the Fund's investments. The absence
of a trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for the Fund to sell them promptly at an acceptable price.

Each of the investment limitations indicated above in this subsection are
fundamental, except for the limitation pertaining to illiquid securities.
Non-fundamental limitations may be changed without shareholder approval.
Whenever an investment policy or limitation states a maximum percentage of the
Fund's assets that may be invested, such percentage limitation will be
determined immediately after and as a result of the investment and any
subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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). If the value of the Fund's illiquid securities at any time
exceeds the percentage limitation applicable at the time of acquisition due to
subsequent fluctuations in value or for other reasons, the Trustees will
consider what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

The Fund offers investors two different classes of shares. The different classes
of shares represent investments in the same portfolio of securities but are
subject to different expenses and will likely have different share prices.

O CLASS A SHARES AND CLASS B SHARES. If Class A shares are purchased, there is
an initial sales charge (on investments up to $1 million). If Class B shares are
purchased, there is no sales charge at the time of purchase, but if the shares
are redeemed within six years, you will normally pay a contingent deferred sales
charge ("CDSC") that varies depending on how long you own your shares.

O WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser:

1. AMOUNT OF INVESTMENT. If you plan to invest a substantial amount, the
reduced sales charges available for larger purchases of Class A shares may
be more beneficial to you. Any order for $1 million or more will only be
accepted as Class A shares for that reason.

2. INVESTMENT HORIZON. While future financial needs cannot be predicted with
certainty, investors who prefer not to pay an initial sales charge and who
plan to hold their shares for more than six years might consider Class B
shares. Investors who plan to redeem shares within eight years might prefer
Class A shares.

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<PAGE>

3. DIFFERENCES IN ACCOUNT FEATURES. The dividends payable to Class B
shareholders will be reduced by the additional expenses borne solely by
that class, such as the asset-based sales charge to which Class B shares
are subject, as described below and in the Statement of Additional
Information.

4. INVESTMENT PROFESSIONALS. A salesperson , financial planner, investment
adviser or trust officer who provides you with information regarding the
investment of your assets (an "Investment Professional") or other person
who is entitled to receive compensation for selling Fund shares may receive
different compensation for selling one class than for selling another
class. Both the CDSC (an asset-based sales charge) for Class B shares and
the front-end sales charge on sales of Class A shares are used primarily to
compensate such persons.

O HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums. When you buy
shares, be sure to specify Class A or Class B shares. If you do not make a
selection, your investment will be made in Class A shares.

o INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. Your Investment Professional
will place your order with the Transfer Agent (see "Fund Organization and Fees -
Transfer Agent" below) on your behalf. You may be required to establish a
brokerage or agency account. Your Investment Professional will inform you if
whether subsequent trades should be directed to the Investment Professional or
directly to the Fund's Transfer Agent. Accounts established with Investment
Professionals may have different features, requirements and fees. In addition,
Investment Professionals may charge for their services. Information regarding
these features, requirements and fees will be provided by the Investment
Professional. If you are purchasing shares of any Fund through a program of
services offered or administered by your Investment Professional, you should
read the program materials in conjunction with this Prospectus. You may initiate
any transaction by telephone through your Investment Professional. Subsequent
investments by telephone may be made directly. See "Special Investor Services"
for more information about telephone transactions.

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<PAGE>

0 INVESTING THROUGH THE SYSTEMATIC INVESTMENT PLAN. You can use the Systematic
Investment Plan to purchase shares directly from your bank account. Please refer
to "The Systematic Investment Plan" below for more details. INVESTING DIRECTLY

The Victory Government Bond Fund,
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.

ABA #011001234
Credit PFSC DDA#16-918-8
The Victory Government Bond Fund

Class A Shares are sold at the public offering price based on the net asset
value that is next determined after the Transfer Agent receives the purchase
order. In most cases, to receive that day's offering price, the Transfer Agent
must receive your order as of the close of regular trading of the New York Stock
Exchange ("NYSE") (normally 4:00 p.m. Eastern time) (the "Valuation Time") on
each Business Day (as defined in "Shareholder Account Rules and Policies -Share
Price") of the Fund. If you buy shares through an Investment Professional, the
Investment Professional must receive your order in a timely fashion on a regular
Business Day and transmit it to the Transfer Agent so that it is received before
the close of business that day. The Transfer Agent may reject any purchase order
for the Fund's shares, in its sole discretion. It is the responsibility of your
Investment Professional to transmit your order to purchase shares to the
Transfer Agent in a timely fashion in order for you to receive that day's share
price.

INVESTMENT REQUIREMENTS

- 13 -

<PAGE>

offering price may be net asset value. In some cases, reduced sales charges may
be available, as described below. When you invest, the Fund receives the net
asset value for your account. The sales charge varies depending on the amount of
your purchase and a portion may be retained by the Distributor and allocated to
your Investment Professional. The Victory Portfolios has a reinstatement policy
which allows an investor who redeems shares originally purchased with a sales
charge to reinvest within 90 days without incurring an additional sales charge.
The current sales charge rates and commissions paid to Investment Professionals
are as follows:

DEALER

CLASS A SALES CHARGE
REALLOWANCE
AS A % OF AS A % OF AS A % OF

OFFERING NET AMOUNT OFFERING

AMOUNT OF PURCHASE PRICE INVESTMENT PRICE

Less than $49,999......... 4.75% 4.99% 4.00%
$50,000 to $99,999........ 4.50% 4.71% 4.00%
$100,000 to $249,999...... 3.50% 3.63% 3.00%
$250,000 to $499,999...... 2.25% 2.30% 2.00%
$500,000 to $999,999...... 1.75% 1.78% 1.50%
$1,000,000 and above...... 0.00% 0.00% (1)

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25% on such
purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

REDUCED SALES CHARGES FOR CLASS A SHARES. You may be eligible to buy Class A
shares at reduced sales charge rates in one or more of the following ways:

LETTER OF INTENT FOR CLASS A SHARES. An investor may obtain a reduced sales
charge by means of a written Letter of Intent which expresses the investor's
intention to purchase shares of the Fund at a specified total public offering
price within a 13-month period.

- 14 -

<PAGE>

to secure payment of the higher sales charge applicable to the shares actually
purchased if the full amount indicated is not purchased, and such escrowed
shares will be involuntarily redeemed to pay the additional sales charge, if
necessary.

Dividends (if any) on escrowed shares, whether paid in cash or reinvested in
additional shares, are not subject to escrow. The escrowed shares will not be
available for redemption, exchange or other disposal by the investor until all
purchases pursuant to the Letter of Intent have been made or the higher sales
charge has been paid. When the full amount indicated has been purchased, the
escrow will be released. A Letter of Intent may include purchases of shares made
not more than 90 days prior to the date the investor signs a Letter of Intent;
however, the 13-month period during which the Letter of Intent is in effect will
begin on the date of the earliest purchase to be included. An investor may
combine purchases that are made in an individual capacity with (1) purchases
that are made by members of the investor's immediate family and (2) purchases
made by businesses that the investor owns as sole proprietorships, for purposes
of obtaining reduced sales charges by means of a written Letter of Intent. In
order to accomplish this, however, investors must designate on the Account
Application the accounts that are to be combined for this purpose. Investors can
only designate accounts that are open at the time the Letter of Intent is
executed.

O RIGHT OF ACCUMULATION AND CONCURRENT PURCHASES. A shareholder may qualify for
a reduced sales charge on purchases of Class A Shares of the Fund, and other
funds of the Victory Portfolios, by combining a current purchase with purchases
of another fund(s), or with certain prior purchases of shares of the Victory
Portfolios. The applicable sales charge is based on the sum of (1) the
purchaser's current purchase plus (2) the current public offering price of the
purchaser's previous purchases of (a) all shares held by the purchaser in the
Fund and (b) all shares held by the purchaser in any other fund of the Victory
Portfolios (except money market funds).

O WAIVERS OF CLASS A SALES CHARGES. No sales charge is imposed on sales of Class
A shares to the following categories of persons (which categories may be changed
or eliminated at any time):

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<PAGE>

KeyCorp and service providers to the Victory Portfolios and the Victory
Shares (collectively, the "Victory Group")), dealers having an
agreement with the Distributor and any trade organization to which Key
Advisers, the Sub-Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or
certain other advisory accounts established with KeyCorp or any of its
affiliates;

(3) Investors who reinvest assets received in a distribution from a
qualified, non-qualified or deferred compensation plan, agency, trust
or custody account that was either (a) maintained by KeyCorp or an
Affiliated Provider, or (b) invested in a fund of the Victory Group;

(5) Shareholders of the former Investors Preference Fund For Income, Inc.
and the Investors Preference New York Tax-Free Fund, Inc. who have
continuously maintained accounts with a fund or funds of the Victory
Group with a balance of $250,000 or more (investors with less than
$250,000 will pay any applicable sales charges); and

(6) Investment advisers or financial planners who place trades for their
own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; and clients of
such investment advisers or financial planners who place trades for
their own accounts if the accounts are linked to the master account of
such investment adviser or financial planner on the books and records
of the broker or agent. Such accounts include retirement and deferred
compensation plans and trusts used to fund those plans, including, but
not limited to, those described in section 401(a), 403(b), or 457 of
the Internal Revenue Code and "rabbi trusts."

CLASS B SHARES. Class B shares are sold at net asset value per share without an
initial sales charge. However, if Class B shares are redeemed within six years
of their purchase, a CDSC will be deducted from the redemption proceeds. That
sales charge will not apply to shares purchased by the reinvestment of dividends
or capital gains distributions. The charge will be assessed on the lesser of the
net asset value of the shares at the time of redemption or the original purchase
price. The CDSC is not imposed on the amount of your account value represented
by the increase in net asset value over the initial purchase price (including
increases due to the reinvestment of dividends and capital gains distributions).
The Class B CDSC is paid to the Distributor to reimburse its expenses of
providing distribution-related services to the Fund in connection with the sale
of Class B shares.

To determine whether the CDSC applies to a redemption, the Victory Portfolios
redeems shares in the following order: (1) shares acquired by reinvestment of
dividends and capital gains distributions, (2) shares held for over six years,
and (3) shares held the longest during the 6-year period. The amount of the CDSC
will depend on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:

CONTINGENT DEFERRED SALES CHARGE
YEARS SINCE PURCHASE ON REDEMPTIONS IN THAT YEAR
PAYMENT WAS MADE (AS % OF AMOUNT SUBJECT TO CHARGE)

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<PAGE>

0-1 5.0%
1-2 4.0%
2-3 3.0%
3-4 3.0%
4-5 2.0%
5-6 1.0%
6 and following none

In the table, a "year" is a 12-month period. All purchases are considered to
have been made on the first regular business day of the month in which the
purchase was made.

O WAIVERS OF CLASS B CDSC. The Class B CDSC will be waived if the shareholder
requests it for any of the following redemptions: (1) distributions to
participants or beneficiaries from Retirement Plans, if the distributions are
made (a) under an Automatic Withdrawal Plan after the participant reaches age 59
1/2 , as long as the payments are no more than 12% of the account value annually
(measured from the date the Transfer Agent receives the request), or (b)
following the death or disability (as defined in the Internal Revenue Code) of
the participant or beneficial owner; (2) redemptions from accounts other than
Retirement Plans following the death or disability of the shareholder (as
evidenced by a determination of disability by the Social Security
Administration), (3) returns of excess contributions to Retirement Plans, and
(4) distributions of not more than 12% of the account value annually.

The CDSC is also waived on Class B shares in the following cases: (1) shares
sold to Key Advisers, the Sub-Adviser or their affiliates; (2) shares issued in
plans of reorganization to which the Victory Portfolios is a party; and (3)
shares redeemed in involuntary redemptions as described above.

O AUTOMATIC CONVERSION OF CLASS B SHARES. Eight years after Class B shares are
purchased, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution Plan, described
below. The conversion is based on the relative net asset value of the two
classes, and no sales charge or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements-Class B Conversion Feature"
in the Statement of Additional Information.

O DISTRIBUTION PLAN FOR CLASS B SHARES. The Victory Portfolios has adopted a
Distribution Plan (the "Plan") under Rule 12b-1 of the 1940 Act for Class B
shares to compensate the Distributor for its services and costs in distributing
Class B shares and servicing accounts. Under the Plan, the Victory Portfolios
pays the Distributor an annual "asset-based sales charge" of 0.75% per year on
Class B shares . This fee is computed on the average daily net assets of Class B
shares and paid monthly. The asset-based sales charge allows investors to buy
Class B shares without a front-end sales charge while allowing the Distributor
to compensate dealers that sell Class B shares. The asset-based sales charge
increases Class B expenses by up to 0.75% of average net assets per year.

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<PAGE>

Victory Portfolios, it provides that the Trustees may elect to continue payments
for certain expenses already incurred. The payments under the Plan increase the
annual expenses of Class B shares. For more details, please refer to "Advisory
and Other Contracts - Class B Shares Distribution Plan" in the Statement of
Additional Information.

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

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<PAGE>

record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you
purchase by exchange.

(5) The registration and tax identification numbers of the two accounts
must be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH
TO PURCHASE BY EXCHANGE.

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange Class A
shares of this Fund only for Class A shares of another fund. At present, not all
of the funds offer the same two classes of shares. If a fund has only one class
of shares that does not have a class designation, they are "Class A" shares for
exchange purposes. In some cases, sales charges may be imposed on exchange
transactions. Certain funds offer Class A or Class B shares and a list can be
obtained by calling the Transfer Agent at 800-539-3863. Please refer to the
Statement of Additional Information for more details about this policy.

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<PAGE>

Telephone exchange requests may be made either by calling your Investment
Professional or the Transfer Agent at 800-539-3863 prior to Valuation Time on
any Business Day (See "Shareholder Account Rules and Policies -- Share Price").

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally 4:00 p.m. Eastern time)
that is in proper form, but either fund may delay the issuance of shares of the
fund into which you are exchanging if it determines it would be disadvantaged by
a same-day transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy might
create excessive turnover in the Fund's portfolio and associated expenses
disadvantageous to the Fund.

o Because excessive trading can hurt fund performance and harm shareholders, the
Victory Portfolios reserves the right to refuse any exchange request that will
impede the Fund's ability to invest effectively or otherwise have the potential
to disadvantage the Fund or to refuse multiple exchange requests submitted by a
shareholder or dealer.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (See the definition of "Business Day" under "Shareholder Account
Rules and Policies -- Share Price"). Shares will be redeemed at the NAV next
calculated after the Transfer Agent has received the redemption request. If the
Fund account is closed, any accrued dividends will be paid at the beginning of
the following month.

You may redeem shares in several ways:

O BY MAIL. Send a written request to:

The Victory Government Bond Fund
P.O. Box 9741
Providence, RI 02940-9741

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<PAGE>

exactly as their names appear on the Account Application. A signature guarantee
is required if: you wish to redeem more than $10,000 worth of shares; your Fund
account registration has changed within the last 60 days; the check is not being
mailed to the address on your account; the check is not being made out to the
account owner; or if the redemption proceeds are being transferred to another
Victory Group account with a different registration. The following institutions
should be able to provide you with a signature guarantee: banks, brokers,
dealers, credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature guarantee
may not be provided by a notary public. A signature guarantee is designed to
protect you, the Fund and its agents from fraud. The Transfer Agent reserves the
right to reject any signature guarantee if (1) it has reason to believe that the
signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

O ADDITIONAL REDEMPTION REQUIREMENTS. The Fund may hold payment on redemptions
until it is reasonably satisfied that investments made by check have been
collected, which can take up to 15 days. Also, when the New York Stock Exchange
(the "NYSE") is closed (or when trading is restricted) for any reason other than
its customary weekend or holiday closings, or under any emergency circumstances
as determined by the Commission to merit such action, the right of redemption
may be suspended or the date of payment postponed for a period of time that may
exceed 7 days. In addition, the Fund reserves the right to advance the time on
that day by which purchase and redemption orders must be received. To the extent
that portfolio securities are traded in other markets on days when the NYSE is
closed, the Fund's NAV may be affected on days when investors do not have access
to the Fund to purchase or redeem shares.

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<PAGE>

SHAREHOLDER ACCOUNT RULES AND POLICIES

SHARE PRICE. The term "net asset value per share," or "NAV", means the value of
one share. The NAV of each class of shares is calculated by adding the value all
the Fund's investments, plus cash and other assets, deducting liabilities of the
Fund and of the class, and then dividing the result by the number of shares of
the class outstanding. The NAV of the Fund is determined and its shares are
priced as of the close of regular trading of the NYSE (normally 4:00 p.m.
Eastern time) (the "Valuation Time") 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 its 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 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 and Christmas .

o Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form . From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

o Dealers that can perform account transactions for their client by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Victory Portfolios if the dealer performs any transaction erroneously.

o The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

o If your account value has fallen below $500 you may be given 60 days'
notice to reestablish the minimum balance. If you do not increase your minimum
balance, your account may be closed and the proceeds mailed to you at the record
address. In some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase orders. Under

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<PAGE>

unusual circumstances, shares of the Fund may be redeemed "in kind," which means
that the redemption proceeds will be paid with securities from the Fund. Please
refer to the Statement of Additional Information for more details.

o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee. Under the circumstances described in "How to Invest," you
may be subject to a CDSC when redeeming Class B shares.

o The Distributor, at its expense, may also provide additional cash compensation
to dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is currently 4.00% of the offering
price. In addition, the Distributor will, from time to time and at its own
expense, provide compensation, including financial assistance, to dealers in
connection with conferences, sales or training programs for their employees,
seminars for the public, advertising campaigns regarding one or more Victory
Portfolios and/or other dealer-sponsored special events including payment for
travel expenses, including lodging, incurred in connection with trips taken by
invited registered representatives and members of their families to locations
within or outside of the United States for meetings or seminars of a business
nature. Compensation will include the following types of non-cash compensation
offered through sales contests: (1) vacation trips including the provision of
travel arrangements and lodging; (2) tickets for entertainment events (such as
concerts, cruises and sporting events) and (3) merchandise (such as clothing,
trophies, clocks and pens). Dealers may not use sales of the Fund's shares to
qualify for this compensation if prohibited by the laws of any state or any
self-regulatory organization, such as the National Association of Securities
Dealers, Inc. None of the aforementioned compensation is paid for by the Fund or
its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

The Fund ordinarily declares and pays dividends separately for Class A and Class
B shares from its net investment income monthly. The Fund may make distributions
at least annually out of any realized capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the end of
its fiscal year.

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and capital gain dividends will be reinvested at the net asset
value of your class of shares of the Fund as of the day after the
record date. If you do not indicate a choice on your Account
Application, you will be assigned this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than 7
days

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<PAGE>

after the dividend payment date which may be more than 7 days after the
dividend record date.

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at the NAV
of the day after the record date and have your income dividends paid in
cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain
dividends, or only capital gain dividends, automatically reinvested in
shares of another fund of the Victory Group. Shares will be purchased
at the NAV as of the day after the record date. If you are reinvesting
dividends of a fund sold without a sales charge in shares of a fund
sold with a sales charge, the shares will be purchased at the public
offering price. If you are reinvesting dividends of a fund sold with a
sales charge in shares of a fund sold with or without a sales charge,
the shares will be purchased at the net asset value of the fund.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital
gain dividends, or only your income dividends, automatically
transferred to your bank checking or savings account. The amount will
be determined on the dividend record date and will normally be
transferred to your account within 7 days of the dividend record date.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account. Please
call or write the Transfer Agent to learn more about this dividend
distribution option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

O REDEMPTION OR EXCHANGES. Investors may realize a gain or loss when redeeming
(selling) or exchanging shares. For most types of accounts, the Fund reports the
proceeds to the IRS annually. Because the shareholders' tax treatment also
depends on their purchase price and personal tax positions, shareholders should

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<PAGE>

keep their regular account statements to use in determining their tax. See
"Buying a Dividend."

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

O BUYING A DIVIDEND. On the record date for a distribution of ordinary income or
capital gains dividend, the net asset value of the Fund is reduced by the amount
of the distribution. An investor who buys shares just before the record date
("buying a dividend") will pay the full price for the shares and then receive a
portion of the purchase price back as a taxable distribution.

FEDERAL TAXES

Distributions by the Fund of its net investment income and the excess, if any,
of its net short-term capital gain over its net long-term capital loss are
designated as ordinary dividends and are taxable to shareholders as ordinary
income. Distributions by the Fund of the excess, if any, of its net long-term
capital gain over its net short-term capital loss are designated as "capital
gain dividends" and are taxable to shareholders as long-term capital gain,
regardless of the length of time shareholders have held their shares. It is
anticipated that no part of any Fund distribution will be eligible for the
dividends-received deduction for corporations.

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares.
Distributions received by shareholders of the Fund in January of a given year
will be treated as received on December 31 of the preceding year provided that
they were declared to shareholders of record on a date in October, November, or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

REDEMPTIONS OR EXCHANGES

If a shareholder disposes of shares in the Fund at a loss before holding such
shares for more than six months, the loss will be treated as a long-term capital
loss to the extent that the shareholder has received a capital gain dividend on
those shares. All or a portion of any loss realized upon a taxable disposition
of shares of the Fund may be disallowed if other shares of the Fund are
purchased within 30 days before or after such disposition.

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<PAGE>

provide this benefit (e.g., Pennsylvania) and other states may limit it (e.g.,
New York, which generally requires at least 50% of a fund's total assets to be
invested in such obligations for the exemption to apply). In addition, certain
types of securities, such as repurchase agreements and certain agency-backed
securities, may not qualify for this U.S. Government interest exemption. Some
states may impose intangible property taxes. Shareholders will be notified
annually of the extent to which the Fund's ordinary income dividends were
derived from U.S. Government obligations. INVESTORS CONSIDERING AN INVESTMENT IN
THE FUND SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS
SUITABLE TO THEIR PARTICULAR TAX SITUATIONS.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

PERFORMANCE

From time to time, performance information for each class of shares of the Fund
showing total return of each class of shares 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
of more than one year. Average annual total return is measured by comparing the
value of an investment in a class 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 annualizing that figure. Cumulative total
return is calculated similarly to average annual total return, except that the
resulting difference is not annualized.

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<PAGE>

Additional information regarding the performance of each of the Victory
Portfolios is included in the Victory Portfolios' annual and semi-annual
reports. The Predecessor Fund's Annual Report to shareholders dated April 30,
1995, includes additional information about the performance of the Predecessor
Fund. These reports are available without charge upon request by calling
800-539-3863.

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

REORGANIZATION WITH PREDECESSOR FUND

The Predecessor Fund was a portfolio of The Victory Funds. On April 28, 1995,
the Shareholders of the Predecessor Fund approved an Agreement and Plan of
Reorganization (the "Reorganization Plan"). Under the Reorganization Plan, the
Predecessor Fund transferred all its assets and liabilities to the Fund in
exchange for shares of the Fund, which were distributed pro rata to shareholders
of the Predecessor Fund, who then became shareholders of the Fund (the
"Reorganization"). The Predecessor Fund has ceased operations. The Fund had no
assets and did not begin operations until the Reorganization occurred.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

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<PAGE>

investment advisory fees aggregating .21% and .25% of the average daily net
assets for Class A and Class B shares, respectively, of the Fund.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
subadvisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

For its services under the investment sub-advisory agreement, Key Advisers pays
the Sub-Adviser fees as a percentage of average daily net assets as follows:
.40% of the first $10 million of average daily net assets; .30% of the next $15
million of average daily net assets; .25% of the next $25 million of average
daily net assets; and .20% of average daily net assets in excess of $50 million.

The person primarily responsible for the investment management of the Fund as
well as his previous experience is as follows:

MANAGING PREVIOUS

PORTFOLIO MANAGER FUND SINCE EXPERIENCE

Robert H. Fernald March, 1994 Vice President, Society Asset
Management, Inc.; Portfolio Manager
with Society Asset Management, Inc.
since 1993 and with Society National
Bank since 1992; Portfolio Manager,
Ameritrust Company National
Association 1991-1992; formerly, Vice
President, Fairfield Research
Corporation.

EFFECT OF BANKING LAWS

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indicated above. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of present or future statutes and regulations could prevent the
Key Advisers, the Sub-Adviser and their affiliates from continuing to perform
all or a part of the above services for their customers and/or the Fund. In such
event, changes in the operation of the Fund may occur, including the possible
alteration or termination of any service then being provided by Key Advisers,
the Sub-Adviser and their affiliates, and the Trustees would consider alternate
investment advisers and other means of continuing available services. It is not
expected that the Fund's shareholders would suffer any adverse financial
consequences (if other service providers are retained) as a result of any of
these occurrences.

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

The Victory Portfolios has adopted a Shareholder Servicing Plan for each class
of shares of the Fund. In accordance with the Shareholder Servicing Plan, the
Fund may enter into Shareholder Service Agreements under which the Fund pays
fees of up to .25% of the average daily net assets of each class for fees
incurred in connection with the personal service and maintenance of accounts
holding the shares of such class. Such agreements are entered into between the
Victory Portfolios and various shareholder servicing agents, including the
Distributor, Key Trust Company of Ohio, N.A. and its affiliates, and other
financial institutions and securities brokers (each, a "Shareholder Servicing
Agent"). Each Shareholder Servicing Agent generally will provide support
services to shareholders by establishing and maintaining accounts and records,
processing dividend and distribution payments, providing account information,
arranging for bank wires, responding to routine inquires, forwarding shareholder
communication, assisting in the processing of purchase, exchange and redemption
requests, and assisting shareholders in changing dividend options, account
designations and addresses. Shareholder Servicing Agents may periodically waive
all or a portion of their respective shareholder servicing fees with respect to
the Fund.

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FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Victory Portfolios' Board of Trustees, recordkeeping services, services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory , compliance , and other administrative and support
services.

For such services, the Sub-Adviser pays fees to Key Advisers as follows: .25% on
the first $10 million of average daily net assets; .15% of the next $15 million
of average daily net assets ; .10% of the next $25 million of average daily net
assets; and .05% of average daily net assets in excess of $50 million.

EXPENSES

For the fiscal period ended October 31, 1995, the Fund's total operating
expenses for Class A and Class B shares were 1.06% and 2.12%, respectively, of
the Fund's average daily net assets, excluding certain voluntary fee reductions
or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Shares of each class of the Fund participate equally in dividends and
distributions and have equal voting, liquidation and other rights. When issued
and paid for, shares will be fully paid and nonassessable by the Victory
Portfolios and will have no preference, conversion, exchange or preemptive
rights. Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares owned. For those investors with qualified
trust accounts established with affiliates of the Adviser, the trustee will vote
the shares at meetings of the Fund's shareholders in accordance with the
shareholder's instructions or will vote in the same percentage as shares that
are not so held in trust. The trustee will forward to these shareholders all
communications received by the trustee, including proxy statements and financial
reports. The Victory Portfolios and the Fund are not required to hold annual
meetings of shareholders and in ordinary circumstances do not intend to hold
such meetings. The Trustees may call special meetings of shareholders for action
by shareholder vote as may be required by the 1940 Act or the Declaration of
Trust. Under certain circumstances, the Trustees may be removed by action of the
Trustees or by the shareholders. Shareholders holding 10% or more of the Victory
Portfolios' outstanding shares may call a special meeting of shareholders for
the purpose of voting upon the question of removal of Trustees.

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<PAGE>

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have each adopted a
Code of Ethics (the "Codes") which require investment personnel (a) to pre-clear
all personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The
Codes also prohibit investment personnel from purchasing securities in an
initial public offering. Personal trading reports are reviewed periodically by
Key Advisers and the Sub-Adviser, and the Board of Trustees reviews their Codes
and any substantial violations of the Codes. Violations of the Code may result
in censure, monetary penalties, suspension or termination of employment.

DELAWARE LAW

The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of personal liability
extended to stockholders of Delaware corporations and the Trust Instrument
provides that shareholders will not be personally liable for liabilities of the
Victory Portfolios. In light of Delaware law, the nature of Victory Portfolios'
business, and the nature of its assets, management of Victory Portfolios
believes that the risk of personal liability to a Fund shareholder would be
extremely remote.

Delaware law authorizes electronic or telephone communications between
shareholders and the Victory Portfolios. Under Delaware law, the Victory
Portfolios will have the flexibility to respond to future business
contingencies. For example, the Trustees will have the power to incorporate the
Victory Portfolios, to merge or consolidate it with another entity, to cause
each fund to become a separate trust, and to change the Victory Portfolio's
domicile without a shareholder vote. This flexibility could help reduce the
expense and frequency of future shareholder meetings for non-investment related
issues.

MISCELLANEOUS

As of the date of this Prospectus, the Fund offers only the classes of shares
that are offered by this Prospectus. Subsequent to the date of this Prospectus,
the Fund may offer additional classes of shares through a separate prospectus.
Any such additional classes may have different sales charges and other expenses,
which would affect investment performance. Further information may be obtained
by contacting your Investment Professional or by calling 800-539-3863.

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<PAGE>

economic trends, (b) describes general trends within the financial services
industry or the mutual fund industry, (c) describes past or anticipated
portfolio holdings for the Fund or (d) describes investment management
strategies for the Victory Portfolios. Such information is provided to inform
shareholders of the activities of the Victory Portfolios for the most recent
fiscal year or semi-annual period and to provide the views of Key Advisers, the
Sub-Adviser and/or the Victory Portfolios' officers regarding expected trends
and strategies.

The Fund intends to eliminate duplicate mailings Reports to an address at which
more than one shareholder of record with the same last name has indicated that
mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

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<PAGE>

THE
VICTORY
PORTFOLIOS
GOVERNMENT MORTGAGE FUND

PROSPECTUS For current yield, purchase, and redemption information,
MARCH 1, 1996 CALL 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the GOVERNMENT MORTGAGE FUND (the "Fund") , a diversified
portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment adviser to the Fund ("Key Advisers" or
the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"Sub-Adviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund seeks to provide a high level of current income consistent with safety
of principal. The Fund pursues this objective by investing exclusively in
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940- 9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses..........................................................3
Financial Highlights...................................................4
Investment Objective................................................. 5
Investment Policies and Risk Factors................................. 5
How to Invest, Exchange and Redeem.....................................9
Dividends, Distributions and Taxes....................................19
Performance...........................................................21
Fund Organization and Fees............................................22
Additional Information................................................25

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<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases (as a
percentage of the offering price) 4.75%
Maximum Sales Charge Imposed on Reinvested Dividends none
Deferred Sales Charge none
Redemption Fees none
Exchange Fee none

ANNUAL FUND OPERATING EXPENSES (as a percentage of average daily net assets)

Management Fees .50%
Administration Fees .15%
Other Expenses(2) .25%
Total Fund Operating Expenses(2) .90%

- ---------------

(1) Investors may be charged a fee if they effect transactions in Fund
shares through a broker or agent, including affiliated banks and non-bank
affiliates of Key Advisers and KeyCorp. (See "How to Invest, Exchange and
Redeem.")

(2) These amounts include an estimate of the shareholder servicing fees
the Fund expects to pay. (See "Fund Organization and Fees - Shareholder
Servicing Plan.")

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Government Mortgage Fund $56 $75 $95 $153

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

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<PAGE>

FINANCIAL HIGHLIGHTS

THE VICTORY GOVERNMENT MORTGAGE FUND
MAY 18,
1990 TO
YEAR ENDED OCTOBER 31, OCT. 31,
1995 1994 1993 1992 1991 1990(a)(d)

NET ASSET VALUE,
<S> <C> <C> <C> <C> <C> <C>
BEGINNING OF PERIOD $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18 $ 10.00
---------- -------- -------- ------- ------- -------

Income from Investment Activities:
Net investment income 0.72 0.68 0.66 0.74 0.80 0.35
Net realized and unrealized
gains (losses) on investments 0.62 (1.02) 0.32 0.34 0.55 0.18
----------- --------- --------- --------- -------- --------
Total from
Investment Activities 1.34 (0.34) .98 1.08 1.35 0.53
----------- ------------------- --------- -------- --------
Distributions
Net investment income (0.71) (0.67) (0.66) (0.74) (0.80) (0.35)
Net realized gains (0.03) (0.02) (0.03)
In excess of net realized gains (0.05)
Tax return of capital (0.02) _______ _______
-------------
Total Distributions (0.81) (0.69) (0.69) (0.74) (0.80) (0.35)
---------- -------- -------- -------- ------- -------

NET ASSET VALUE,
END OF PERIOD $ 10.86 $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18
========== ======== ======== ======= ======= =======

Total Return 13.55% (3.01%) 9.05% 10.34% 13.77% 5.37%
(Excludes Sales Charge)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of
Period (000) $136,103 $148,168 $132,738 $73,660 $42,616 $31,972
Ratio of expenses to
average net assets 0.77% 0.76% 0.75% 0.77% 0.78% 0.82%
Ratio of net investment
income to average net assets 6.81% 6.38% 5.92% 6.82% 7.68% 7.98%
Ratio of expenses to
average net assets (c) 0.79% 0.96% 0.76%
Ratio of net investment
income to average net
assets (c) 6.80% 6.18% 5.92%
Portfolio turnover 59.14% 131.63% 50.18% 11.19% 20.70%

</TABLE>

(a) Period from commencement of operations.
(b) Annualized.
(c) During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
(d) This information is not included in the financial statements audited
by Coopers & Lybrand L.L.P.

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<PAGE>

INVESTMENT OBJECTIVE

The Fund seeks to provide a high level of current income consistent with safety
of principal. The investment objective of the Fund is fundamental and may not be
changed without a vote of the holders of a majority of its outstanding voting
securities (as defined in the Statement of Additional Information). There can be
no assurance that the Fund will achieve its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund will invest exclusively in obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities.

Mortgage-related securities in which the Fund may invest must be issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, such as
the Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association ("FNMA"), the Federal Home Loan Bank ("FHLB") and the
Federal Home Loan Mortgage Corporation ("FHLMC").

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

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<PAGE>

custodian arranges for the issuance of the certificates or receipts evidencing
ownership and maintains the register. Receipts include Treasury Receipts
("TRs"), Treasury Investment Growth Receipts ("TIGRs") and Certificates of
Accrual on Treasury Securities ("CATS").

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. The Fund will limit its investment in such instruments to
20% of its total assets.

O GOVERNMENT MORTGAGE-BACKED SECURITIES. The principal governmental guarantor
(i.e., backed by the full faith and credit of the U.S. Government) 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 backed by 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 but are not backed by the
full faith and credit of the United States Government.

The investment characteristics of mortgage-related securities differ from
traditional debt securities. These differences can result in significantly
greater price and yield volatility than is the case with traditional fixed
income securities. The major differences typically include more frequent
interest and principal payments, usually monthly, the adjustability of interest
rates, and the possibility that prepayments of principal may be made at any
time. Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors. During periods of
declining interest rates, prepayment rates can be expected to accelerate. Under
certain interest rate and prepayment rate scenarios, the Fund may fail to recoup
fully its investment in mortgage-backed securities (and incur capital losses)
notwithstanding a direct or indirect governmental or agency guarantee. In
general, changes in the rate of prepayments on a mortgage-related security will
change that security's market value and its yield to maturity. When interest
rates fall, high prepayments could force the Fund to reinvest principal at a
time when investment opportunities are not attractive. Thus, mortgage-backed
securities may not be an effective means for the Fund to lock in long-term
interest rates. Conversely, during periods when interest rates rise, slow
prepayments could cause the average life of the security to lengthen and the
value to decline more than anticipated. However, during periods of rising
interest rates, principal repayments by mortgage-backed securities allow the
Fund to reinvest at increased interest rates.

O COLLATERALIZED MORTGAGE OBLIGATIONS. Mortgage-related securities in which the
Fund may invest may also include collateralized mortgage obligations ("CMOs").
CMOs are debt obligations issued generally by finance subsidiaries or trusts
that are secured by mortgage-backed certificates, including, in many cases,
certificates issued by government-related guarantors, including GNMA, FNMA and
FHLMC, together with certain funds and other collateral. Although payment of the
principal of and interest on the mortgage-backed certificates pledged to secure
the CMOs may be guaranteed by GNMA, FNMA or FHLMC, the CMOs represent
obligations solely of the issuer and are not insured or guaranteed by GNMA,
FHLMC, FNMA or any other governmental agency, or by any other person or entity.
The issuers of the CMOs typically have no significant assets other than those
pledged as collateral for the obligations.

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<PAGE>

O SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities. The Fund must receive collateral
equal to 100% of the securities' value in the form of cash or U.S. Government
securities, plus any interest due, which collateral must be marked to market
daily by Key Advisers or the Sub-Adviser. 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 pays the
Fund amounts equal to any dividends or interest paid on such securities plus any
interest negotiated between the parties to the lending agreement. Loans are
subject to termination by the Fund or the borrower at any time. While the Fund
does not have the right to vote securities on loan, the Fund intends to
terminate any loan and regain the right to vote if that is considered important
with respect to the Fund's 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' Board of Trustees (the "Trustees"). The Fund will
limit its securities lending to 33 1/3% of total assets.

O WHEN-ISSUED SECURITIES. The Fund may purchase securities on a when-issued or
delayed delivery basis. These transactions are arrangements in which the Fund
purchases securities with payment and delivery scheduled for a future time. When
the Fund agrees to purchase securities on a when-issued basis, the Fund's
custodian must set aside cash or liquid portfolio securities equal to the amount
of that commitment in a separate account, and may be required to subsequently
place additional assets in the separate account to reflect any increase in the
Fund's commitment. Prior to delivery of when-issued securities, their value is
subject to fluctuation and no income accrues until their receipt. The Fund
engages in when-issued and delayed delivery transaction only for the purpose of
acquiring portfolio securities consistent with its investment objective and
policies, and not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction; its
failure to do so may cause the Fund to miss a price or yield considered to be
advantageous.

O REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

O REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund sells portfolio securities to financial institutions such
as banks and broker-dealers, and agrees to repurchase them at a mutually
agreed-upon date and price. At the time the Fund enters into a reverse
repurchase agreement, it must place in a segregated custodial account assets
having a value equal to the repurchase price (including 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").

O INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and, to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
Sub-Adviser will waive its investment advisory fees as to all assets invested in
other investment companies. Because such other investment companies employ an
investment adviser, such

- 7 -

<PAGE>

investment by the Fund will cause shareholders to bear duplicative fees, such as
management fees to the extent such fees are not waived by Key Advisers or the
Sub-Adviser.

O FUTURES CONTRACTS. The 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 Fund may enter into futures contracts in an effort to hedge against market
and currency risks. For example, when interest rates are expected to rise or
market values of portfolio securities are expected to fall, the Fund can seek to
offset a decline in the value of its portfolio securities by entering into
futures contract transactions. 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 acquisition of put and call options on futures contracts will 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.

Aggregate initial margin deposits for futures contracts, and premiums paid for
related options, may not exceed 5% of the Fund's total assets (other than in
connection with bona fide hedging purposes), and the value of securities that
are the subject of such futures and options (both for receipt and delivery) may
not exceed one-third of the market value 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.

Futures transactions involve brokerage costs and require the Fund to segregate
assets to cover contracts that would require it to purchase securities or
currencies. The 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 the 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 the 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.

O PRIVATE PLACEMENT INVESTMENTS. The Fund may invest in high-quality commercial
paper issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act"). Section 4(2)
commercial paper ("Commercial Paper") is generally sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Commercial Paper is normally
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in Commercial
Paper, thus providing liquidity. The Fund believes that Commercial Paper and
possibly certain other Restricted Securities (as defined in the Statement of
Additional Information) that meet the criteria for liquidity established by the
Trustees are quite liquid. The Fund intends, therefore, to treat the restricted
securities that meet the criteria for liquidity established by the Trustees,
including Commercial Paper, as determined by Key Advisers or the Sub-Adviser, as
liquid and not subject to the investment limitation applicable to liquid
securities. See "Investment Limitations" below.

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<PAGE>

short-term trading is to take advantage of what Key Advisers or the Sub-Adviser
believes are changes in market, industry or individual company conditions or
outlook. Any such trading would increase the Fund's turnover rate and its
transaction costs. High turnover will generally result in higher brokerage costs
and possible tax consequences for the Fund. In the fiscal year ended October 31,
1995, the portfolio turnover rate was 59.14% compared to 131.63% in the prior
fiscal year.

INVESTMENT LIMITATIONS

The following summarizes one of the Fund's principal investment limitations. The
Statement of Additional Information contains a complete listing of the Fund's
investment limitations and provides additional information about investment
restrictions designed to reduce the risk of an investment of the Fund.

o The Fund may not borrow money other than (a) by entering 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 such commitments do not exceed 33 1/3% of the
Fund's total assets; and (b) for temporary or emergency purposes in an amount
not exceeding 5% of the value of the Fund's total assets.

The investment limitation indicated above in this subsection is fundamental.
Whenever an investment policy or limitation states a maximum percentage of the
Fund's assets that may be invested, such percentage limitation will be
determined immediately after and as a result of the investment and any
subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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).

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

O HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

- 9 -

<PAGE>

different features, requirements and fees. In addition, Investment Professionals
may charge for their services. Information regarding these features,
requirements and fees will be provided by the Investment Professional. If you
are purchasing shares of any Fund through a program of services offered or
administered by your Investment Professional, you should read the program
materials in conjunction with this Prospectus. You may initiate any transaction
by telephone either through your bank trust department or through your
Investment Professional. Subsequent investments by telephone may be made
directly. See "Special Investor Services" for more information about telephone
transactions.

INVESTING DIRECTLY

The Victory Government Mortgage Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.

ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Government Mortgage Fund

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<PAGE>

Shares are sold at the public offering price based on the net asset value that
is next determined after the Transfer Agent receives the purchase order. In most
cases, to receive that day's offering price, the Transfer Agent must receive
your order as of the close of regular trading of the New York Stock Exchange
("NYSE") (normally 4:00 p.m. Eastern time) (the "Valuation Time") on each
Business Day (as defined in "Shareholder Account Rules and Polices -- Share
Price" below). If you buy shares through an Investment Professional, the
Investment Professional must receive your order in a timely fashion on a regular
Business Day and transmit it to the Transfer Agent so that it is received before
the close of business that day. The Transfer Agent may reject any purchase order
for the Fund's shares, in its sole discretion. It is the responsibility of your
Investment Professional to transmit your order to purchase shares to the Tranfer
Agent in a timely fashion in order for you to receive that day's share price.

INVESTMENT REQUIREMENTS

Sales Charge Sales Charge Dealer
As a % of As a % of Reallowance
Offering Net Amount As a % of
Amount of Purchase Price Invested Offering Price

Less than $49,999................ 4.75% 4.99% 4.00%
$50,000 to $99,999............... 4.50% 4.71% 4.00%
$100,000 to $249,999............. 3.50% 3.63% 3.00%
$250,000 to $499,999............. 2.25% 2.30% 2.00%
$500,000 to $999,999............. 1.75% 1.78% 1.50%
$1,000,000 and above............. 0.00% 0.00% (1)

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25%
on such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

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<PAGE>

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

A Letter of Intent is not a binding obligation upon the investor to purchase the
full amount indicated. The minimum initial investment under a Letter of Intent
is 5% of the total amount. Shares purchased with the first 5% of the total
amount will be held in escrow (while remaining registered in the name of the
investor) to secure payment of the higher sales charge applicable to the shares
actually purchased if the full amount indicated is not purchased, and such
escrowed shares will be involuntarily redeemed to pay the additional sales
charge, if necessary. Dividends (if any) on escrowed shares, whether paid in
cash or reinvested in additional shares, are not subject to escrow. The escrowed
shares will not be available for redemption, exchange or other disposal by the
investor until all purchases pursuant to the Letter of Intent have been made or
the higher sales charge has been paid. When the full amount indicated has been
purchased, the escrow will be released. A Letter of Intent may include purchases
of shares made not more than 90 days prior to the date the investor signs a
Letter of Intent; however, the 13-month period during which the Letter of Intent
is in effect will begin on the date of the earliest purchase to be included. An
investor may combine purchases that are made in an individual capacity with (1)
purchases that are made by members of the investor's immediate family and (2)
purchases made by businesses that the investor owns as sole proprietorships, for
purposes of obtaining reduced sales charges by means of a written Letter of
Intent. In order to accomplish this, however, investors must designate on the
Account Application the accounts that are to be combined for this purpose.
Investors can only designate accounts that are open at the time the Letter of
Intent is executed.

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<PAGE>

purchases of another fund(s), or with certain prior purchases of shares of the
Victory Portfolios. The applicable sales charge is based on the sum of (1) the
purchaser's current purchase plus (2) the current public offering price of the
purchaser's previous purchases of (a) all shares held by the purchaser in the
Fund and (b) all shares held by the purchaser in any other fund of the Victory
Portfolios (except money market funds).

O WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to the
following categories of persons (which categories may be changed or eliminated
at any time):

(1) Current or retired Trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an
"Affiliated Provider" ("Affiliated Providers " refers to affiliates and
subsidiaries of KeyCorp and service providers to the Victory Portfolios
and the Victory Shares (collectively, the "Victory Group")), dealers
having an agreement with the Distributor and any trade organization to
which Key Advisers, the Sub-Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or
certain other advisory accounts established with KeyCorp or any of its
affiliates;

(3) Investors who reinvest assets received in a distribution from a
qualified, non-qualified or deferred compensation plan, agency, trust
or custody account that was either (a) maintained by KeyCorp or an
Affiliated Provider, or (b) invested in a fund of the Victory Group;

(6) Investment advisers or financial planners who place trades for their
own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; and clients of
such investment advisers or financial planners who place trades for
their own accounts if the accounts are linked to the master account of
such investment adviser or financial planner on the books and records
of the broker or agent. Such accounts include retirement and deferred
compensation plans and trusts used to fund those plans, including, but
not limited to, those defined in section 401(a), 403(b), or 457 of the
Internal Revenue Code and "rabbi trusts".

SPECIAL INVESTOR SERVICES

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<PAGE>

check with your bank's magnetic ink coding number across the front. If your bank
account is jointly owned, be sure that all owners sign. You must first meet the
Fund's initial investment requirement of $500, then investments may be made
monthly by automatically deducting $25 or more from your bank checking account.
For officers, trustees, directors and employees, including retired directors and
employees, of the Victory Group, KeyCorp and its affiliates, and the
Administrator and its affiliates (and family members of each of the foregoing)
who participate in the Systematic Investment Plan, there is no minimum initial
investment required. You may change the amount of your monthly purchase at any
time. Your bank checking account will be debited on the date indicated on your
Account Application. Shares will be purchased at the offering price next
determined following receipt of the order by the Transfer Agent. You may cancel
the Systematic Investment Plan at any time without payment of a cancellation
fee. Your monthly account statement will reflect systematic investment
transactions, and a debit entry will appear on your bank statement.

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

O TELEPHONE TRANSACTIONS. You can initiate most transactions by telephone. You
may call the Transfer Agent toll-free at 800-539-3863 or call your Investment
Professional or bank trust department. Telephone transaction privileges for
purchases, exchanges or redemptions may be modified, suspended or terminated by
the Fund at any time. If an account has more than one owner, the Fund and the
Transfer Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer representative of
record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

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<PAGE>

Investment Professional can set up your new account in the Fund under one of
several tax-sheltered plans. These plans let you invest for retirement and
shelter your investment income from current taxes. Plans include Individual
Retirement Accounts (IRAs) and Rollover IRAs. Other fees may be charged by the
IRA custodian or trustee.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for
sale in your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares on any Business
Day.

(4) You must meet the minimum purchase requirements for the fund you
purchase by exchange.

(5) The registration and tax identification numbers of the two
accounts must be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND
YOU WISH TO PURCHASE BY EXCHANGE.

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange shares of
this Fund only for Class A shares of another fund. At present, not all of the
funds offer the same two classes of shares. If a fund has only one class of
shares that does not have a class designation, they are "Class A" shares for
exchange purposes. In some cases, sales charges may be imposed on exchange
transactions. Certain funds offer Class A or Class B shares and a list can be
obtained by calling the Transfer Agent at 800-539-3863. Please refer to the
Statement of Additional Information for more details about this policy.

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally 4:00 p.m. Eastern time)
that is in proper form, but either fund may delay the issuance of shares of the
fund into which you are exchanging if it determines it would be disadvantaged by
a same-day transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy might
create excessive turnover in the Fund's portfolio and associated expenses
disadvantageous to the Fund.

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<PAGE>

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (See the definition of "Business Day" under "Shareholder Account
Rules and Policies -- Share Price" below). Shares will be redeemed at the NAV
next calculated after the Transfer Agent has received the redemption request. If
the Fund account is closed, any accrued dividends will be paid at the beginning
of the following month.

You may redeem shares in several ways:

O BY MAIL. Send a written request to: The Victory Government Mortgage Fund
P.O. Box 9741
Providence, RI 02940-9741

Write a "letter of instruction" with your name, the Fund's name, your Fund
account number, the dollar amount or number of shares to be redeemed, and any
additional requirements that apply to each particular account. You will need the
letter of instruction signed by all persons required to sign for transactions,
exactly as their names appear on the Account Application. A signature guarantee
is required if: you wish to redeem more than $10,000 worth of shares; your Fund
account registration has changed within the last 60 days; the check is not being
mailed to the address on your account; the check is not being made out to the
account owner; or the redemption proceeds are being transferred to another
Victory Group account with a different registration. The following institutions
should be able to provide you with a signature guarantee: banks, brokers,
dealers, credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature guarantee
may not be provided by a notary public. A signature guarantee is designed to
protect you, the Fund, and its agents from fraud. The Transfer Agent reserves
the right to reject any signature guarantee if (1) it has reason to believe that
the signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

O BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before Valuation Time (normally 4:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of
instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

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<PAGE>

O ADDITIONAL REDEMPTION REQUIREMENTS. The Fund may withhold payment on
redemptions until it is reasonably satisfied that investments made by check have
been collected, which can take up to 15 days. Also, when the New York Stock
Exchange (the "NYSE") is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any emergency
circumstances as determined by the Commission to merit such action, the right of
redemption may be suspended or the date of payment postponed for a period of
time that may exceed 7 days. In addition, the Fund reserves the right to advance
the time on that day by which purchase and redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the Fund's NAV may be affected on days when investors do not
have access to the Fund to purchase or redeem shares.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The NAV is calculated by adding the value of all the Fund's
investments, plus cash and other assets, deducting liabilities of the Fund, and
then dividing the result by the number of shares outstanding. The NAV of the
Fund is determined and its shares are priced as of the close of regular trading
of the NYSE (normally 4:00 p.m. Eastern time) (the "Valuation Time") 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 its 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 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 , and Christmas .

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<PAGE>

o Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form . From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

o Dealers that can perform account transactions for their clients by
participating in networking through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Victory Portfolios if the dealer performs any transaction erroneously.

o The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

o The Distributor, at its expense, may provide additional cash compensation to
dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is 4.00% of the offering price. In
addition, the Distributor may, from time to time and at its own expense, provide
compensation, including financial assistance, to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns regarding one or more Victory Portfolios and/or
other dealer-sponsored special events including payment for travel expenses,
including lodging incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Compensation
will include the following types of non-cash compensation offered through sales
contests: (1) vacation trips including the provision of travel arrangements and
lodging; (2) tickets for entertainment events (such as concerts, cruises and
sporting events) and (3) merchandise (such as clothing, trophies, clocks and
pens). Dealers may not use sales of the Fund's shares to qualify for this
compensation if prohibited by the laws of any state or any self-regulatory
organization, such as the National Association of Securities Dealers, Inc. None
of the aforementioned compensation is paid for by the Fund or its shareholders.

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<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

The Fund ordinarily declares and pays dividends from its net investment income
monthly . The Fund may make distributions at least annually out of any realized
capital gains, and the Fund may make supplemental distributions of dividends and
capital gains following the end of its fiscal year.

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and capital gain dividends will be reinvested at the net asset
value of the Fund as of the day after the record date. If you do not
indicate a choice on your Account Application, you will be assigned
this option. Reinvested dividend distributions receive the same tax
treatment as dividend distributions paid in cash.

2. CASH OPTION. You will receive a check for each income or
capital gain dividend, if any. Distribution checks will be mailed no
later than 7 days after the dividend payment date which may be more
than 7 days after the dividend record date.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain
dividends, or only capital gain dividends, automatically reinvested in
shares of another fund of the Victory Group. Shares will be purchased
at the NAV as of the day after the record date. If you are reinvesting
dividends of a fund sold without a sales charge in shares of a fund
sold with a sales charge, the shares will be purchased at the public
offering price. If you are reinvesting dividends of a fund sold with a
sales charge in shares of a fund sold with or without a sales charge,
the shares will be purchased at the net asset value of the fund.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital
gain dividends, or only your income dividends, automatically
transferred to your bank checking or savings account. The amount will
be determined on the dividend record date and will normally be
transferred to your account within 7 days of the dividend record date.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account. Please
call or write the Transfer Agent to learn more about this dividend
distribution option.

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<PAGE>

O STATEMENTS AND REPORTS. You will receive a monthly statement reflecting all
transactions that affect the share balance or the registration of your Fund
account. You will receive a confirmation after every transaction that affected
the share balance of your Fund account, except for dividend reinvestment,
systematic investment and systematic withdrawal transactions. These transactions
will be detailed in your Fund account statement. Transactions that affect the
share balance of your Fund investment in an account established with an
Investment Professional or financial institution will be detailed in regular
statements or through confirmation procedures of the financial institution.
Certificates representing shares of the Fund will not be issued. An Internal
Revenue Service ("IRS") Form 1099-DIV with federal tax information will be
mailed to you by January 31 of each tax year and also will be filed with the
IRS. At least twice a year, you will receive the Fund's financial reports.

O REDEMPTIONS OR EXCHANGES. Investors may realize a gain or loss when redeeming
(selling) or exchanging shares. For most types of accounts, the Fund reports the
proceeds to the IRS annually. Because the shareholders' tax treatment also
depends on their purchase price and personal tax positions, shareholders should
keep their regular account statements to use in determining their tax. See
"Buying a Dividend".

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES [to be updated by Tax Dept.]

The Fund intends to qualify each year and elect to be treated as a separate
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "IRS Code"). If the Fund is treated as a "regulated
investment company" and all its taxable income is distributed to its
shareholders in accordance with the timing requirements imposed by the IRS Code,
it will not be subject to federal income tax on its income. The Fund's
distributions that are attributable to its net investment income and short-term
capital gains are taxable as ordinary income, and its distributions from
long-term capital gains are taxed as long-term capital gains. Such distributions
are taxable when they are paid, whether taken in cash or reinvested in
additional shares, except that distributions declared in October, November or
December and paid during the following January are taxable as if paid and
received on December 31. Dividends received from the Fund by corporate
shareholders are not entitled to the dividends-received deduction. The Fund
sends tax statements to its shareholders (with copies to the Internal Revenue
Service (the "IRS")) by January 31 showing the amounts and tax status of
distributions made (or deemed made) during the preceding calendar year.

Income received by direct holders of obligations of the U.S. Government and
certain of its agencies and instrumentalities is exempt from state and local
income taxation. The Fund's dividends from investment income may, to the extent
such dividends consist of interest from obligations of the U.S. government and
certain of its agencies and instrumentalities, also be exempt from state and
local income taxes. The Fund intends to advise shareholders of the proportion of
their dividends which consist of such interest. Shareholders ar urged to consult
their tax advisers regarding the possible exclusion of a portion of their
dividends for state a local income tax purposes in their respective
jurisdictions.

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<PAGE>

OTHER TAX INFORMATION

The information above is only a summary of some of the federal income tax
consequences generally affecting the Fund and its U.S. shareholders, and no
attempt has been made to discuss individual tax consequences. A prospective
investor should also review the more detailed discussion of federal income tax
considerations in the Statement of Additional Information. In addition to the
federal income tax, a shareholder may be subject to state or local taxes on his
or her investment in the Fund, depending on the laws of the shareholder's
jurisdiction. Investors considering an investment in the Fund should consult
their tax advisers to determine whether the Fund is suitable to their particular
tax situation.

PERFORMANCE

Performance is a function of the type and quality of instruments held in the
Fund's portfolio, operating expenses, and market conditions. Consequently,
performance will fluctuate and data reported are not necessarily representative
of future results. Any fees charged by service providers with respect to
customer accounts for investing in shares of the Fund will not be reflected in
performance calculations.

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<PAGE>

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios has been operating continuously since 1986, when it was created under
Massachusetts law as a Massachusetts business trust, although certain of its
funds have a prior operating history from their predecessor funds. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub- Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
sub-advisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

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<PAGE>

The person primarily responsible for the investment management of the Fund, as
well as his previous experience, is as follows:

PORTFOLIO MANAGING PREVIOUS
MANAGER FUND SINCE EXPERIENCE

Robert H. Fernald November, 1994 Vice President and Portfolio
Manager for Society Asset
Management, Inc., beginning in
1993 and for Society National
Bank since 1992; Portfolio
Manager for Ameritrust Company
National Association from 1991
to 1992 ; formerly Vice
President of Fairfield
Research Corporation.

EFFECT OF BANKING LAWS

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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<PAGE>

Portfolios, the Administrator receives a fee from the Fund, computed daily and
paid monthly, at an annual rate of fifteen one-hundredths of one percent (.15%)
of the Fund's average daily net assets. The Administrator may periodically waive
all or a portion of its administrative fee with respect to the Fund .

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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Victory Portfolios' Board of Trustees, recordkeeping services, services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory , compliance , and other administrative and support
services.

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<PAGE>

For such services, the Sub-Adviser pays fees to Key Advisers as follows: .25% on
the first $10 million of average daily net assets; .15% of the next $15 million
of average daily net assets; .10% of the next $25 million of average daily net
assets; and .05% of average daily net assets in excess of $50 million.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were .79% of the Fund's average net assets, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently, there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts, the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not so held
in trust. The trustee will forward to these shareholders all communications
received by the trustee, including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust. Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have adopted a Code of
Ethics (the "Code") which requires investment personnel (a) to pre-clear all
personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Fund. The Code also
prohibits investment personnel from purchasing securities in an initial public
offering. Personal trading reports are reviewed periodically by Key Advisers and
the Sub-Adviser, and the Board of Trustees reviews annually such reports
(including information on any substantial violations of the Code). Violations of
the Code may result in censure, monetary penalties, suspension or termination of
employment.

DELAWARE LAW

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<PAGE>

MISCELLANEOUS

As of the date of the date of this Prospectus, the Fund offers only the class of
shares offered by this Prospectus. Subsequent to the date of this Prospectus,
the Fund may offer additional classes of shares through a separate prospectus.
Any such additional classes may have different sales charges and other expenses,
which would affect investment performance. Further information may be obtained
by contacting your Investment Professional or by calling 800-539-3863.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE VICTORY
PORTFOLIOS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE VICTORY PORTFOLIOS OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.

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<PAGE>

THE
VICTORY
PORTFOLIOS
GROWTH FUND

PROSPECTUS For current yield, purchase and redemption information,
MARCH 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the GROWTH FUND (the "Fund"), a diversified portfolio.
KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect subsidiary of
KeyCorp, is the investment adviser to the Fund ("Key Advisers" or the
"Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the "Sub-
Adviser" or "Society). Concord Holding Corporation is the Fund's administrator
(the "Administrator"). Victory Broker-Dealer Services, Inc. is the Fund's
distributor (the "Distributor").

The Fund seeks to provide long-term growth of capital. The Fund pursues this
objective by investing primarily in common stocks of issuers listed on a
nationally recognized exchange with an emphasis on companies with superior
prospects for long-term earnings growth and price appreciation.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741, or calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP BANK,
ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses .................................................. 3
Financial Highlights ............................................. 4
Investment Objective .......................................... .5
Investment Policies and Risk Factors.............................. 5
How to Invest, Exchange and Redeem .............................. 12
Dividends, Distributions and Taxes .............................. 21
Performance ..................................................... 24
Fund Organization and Fees ...................................... 24
Additional Information .......................................... 28

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<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases (as a percentage
of the offering price).............................................. 4.75%
Maximum Sales Charge Imposed on Reinvested Dividends ............... none
Deferred Sales Charge ................................................none
Redemption Fees ......................................................none
Exchange Fee ......................................................... none

ANNUAL FUND OPERATING EXPENSES (as a percentage of average daily net assets)

Management Fees.................................................. 1.00%
Administration Fees ............................................ .15%
Other Expenses(2)............................................... .25%
Total Fund Operating Expenses(2)................................ 1.40%

(1) Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent, including affiliated banks and non-bank
affiliates of Key Advisers and KeyCorp. (See "How to Invest, Exchange and
Redeem.")

(2) These amounts include an estimate of shareholder servicing fees the Fund
expects to pay (see "Fund Organization and Fees -- Shareholder Servicing
Plan").

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Growth Fund.......................... $61 $90 $120 $207

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

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<PAGE>

FINANCIAL HIGHLIGHTS

THE VICTORY GROWTH FUND

FISCAL YEAR DECEMBER 3,
1993
ENDED TO OCTOBER 31,
CTOBER 31, 1995(D) 1994(A)

NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 10.00
-------- -------
Income from Investment Activities
Net investment income 0.11 0.10
Net realized and unrealized gains
(losses) from investments 1.97 0.22
---------- -------
Total from Investment
Activities 2.08 0.32
---------- -------
Distributions
Net investment income (0.11) (0.09)
Net realized gains (0.05) 0.00
Total Distributions (0.16) (0.09)
--------- -------
Net Asset Value, End of Period $ 12.15 $ 10.23
========== =======
TOTAL RETURN (EXCLUDES SALES CHARGE) 20.54% 3.22%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $108,253 $66,921
Ratio of expenses to average net assets 1.07% 0.94%(c)
Ratio of net investment income to
average net assets 1.00% 1.10%(c)
Ratio of expenses to average net
assets (e) 1.42% 1.51%(c)
Ratio of net investment income to average
net assets (e) 0.65% 0.52%(c)
Portfolio Turnover 107.13% 28.09%

(a) Period from commencement of operations.
(b) Not Annualized.
(c) Annualized.
(d) Effective June 5, 1995, the Victory Equity Portfolio merged into the
Growth Fund. Financial highlights for the period prior to June 5, 1995
represent the Growth Fund.
(e) During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.

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<PAGE>

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term growth of capital. The investment objective
of the Fund is fundamental and may not be changed without a vote of the holders
of a majority of the Fund's outstanding voting securities (as defined in the
Statement of Additional Information). There can be no assurance that the Fund
will achieve its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its objective by investing primarily in a diversified group of
common stocks of issuers listed on a nationally recognized exchange with an
emphasis on companies with superior prospects for long-term earnings growth and
price appreciation.

Under normal market conditions, Key Advisers or the Sub-Adviser selects
securities issued by companies with above-average growth rates, high return on
equity, high rate of reinvestment in the company, and strong balance sheets.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

o SHORT-TERM OBLIGATIONS. There may be times when, in Key Advisers' or the Sub-
Adviser's opinion, market conditions warrant that, for temporary defensive
purposes, the Fund may hold more than 20% of its total assets in short-term
obligations. To the extent that the Fund's assets are so invested, they will not
be invested so as to meet its investment objective. The instruments may include
"high quality" liquid debt securities such as commercial paper, certificates of
deposit, bankers' acceptances, repurchase agreements which mature in less than
seven days, and United States Treasury Bills. Bankers' acceptances are
instruments of United States banks which are drafts or bills of exchange
"accepted" by a bank or trust company as an obligation to pay on maturity. For a
discussion of repurchase agreements, see below.

o INVESTMENT GRADE SECURITIES. "Investment grade" obligations are those rated at
the time of purchase within the four highest rating categories assigned by a
nationally recognized statistical ratings organization ("NRSRO") or, if unrated,
are obligations that Key Advisers or the Sub-Adviser determine to be of
comparable quality. The applicable securities ratings are described in the
Appendix to the Statement of Additional Information. "High-Quality" short-term
obligations are those obligations which, at the time of purchase, (1) possess a
rating in one of the two highest ratings categories from at least one NRSRO (for
example, commercial paper rated "A-1" or "A-2" by Standard & Poor's Corporation
or "P-1" or "P-2" by Moody's Investors Service, Inc.) or (2) are unrated by an
NRSRO but are determined by Key Advisers or the Sub-Adviser to present minimal
credit risks and to be of comparable quality to rated instruments

- 5 -

<PAGE>

eligible for purchase by the Fund under guidelines adopted by the Victory
Portfolios Board of Trustees (the "Trustees").

o FOREIGN SECURITIES. The Fund may invest in equity securities of foreign
issuers, including securities traded in the form of American Depository
Receipts. The Fund will limit its investments in such securities to 20% of its
total assets. The Fund will not hold foreign currency as a result of investment
in foreign securities.

Investments in securities of foreign companies generally involve greater risks
than are present in U.S. investments. Compared to U.S. and Canadian companies,
there is generally less publicly available information about foreign companies
and there may be less governmental regulation and supervision of foreign stock
exchanges, brokers and listed companies. Foreign companies generally are not
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to U.S. companies.
Securities of some foreign companies are less liquid, and their prices more
volatile, than securities of comparable U.S. companies. Settlement of
transactions in some foreign markets may be delayed or may be less frequent than
in the U.S., which could affect the liquidity of the Fund's investment. In
addition, with respect to some foreign countries, there is the possibility of
nationalization, expropriation or confiscatory taxation; limitations on the
removal of securities, property or other assets of the Fund; political or social
instability; increased difficulty in obtaining legal judgments; or diplomatic
developments which could affect U.S. investments in those countries. Key
Advisers or the Sub-Adviser will take such factors into consideration in
managing the Fund's investments.

o FUTURES CONTRACTS. The Fund may also 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 Fund may enter into futures contracts in an effort to hedge against market
risks. For example, when interest rates are expected to rise or market values of
portfolio securities are expected to fall, the Fund can seek to offset a decline
in the value of its portfolio securities by entering into futures contract
transactions. 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.

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<PAGE>

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 the 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 the 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.

o ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities ("Zero Coupon Bonds"). Zero Coupon Bonds are purchased at
a discount from the face amount because the buyer receives only the right to
receive a fixed payment on a certain date in the future and does not receive any
periodic interest payments. The effect of owning instruments which do not make
current interest payments is that a fixed yield is earned not only on the
original investment but also, in effect, on accretion during the life of the
obligations. This implicit reinvestment of earnings at the same rate eliminates
the risk of being unable to reinvest distributions at a rate as high as the
implicit yields on the Zero Coupon Bond, but at the same time eliminates the
holder's ability to reinvest at higher rates . For this reason, Zero Coupon
Bonds are subject to substantially greater price fluctuations during periods of
changing market interest rates than are comparable securities which pay interest
periodically. The amount of price fluctuations tends to increase as maturity of
the security increases.

o RECEIPTS. In addition to bills, notes and bonds issued by the U.S. Treasury,
the Fund may also purchase separately traded interest and principal component
parts of such obligations that are transferable through the Federal book entry
system, known as Separately Traded Registered Interest and Principal Securities
("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES"). These instruments
are issued by banks and brokerage firms and are created by depositing Treasury
notes and Treasury bonds into a special account at a custodian bank; the
custodian holds the interest and principal payments for the benefit of the
registered owners of the certificates or receipts. The custodian arranges for
the issuance of the certificates or receipts evidencing ownership and maintains
the register. Receipts include Treasury Receipts ("TRs"), Treasury Investment
Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury Securities
("CATS").

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. The Fund will limit its investment in such instruments to
20% of its total assets.

o SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities . The Fund must receive collateral
equal to 100% of the securities' value in the form of cash or U.S. Government
securities, plus any interest due, which collateral must be marked to market
daily by Key Advisers or the Sub-Adviser. 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 pays the
Fund amounts equal to any dividends or interest paid on such securities plus any
interest negotiated between the parties to the lending agreement. Loans are
subject to termination by the Fund or the borrower at any time. While the Fund
does not have the right to vote securities on loan, the Fund intends to
terminate any loan and regain the right to vote if that is considered important
with

- 7 -

<PAGE>

respect to the Fund's 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' Board of Trustees (the "Trustees"). The Fund will
limit its securities lending to 33 1/3 % of total assets.

o WHEN-ISSUED SECURITIES. The Fund may purchase securities on a when-issued or
delayed delivery basis. These transactions are arrangements in which the Fund
purchases securities with payment and delivery scheduled for a future time. When
the Fund agrees to purchase securities on a when-issued basis, the Fund's
custodian must set aside cash or liquid portfolio securities equal to the amount
of that commitment in a separate account, and may be required to subsequently
place additional assets in the separate account to reflect any increase in the
Fund's commitment. Prior to delivery of when-issued securities, their value is
subject to fluctuation and no income accrues until their receipt. The Fund
engages in when-issued and delayed delivery transactions only for the purpose of
acquiring portfolio securities consistent with its investment objective and
policies, and not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction; its
failure to do so may cause the Fund to miss a price or yield considered to be
advantageous.

o VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase Investment Grade
variable and floating rate notes . The interest rates on these securities may be
reset daily, weekly, quarterly, or some other reset period, and may be subject
to a floor or ceiling. There is a risk that the current interest rate on such
obligations may not accurately reflect existing market interest rates. There may
be no active secondary market with respect to a particular variable or floating
rate note. Variable and floating rate notes for which no readily available
market exists will be purchased in an amount which, together with other illiquid
securities held by the Fund, does not exceed 15% of the Fund's total net assets
unless such notes are subject to a demand feature that will permit the Fund to
receive payment of the principal within seven days after demand therefor. These
securities are included among those which are sometimes referred to as
"derivative securities."

O REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

o REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund sells portfolio securities to financial institutions such
as banks and broker-dealers, and agrees to repurchase them at a mutually
agreed-upon date and price. At the time the Fund enters into a reverse
repurchase agreement, it must place in a segregated custodial account assets
having a value equal to the repurchase price (including 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").

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<PAGE>

o INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and, to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
Sub-Adviser will waive its investment advisory fees 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, to the extent such fees are not
waived by Key Advisers or the Sub-Adviser.

o PRIVATE PLACEMENT INVESTMENTS. The Fund may invest in high quality commercial
paper issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act"). Section 4(2)
commercial paper ("Commercial Paper") is generally sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Commercial Paper is normally
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in Commercial
Paper, thus providing liquidity. The Fund believes that Commercial Paper and
possibly certain other Restricted Securities (as defined in the Statement of
Additional Information) that meet the criteria for liquidity established by the
Trustees are quite liquid. The Fund intends, therefore, to treat the restricted
securities that meet the criteria for liquidity established by the Trustees,
including Commercial Paper, as determined by Key Advisers or the Sub-Adviser, as
liquid and not subject to the investment limitation applicable to illiquid
securities. See "Investment Limitations."

o OPTIONS. The Fund may write call options from time to time. The Fund will
write only covered call options (options on securities owned by the Fund and
index options). Such options must be listed on a national securities exchange
and issued by the Options Clearing Corporation. In order to close out a call
option it has written, the Fund will enter into a "closing purchase
transaction", i.e., the purchase of a call option on the same security with the
same exercise price and expiration date as the call option which the Fund
previously wrote on any particular security. When a portfolio security subject
to a call option is sold, the Fund will effect a closing purchase transaction to
close out any existing call option on that security. If the Fund is unable to
effect a closing purchase transaction, it will not be able to sell the
underlying security until the option expires or the Fund delivers the underlying
security upon exercise. Upon the exercise of an option, the Fund is not entitled
to the gains, if any, on securities underlying the options. The Fund intends to
limit its investment in call and index options to 25% of its total assets.

Certain investment management techniques which the Fund may use, such as the
purchase and sale of options (described above), may expose the Fund to special
risks. These products may be used to adjust the risk and return characteristics
of the Fund's portfolio of investments. These various products may increase or
decrease exposure to security prices, interest rates, or other factors that
affect security values, regardless of the issuer's credit risk. Regardless of
whether the intent was to decrease risk or increase return, if market conditions
do not perform consistently with expectations, these products may result in a
loss. In addition, losses may occur if counterparties involved in transactions
do not perform as promised. These products may expose the Fund to potentially
greater risk of loss than more traditional equity investments.

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<PAGE>

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal year ended October 31, 1995, the
portfolio turnover rate was 107.13% compared to 28.09% in the fiscal period from
December 31, 1993 to October 31, 1994.

NOTE : The Statement of Additional Information contains additional information
about the investment practices of the Fund and risk factors. The investment
policies and limitations of the Fund may be changed by the Trustees without any
vote of shareholders unless (1) a policy is expressly deemed to be a fundamental
policy of the Fund or (2) a policy is expressly deemed to be changeable only by
such majority vote.

INVESTMENT LIMITATIONS

1. The Fund may not borrow money other than (a) by entering 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 such commitments do not
exceed 33 1/3% of the Fund's total assets; and (b) for temporary or
emergency purposes in an amount not exceeding 5% of the value of the Fund's
total assets.

2. The Fund will not purchase a security if, as a result, more than 15% of its
net assets would be invested in illiquid securities. Illiquid securities
are investments that cannot be readily sold within seven days in the usual
course of business at approximately the price at which the Fund has valued
them . Under the supervision of the Trustees, Key Advisers or the Sub
-Adviser determines the liquidity of the Fund's investments. The absence of
a trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for the Fund to sell them promptly at an acceptable price.

3. The Fund is "diversified" within the meaning of the 1940 Act. With respect
to 75% of its 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.

4. The Fund's policy regarding concentration of investments provides that the
Fund may not purchase the securities of any issuer (other than securities

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<PAGE>

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 its total assets would be invested in the
securities of companies whose principal business activities are in the
same industry.

Each of the investment limitations indicated above in this subsection are
fundamental, except for the limitation pertaining to illiquid securities.
Non-fundamental limitations may be changed without shareholder approval.
Whenever an investment policy or limitation states a maximum percentage of the
Fund's assets that may be invested, such percentage limitation will be
determined immediately after and as a result of the investment, and any
subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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). If the value of the Fund's illiquid securities at any time
exceeds the percentage limitation applicable at the time of acquisition due to
subsequent fluctuations in value or for other reasons, the Trustees will
consider what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

O HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that have entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

o INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. An "Investment Professional"
is a sales person, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets. Your
Investment Professional will place your order with the Transfer Agent (see "Fund
Organization and Fees - Transfer Agent") on your behalf. You may be required to
establish a brokerage or agency account. Your Investment Professional will
notify you whether subsequent trades should be directed to the Investment
Professional or directly to the Fund's Transfer Agent. Accounts established with
Investment Professionals may have different features, requirements and fees. In
addition, Investment Professionals may charge for their services. Information
regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate transactions by telephone either through your bank trust department or
through your Investment Professional. Subsequent investments by telephone may be
made directly. See "Special Investor Services" for more information about
telephone transactions.

o INVESTING THROUGH YOUR BANK TRUST DEPARTMENT. Your bank trust department may
require a minimum investment and may charge additional fees. Fee schedules for
such accounts are available upon request and are detailed in the agreements by
which a client opens the desired account. Your bank trust department may require
a completed and signed Account Application for the Fund in which an investment
is made. Additional documents may be required from corporations, associations,
and certain fiduciaries. Any account information, such as balances, should be
obtained through your bank trust department. Additional purchases, exchanges or

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<PAGE>

redemptions should also be coordinated through your bank trust department.
Contact your bank trust department for instructions.

o INVESTING THROUGH THE SYSTEMATIC INVESTMENT PLAN. You can use the Systematic
Investment Plan to purchase shares directly from your bank account. Please refer
to "The Systematic Investment Plan" below for more details.

INVESTING DIRECTLY

The Victory Growth Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.

ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Growth Fund

Shares are sold at the public offering price based on the net asset value that
is next determined after the Transfer Agent receives the purchase order. In most
cases, to receive that day's offering price, the Transfer Agent must receive
your order as of the close of regular trading of the New York Stock Exchange
("NYSE") (normally 4:00 p.m. Eastern time) (the "Valuation Time") on each
Business Day (as defined in "Shareholder Account Rules and Policies -- Share
Price"). If you buy shares through an Investment Professional, the Investment
Professional must receive your order in a timely fashion on a regular Business
Day and transmit it to the Transfer Agent so that it is received before the
close of business that day. The Transfer Agent may reject any purchase order for
the Fund's shares, in its sole discretion. It is the responsibility of your
Investment Professional to transmit your order to purchase shares to the
Transfer Agent in a timely fashion in order for you to receive that day's share
price.

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<PAGE>

INVESTMENT REQUIREMENTS

SALES SALES
CHARGE AS CHARGE AS DEALER
A % OF A % OF REALLOWANCE
OFFERING NET AMOUNT AS A % OF
AMOUNT OF PURCHASE PRICE INVESTED OFFERING
PRICE

Less than $49,999................. 4.75% 4.99% 4.00%
$50,000 to $99,999................ 4.50% 4.71% 4.00%
$100,000 to $249,999.............. 3.50% 3.63% 3.00%
$250,000 to $499,999.............. 2.25% 2.30% 2.00%
$500,000 to $999,999.............. 1.75% 1.78% 1.50%
$1,000,000 and above.............. 0.00% 0.00% (1)

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25%
of such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

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<PAGE>

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

o RIGHT OF ACCUMULATION AND CONCURRENT PURCHASES. A shareholder may qualify for
a reduced sales charge on purchases of shares of the Fund and other funds of the
Victory Portfolios by combining a current purchase with purchases of another
fund(s) or with certain prior purchases of shares of the Victory Portfolios. The
applicable sales charge is based on the sum of (1) the purchaser's current
purchase plus (2) the current public offering price of the purchaser's previous
purchases of (a) all shares held by the purchaser in the Fund and (b) all shares
held by the purchaser in any other fund of the Victory Portfolios (except money
market funds).

To receive the applicable public offering price pursuant to the right of
accumulation, shareholders must provide the Transfer Agent with sufficient

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<PAGE>

information at the time of purchase to permit confirmation of qualification.
Accumulation privileges may be amended or terminated without notice at any time
by the Distributor. See "Combined Purchases" and "Rights of Accumulation" in the
Statement of Additional Information.

O WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to
the following categories of persons(which categories may be changed or

eliminated at any time):

(1) Current or retired Trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an "Affiliated
Provider " ("Affiliated Providers" refer to affiliates and subsidiaries of
KeyCorp and service providers to the Victory Portfolios and the Victory
Shares (collectively, the "Victory Group")), dealers having an agreement
with the Distributor and any trade organization to which Key Advisers, the
Sub -Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or certain
other advisory accounts established with KeyCorp or any of its affiliates;

(5) Shareholders of the former Investors Preference Fund For Income, Inc. and
the Investors Preference New York Tax-Free Fund, Inc. who have continuously
maintained accounts with a fund or funds of the Victory Group with a
balance of $250,000 or more (investors with less than $250,000 will pay any
applicable sales charges); and

(6) Investment advisers or financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; and clients of such investment
advisers or financial planners who place trades for their own accounts if
the accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker or agent. Such
accounts include retirement and deferred compensation plans and trusts used
to fund those plans, including, but not limited to, those defined in
section 401(a), 403(b), or 457 of the Internal Revenue Code and "rabbi
trusts."

SPECIAL INVESTOR SERVICES

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<PAGE>

Administrator and its affiliates (and family members of each of the foregoing)
who participate in the Systematic Investment Plan, there is no minimum initial
investment required. You may change the amount of your monthly purchase at any
time. Your bank checking account will be debited on the date indicated on your
Account Application. Shares will be purchased at the offering price next
determined following receipt of the order by the Transfer Agent. You may cancel
the Systematic Investment Plan at any time without payment of a cancellation
fee. Your monthly account statement will reflect systematic investment
transactions, and a debit entry will appear on your bank statement.

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

O TELEPHONE TRANSACTIONS. You can initiate most transactions by telephone. You
may call the Transfer Agent toll-free at 800-539-3863 or call your Investment
Professional or bank trust department. Telephone transaction privileges for
purchases, exchanges or redemptions may be modified, suspended or terminated by
the Fund at any time. If an account has more than one owner, the Fund and the
Transfer Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer representative of
record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

O RETIREMENT PLANS. Retirement plans can be among the best tax -planning
vehicles available to individuals. Call your Investment Professional for more

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<PAGE>

information on the plans and their benefits, provisions and fees. Your
Investment Professional can set up your new account in the Fund under one of
several tax-sheltered plans. These plans let you invest for retirement and
shelter your investment income from current taxes. Plans include Individual
Retirement Accounts ("IRAs") and Rollover IRAs. Other fees may be charged by the
IRA custodian or trustee.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in your
state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you purchase
by exchange.

(5) The registration and tax identification numbers of the two accounts must be
identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH TO
PURCHASE BY EXCHANGE.

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange shares of
this Fund only for Class A shares of another fund, as funds having only one
class of shares are deemed to be "Class A" shares for exchange purposes. At
present, not all of the funds offer the same two classes of shares. Certain
funds offer Class A or Class B shares and a list can be obtained by calling the
Transfer Agent at 800-539-3863. In some cases, sales charges may be imposed on
exchange transactions. Please refer to the Statement of Additional Information
for more details about this policy.

Telephone exchange requests may be made either by calling your Investment
Professional or the Transfer Agent at 800-539-3863 prior to the Valuation Time
on any Business Day. (See "Shareholder Account Rules and Policies Share Price"
below).

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally 4:00 p.m. Eastern time)
that is in proper form, but either fund may delay the issuance of shares of the
fund into which you are exchanging if it determines it would be disadvantaged by
a same-day transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy might

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<PAGE>

create excessive turnover in the Fund's portfolio and associated expenses
disadvantageous to the Fund.

o Because excessive trading can hurt fund performance and therefore harm
shareholders, the Victory Portfolios reserves the right to refuse any exchange
request that will impede the Fund's ability to invest effectively or otherwise
have the potential to disadvantage the Fund, or to refuse multiple exchange
requests submitted by a shareholder or dealer.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (See the definition of "Business Day" under "Shareholder Account
Rules and Policies - "Share Price"). Shares will be redeemed at the NAV next
calculated after the Transfer Agent has received the redemption request. If the
Fund account is closed, any accrued dividends will be paid at the beginning of
the following month.

You may redeem shares in several ways:

O BY MAIL. Send a written request to:

The Victory Growth Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Write a "letter of instruction" with your name, the Fund's name, your Fund
account number, the dollar amount or number of shares to be redeemed, and any
additional requirements that apply to each particular account. You will need the
letter of instruction signed by all persons required to sign for transactions,
exactly as their names appear on the Account Application. A signature guarantee
is required if: you wish to redeem more than $10,000 worth of shares; your Fund
account registration has changed within the last 60 days; the check is not being
mailed to the address on your account; the check is not being made out to the
account owner; or if the redemption proceeds are being transferred to another
Victory Group account with a different registration. The following institutions
should be able to provide you with a signature guarantee: banks, brokers,
dealers, credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature guarantee
may not be provided by a notary public. A signature guarantee is designed to
protect you, the Fund, and its agents from fraud. The Transfer Agent reserves
the right to reject any signature guarantee if (1) it has reason to believe that
the signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

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<PAGE>

O BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before Valuation Time (normally 4:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of
instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

If you are unable to reach the Transfer Agent by telephone (for example, during
times of unusual market activity), consider placing your order by mail directly
to the Transfer Agent. In case of suspension of the right of redemption, you may
either withdraw your request for redemption or receive payment based on the NAV
next determined after the termination of the suspension. If your balance in the
fund falls below $500, you may be given 60 days' notice to reestablish the
minimum balance (except with respect to officers, trustees, directors and
employees, including retired directors and employees, of the Victory Portfolios,
KeyCorp and its affiliates, and the Administrator and its affiliates (and family
members of each of the foregoing), participating in the Systematic Investment
Plan, to whom no minimum balance requirement applies). If you do not increase
your balance, your account may be closed and the proceeds mailed to you at the
address on record. Shares will be redeemed at the last calculated NAV on the day
the account is closed.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The NAV is calculated by adding the value of all the Fund's
investments, plus cash and other assets, deducting liabilities of the Fund and
of the class, and then dividing the result by the number of shares outstanding.
The NAV of the Fund is determined and its shares are priced as of the close of
regular trading of the NYSE (normally 4:00 p.m. Eastern time) (the "Valuation
Time") 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 its 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 be open in observance of the following holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial

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<PAGE>

Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas .

O Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form . From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

O Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Victory Portfolios if the dealer performs any transaction erroneously.

O The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

O Payment for redeemed shares is made ordinarily in cash and forwarded by check
within three business days after the Transfer Agent receives redemption
instructions in proper form, except under unusual circumstances determined by
the Securities and Exchange Commission delaying or suspending such payments. The
Transfer Agent may delay forwarding a check for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as 15
days from the date the shares were purchased. That delay may be avoided if you
arrange with your bank to provide telephone or written assurance to the Transfer
Agent that your purchase payment has cleared.

O If your account value has fallen below $500, you may be given 60 days' notice
to reestablish the minimum balance. If you do not increase your minimum balance,
your account may be closed and the proceeds mailed to you at the record address.
In some cases involuntary redemptions may be made to repay the Distributor for
losses from the cancellation of share purchase orders. Under unusual
circumstances, shares of the Fund may be redeemed "in kind," which means that
the redemption proceeds will be paid with securities from the Fund. Please refer
to the Statement of Additional Information for more details.

O "Backup Withholding" of Federal income tax may be applied at the rate of 31%
from dividends, distributions and redemption proceeds (including exchanges) if
you fail to furnish the Victory Portfolios with a certified Social Security or
taxpayer identification number when you sign your Account Application, or if you
violate Internal Revenue Service regulations on tax reporting of dividends.

O The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

o The Distributor, at its expense, may also provide additional cash compensation
to dealers in connection with sales of shares of the Fund. The maximum cash

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<PAGE>

compensation payable by the Distributor is 4.00% of the offering price. In
addition, the Distributor will, from time to time and at its own expense,
provide compensation, including financial assistance, to dealers in connection
with conferences, sales or training programs for their employees, seminars for
the public, advertising campaigns regarding one or more Victory Portfolios
and/or other dealer-sponsored special events including payment for travel
expenses, including lodging incurred in connection with trips taken by invited
registered representatives and members of their families to locations within or
outside of the United States for meetings or seminars of a business nature.
Compensation will include the following types of non-cash compensation offered
through sales contests: (1) vacation trips including the provision of travel
arrangements and lodging; (2) tickets for entertainment events (such as
concerts, cruises and sporting events) and (3) merchandise (such as clothing,
trophies, clocks and pens). Dealers may not use sales of the Fund's shares to
qualify for this compensation if prohibited by the laws of any state or any
self-regulatory organization, such as the National Association of Securities
Dealers, Inc. None of the aforementioned compensation is paid for by the Fund or
its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

The Fund ordinarily declares and pays dividends from its net investment income
quarterly. The Fund may make distributions at least annually out of any realized
capital gains, and the Fund may make supplemental distributions of dividends and
capital gains following the end of its fiscal year.

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain dividends,
or only capital gain dividends, automatically reinvested in shares of
another fund of the Victory Group. Shares will be purchased at the NAV as
of the day after the record date. If you are reinvesting dividends of a
fund sold without a sales charge in shares of a fund sold with a sales
charge, the shares will be purchased at the public offering price. If you
are reinvesting dividends of a fund sold with a sales charge in shares of a
fund sold with or without a sales charge, the shares will be purchased at
the net asset value of the fund. Dividend distributions can be directed
only to an existing account with a registration that is identical to that
of your Fund account.

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KL2:129870.1

<PAGE>

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital gain
dividends, or only your income dividends, automatically transferred to your
bank checking or savings account. The amount will be determined on the
dividend record date and will normally be transferred to your account
within 7 days of the dividend record date. Dividend distributions can be
directed only to an existing account with a registration that is identical
to that of your Fund account. Please call or write the Transfer Agent to
learn more about this dividend distribution option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

O STATEMENTS AND REPORTS. You will receive a monthly statement reflecting all
transactions that affect the share balance or the registration of your Fund
account. You will receive a confirmation after every transaction that affected
the share balance of your Fund account, except for dividend reinvestment,
systematic investment and systematic withdrawal transactions. These transactions
will be detailed in your Fund account statement. Transactions that affect the
share balance of your Fund investment in an account established with an
Investment Professional or financial institution will be detailed in regular
statements or through confirmation procedures of the financial institution.
Certificates representing shares of the Fund will not be issued. An Internal
Revenue Service ("IRS") Form 1099- DIV with federal tax information will be
mailed to you by January 31 of each tax year and also will be filed with the
IRS. At least twice a year, you will receive the Fund's financial reports.

o REDEMPTIONS OR EXCHANGES. Investors may realize a gain or loss when redeeming
(selling) or exchanging shares. For most types of accounts, the Fund reports the
proceeds to the IRS annually. Because the shareholders' tax treatment also
depends on their purchase price and personal tax positions, shareholders should
keep their regular account statements to use in determining their tax. See
"Buying a Dividend."

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES

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requirements imposed by the IRS Code, so that the Fund will not be subject to
federal income taxes or the 4% excise tax on undistributed income.

Distributions by the Fund of its net investment income and the excess, if any,
of its net short-term capital gain over its net long-term capital loss are
taxable to shareholders as ordinary income. These distributions are treated as
dividends for federal income tax purposes, but only a portion thereof may
qualify for the 70% dividends-received deduction for corporate shareholders
(which portion may not exceed the aggregate amount of qualifying dividends from
domestic corporations received by the Fund and must be designated by the Fund as
so qualifying). Distributions by the Fund of the excess, if any, of its net
long-term capital gain over its net short-term capital loss are designated as
capital gain dividends and are taxable to shareholders as long-term capital
gain, regardless of the length of time shareholders have held their shares. Such
distributions are not eligible for the dividends-received deduction. If a
shareholder disposes of shares in the Fund at a loss before holding such shares
for more than six months, the loss will be treated as a long-term capital loss
to the extent that the shareholder has received a capital gain dividend on those
shares.

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares.
Distributions received by shareholders of the Fund in January of a given year
will be treated as received on December 31 of the preceding year provided that
they were declared to shareholders of record on a date in October, November, or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

Income from securities of foreign issuers may be subject to foreign withholding
taxes. Credit for such foreign taxes, if any, will not pass through to the
shareholders.

o OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws of the shareholder's jurisdiction. INVESTORS CONSIDERING AN INVESTMENT IN
THE FUND SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS
SUITABLE TO THEIR PARTICULAR TAX SITUATION.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

PERFORMANCE

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to indicate future performance. Average annual total return will be calculated
over a stated period of more than one year. Average annual total return is
measured by comparing the value of an investment 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 annualizing that figure.
Cumulative total return is calculated similarly to average annual total return,
except that the resulting difference is not annualized.

Performance is a function of the type and quality of instruments held in the
Fund's portfolio, operating expenses, and market conditions. Consequently,
performance will fluctuate and data reported are not necessarily representative
of future results. Any fees charged by service providers with respect to
customer accounts for investing in shares of the Fund will not be reflected in
performance calculations.

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-
3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

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continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

For the services provided and expenses incurred pursuant to the investment
advisory agreement between the Victory Portfolios respecting the Fund, Key
Advisers is entitled to receive a fee, computed daily and paid monthly, at an
annual rate of one percent (1.00%) of the average daily net assets of the Fund.
The investment advisory fee paid by the Fund is higher than the advisory fees
paid by most mutual funds, although the Trustees believe such fees to be
comparable to advisory fees paid by many funds having similar objectives and
policies. The advisory fees for the Fund have been determined to be fair and
reasonable in light of the services provided to the Fund. Key Advisers may
periodically waive all or a portion of its advisory fee with respect to the Fund
. Prior to January 1, 1996, Society Asset Management, Inc. served as investment
adviser to the Fund. During the Fund's fiscal period ended October 31, 1995,
Society Asset Management, Inc. earned investment advisory fees aggregating .71%
of the average daily net assets of the Fund.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub- Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
sub-advisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

For its services under the investment sub-advisory agreement, Key Advisers pays
the Sub-Adviser fees as a percentage of average daily net assets as follows:
.65% of the first $10 million of average daily net assets; .50% of the next $15
million of average daily net assets; .40% of the next $25 million of average
daily net assets; and .35% of average daily net assets in excess of $50 million.

The person primarily responsible for the investment management of the Fund as
well as his previous experience is as follows:

PORTFOLIO MANAGING PREVIOUS
MANAGER FUND SINCE EXPERIENCE

William F. Ruple June, 1995 Vice President and
Portfolio Manager with
Society Asset
Management since
December, 1992;
Portfolio Manager with
Society National Bank from 1989 to
December 1992.

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<PAGE>

EFFECT OF BANKING LAWS

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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 responsible for the underwriting of
Fund shares.

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TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Victory Portfolios' Board of Trustees, recordkeeping services, and services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory , compliance , and other administrative and support
services.

For such services, the Sub-Adviser pays fees to Key Advisers as follows: .30% on
the first $10 million of average daily net assets; .15% of the next $15 million
of average daily net assets; .05% of the next $25 million of average daily net
assets; and .00% of average daily net assets in excess of $50 million.

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<PAGE>

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were 1.42% of the Fund's average net assets , excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts , the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not so held
in trust. The trustee will forward to these shareholders all communications
received by the trustee, including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust. Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have adopted a Code of
Ethics (the "Code") which requires investment personnel (a) to pre-clear all
personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub-Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

DELAWARE LAW

In the unlikely event a shareholder is held personally liable for the Victory
Portfolios' obligations, the Victory Portfolios will be required to use its

- 28 -

<PAGE>

property to protect or compensate the shareholder. On request, the Victory
Portfolios will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Victory Portfolios. Therefore, financial loss
resulting from liability as a shareholder will occur only if the Victory
Portfolios itself cannot meet its obligations to indemnify shareholders and pay
judgments against them.

MISCELLANEOUS

As of the date of this Prospectus, the Fund offers only the class of shares that
are offered by this Prospectus. Subsequent to the date of this Prospectus, the
Fund may offer additional classes of shares through a separate prospectus. Any
such additional classes may have different sales charges and other expenses,
which would affect investment performance. Further information may be obtained
by contacting your Investment Professional or by calling 800-539-3863.

Shareholders will receive Semi-Annual Reports, which are unaudited, and Annual
Reports, which are audited by independent public accountants ("Reports"),
describing the investment operations of the Fund. Each of these Reports, when
available for a particular fiscal year end or the end of a semi-annual period,
is incorporated herein by reference. The Victory Portfolios may include
information in their Annual Reports and Semi-Annual Reports to shareholders that
(a) describes general economic trends, (b) describes general trends within the
financial services industry or the mutual fund industry, (c) describes past or
anticipated portfolio holdings for the Fund or (d) describes investment
management strategies for the Victory Portfolios. Such information is provided
to inform shareholders of the activities of the Victory Portfolios for the most
recent fiscal year or semi-annual period and to provide the views of Key
Advisers, the Sub-Adviser and/or the Victory Portfolios' officers regarding
expected trends and strategies.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Report at no cost by writing to the Fund at the address listed on page 1 of this
Prospectus or by calling 800-539-3863.

No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offering
made by this Prospectus, and if given or made, such information or
representations must not be relied upon as having been authorized by the Victory
Portfolios or the Distributor. This Prospectus does not constitute an offering
by the Victory Portfolios or by the Distributor in any jurisdiction in which
such offering may not lawfully be made.

- 29 -

<PAGE>

THE VICTORY INSTITUTIONAL MONEY MARKET FUND

March 1, 1996

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses....................................................... 4
Financial Highlights................................................ 5
Investment Objective................................................ 6
Investment Policies and Risk Factors................................ 6
How to Invest, Exchange and Redeem.................................. 13
Dividends, Distributions and Taxes.................................. 19
Performance......................................................... 21
Fund Organization and Fees.......................................... 22
Additional Information.............................................. 25

- ii -

<PAGE>

THE
VICTORY
PORTFOLIOS
INSTITUTIONAL MONEY MARKET FUND

PROSPECTUS For current yield, purchase, and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the INSTITUTIONAL MONEY MARKET FUND (the "Fund"), a
diversified portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment adviser to the Fund ("Key
Advisers" or the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"Sub- Adviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund's investment objective is to obtain as high a level of current income
as is consistent with preserving capital and providing liquidity. The Fund
pursues this objective by investing primarily in a portfolio of high-quality,
U.S. dollar-denominated money market instruments.

The Fund seeks to maintain a constant net asset value of $1.00 per unit of
beneficial interest, and shares of the Fund are offered at net asset value.

The Fund offers two classes of shares: Investor Shares and Select Shares. The
Investor Shares are sold at net asset value without a sales load , and are not
subject to a shareholder servicing fee ; the Investor Shares are available to
certain institutions. The Select Shares are sold at net asset value without a
sales load but are subject to a shareholder servicing fee not to exceed 0.25% of
the aggregate net assets of that class; such fees are paid to bank trust
departments and other financial institutions that provide shareholder services
to shareholders of the Select Shares Class.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940- 9741, or by calling 800-539-3863.

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER UNIT.

SHARES OF THE FUND ARE:

o NOT INSURED BY THE FDIC;

o NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

o SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

- 3 -

<PAGE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, OR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR
HAS THE COMMISSION OR ANY SUCH STATE AUTHORITY PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

- 4 -

<PAGE>

FUND EXPENSES

The table below summarizes the expenses associated with the Fund. This
standard format was developed for use by all mutual funds to help an investor
make investment decisions. You should consider this expense information along
with other important information in this Prospectus, including the Fund's
investment objective, policies and risk factors.

SHAREHOLDER TRANSACTION EXPENSES.(1)

Maximum Sales Charge Imposed on Purchases (as a percentage
of the offering price) none
Maximum Sales Charge Imposed on Reinvested Dividends none
Deferred Sales Charge none
Redemption Fees none
Exchange Fee none

ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE WAIVERS AND REIMBURSEMENTS (as a
percentage of average daily net assets).

INVESTOR SELECT
SHARES* SHARES**

Management Fees(2) .10% .10%
Administration Fee .06% .06%
Other Expenses .11% .36%(3)
---- ---
Total Fund Operating Expenses .27% .52%
=== ===

(2) The Adviser and the Administrator have agreed to reduce their fees for
the indefinite future. Absent the voluntary reduction of investment
advisory and administration fees, "Management Fees" and "Administration
Fees" as a percentage of daily net assets would be .25% and .15%,
respectively.

(3) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay (see "Fund Organization and Fees -- Shareholder
Servicing Plan").

(4) Absent the voluntary reductions referred to in footnote (2) above,
"Total Fund Operations Expenses as a percentage of average daily net
assets for Investor and Select Shares would be .51% and .76%,
respectively.

* Investor Shares was formerly known as Institutional Shares.
** Select Shares was formerly known as Service Shares.

EXAMPLE: You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) full redemption at the end of each time
period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Institutional Money Market Fund--
Investor Shares.................... $3 $ 9 $15 $34
Institutional Money Market Fund--
Select Shares...................... $5 $17 $29 $65

- 5 -

<PAGE>

The purpose of the table above is to assist the investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. See "Fund Organization and Fees" for a more
complete discussion of annual operating expenses of the Fund. The foregoing
example is based upon expenses for the fiscal year ended October 31, 1995 and
expenses that each class of shares of the Fund is expected to incur during the
current fiscal year. THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.

- 6 -

<PAGE>

FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect
to the financial highlights for the Fund, for the periods indicated. The
information below has been derived from financial statements audited (except as
indicated) by Coopers & Lybrand L.L.P. (for the fiscal period ended October 31,
1995) and by KPMG Peat Marwick LLP (for all earlier periods), respectively,
whose reports thereon, together with the financial statements of the Fund and
the Predecessor Fund, are incorporated by reference into the Statement of
Additional Information. The Predecessor Fund offered Select Shares only. The
information set forth below is for a share of the Fund outstanding throughout
each period indicated.
<TABLE>
<CAPTION>

THE VICTORY INSTITUTIONAL MONEY MARKET FUND

INVESTOR
SELECT SHARES SHARES
SIX MONTHS
JUNE 5, 1995 ENDED
OCTOBER 31, OCTOBER 31, YEAR ENDED APRIL 30,
1995(A)(E) 1995(E) 1995(D) 1994(D) 1993(D) 1992(D) 1991(D) 1990 1989
---------- ------- ------- ------- ------- ------- ------- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from
Investment Activities

Net investment income 0.012 0.290 0.500 0.028 0.032 0.051 0.076 0.087 0.082
Distributions
Net investmen
income (0.012) (0.290) (0.500) (0.028) (0.032) (0.051) (0.076) (0.087) (0.082)
------ ------ ------ ------ ------ ------ ------ ------ ------

NET ASSET VALUE,
END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------

Total Return 1.23%(b) 2.90%(b) 4.91% 2.80% 3.26% 5.21% 7.83% 8.95% 8.46%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period(000) $11,479 $504,536 $449,814 $541,229 $155,097 $177,640 $248,515 $178,208 $133,492
Ratio of expenses to
average net assets 0.51%(c) 0.26%(c) 0.27% 0.55% 0.43% 0.30% 0.30% .30% .29%
Ratio of net investme
income to average
net assets 5.33%(c) 5.69%(c) 4.91% 2.78% 3.19% 5.06% 7.46% 8.63% 8.21%
Ratio of expenses to
average net assets(g) 1.00%(c) 0.49%(c) 0.51% 0.55% 0.48% 0.42% 0.44%
Ratio of net investment
income to average net
assets(g) 4.84%(c) 5.46%(c) 4.67% 2.78% 3.14% 4.94% 7.32%

YEAR ENDED APRIL 30,
1988 1987 1986

<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $1.000 $1.000 $1.000

Income from
Investment Activities

Net investment income 0.068 0.061 0.075
Distributions
Net investmen
income 0.068)(f) (0.061)(f) (0.075)

NET ASSET VALUE,
END OF PERIOD $1.000 $1.000 $1.000

Total Return 6.98% 6.21% 7.72%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period(000) $172,151 $106,961 $56,260
Ratio of expenses to
average net assets .25% .24% .39%
Ratio of net investme
income to average
net assets 6.94%(f) 6.02%(f) 7.58%(f)
Ratio of expenses to
average net assets(g)
Ratio of net investment
income to average net
assets(g)
</TABLE>

- -----------------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Effective June 5, 1995, the Victory Institutional Money Market Portfolio
became the Institutional Money Market Fund, and the Fund commenced
offering separate share classes.
(f) Through March 13, 1988, distributions were declared from the total of net
interest income, net realized gain/(loss) on investments and unrealized
appreciation (depreciation) of investments. Subsequently, distributions
have been declared solely from net interest income.
(g) During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had
not occurred, the ratios would have been as indicated.

- 7 -

<PAGE>

INVESTMENT OBJECTIVE

The Fund's objective is to obtain as high a level of current income as is
consistent with preserving capital and providing liquidity through investment in
high-quality, money-market instruments. The investment objective of the Fund is
fundamental and therefore may not be changed without a vote of the holders of a
majority of the Fund's outstanding voting securities (as defined in the
Statement of Additional Information). There is no assurance that the Fund will
achieve its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES.

The Fund pursues its objective by investing primarily in a portfolio of
high-quality, U.S. dollar-denominated money market instruments.

The Fund will invest in the following high-quality, U.S. dollar-denominated
money market instruments with remaining maturities of 397 days or less at the
time of purchase by the Fund and average maturity, computed on a dollar weighted
basis, of 90 days or less:

o obligations of domestic financial institutions consisting of
certificates of deposit, bankers' acceptances and time deposits.

o obligations of foreign branches of U.S. banks (Eurodollars) including
certificates of deposit, bankers' acceptances and time deposits.

o obligations of the U.S. government or any of its agencies or
instrumentalities which may be backed by the credit-worthiness of the
issuing agency.

o short-term corporate obligations, consisting of commercial paper,
notes, and bonds, with remaining maturities of 397 days or less.

o repurchase agreements with member banks of the Federal Reserve System
and primary dealers in U.S. government securities with respect to any
security in which the Fund is authorized to invest.

o other short-term debt obligations of domestic issuers discussed in this
prospectus.

The Fund will only purchase obligations that at the time of purchase (i) are
rated high quality by at least two nationally recognized statistical rating
organizations ("NRSRO"); (ii) are rated high quality if rated by only one rating
service; or (iii) if unrated, are determined to be of equivalent quality
pursuant to procedures reviewed by the Trustees. Obligations that are not rated
are not necessarily of lower quality than those which are rated, but may be less
marketable and therefore may provide higher yields.

Currently, only obligations in the top two categories are considered to be rated
high quality for commercial paper. The two highest rating categories of Duff,
Fitch, Moody's and S&P are Duff 1 and Duff 2, Fitch-1 and Fitch-2, Prime-1 and
Prime-2, and A-1 and A-2, respectively. Under Rule 2a-7, the Fund is not
permitted to invest more than 5% of its total assets in securities that would be
considered to be in the second highest rating category, and, subject to this
limitation, the Fund may not invest more than the greater of 1% of its total
assets or $1 million in such securities of any one issuer. However, the Fund
currently has a nonfundamental policy to purchase only commercial paper which is
rated in the single highest category by at least one NRSRO as outlined above, or
which, if unrated, is deemed to be of equivalent quality pursuant to procedures
reviewed by the Trustees. The Fund may purchase an instrument rated below
highest quality by a rating service if two other services have given that
instrument a highest quality rating, and if Key Advisers or the Sub-Adviser
considers that the instrument is of highest quality and presents minimal credit
risks.

- 8 -

<PAGE>

For other corporate obligations, the two highest rating categories are Duff 1
and Duff 2, AAA and AA by Fitch, Aaa and Aa by Moody's, and AAA and AA by S&P.
For a more complete description of these ratings see the Appendix to the
Statement of Additional Information.

The Fund may invest in obligations of foreign branches of U.S. banks
(Eurodollars). Payment of interest and principal upon these obligations may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). In addition, evidences of ownership
of portfolio securities may be held outside of the U.S. and the Fund may be
subject to the risks associated with the holding of such property overseas.
Various provisions of federal law governing the establishment and operation of
domestic branches do not apply to foreign branches of domestic banks. Key
Advisers or the Sub-Adviser carefully considers these factors when making
investments. The Fund does not limit the amount of its assets which can be
invested in any one type of instrument or in any foreign country in which a
branch of a U.S. bank or the parent of a U.S. branch is located. Investments in
obligations of foreign branches of U.S. banks may be subject to an overall limit
of 25% of total assets which may be invested in a single industry.

Available cash invested in the Fund earns income at current money market rates
while remaining conveniently liquid. In order to provide full liquidity, the
Fund will seek to maintain a stable $1.00 share price; limit portfolio average
maturity to 90 days or less; buy U.S. dollar-denominated securities which mature
in 397 days or less; and buy only high quality securities with minimal credit
risks. As required by Rule 2a-7 under the Investment Company Act of 1940, as
amended ("Rule 2a-7"), the Fund's Board of Trustees (the "Trustees") will
monitor the quality of the Fund's investments.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

o MONEY MARKET INSTRUMENTS. The Fund may invest in money market instruments ,
which are short-term, high-quality debt securities, including U.S. government
obligations, commercial paper, certificates of deposit, bankers' acceptances,
time deposits and short-term corporate obligations. Money market instruments may
carry fixed rates of return or have variable or floating interest rates.

O COMMERCIAL PAPER. The Fund may invest in short-term obligations issued by
banks, broker-dealers, corporations and other entities for purposes such as
financing their current operations.

- 9 -

<PAGE>

O BANKERS' ACCEPTANCES. The Fund may invest in negotiable obligations of a
bank to pay a draft which has been drawn on it by a customer. These obligations
are backed by large banks and usually backed by goods in international trade.

O TIME DEPOSITS. The Fund may invest in non-negotiable deposits in a banking
institution earning a specified interest rate over a given period of time.

O SHORT-TERM CORPORATE OBLIGATIONS. Corporate obligations are bonds issued by
corporations and other business organizations in order to finance their
long-term credit needs. Corporate bonds in which a Fund may invest generally
consist of those rated in the two highest rating categories of an NRSRO that
possess many favorable investment attributes. In the lower end of this category,
credit quality may be more susceptible to potential future changes in
circumstances.

O WHEN ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. When the Fund agrees to purchase securities on a when-issued basis,
the Fund's custodian must set aside cash or liquid portfolio securities equal to
the amount of that commitment in a separate account, and may be required to
subsequently place additional assets in the separate account to reflect any
increase in the Fund's commitment. Prior to delivery of when-issued securities,
their value is subject to fluctuation and no income accrues until their receipt.
The Fund engages in when-issued and delayed delivery transactions only for the
purpose of acquiring portfolio securities consistent with its investment
objective and policies, and not for investment leverage. In when-issued and
delayed delivery transactions, the Fund relies on the seller to complete the
transaction; its failure to do so may cause the Fund to miss a price or yield
considered to be advantageous.

O VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase variable and
floating rate notes. The interest rates on these securities may be reset daily,
weekly, quarterly, or some other reset period, and may be subject to a floor or
ceiling. There is a risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. There may be no active
secondary market with respect to a particular variable or floating rate note.
Variable and floating rate notes for which no readily available market exists
will be purchased in an amount which, together with other illiquid securities
held by the Fund, does not exceed 10% of the Fund's net assets unless such notes
are subject to a demand feature that will permit the Fund to receive payment of
the principal within seven days after demand therefor. These securities are
included among those which are sometimes referred to as "derivative securities."

O REPURCHASE AGREEMENTS AND SECURITIES LOANS. Under the terms of a repurchase
agreement, the Fund acquires securities from financial institutions or
registered broker-dealers, 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 was delayed pending court action.

- 10 -

<PAGE>

- 11 -

<PAGE>

holds the interest and principal payments for the benefit of the registered
owners of the certificates or receipts. The custodian arranges for the issuance
of the certificates or receipts evidencing ownership and maintains the register.
Receipts include Treasury Receipts ("TRs"), Treasury Investment Growth Receipts
("TIGRs") and Certificates of Accrual on Treasury Securities ("CATS").

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. [The Fund will limit its investment in such instruments to
20% of its total assets.]

O U.S. GOVERNMENT OBLIGATIONS . The Fund may invest in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government National Mortgage Association ("GNMA") and 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 the Federal National
Mortgage Association ("FNMA") are supported by the right of the issuer to borrow
from the Treasury; others, such as those of the Student Loan Marketing
Association ("SLMA"), 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 the Federal Home Loan Mortgage Corporation
("FHLMC"), are supported only by the credit of the 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 or
instrumentalities only when Key Advisers or the Sub-Adviser believest that the
credit risk with respect thereto is minimal.

O INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and, to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
Sub-Adviser will waive its investment advisory fees 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, to the extent such fees are not
waived by Key Advisers or the Sub-Adviser.

O PRIVATE PLACEMENT INVESTMENTS. The Fund may invest in high-quality commercial
paper issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act"). Section 4(2)
commercial paper ("Commercial Paper") is generally sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Commercial Paper is normally
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in Commercial
Paper, thus providing liquidity. The Fund believes that Commercial Paper and
possibly certain other Restricted Securities (as defined in the Statement of
Additional Information) that meet the criteria for liquidity established by the
Trustees are quite liquid. The Fund intends, therefore, to treat the restricted
securities that meet the criteria for liquidity established by the Trustees,
including Commercial Paper, as determined by Key Advisers or the Sub-Adviser, as
liquid and not subject to the investment limitation applicable to illiquid
securities. See "Investment Limitations" below.

- 12 -

<PAGE>

agreement only when Key Advisers and the Sub-Adviser have determined, under
guidelines established by the Victory Portfolios' Board of Trustees, that the
agreement presents minimal credit risks to the Fund and is of comparable quality
to instruments that possess the highest short -term rating from an NRSRO not
affiliated with the issuer or guarantor of the instrument. The Fund may receive
all principal and accrued interest on a short-term funding agreement at any time
upon thirty days' written notice. Because the Fund may not receive the principal
amount of a short-term funding agreement from the insurance company on seven
days' notice or less, a short-term funding agreement is considered an illiquid
investment and, together with other instruments in the Fund which are not
readily marketable, will not exceed 10% of the Fund's total assets.

INVESTMENT LIMITATIONS

1. The Fund may not borrow money other than (a) by entering 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 such
commitments do not exceed 33 1/3% of the Fund's total assets; and (b)
for temporary or emergency purposes in an amount not exceeding 5% of
the value of the Fund's total assets.

2. The Fund will not purchase a security if, as a result, more than 10% of
its net assets would be invested in illiquid securities. The Fund may
invest up to 10% of its net assets in illiquid investments (investments
that cannot be readily sold within seven days in the usual course of
business at approximately the price at which the Fund has valued them),
including restricted securities deemed to be illiquid. Under the
supervision of the Trustees, Key Advisers or the Sub -Adviser
determines the liquidity of the Fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time -consuming negotiation and legal expenses, and it may be difficult
or impossible for the Fund to sell them promptly at an acceptable
price.

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<PAGE>

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

The Fund offers investors two different classes of shares. The different classes
of share represent investments in the same portfolio of securities but are
subject to different expenses and will likely have different share prices.

HOW ARE SHARES PURCHASED? Investor Shares and Select Shares may be purchased
directly or through an Investment Professional of a securities broker or other
financial institution that has entered into a selling agreement with the Fund or
the Distributor. Shares are also available to clients of bank trust departments
. For both classes, the minimum investment is $1,000,000 for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums. When you buy
shares, be sure to specify Investor or Select shares.

o INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL . An " Investment Professional
" is a salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets. Your
Investment Professional will place your order with the Transfer Agent (see "Fund
Organization and Fees--Transfer Agent" below) on your behalf. You may be
required to establish a brokerage or agency account. Your Investment
Professional will notify you whether subsequent trades should be directed to the
Investment Professional or directly to the Fund's Transfer Agent. Accounts
established with Investment Professionals may have different features,
requirements and fees. In addition, Investment Professionals may charge for
their services. Information regarding these features, requirements and fees will
be provided by the Investment Professional. If you are purchasing shares of any
Fund through a program of services offered or administered by your Investment
Professional, you should read the program materials in conjunction with this
Prospectus. You may initiate any transaction by telephone either through your
bank trust department or through your Investment Professional. Subsequent
investments by telephone may be made directly. See "Special Investor Services"
for more information about telephone transactions.

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<PAGE>

be obtained through your bank trust department. Additional purchases, exchanges
or redemptions should also be coordinated through your bank trust department.
Contact your bank trust department for instructions.

INVESTING DIRECTLY

O BY MAIL. You may purchase shares by completing and signing an Account
Application (initial purchase only) and mailing it, together with a check (or
other negotiable bank draft or money order) in the amount of at least the
minimum investment requirement to:
The Victory Institutional Money Market Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741.

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.
ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Institutional Money Market Fund.

Shares are sold at the net asset value that is next determined after the
Transfer Agent receives the purchase order. The net asset value of each share of
the Fund is determined on each Business Day (as defined in "Shareholder Account
Rules and Policies -- Share Price" below) normally 2:00 p.m. (Eastern time) and
all net income of the Fund is declared as a dividend to the Fund's shareholders
of record as of that time. If you buy shares through an Investment Professional,
the Investment Professional must receive your order in a timely fashion on a
regular Business Day and transmit it to the Transfer Agent so that it is
received before the close of business that day. The Transfer Agent may reject
any purchase order for the Fund's shares, in its sole discretion. It is the
responsibility of your Investment Professional to transmit your order to
purchase shares to the Transfer Agent in a timely fashion in order for you to
begin earning dividends on the Business Day when the order to purchase such
shares is deemed to have been received as provided above.

INVESTMENT REQUIREMENTS

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<PAGE>

incurred. Payment for the purchase is expected at the time of the order. If
payment is not received within three business days of the date of the order, the
order may be canceled, and you could be held liable for resulting fees and/or
losses.

SPECIAL INVESTOR SERVICES

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<PAGE>

O RETIREMENT PLANS. Retirement plans can be among the best tax-planning vehicles
available to individuals. Call your Investment Professional for more information
on the plans and their benefits, provisions and fees. Your Investment
Professional can set up your new account in the Fund under one of several
tax-shelter plans. These plans let you invest for retirement and shleter your
investment income from current taxes. Plans include Individual Retirement
Accounts (IRAs) and Rollover IRAs. Other fees may be charged by the IRA
custodian or trustee.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you
purchase by exchange.

(5) The registration and tax identification numbers of the two accounts
must be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH
TO PURCHASE BY EXCHANGE.

There are certain exchange policies you should be aware of:

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<PAGE>

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem shares in several ways:

O BY MAIL. Send a written request to:

The Victory Institutional Money Market Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

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<PAGE>

If you are unable to reach the Transfer Agent by telephone (for example, during
times of unusual market activity), consider placing your order by mail directly
to the Transfer Agent. In case of suspension of the right of redemption, you may
either withdraw your request for redemption or receive payment based on the NAV
next determined after the termination of the suspension. If your balance in the
Fund falls below $1,000,000, you may be given 60 days' notice to reestablish the
minimum balance (except with respect to officers, trustees, directors and
employees, including retired directors and employees, of the Victory Portfolios,
KeyCorp and its affiliates, and the Administrator and its affiliates (and family
members of each of the foregoing) participating in the Systematic Investment
Plan, to whom no minimum balance requirement applies). If you do not increase
your balance, your account may be closed and the proceeds mailed to you at the
address on record.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The NAV per share for each class of shares of the Fund is
calculated by adding the value of all of the Fund's investments plus cash and
other assets, deducting liabilities of the Fund and of the class, and then
dividing the result by the number of shares of the class outstanding. The NAV of
each class of shares of the Fund is determined and its shares are normally
priced as of 2:00 p.m. (Eastern time) (the "Valuation Time") 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 a class of the Fund are tendered for redemption
and no order to purchase any shares is received) during which there is
sufficient trading in its 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 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 and
Christmas .

The assets are valued on the basis of amortized cost. This means valuation
assumes a steady rate of payment from the date of purchase until maturity
instead of looking at actual changes in market value. Although the Fund seeks to
maintain an NAV of $1.00 for each class of its shares, there can be no assurance
that it will be able to do so.

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<PAGE>

be as much as 15 days from the date the shares were purchased. That delay may be
avoided if you arrange with your bank to provide telephone or written assurance
to the Transfer Agent that your purchase payment has cleared.

o If your account value has fallen below $1,000,000, you may be given 60 days'
notice to reestablish the minimum balance. If you do not increase your minimum
balance, your account may be closed and the proceeds mailed to you at the record
address. In some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase orders. Under
unusual circumstances, shares of the Fund may be redeemed "in kind," which means
that the redemption proceeds will be paid with securities from the Fund. Please
refer to the Statement of Additional Information for more details.

o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

o The Distributor at its expense, may provide cash compensation to dealers in
connection with sales of Select Shares of the Fund. In addition, the Distributor
will, from time to time and at its own expense, provide compensation, including
financial assistance, to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding one or more Victory Portfolios and/or other dealer-sponsored
special events including payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Compensation will include
the following types of non-cash compensation offered through sales contests: (1)
vacation trips including the provision of travel arrangements and lodging; (2)
tickets for entertainment events (such as concerts, cruises and sporting events)
and (3) merchandise (such as clothing, trophies, clocks and pens). Dealers may
not use sales of the Fund's shares to qualify for this compensation if
prohibited by the laws of any state or any self-regulatory organization, such as
the National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and capital gain dividends will be reinvested at the net asset
value of the Fund as of the dividend payment date. If you do not
indicate a choice on your Account Application, you will be assigned
this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than 7
days after the last day of the preceding month.

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<PAGE>

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund and have
your income dividends paid in cash.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES

Distributions by the Fund of its net investment income and the excess, if any,
of its net short-term capital gain over its net long-term capital loss are
taxable to shareholders as ordinary income. Distributions by the Fund of the
excess, if any, of its net short-term capital gain over its net long-term
capital loss are designated as ordinary dividends and are taxable to
shareholders as ordinary income. Distributions by the Fund of the excess, if
any, of its net long-term capital gain over its net short-term capital loss are
designated as "capital gain dividends" and are

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<PAGE>

taxable to shareholders as long-term capital gain, regardless of the length of
time shareholders have held their shares. The Fund does not expect to realize
any such capital gain. It is anticipated that no part of any Fund distribution
will be eligible for the dividends-received deduction for corporations.

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares and
may also be subject to state and local taxes. Distributions received by
shareholders of the Fund in January of a given year will be treated as received
on December 31 of the preceding year provided that they were declared to
shareholders of record on a date in October, November , or December of such
preceding year. The Fund sends tax statements to its shareholders (with copies
to the Internal Revenue Service (the "IRS")) by January 31 showing the amounts
and tax status of distributions made (or deemed made) during the preceding
calendar year.

REDEMPTIONS OR EXCHANGES

Investors may realize a gain or loss for federal tax purposes when redeeming
(selling) or exchanging shares of the Fund, although no gain or loss would
normally be expected in the case of the Fund if its NAV per share does not
deviate from $1.00. If a shareholder disposes of shares in the Fund at a loss
before holding such shares for more than six months, the loss will be treated as
a long-term capital loss to the extent that the shareholder has received a
capital gain dividend on those shares. All or a portion of any loss realized
upon a taxable disposition of shares of the Fund may be disallowed if other
shares of the Fund are purchased within 30 days before or after such
disposition.

O OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws in the shareholder's jurisdiction. Some states exempt mutual fund dividends
derived from U.S. Government obligations (distinct from state and local bonds)
from their state and local income taxes. However, some states do not provide
this benefit (e.g., Pennsylvania) and other states may limit it (e.g., New York,
which generally requires at least 50% of a fund's total assets to be invested in
such obligations for the exemption to apply). Shareholders will be notified
annually of the extent to which the Fund's ordinary income dividends were
derived from U.S. Government obligations. INVESTORS CONSIDERING AN INVESTMENT IN
THE FUND SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS
SUITABLE TO THEIR PARTICULAR TAX SITUATIONS.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

PERFORMANCE

From time to time, the Fund's "yield" and "effective yield" for each class of
shares may be presented in advertisements, sales literature and in reports to
shareholders. The "yield" is based upon the income earned by each class of
shares of the Fund over a seven-day period, which is then annualized, i.e., the
income earned in the period is assumed to be earned every seven days over a
52-week period and is stated as a percentage of the investment. The "effective
yield" of each class of shares of the Fund is calculated similarly, but when
annualized, the income earned by the investment is assumed to be reinvested in
shares of the class and thus compounded in the course of a 52-week period. The
effective yield will be higher than the yield because of the compounding effect
of this assumed reinvestment.

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<PAGE>

From time to time, performance information for each class of shares of the Fund
showing total return of each class of shares 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
of more than one year. Average annual total return is measured by comparing the
value of an investment in each class of shares of the Fund at the beginning of
the relevant period to the redemption value of the investment at the end of the
period (assuming immediate reinvestment of any dividends or capital gains
distributions) and annualizing that figure. Cumulative total return is
calculated similarly to average annual total return, except that the resulting
difference is not annualized.

Investors may also judge, and the Victory Portfolios may at times advertise, the
performance of a class of shares of the Fund by comparing it to the performance
of other mutual funds 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. and Standard &
Poor's Corporation, in publications issued by Lipper Analytical Services, Inc.,
and in the following publications: IBC's Money Fund Reports, Value Line Mutual
Fund Survey, 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 and local newspapers. In addition,
general information about the Fund that appears in publications such as those
mentioned above may also be quoted or reproduced in advertisements, sales
literature or in reports to shareholders.

FUND ORGANIZATION AND FEES

The Victory Portfolios, a business trust organized under the laws of Delaware,
is an open-end management investment company, commonly known as a mutual fund,
and currently consisting of twenty-eight series portfolios. The Victory
Portfolios has been operating continuously since 1986, when it was created under
Massachusetts law as a Massachusetts business trust although certain of its
funds have a prior operating history from their predecessor funds. On February
29, 1996, the Victory Portfolios converted from a Massachusetts business trust
to a Delaware business trust. The Victory Portfolios' offices are located at
3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund's investments.

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<PAGE>

including large corporate and public retirement plans, Taft-Hartley plans,
foundations and endowments, high net worth individuals and mutual funds.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc. a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
sub-advisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

For its services under the investment sub-advisory agreement, Key Advisers pays
the Sub-Adviser sub-advisory fees at an annual rate as a percentage of the
Fund's average daily net assets as follows: .25% of the first $10 million of
average daily net assets; .20% of the next $15 million of average daily net
assets; .15% of the next $25 million of average daily net assets; and .125% of
average daily net assets in excess of $50 million.

EFFECT OF BANKING LAWS

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<PAGE>

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

SHAREHOLDER SERVICING - SELECT SHARES

The Victory Portfolios has adopted a Shareholder Servicing Plan for the Select
Shares class of the Fund. In accordance with the Shareholder Servicing Plan for
the Select Shares, the Fund may enter into Shareholder Service Agreements under
which the Fund pays fees of up to .25% of the average daily net assets of such
class for fees incurred in connection with the personal service and maintenance
of accounts holding the shares of such class. Such agreements are entered into
between the Victory Portfolios and various shareholder servicing agents,
including the Distributor, Key Trust Company of Ohio, N.A. and its affiliates,
and other financial institutions and securities brokers (each, a "Shareholder
Servicing Agent"). Each Shareholder Servicing Agent generally will provide
support services to shareholders by establishing and maintaining accounts and
records, processing dividend and distribution payments, providing account
information, arranging for bank wires, responding to routine inquires,
forwarding shareholder communication, assisting in the processing of purchase,
exchange and redemption requests, and assisting shareholders in changing
dividend options, account designations and addresses. Shareholder Servicing
Agents may periodically waive all or a portion of their respective shareholder
servicing fees with respect to the Fund .

CUSTODIAN

Key Trust Company of Ohio, N.A. an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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<PAGE>

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 Victory Portfolios' Board of Trustees, recordkeeping services, and services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory , compliance and other administrative and support
services.

EXPENSES

For the fiscal period ended October 31, 1995, the Fund's total operating
expenses were .49% of the average daily net assets of the Investor Shares and
1.00% of the average daily net assets of the Select Shares, excluding certain
voluntary fee reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Shares of each class of the Fund participate equally in dividends and
distributions and have equal voting, liquidation and other rights. When issued
and paid for, shares will be fully paid and nonassessable by the Victory
Portfolios and will have no preference, conversion, exchange or preemptive
rights. Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares owned. For those investors with qualified
trust accounts , the trustee will vote the shares at meetings of the Fund's
shareholders in accordance with the shareholder's instructions or will vote in
the same percentage as shares that are not so held in trust. The trustee will
forward to these shareholders all communications received by the trustee,
including proxy statements and financial reports. The Victory Portfolios and the
Fund are not required to hold annual meetings of shareholders and in ordinary
circumstances do not intend to hold such meetings. The Trustees may call special
meetings of shareholders for action by shareholder vote as may be required by
the 1940 Act or the Declaration of Trust. Under certain circumstances, the
Trustees may be removed by action of the Trustees or by the shareholders.
Shareholders holding 10% or more of the Victory Portfolios' outstanding shares
may call a special meeting of shareholders for the purpose of voting upon the
question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have each adopted a
Code of Ethics (the "Codes") which require investment personnel (a) to pre-clear
all personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The
Codes also prohibit investment personnel from purchasing securities in an
initial public offering. Personal trading reports are reviewed periodically by
Key Advisers and the Sub-Adviser, and the Board of Trustees reviews their Codes
and any substantial violations of the Codes. Violations of the respective Codes
may result in censure, monetary penalties, suspension or termination of
employment.

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<PAGE>

DELAWARE LAW

In the unlikely event a shareholder is held personally liable for the Victory
Portfolios' obligations, the Delaware successor to the Victory Portfolios will
be required to use its property to protect or compensate the shareholder. On
request, the Delaware successor to the Victory Portfolios will defend any claim
made and pay any judgment against a shareholder for any act or obligation of the
Victory Portfolios. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Delaware successor to the Victory Portfolios
itself cannot meet its obligations to indemnify shareholders and pay judgments
against them.

Delaware law authorizes electronic or telephone communications between
shareholders and the Victory Portfolios. Under Delaware law, the Delaware
successor to the Victory Portfolios will have the flexibility to respond to
future business contingencies. For example, the Trustees will have the power to
incorporate the Victory Portfolios, to merge or consolidate it with another
entity, to cause each fund to become a separate trust, and to change the Victory
Portfolio's domicile without a shareholder vote. This flexibility could help
reduce the expense and frequency of future shareholder meetings for
non-investment related issues.

MISCELLANEOUS

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

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<PAGE>

THE
VICTORY

PORTFOLIOS
INTERMEDIATE INCOME FUND

PROSPECTUS For current yield, purchase, and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the INTERMEDIATE INCOME FUND (the "Fund"), a diversified
portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment adviser to the Fund ("Key Advisers" or
the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"SubAdviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

Fund seeks to provide a high level of income. The Fund pursues this objective
by investing in debt securities issued by corporations and the U.S. Government
and its agencies and instrumentalities.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP BANK,
ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

<PAGE>

TABLE OF CONTENTS Page

Fund Expense...........................................................3
Financial Highlights................................................... 4
Investment Objective...................................................4
Investment Policies and Risk Factors...................................4
How to Invest, Exchange and Redeem......................................12
Dividends, Distributions and Taxes......................................21
Performance.............................................................24
Fund Organization and Fees..............................................25
Additional Information..................................................28

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases
(as a percentage of the offering price)............................. 4.75%

Maximum Sales Charge Imposed on Reinvested Dividends................ none

Deferred Sales Charge ............................................... none

Redemption Fees....................................................... none

Exchange Fee.......................................................... none

ANNUAL FUND OPERATING EXPENSES, AFTER EXPENSE WAIVERS AND REIMBURSEMENTS (as a
percentage of average daily net assets)

Management Fees(2)................................................. 57%

Administration Fees................................................ .15%

Other Expenses(3).................................................. .23%

Total Fund Operating Expenses (2)(3)............................. .95%
====

(1) Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent, including affiliated banks and non-bank
affiliates of Key Advisers and KeyCorp. (See "How to Invest, Exchange and
Redeem.")

(2) The Adviser has agreed to reduce its investment advisory fees and/or
reimburse expenses for the indefinite future. Absent the voluntary
reduction of investment advisory fees, "Management Fees" as a percentage of
average daily net assets would be .75% and "Total Operating Expenses" as a
percentage of average daily net assets would be 1.13%.

(3) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay (see "Fund Organization and Fees - Shareholder
Servicing Plan").

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1)a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Intermediate Income Fund $57 $76 $98 $159

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or

<PAGE>

indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FORGOING EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN.

<PAGE>

FINANCIAL HIGHLIGHTS

THE VICTORY INTERMEDIATE INCOME FUND

DECEMBER 10,
YEAR ENDED 1993 TO
OCTOBER 31, OCTOBER 31,
1995 1994(A)
---- ---------

NET ASSET VALUE, BEGINNING OF
PERIOD $9.25 $10.00
---- -----
Income from Investment Activities
Net investment income............................. 0.60 0.52
Net realized and unrealized gains
(losses) on investments........................ 0.44 (0.76)
------ ------
Total from Investment Activities.................. 1.04 (0.24)
------ ------
DISTRIBUTIONS:
Net investment income............................. (0.60) (0.51)
------- ------
NET ASSET VALUE, END OF PERIOD.................... $9.69 $9.25
==== ====
Total Return (Excludes Sales
Charge) 11/65% (2.48%) (b)
Net Assets, End of Period (000)................. $163,281 $112,923
Ratio of expenses to average
net assets...................................... 0.82% 0.79%(c)

Ratio of net investment income to
average net assets............................. 6.32% 6.23%(c)

Ratio of expenses to average
net assets(d)................................... 1.06% 1.25%(c)
Ratio of net investment income to
average net assets (d)......................... 6.08% 5.77%(c)
Portfolio turnover................................ 98.07% 55.06%

(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.

<PAGE>

INVESTMENT OBJECTIVE

The Fund seeks to provide a high level of income. The investment objective of
the Fund is fundamental and may not be changed without a vote of the holders of
a majority of its outstanding voting securities (as defined in the Statement of
Additional Information). There can be no assurance that the Fund will achieve
its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund will invest in debt securities issued by corporations and the U.S.
Government and its agencies instrumentalities.

Under normal market conditions, the Fund will invest at least 65% of the value
of its total assets in investment-grade bonds, debentures, notes with remaining
maturities at the time of purchase of one year or more, zero-coupon securities,
mortgage-related securities, state, municipal or industrial revenue bonds,
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, debt securities convertible into, or exchangeable for, common
stocks, first mortgage loans and participation certificates in pools of
mortgages issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. The Fund will invest in state and municipal securities when,
in the opinion of Key Advisers or the Sub-Adviser, their yields are competitive
with comparable taxable debt obligations. In addition, up to 20% of the value of
the Fund's total assets may be invested in preferred stocks, notes with
remaining maturities at the time of purchase of less than one year, short-term
debt obligations consisting of commercial paper (including variable amount
master demand notes), bankers' acceptances, certificates of deposit and time
deposits of domestic and foreign branches of U.S. banks and foreign banks,
repurchase agreements, and securities of other investment companies. Some of the
securities in which the Fund invests may have warrants or options attached.

Under normal market conditions, the Fund intends to maintain a dollar-weighted
average portfolio maturity of approximately three to eight years. However, for
temporary defensive purposes, as determined by Key Advisers or the SubAdviser,
the Fund may extend or shorten the dollar-weighted average maturity of its
portfolio depending upon anticipated changes in interest rates or other relevant
market factors.

Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.
Because the Fund invests in debt securities, which fluctuate in value, the
Fund's shares will fluctuate in value. All [debt securities] purchased by the
Fund will be investment grade.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

KL2:129874.1
6

<PAGE>

certain risk factors. The Fund may, following notice to its shareholders, 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 this Prospectus.

o BONDS, NOTES AND DEBENTURES OF U.S. CORPORATE ISSUERS. Debentures represent
unsecured promises to pay, while notes and bonds may be secured by mortgages on
real property or security interests in personal property. Bonds include, but are
not limited to, debt instruments with maturities of approximately one year or
more, debentures, mortgage-related securities, stripped government securities
and zero coupon obligations. Bonds, notes and debentures in which the Fund may
invest may differ in interest rates, maturities and times of issuance. The
market value of the Fund's fixed income investments will change in response to
interest rate changes and other factors. During periods of falling interest
rates, the values of outstanding fixed income securities generally rise.
Conversely, during periods of rising interest rates, the values of such
securities generally decline. Moreover, while securities with longer maturities
tend to produce higher yields, the price of longer maturity securities are also
subject to greater market fluctuations as a result of changes in interest rates.
Changes by recognized agencies in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and principal also affect
the value of these investments. Except under conditions of default, changes in
the value of fund securities will not affect cash income derived from these
securities but will affect the Fund's net asset value.

o U.S. GOVERNMENT SECURITIES. The Fund may invest in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government National Mortgage Association ("GNMA") and 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 the Federal National
Mortgage Association ("FNMA") are supported by the right of the issuer to borrow
from the Treasury; others, such as those of the Student Loan Marketing
Association ("SLMA"), 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 the Federal Home Loan Mortgage Corporation
("FHLMC"), are supported only by the credit of the 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 or
instrumentalities only when Key Advisers or the Sub-Adviser believes that the
credit risk is minimal.

o GOVERNMENT MORTGAGE-BACKED SECURITIES. The principal governmental guarantor
(i.e., backed by the full faith and credit of the U.S. Government) of
mortgage-related securities is GNMA. GNMA is a wholly owned United States
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 backed by pools of FHA-insured or VA-guaranteed
mortgages.

<PAGE>

Government-related guarantors (i.e., not backed by the full faith and credit of
the U.S. Government) include FNMA and FHLMC. FNMA and FHLMC are
governmentsponsored 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 but are not backed by the
full faith and credit of the U.S. Government.

The investment characteristics of mortgage-related securities differ from
traditional debt securities. These differences can result in significantly
greater price and yield volatility than is the case with traditional fixed
income securities. The major differences typically include more frequent
interest and principal payments (usually monthly) the adjustablility of interest
rates, and the possibility that prepayments of principal may be made at any
time. Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors. During periods of
declining interest rates, prepayment rates can be expected to accelerate. Under
certain interest rate and prepayment reate scenarios, the Fund may fail to
recoup fully its investment in mortgage-backed securities (and incur capital
losses), nothwithstanding a direct or indirect governmental or agency guarantee.
In general, changes in the rate of prepayments on a mortgage-related security
will change that security's market value and its yield to maturity. When
interest rates fall, high opportunities are not attractive. Thus,
mortgage-backed securities may not be an effective means for the Fund to lock in
long-term interest rates. Conversely, during period when interest rates rise,
slow prepayments could cause the average life of the security to lengthen and
the value to decline more than anticipated. However, during periods of rising
interest rates, principal prepayments by mortgage-backed securities allows the
fund to reinvest at increased interest rates.

o MORTGAGE-RELATED SECURITIES ISSUED BY NON-GOVERNMENTAL ENTITIES. The Fund
may invest in mortgage-related securities issued by non-governmental entities.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may
also be the originators of the underlying mortgage loans as well as the
guarantors of the mortgage-related securities. Pools created by such
non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are not direct or indirect
government guarantees of payments in the former pools. However, timely payment
of interest and principal of these pools is supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance. The insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. Such insurance and guarantees and the
creditworthiness of the issuers thereof will be considered in determining
whether a mortgage-related security meets the Fund's investment quality
standards. There can be no assurance that the private insurers can meet their
obligations under the policies. The Fund may buy mortgage-related securities
without insurance or guarantees if, through an examination of the loan
experience and practices of the poolers, Key Advisers or the Sub-Adviser
determines that the securities meet the Fund's quality standards. Although the
market for such securities is becoming increasingly liquid, securities issued by
certain private organizations may not be readily marketable. The Fund will not
purchase mortgage-related securities or any other assets which in Key Advisers
or the Sub-Adviser's opinion are illiquid if, as a result, more than 15% of the
value of the Fund's total assets will be invested in illiquid securities.

<PAGE>

substantially less than the original maturity of the mortgage pools underlying
the securities as the result of mortgage prepayments. The rate of such
prepayments, and hence the average life of the certificates, will be a function
of current market interest rates and current conditions in the relevant housing
markets. The impact of prepayment of mortgages is described under "Government
Mortgage-Backed Securities" above. Estimated average life will be determined by
Key Advisers or the Sub-Adviser. Various independent mortgage-related securities
dealers publish estimated average life data using proprietary models, and in
making such determinations, Key Advisers or the Sub-Adviser will rely on such
data except to the extent such data are deemed unreliable by Key Advisers or the
Sub-Adviser. Key Advisers or the Sub- Adviser might deem data unreliable which
appeared to present a significantly different estimated average life for a
security than data relating to the estimated average life of comparable
securities as provided by other independent mortgage-related securities dealers.

o COLLATERALIZED MORTGAGE OBLIGATIONS. Mortgage-related securities in which the
Fund may invest may also include collateralized mortgage obligations ("CMOs").
CMOs are debt obligations issued generally by finance subsidiaries or trusts
that are secured by mortgage-backed certificates, including, in many cases,
certificates issued by government-related guarantors, including GNMA, FNMA and
FHLMC, together with certain funds and other collateral. Although payment of the
principal of and interest on the mortgage-backed certificates pledged to secure
the CMOs may be guaranteed by GNMA, FNMA or FHLMC, the CMOs represent
obligations solely of the issuer and are not insured or guaranteed by GNMA,
FHLMC, FNMA or any other governmental agency, or by any other person or entity.
The issuers of the CMOs typically have no significant assets other than those
pledged as collateral for the obligations.

o SHORT-TERM OBLIGATIONS. These instruments may include "high quality" liquid
debt securities such as commercial paper, certificates of deposit, bankers'
acceptances, repurchase agreements which mature in less than seven days and
United States Treasury Bills. Bankers' acceptances are instruments of United
States banks which are drafts or bills of exchange "accepted" by a bank or trust
company as an obligation to pay on maturity. For a discussion of repurchase
agreements, see below.

o INVESTMENT GRADE AND HIGH QUALITY SECURITIES. "Investment Grade" obligations
are those rated at the time of purchase within the four highest rating
categories assigned by a nationally recognized statistical ratings organization
("NRSRO") or, if unrated, are obligations that Key Advisers or the Sub-Adviser
determine to be of comparable quality. The applicable securities ratings are
described in the Appendix to the Statement of Additional Information.

o INTERNATIONAL BONDS. The Fund may invest in Euro and Yankee obligations, which
are U.S. dollar-denominated international bonds for which the primary trading
market is in the United States ("Yankee Bonds"), or for which the primary
trading market is abroad ("Eurodollar Bonds"). The Fund may also invest in
Canadian and Supranational Agency Bonds (e.g., International Monetary Fund).
(See "Foreign Securities" for a description of risks associated with investments
in foreign securities.)

O FOREIGN SECURITIES. The Fund may invest in debt securities of foreign issuers,
including securities traded in the form of American Depository Receipts. The
Fund will limit its investments in such securities to 20% of its total assets.
The Fund will not hold foreign currency as a result of investment in foreign
securities.

<PAGE>

exchanges, brokers and listed companies. Foreign companies generally are not
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to U.S. companies.
Securities of some foreign companies are less liquid, and their prices more
volatile, than securities of comparable U.S. companies. Settlement of
transactions in some foreign markets may be delayed or may be less frequent than
in the U.S., which could affect the liquidity of the Fund's investment. In
addition, with respect to some foreign countries, there is the possibility of
nationalization, expropriation or confiscatory taxation; limitations on the
removal of securities, property or other assets of the Fund; political or social
instability; increased difficulty in obtaining legal judgments; or diplomatic
developments which could affect U.S. investments in those countries. Key
Advisers or the Sub-Adviser will take such factors into consideration in
managing the Fund's investments.

o ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
Government securities and zero coupon corporate securities ("Zero Bonds"). Zero
Coupon Bonds are purchased at a discount from the face amount because the buyer

<PAGE>

receives only the right to a fixed payment on a certain date in the future and
does not receive any periodic interest payments. The effect of owning
instruments which do not make current interest payments is that a fixed yield is
earned not only on the original investment but also in effect, on accretion
during thelife of the obligations. This implicit reinvestment of earnings at the
same rate eliminates the risk of being unable to reinvest distributions at a
rate as high as the implicit yields on the Zero Coupon Bond, but at the same
time eliminates the holder's ability to reinvest at higher rates. For this
reason, Zero Coupon Bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
comparable securities which pay interest periodically.

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
amount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuation in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. The Fund will limit its investments in such instruments to
20% of its total assets.

o SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities. The Fund must receive collateral
equal to 100% of the securities' value in the form of cash or U.S. Government
securities, plus any interest due, which collateral must be marked to market
daily by Key Advisers or the Sub-Adviser. 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 pays the
Fund an amount equal to any dividends or interest paid on such securities plus
any interest negotiated between the parties to the lending agreement. Loans are
subject to termination by the Fund or the borrower at any time. While the Fund
does not have the right to vote securities on loan, the Fund intends to
terminate any loan and regain the right to vote if that is considered important
with respect to the Fund's 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' Board of Trustees (the "Trustees"). The Fund will
limit its securities lending to 331/3% of total assets.

<PAGE>

subsequently place additional assets in the separate account to reflect any
increase in the Fund's commitment. Prior to delivery of when-issued securities,
their value is subject to fluctuation and no income accrues until their receipt.
The Fund engages in when-issued and delayed delivery transactions only for the
purpose of acquiring portfolio securities consistent with its investment
objective and policies, and not for investment leverage. In when-issued and
delayed delivery transactions, the Fund relies on the seller to complete the
transaction; its failure to do so may cause the Fund to miss a price or yield
considered to be advantageous.

o REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

o INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and, to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
SubAdviser will waive its investment advisory fees 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, to the extent such fees are not
waived by Key Advisers or the Sub-Adviser.

<PAGE>

Additional Information) that meet the criteria for liquidity established by the
Trustees are quite liquid. The Fund intends, therefore, to treat the restricted
securities that meet the criteria for liquidity established by the Trustees,
including Commercial Paper, as determined by Key Advisers or the Sub-Adviser, as
liquid and not subject to the investment limitation applicable to illiquid
securities. See "Investment Limitations."

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal year ended October 31, 1995, the
portfolio turnover rate was 98.07% compared to 55.06% in the fiscal period
December 10, 1993 to October 31, 1994.

INVESTMENT LIMITATIONS

1. The Fund may not borrow money other that (a) by entering 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 such commmitments do not
exceed 331/3% of the value of the Fund's total assets; and (b) for
temporary or emergency purposes in an amount not exceeding 5% of the value
of the Fund's total assets.

2. The Fund will not purchase a security if, as as result, more that 15% of
its net assets would be invested in illiquid securities. Illiquid
securities are investments that cannot be readily sold within seven days in
the usual course of business at approximately the price at which the Fund
has valued them . Under the supervision of the Trustees, Key Advisers or
the Sub -Adviser determines the liquidity of the Fund's investments. The
absence of a trading market can make it difficult to ascertain a market
value for illiquid investments. Disposing of illiquid investments may
involve time -consuming negotiation and legal expenses, and it may be
difficult or impossible for the Fund to sell them promptly at an acceptable
price.

3. The Fund is "diversified" within the meaning of the 1940 Act. With respect
to 75% of its total assets, the Fund may not purchase the

<PAGE>

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.

The investment limitation pertaining to borrowing in this subsection is
fundamental and the limitation pertaining to illiquid securities is
nonfundamental. Non-fundamental limitations may be changed without shareholder
approval. Whenever an investment policy or limitation states a maximum
percentage of the Fund's assets that may be invested, such percentage limitation
will be determined immediately after and as a result of the investment and any
subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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). If the value of the Fund's 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 Trustees will consider
what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

o HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

O INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. An Investment Professional is
a salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the invesment of your assets. Your
Investment Professional will place your order with the Transfer Agent (see "Fund
Organization and Fees--Transfer Agent") on your behalf. You may be required to
establish a brokerage or agency account. Your Investment Professional will
notify you whether subsequent trades should be directed to the Investment
Professional or directly to the Fund's Transfer Agent. Accounts established with
Investment Professionals may have different features, requirements and fees. In
addition, Investment Professionals may charge for their services. Information
regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone either through your bank trust department
or through your Investment Professional. Subsequent investments by telephone may
be made directly. See "Special Investor Services" for more information about
telephone transactions.

<PAGE>

o INVESTING THROUGH YOUR BANK TRUST DEPARTMENT. Your bank trust department may
require a minimum investment and may charge additional fees. Fee schedules for
such accounts are available upon request and are detailed in the agreements by
which a client opens the desired account. Your bank trust department may require
a completed and signed application for the Fund in which an investment is made.
Additional documents may be required from corporations, associations, and
certain fiduciaries. Any account information, such as balances, should be
obtained through your bank trust department. Additional purchases, exchanges or
redemptions should also be coordinated through your bank trust department.

Contact your bank trust department for instructions.

O INVESTING THROUGH THE SYSTEMATIC INVESTMENT PLAN. You Can use the Systematic
Investment Plan to purchase shares directly from your bank account. Please refer
to "The Systematic Investment Plan" for more details.

INVESTING DIRECTLY

The Victory Intermediate Income Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.

ABA #011001234
Credit PFSC DDA#16-918-8
The Victory : Intermediate Income Fund

Shares are sold at the public offering price based on the net asset value per
share ("NAV") that is next determined after the Transfer Agent receives the
purchase order. In most cases, to receive that day's offering price, the
Transfer Agent must receive your order as of the close of regular trading of the
New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern time) (the
"Valuation Time") on each Business Day (as defined in "Shareholder Account Rules
and Policies--Share Price"). If you buy shares through an Investment
Professional, the Investment Professional must receive your order in a timely
fashion on a regular Business Day and transmit it to the Transfer Agent so that

<PAGE>

it is received before the close of business that day. The Transfer Agent may
reject any purchase order for the Fund's shares, in its sole discretion. It is
the responsibility of your Investment Professional to transmit your order to
purchase shares to the Transfer Agent in a timely fashion in order for you to
receive that day's share price.

INVESTMENT REQUIREMENTS

Sales ChargeSales Chare Dealer
As a % of: As a % of: Reallowance
Offering Net Amount As a % of
Amount of Purchase Price Invested Offering Price

Less than $49,999........................4.75% 4.99% 4.00%
$50,000 to $99,999.......................4.50% 4.71% 4.00%
$100,000 to $249,999.....................3.50% 3.63% 3.00%
$250,000 to $499,999.....................2.25% 2.30% 2.00%
$500,000 to $999,999.....................1.75% 1.78% 1.50%
$1,000,000 and above.....................0.00% 0.00% (1)

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25% on
such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

<PAGE>

Albany or PFIC and their broker-dealer affiliates. "Dealer Retention" is an
amount equal to the difference between the applicable sales charge and such part
of the sales charge which is reallowed to broker-dealers.

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

A Letter of Intent is not a binding obligation upon the investor to purchase the
full amount indicated. The minimum initial investment under a Letter of Intent
is 5% of the total amount. Shares purchased with the first 5% of such amount
will be held in escrow (while remaining registered in the name of the investor)
to secure payment of the higher sales charge applicable to the shares actually
purchased if the full amount indicated is not purchased, and such escrowed
shares will be involuntarily redeemed to pay the additional sales charge, if
necessary.
Dividends (if any) on escrowed shares, whether paid in cash or reinvested in
additional shares, are not subject to escrow. The escrowed shares will not be
available for redemption, exchange or other disposal by the investor until all
purchases pursuant to the Letter of Intent have been made or the higher sales
charge has been paid. When the full amount indicated has been purchased, the
escrow will be released. A Letter of Intent may include purchases of shares made
not more than 90 days prior to the date the investor signs a Letter of Intent;
however, the 13-month period during which the Letter of Intent is in effect will
begin on the date of the earliest purchase to be included. An investor may
combine purchases that are made in an individual capacity with (1) purchases
that are made by members of the investor's immediate family and (2) purchases
made by businesses that the investor owns as sole proprietorships, for purposes
of obtaining reduced sales charges by means of a written Letter of Intent. In
order to accomplish this, however, investors must designate on the Account
Application the accounts that are to be combined for this purpose. Investors can
only designate accounts that are open at the time the Letter of Intent is
executed.

O RIGHT OF ACCUMULATION AND CONCURRENT PURCHASES. A shareholder may qualify for
a reduced sales charge on purchases of shares of the Fund, and other funds of
the Victory Portfolios, by combining a current purchase with purchases of
another fund(s) or with certain prior purchases of shares of the Victory
Portfolios. The applicable sales charge is based on the sum of (1) the
purchaser's current purchase plus (2) the current public offering price of the
purchaser's previous

<PAGE>

purchases of (a) all shares held by the purchaser in the Fund and (b) all shares
held by the purchaser in any other fund of the Victory Portfolios (except money
market funds).

O WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to the
following categories of persons (which categories may be changed or eliminated
at any time):

(1) Current or retired Trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an "Affiliated
Provider " ("Affiliated Providers" refer to affiliates and subsidiaries of
KeyCorp and service providers to the Victory Portfolios and the Victory
Shares (collectively, the "Victory Group")), dealers having an agreement
with the Distributor and any trade organization to which Key Advisers, the
Sub -Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or certain
other advisory accounts established with KeyCorp or any of its affiliates;

(5) Shareholders of the former Investors Preference Fund For Income, Inc. and
the Investors Preference New York Tax-Free Fund, Inc. who have continuously
maintained accounts with a fund or funds of the Victory Group with a
balance of $250,000 or more (investors with less than $250,000 will pay any
applicable sales charges); and

(6) Investment advisers or financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; and clients of such investment
advisers or financial planners who place trades for their own accounts if
the accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker or agent. Such
accounts include retirement and deferred compensation plans and trusts used
to fund those plans, including, but not limited to, those defined in
section 401(k), 403(b), or 457 of the Internal Revenue Code and "rabbi
trusts."

SPECIAL INVESTOR SERVICES

<PAGE>

magnetic ink coding number across the front. If your bank account is jointly
owned, be sure that all owners sign. You must first meet the Fund's initial
investment requirement of $500, then investments may be made monthly by
automatically deducting $25 or more from your bank checking account. For
officers, trustees, directors and employees, including retired directors and
employees, of the Victory Group, KeyCorp and its affiliates, and the
Administrator and its affiliates (and family members of each of the foregoing)
who participate in the Systematic Investment Plan, there is no minimum initial
investment required. You may change the amount of your monthly purchase at any
time. Your bank checking account will be debited on the date indicated on your
Account Application. Shares will be purchased at the offering price next
determined following receipt of the order by the Transfer Agent. You may cancel
the Systematic Investment Plan at any time without payment of a cancellation
fee. Your monthly account statement will reflect systematic investment
transactions, and a debit entry will appear on your bank statement.

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income divedends and capital gains dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

Your account will be debited on the date you indicate on your Account
Application. Shares will be redeemed at the net asset value per share (the
"NAV")as determined on the debit date indicated on your Account Application. You
may cancel the Systematic Withdrawal Plan at any time without payment of a
cancellation fee. Each Systematic Withdrawal Plan transaction will appear as a
debit entry on your monthly account statement.

<PAGE>

account. Your Investment Professional, bank trust department or the Transfer
Agent may also record calls, and you should verify the accuracy of your
confirmation statements immediately after you receive them.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you purchase
by exchange.

(5) The registration and tax identification numbers of the two accounts must
be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH TO
PURCHASE BY EXCHANGE.

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange shares of
this Fund only for Class A shares of another fund. At present, not all of the
funds offer the same two classes of shares. If a fund has only one class of
shares that does not have a class designation, they are "Class A" shares for
exchange purposes. In some cases, sales charges may be imposed on exchange
transactions. Certain funds offer Class A or Class B shares and a list can be
obtained by calling the Transfer Agent at 800-539-3863. Please refer to the
Statement of Additional Information for more details about this policy.

Telephone exchange requests may be made either by calling your Investment
Professional or the Transfer Agent at 800-539-3863 prior to Valuation Time on
any Business Day (see "Shareholder Account Rules and Policies--Share Price").

<PAGE>

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and and issued by the other fund in
the exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally 4:00 p.m. Eastern time)
that is in proper form, but either fund may delay the issuance of shares of the
fund into which you are exchanging if it determines it would be disadvantaged by
a same-day transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy might
create excessive turnover in the Fund's portfolio and associated expenses
disadvantageous to the Fund.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (See the definition of "Business Day" under "Shareholder Account
Rules and Policies--Share Price") . Shares will be redeemed at the NAV next
calculated after the Transfer Agent has received the redemption request. If the
Fund account is closed, any accrued dividends will be paid at the beginning of
the following month.

You may redeem shares in several ways:

o BY MAIL. Send a written request to: The Victory Portfolios:
Intermediate Income Fund

P.O. Box 9741
Providence, RI 02940-9741

<PAGE>

guarantee: banks, brokers, dealers, credit unions (if authorized under state
law), securities exchanges and associations, clearing agencies, and savings
associations. A signature guarantee may not be provided by a notary public. A
signature guarantee is designed to protect you, the Fund, and its agents from
fraud. The Transfer Agent reserves the right to reject any signature guarantee
if (1) it has reason to believe that the signature is not genuine, (2) it has
reason to believe that the transaction would otherwise be improper, or (3) the
guarantor institution is a broker or dealer that is neither a member of a
clearing corporation nor maintains net capital of at least $100,000.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV", means the
value of one share. The NAV is calculated by adding the value of all the

<PAGE>

Fund's investments, plus cash and other assets, deducting liabilities of the
Fund, and then dividing the result by the number of shares outstanding. The NAV
of the Fund is determined and its shares are priced as of the close of regular
trading of the NYSE, (normally 4:00 p.m. Eastern Time) (the "Valuation Time") 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 its 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 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 and
Christmas .

o Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form . From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

O The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

O Payment for redeemed shares is ordinarily made in cash and forwarded by check
within three business days after the Transfer Agent receives redemption
instructions in proper form, except under unusual circumstances determined by
the Securities and Exchange Commission delaying or suspending such payments. The
Transfer Agent may delay forwarding a check for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as 15
days from the date the shares were purchased. That delay may be avoided if you
arrange with your bank to provide telephone or written assurance to the Transfer
Agent that your purchase payment has cleared.

<PAGE>

O The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

o The Distributor, at its expense, may provide additional cash compensation to
dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is 4.00% of the offering price. In
addition, the Distributor may, from time to time and at its own expense, provide
compensation, including financial assistance, to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns regarding one or more Victory Portfolios and/or
other dealer-sponsored special events including payment for travel expenses,
including lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Compensation
will include the following types of non-cash compensation offered through sales
contests: (1) vacation trips including the provision of travel arrangements and
lodging; (2) tickets for entertainment events (such as concerts, cruises and
sporting events) and (3) merchandise (such as clothing, trophies, clocks and
pens). Dealers may not use sales of the Fund's shares to qualify for this
compensation if prohibited by the laws of any state or any self-regulatory
organization, such as the National Association of Securities Dealers, Inc. None
of the aforementioned compensation is paid for by the Fund or its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS.

The Fund ordinarily declares and pays dividends from its net investment income
monthly . The Fund may make distributions at least annually out of any realized
capital gains, and the Fund may make supplemental distributions of dividends and
capital gains following the end of its fiscal year.

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and capital gain dividends will be reinvested at the net asset
value of the Fund as of the day after the record date. If you do not
indicate a choice on your Account Application, you will be assigned
this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than
7 days after the dividend payment date which may be more than 7 days
after the dividend record date.

<PAGE>

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain dividends,
or only capital gain dividends, automatically reinvested in shares of
another fund of the Victory Group. Shares will be purchased at the NAV as
of the day after the record date. If you are reinvesting dividends of a
fund sold without a sales charge in shares of a fund sold with a sales
charge, the shares will be purchased at the public offering price. If you
are reinvesting dividends of a fund sold with a sales charge in shares of a
fund sold with or without a sales charge, the shares will be purchased at
the net asset value of the fund. Dividend distributions can be directed
only to an existing account with a registration that is identical to that
of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and
capital gain dividends, or only your income dividends,
automatically transferred to your bank checking or savings
account. The amount will be determined on the dividend record
date and will normally be transferred to your account within 7
days of the dividend record date. Dividend distributions can be
directed only to an existing account with a registration that is
identical to that of your Fund account. Please call or write the
Transfer Agent to learn more about this dividend distribution
option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

<PAGE>

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES [to be revised by Tax Dept]

Income received by direct holders of obligations of the U.S. Government and
certain of its agencies and instrumentalities is exempt from state and local
income taxation. The Fund's dividends from investment income may, to the extent
such dividends consist of interest from obligations of the U.S. Government and
certain of its agencies and instrumentalities, also be exempt from state and
local income taxes. The Fund intends to advise shareholders of the proportion of
their dividends which consist of such interest. Shareholders are urged to
consult their tax advisers regarding the possible exclusion of a portion of
their dividends for state and local income tax purposes in their respective
jurisdictions.

o OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws of the shareholder's jurisdiction. INVESTORS CONSIDERING AN INVESTMENT IN
THE FUND SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS
SUITABLE TO THEIR PARTICULAR TAX SITUATION.

<PAGE>

IRS requires the Fund to withhold 31% of amounts distributed to them by the Fund
as dividends or in redemption of their shares.

PERFORMANCE

Yield will be computed by dividing the Fund's net invesment income per share
earned during a recent thiry-day 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 and annualizing the result.

Performance is a function of the type and quality of instruments held in the
Fund's portfolio, operating expenses, and market conditions. Consequently,
performance will fluctuate and data reported are not necessarily representative
of future results. Any fees charged by service providers with respect to
customer accounts for investing in shares of the Fund will not be reflected in
performance calculations.

FUND ORGANIZATION AND FEES

<PAGE>

Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-
3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
sub-advisory agreement, respectively, provide that Key Advisers and the
SubAdviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

<PAGE>

The person primarily responsible for the investment management of the Fund as
well as his previous experience is as follows:

PORTFOLIO MANAGING PREVIOUS
MANAGER FUND SINCE EXPERIENCE

David M. Baccile March 1996 Society Asset Management,
Inc., beginning in 1994;
Credit Analyst
and Fixed
Income Trader
for KeyCorp
since 1990.

EFFECT OF BANKING LAWS

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and

Distributor.

<PAGE>

net assets. The Administrator may periodically waive all or a portion of its
administrative fee with respect to the Fund .

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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-
Adviser, serves as custodian for the Fund and receives fees for the
services it performs as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

BUSINESS MANAGEMENT AGREEMENT

<PAGE>

Trustees, recordkeeping services, services rendered in connection with the
preparation of regulatory filings and other reports, and regulatory , compliance
, and other administrative and support services.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were 1.06% of the Fund's average net assets, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts , the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not so held
in trust. The trustee will forward to these shareholders all communications
received by the trustee, including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust. Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have adopted a Code of
Ethics (the "Code") which requires investment personnel (a) to pre-clear all
personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub- Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

<PAGE>

DELAWARE LAW

MISCELLANEOUS

Shareholders will receive Semi-Annual Reports, which are unaudited, and Annual
Reports, which are audited by independent public accountants ("Reports"),
describing the investment operations of the Fund. Each of the Reports, when
available for a particular fiscal year end or the end of a semi-annual period,
is incorporated herein by reference. The Victory Portfolios may include
information in their Reports to shareholders that (a) describes general economic
trends, (b) describes general trends within the financial services industry or
the mutual fund industry, (c) describes past or anticipated portfolio holdings
for the Fund or (d) describes investment management strategies for the Victory
Portfolios. Such information is provided to inform shareholders of the
activities of the Victory Portfolios for the most recent fiscal year or
semi-annual period and to provide the views of Key Advisers, the Sub-Adviser
and/or the Victory Portfolios' officers regarding expected trends and
strategies.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last

<PAGE>

name has indicated that mail is to be delivered. Shareholders may receive
additional copies of any Reports at no cost by writing to the Fund at the
address listed on Page 1 of this Prospectus or by calling 800-539-3863.

THE
VICTORY
PORTFOLIOS
INVESTMENT QUALITY BOND FUND

PROSPECTUS For current yield, purchase, and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the INVESTMENT QUALITY BOND FUND (the "Fund"), a
diversified portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment adviser to the Fund ("Key
Advisers" or the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"Sub-Adviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund seeks to provide a high level of income. The Fund pursues this
objective by investing primarily in investment-grade bonds issued by
corporations and the U.S. Government and its agencies or instrumentalities.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940- 9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

KL2:129878.1

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses..............................................................2
Financial Highlights.......................................................3
Investment Objective..................................................... 4
Investment Policies and Risk Factors..................................... 4
How to Invest, Exchange and Redeem.........................................9
Dividends, Distributions and Taxes........................................15
Performance...............................................................17
Fund Organization and Fees................................................17
Additional Information....................................................20

- 2 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases (as a
percentage of the offering price).................. 4.75%
Maximum Sales Charge Imposed on Reinvested Dividends......none
Deferred Sales Charge.....................................none
Redemption Fees............................................none
Exchange Fee...............................................none

ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE WAIVERS AND REIMBURSEMENTS
(as a percentage of average daily net assets)

Management Fees(2)...................................... ..62%
Administration Fees..................................... ..15%
Other Expenses(3)....................................... ..23%
Total Fund Operating Expenses(2)(3)................ ...1.00%

(1) Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent, including affiliated banks and non-bank
affiliates of Key Advisers and KeyCorp. (See "How to Invest, Exchange and
Redeem.")

(2) The Adviser has agreed to reduce its investment advisory fees for the
indefinite future. Absent the voluntary reduction of investment advisory
fees, "Management Fees" as a percentage of average daily net assets would
be 0.75%, and "Total Operating Expenses" as a percentage of average daily
net assets would be 1.13%.

(3) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay (see "Fund Organization and Fees - Shareholder
Servicing Plan").

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Investment Quality Bond Fund $57 $78 $100 $164

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

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FINANCIAL HIGHLIGHTS

THE VICTORY INVESTMENT QUALITY BOND FUND

YEAR DECEMBER 10, 1993
ENDED TO OCTOBER 31,
OCTOBER 31, 1995(D) 1994(A)

NET ASSET VALUE, BEGINNING OF PERIOD $9.10 $10.00
------- ------
Investment Activities
Net investment income 0.62 0.53
Net realized and unrealized gains
(losses) on investments 0.67 (0.92)
------- -------
Total from Investment Activities 1.29 (0.39)
------- -------
Distributions
Net investment income (0.63) (0.51)
------ -------
NET ASSET VALUE, END OF PERIOD $ 9.76 $ 9.10
======== ======
TOTAL RETURN (EXCLUDES SALES CHARGE) 14.63% (3.92%)(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $125,248 $94,685
Ratio of expenses to average net assets .88% 0.79%(c)
Ratio of net investment income to
average net assets 6.59% 6.33%(c)
Ratio of expenses to average net assets (e) 1.10% 1.25%(c)
Ratio of net investment income to
average net assets (e) 6.37% 5.87%(c)
Portfolio turnover 160.01% 89.92%

(a) Period from commencement of operations.
(b) Not Annualized.
(c) Annualized.
(d) Effective June 5, 1995, the Victory Corporate Bond Portfolio merged
into the Investment Quality Bond Fund. Financial highlights for the
periods prior to June 5, 1995 represent the Investment Quality Bond
Fund.
(e) During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.

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INVESTMENT OBJECTIVE

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its objective by investing primarily in investment-grade bonds
issued by corporations and the U.S. Government and its agencies or
instrumentalities.

Under normal market conditions, the Fund will invest at least 65% of the value
of its total assets in investment-grade bonds. The Fund's investments will
include debentures, notes with remaining maturities at the time of purchase of
one year or more, zero-coupon securities, mortgage-related securities, state,
municipal or industrial revenue bonds, obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, debt securities
convertible into, or exchangeable for, common stocks, first mortgage loans and
participation certificates in pools of mortgages issued or guaranteed by the
U.S. Government or its agencies or instrumentalities. The Fund will invest in
state and municipal securities when, in the opinion of Key Advisers or the Sub-
Adviser, their yields are competitive with those of comparable taxable debt
obligations. In addition, up to 20% of the value of the Fund's total assets may
be invested in preferred stocks, notes with remaining maturities at the time of
purchase of less than one year, short-term debt obligations consisting of
commercial paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit and time deposits of domestic and foreign
branches of U.S. banks and foreign banks, repurchase agreements, and securities
of other investment companies. Some of the securities in which the Fund invests
may have warrants or options attached.

All instruments purchased by the Fund will be rated, at the time of purchase,
within the four highest rating categories by a nationally recognized statistical
ratings organization ("NRSRO") (investment grade) or, if unrated, will be of
comparable quality, as determined by Key Advisers or the Sub-Adviser.

Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

O INVESTMENT GRADE AND HIGH QUALITY SECURITIES. "Investment Grade" obligations
are those rated at the time of purchase within the four highest rating
categories assigned by a nationally recognized statistical ratings organization
("NRSRO") or, if unrated, are obligations that Key Advisers or the Sub- Adviser
determine to be

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<PAGE>

of comparable quality. The applicable securities ratings are described in the
Appendix to the Statement of Additional Information. "High-Quality" short-term
obligations are those obligations which, at the time of purchase, (1) possess a
rating in one of the two highest ratings categories from at least one NRSRO (for
example, commercial paper rated "A-1" or "A-2" by Standard & Poor's Corporation
or "P-1" or "P-2" by Moody's Investors Service, Inc.) or (2) are unrated by an
NRSRO but are determined by Key Advisers or the Sub-Adviser to present minimal
credit risks and to be of comparable quality to rated instruments eligible for
purchase by the Fund under guidelines adopted by the Trustees.

o BONDS, NOTES AND DEBENTURES OF U.S. CORPORATE ISSUERS. Debentures represent
unsecured promises to pay, while notes and bonds may be secured by mortgages on
real property or security interests in personal property. Bonds include, but are
not limited to, debt instruments with maturities of approximately one year or
more, debentures, mortgage-related securities, stripped government securities
and zero coupon obligations. Bonds, notes and debentures in which the Fund may
invest may differ in interest rates, maturities and times of issuance. The
market value of the Fund's fixed income investments will change in response to
interest rate changes and other factors. During periods of falling interest
rates, the values of outstanding fixed income securities generally rise.
Conversely, during periods of rising interest rates, the values of such
securities generally decline. Moreover, while securities with longer maturities
tend to produce higher yields, the price of longer maturity securities are also
subject to greater market fluctuations as a result of changes in interest rates.
Changes by recognized agencies in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and principal also affect
the value of these investments. Except under conditions of default, changes in
the value of Fund securities will not affect cash income derived from these
securities but will affect the Fund's net asset value.

o ZERO COUPON BONDS. The Fund is permitted to purchase zero coupon U.S.
Government securities ("Zero Coupon Bonds"). Zero Coupon Bonds are purchased at
a discount from the face amount because the buyer receives only the right to
receive a fixed payment on a certain date in the future and does not receive any
periodic interest payments. The effect of owning instruments which do not make
current interest payments is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount accretion during the
life of the obligations. This implicit reinvestment of earnings at the same rate
eliminates the risk of being unable to reinvest distributions at a rate as high
as the implicit yields on the Zero Coupon Bond, but at the same time eliminates
the holder's ability to reinvest the interest payments at higher rates in the
future. For this reason, Zero Coupon Bonds are subject to substantially greater
price fluctuations during periods of changing market interest rates than are
comparable securities which pay interest periodically. The amount of price
fluctuation tends to increase as the maturity of the security increases.

o SHORT-TERM OBLIGATIONS. These instruments may include High Quality liquid debt
securities, such as commercial paper, certificates of deposit, bankers'
acceptances, certificates of deposit and demand and time deposits of domestic
and foreign branches of U.S. banks and foreign banks, and repurchase agreements
which mature in less than seven days and United States Treasury Bills. Banker's
acceptances which are drafts or bills of exchange "accepted" by a bank or trust
company as an obligation to pay on maturity. For a description of risks
associated with investments in foreign securities, see " Foreign Securities"
below. For a discussion of repurchase agreements, see below.

o FOREIGN SECURITIES. The Fund may invest up to 20% of the value of its total
assets in debt securities of foreign issuers, including foreign banks.
Investments in securities of foreign companies generally involve greater risks

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than are present in U.S. investments. Compared to U.S. and Canadian companies,
there is generally less publicly available information about foreign companies
and there may be less governmental regulation and supervision of foreign stock
exchanges, brokers and listed companies. Foreign companies generally are not
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to U.S. companies.
Securities of some foreign companies are less liquid, and their prices more
volatile, than securities of comparable U.S. companies. Settlement of
transactions in some foreign markets may be delayed or may be less frequent than
in the U.S., which could affect the liquidity of the Fund's investment. In
addition, with respect to some foreign countries, there is the possibility of
nationalization, expropriation or confiscatory taxation; limitations on the
removal of securities, property or other assets of the Fund; political or social
instability; increased difficulty in obtaining legal judgments; or diplomatic
developments which could affect U.S. investments in those countries. Key
Advisers or the Sub-Adviser will take such factors into consideration in
managing the Fund's investments. The Fund will not hold foreign currency in
amounts exceeding 5% of its assets as a result of such investments.

O FUTURES CONTRACTS. The Fund may also 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.

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<PAGE>

Federal National Mortgage Association ("FNMA") are supported by the right of the
issuer to borrow from the Treasury; others, such as those of the Student Loan
Marketing Association ("SLMA"), 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 the Federal Home Loan Mortgage
Corporation ("FHLMC"), are supported only by the credit of the 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.

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. The Fund will limit its investment in such instrument to
20% of its total assets.

o GOVERNMENT MORTGAGE-BACKED SECURITIES. The principal governmental guarantor
(i.e., backed by the full faith and credit of the U.S. Government) 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 backed by pools of FHA-insured or VA-guaranteed
mortgages.

The investment characteristics of mortgage-related securities differ from
traditional debt securities. These differences can result in greater price and
yield volatility than is the case with traditional fixed income securities. The
major differences typically include more frequent interest and principal
payments, usually monthly, the adjustability of interest rates, and the
possibility that prepayments of principal may be made at any time. Prepayment
rates are influenced by changes in current interest rates and a variety of
economic, geographic, social and other factors. During periods of declining
interest rates, prepayment rates can be expected to accelerate. Under certain
interest rate and prepayment rate scenarios, the Fund may fail to recoup fully
its investment in mortgage-backed securities (and incur capital losses)
notwithstanding a direct or indirect governmental or agency guarantee. In
general, changes in the rate of prepayments on a mortgage-related security will
change that security's market value and its yield to maturity. When interest
rates fall, high prepayments could force the Fund to reinvest principal at a
time when investment opportunities are not attractive. Thus, mortgage-backed
securities may not be

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<PAGE>

an effective means for the Fund to lock in long-term interest rates. Conversely,
during periods when interest rates rise, slow prepayments could cause the
average life of the security to lengthen and the value to decline more than
anticipated. However, during periods of rising interest rates, principal
repayments by mortgage-backed securities allow the Fund to reinvest at increased
interest rates.

o MORTGAGE-RELATED SECURITIES ISSUED BY NON-GOVERNMENTAL ENTITIES. The Fund may
invest in mortgage-related securities issued by non-governmental entities.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may
also be the originators of the underlying mortgage loans as well as the
guarantors of the mortgage-related securities. Pools created by such
non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are not direct or indirect
government guarantees of payments in the former pools. However, timely payment
of interest and principal of these pools is supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance. The insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. Such insurance and guarantees and the
creditworthiness of the issuers thereof will be considered in determining
whether a mortgage-related security meets the Fund's investment quality
standards. There can be no assurance that the private insurers can meet their
obligations under the policies. The Fund may buy mortgage-related securities
without insurance or guarantees if, through an examination of the loan
experience and practices of the poolers, Key Advisers or the Sub-Adviser
determines that the securities meet the Fund's quality standards. Although the
market for such securities is becoming increasingly liquid, securities issued by
certain private organizations may not be readily marketable. The Fund will not
purchase mortgage-related securities or any other assets which in the opinion of
Key Advisers or the Sub-Adviser are illiquid if, as a result, more than 15% of
the value of the Fund's total assets will be invested in illiquid securities.

The Fund may purchase mortgage-related securities with stated maturities in
excess of 10 years. Mortgage-related securities include collateralized mortgage
obligations and participation certificates in pools of mortgages. The average
life of mortgage-related securities varies with the maturities of the underlying
mortgage instruments, which have maximum maturities of 40 years. The average
life is likely to be substantially less than the original maturity of the
mortgage pools underlying the securities as the result of mortgage prepayments.
The rate of such prepayments, and hence the average life of the certificates,
will be a function of current market interest rates and current conditions in
the relevant housing markets. The impact of prepayment of mortgages is described
under "Government Mortgage-Backed Securities" above. Estimated average life will
be determined by Key Advisers or the Sub-Adviser. Various independent
mortgage-related securities dealers publish estimated average life data using
proprietary models, and in making such determinations, Key Advisers or the
Sub-Adviser will rely on such data except to the extent such data are deemed
unreliable by Key Advisers or the Sub-Adviser. Key Advisers or the Sub- Adviser
might deem data unreliable which appeared to present a significantly different
estimated average life for a security than data relating to the estimated
average life of comparable securities as provided by other independent
mortgage-related securities dealers.

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<PAGE>

o SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities. The Fund must receive collateral
equal to 100% of the securities' value in the form of cash or U.S. Government
securities, plus any interest due, which collateral must be marked to market
daily by Key Advisers or the Sub-Adviser. 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 pays the
Fund amounts equal to any dividends or interest paid on such securities plus any
interest negotiated between the parties to the lending agreement. Loans are
subject to termination by the Fund or the borrower at any time. While the Fund
does not have the right to vote securities on loan, the Fund intends to
terminate any loan and regain the right to vote if that is considered important
with respect to the Fund's 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' Board of Trustees (the "Trustees"). The Fund will
limit its securities lending to 331/3% of total assets.

o REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

o INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
Sub-Adviser will waive its investment advisory fees as to all assets invested in
other investment companies. Because such other investment companies employ an
investment adviser, such

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investment by the Fund will cause shareholders to bear duplicative fees, such as
management fees, to the extent such fees are not waived by Key Advisers or the
Sub-Adviser.

O PRIVATE PLACEMENT INVESTMENTS. The Fund may invest in High Quality commercial
paper issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act"). Section 4(2)
commercial paper ("Commercial Paper") is generally sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Commercial Paper is normally
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in Commercial
Paper, thus providing liquidity. The Fund believes that Commercial Paper and
possibly certain other Restricted Securities (as defined in the Statement of
Additional Information) that meet the criteria for liquidity established by the
Trustees are quite liquid. The Fund intends, therefore, to treat the restricted
securities that meet the criteria for liquidity established by the Trustees,
including Commercial Paper, as determined by Key Advisers or the Sub-Adviser, as
liquid and not subject to the investment limitation applicable to illiquid
securities. Therefore, the Fund will generally purchase Commercial Paper without
regard to the Fund's restriction on illiquid securities. See "Investment
Limitations" below.

Certain investment management techniques which the Fund may use may expose the
Fund to special risks. These products may be used to adjust the risk and return
characteristics of the Fund's portfolio of investments. These various products
may increase or decrease exposure to fluctuation in security prices, interest
rates, or other factors that affect security values, regardless of the issuer's
credit risk. Regardless of whether the intent was to decrease risk or increase
return, if market conditions do not perform consistently with expectations,
these products may result in a loss. In addition, losses may occur if
counterparties involved in transactions do not perform as promised. These
products may expose the Fund to potentially greater risk of loss than more
traditional equity investments.

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers of the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal year ended October 31, 1995, the
portfolio turnover rate was 160.01% compared to 89.92% in the fiscal period from
December 10, 1993 to October 31, 1994.

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INVESTMENT LIMITATIONS

1. The Fund may not borrow money other than (a) by entering 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 such
commitments do not exceed 33 1/3% of the Fund's total assets; and (b)
for temporary or emergency purposes in an amount not exceeding 5% of
the value of the Fund's total assets.

2. The Fund will not purchase a security if, as a result, more than 15% of
its net assets would be invested in illiquid securities. Illiquid
securities are investments that cannot be readily sold within seven
days in the usual course of business at approximately the price at
which the Fund has valued them. Under the supervision of the Trustees,
Key Advisers or the Sub-Adviser determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and legal
expenses, and it may be difficult or impossible for the Fund to sell
them promptly at an acceptable price.

The investment limitation indicated above pertaining to borrowing is
fundamental, while the investment limitation pertaining to illiquid securities
is non-fundamental. Non-fundamental limitations may be changed without
shareholder approval. Whenever an investment policy or limitation states a
maximum percentage of the Fund's assets that may be invested, such percentage
limitation will be determined immediately after and as a result of the
investment and any subsequent change in values, assets, or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations, 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). If the value of the Fund's 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 Trustees will
consider what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

O HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

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<PAGE>

purchasing shares of any Fund through a program of services offered or
administered by your Investment Professional, you should read the program
materials in conjunction with this Prospectus. You may initiate any transaction
by telephone through your Investment Professional. Subsequent investments by
telephone may be made directly. See "Special Investor Services" for more
information about telephone transactions.

The services rendered by a bank trust department, including Key Trust Company of
Ohio, N.A. and other affiliates of Key Advisers or the Sub-Adviser are not
duplicative of any of the services for which Key Advisers or the SubAdviser as
the investment adviser or sub-adviser, respectively, is compensated for advising
the Fund. The charges paid by clients of bank trust departments, or their
affiliates, should also be considered by the investor in addition to the net
yield and return on the investment in the Fund, although such charges do not
affect the Fund's dividends or distributions.

INVESTING DIRECTLY

The Victory Investment Quality Bond Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.
ABA #011001234
Credit PFSC DDA #16-918-8

The Victory Investment Quality Bond Fund

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<PAGE>

Shares are sold at the public offering price based on the net asset value that
is next determined after the Transfer Agent receives the purchase order. In most
cases, to receive that day's offering price, the Transfer Agent must receive
your order as of the close of regular trading of the New York Stock Exchange
("NYSE") (normally 4:00 p.m. Eastern time) (the "Valuation Time") on each
Business Day (as defined in "Shareholder Account Rules and Policies -- Share
Price"). If you buy shares through an Investment Professional, the Investment
Professional must receive your order in a timely fashion on a regular Business
Day and transmit it to the Transfer Agent so that it is received before the
close of business that day. The Transfer Agent may reject any purchase order for
the Fund's shares, in its sole discretion. It is the responsibility of your
Investment Professional to transmit your order to purchase shares to the
Transfer Agent in a timely fashion in order for you to receive that day's share
price.

INVESTMENT REQUIREMENTS

SALES CHARGE SALES CHARGE DEALER
AS A % OF AS A % OF REALLOWANCE
OFFERING NET AMOUNT AS A % OF
PRICE INVESTED OFFERING PRICE

AMOUNT OF PURCHASE
Less than $49,999 ......................4.75% 4.99% 4.00%
$50,000 to $99,999 ......................4.50% 4.71% 4.00%
$100,000 to $249,999 ....................3.50% 3.63% 3.00%
$250,000 to $499,999 ....................2.25% 2.30% 2.00%
$500,000 to $999,999 ....................1.75% 1.78% 1.50%
$1,000,000 and above ....................0.00% 0.00% (1)

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25%
on such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

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<PAGE>

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

O RIGHT OF ACCUMULATION AND CONCURRENT PURCHASES. A shareholder may qualify for
a reduced sales charge on purchases of shares of the Fund and other funds of the
Victory Portfolios, by combining a current purchase with

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<PAGE>

O WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to the
following categories of persons (which categories may be changed or eliminated
at any time):

(2) Investors who purchase shares for trust, investment management or certain
other advisory accounts established with KeyCorp or any of its affiliates;

(5) Shareholders of the former Investors Preference Fund For Income, Inc. and
the Investors Preference New York Tax-Free Fund, Inc. who have continuously
maintained accounts with a fund or funds of the Victory Group with a
balance of $250,000 or more (investors with less than $250,000 will pay any
applicable sales charges); and

(6) Investment advisers or financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; and clients of such investment
advisers or financial planners who place trades for their own accounts if
the accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker or agent. Such
accounts include retirement and deferred compensation plans and trusts used
to fund those plans, including, but not limited to, those defined in
section 401(a), 403(b), or 457 of the Internal Revenue Code and "rabbi
trusts."

SPECIAL INVESTOR SERVICES

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<PAGE>

sure that all owners sign. You must first meet the Fund's initial investment
requirement of $500, then investments may be made monthly by automatically
deducting $25 or more from your bank checking account. For officers, trustees,
directors and employees, including retired directors and employees, of the
Victory Group, KeyCorp and its affiliates, and the Administrator and its
affiliates (and family members of each of the foregoing) who participate in the
Systematic Investment Plan, there is no minimum initial investment required. You
may change the amount of your monthly purchase at any time. Your bank checking
account will be debited on the date indicated on your Account Application.
Shares will be purchased at the offering price next determined following receipt
of the order by the Transfer Agent. You may cancel the Systematic Investment
Plan at any time without payment of a cancellation fee. Your monthly account
statement will reflect systematic investment transactions, and a debit entry
will appear on your bank statement.

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

O TELEPHONE TRANSACTIONS. You can initiate most transactions by telephone. You
may call the Transfer Agent toll-free at 800-539-3863 or call your Investment
Professional or bank trust department. Telephone transaction privileges for
purchases, exchanges or redemptions may be modified, suspended or terminated by
the Fund at any time. If an account has more than one owner, the Fund and the
Transfer Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer representative of
record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

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<PAGE>

plans let you invest for retirement and shelter your investment income from
current taxes. Plans include Individual Retirement Accounts ("IRAs") and
Rollover IRAs. Other fees may be charged by the IRA custodian or trustee.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in your
state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you purchase
by exchange.

(5) The registration and tax identification numbers of the two accounts must be
identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH TO
PURCHASE BY EXCHANGE.

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange shares of
this Fund only for Class A shares of another fund, as funds having only one
class of shares are deemed to be "Class A" shares for exchange purposes. At
present, not all of the funds offer the same two classes of shares. Certain
funds offer Class A or Class B shares and a list can be obtained by calling the
Transfer Agent at 800-539-3863. In some cases, sales charges may be imposed on
exchange transactions. Please refer to the Statement of Additional Information
for more details about this policy.

Telephone exchange requests may be made either by calling your Investment
Professional or the Transfer Agent at 800-539-3863 prior to the Valuation Time
(normally 4:00 p.m. Eastern time) on any Business Day. (See "Shareholder Account
Rules and Policies -- Share Price").

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally 4:00 p.m., Eastern
time) that is in proper form, but either fund may delay the issuance of shares
of the fund into which you are exchanging if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might create excessive turnover in the Fund's portfolio and associated
expenses disadvantageous to the Fund.

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<PAGE>

otherwise have the potential to disadvantage the Fund or to refuse multiple
exchange requests submitted by a shareholder or dealer.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business. (See the definition of "Business Day" under "Shareholder Account
Rules and Policies -- Share Price"). Shares will be redeemed at the NAV next
calculated after the Transfer Agent has received the redemption request. If the
Fund account is closed, any accrued dividends will be paid at the beginning of
the following month.

You may redeem shares in several ways:

O BY MAIL. Send a written request to:

The Victory Investment Quality Bond Fund
Primary Funds Service Corporation

P.O. Box 9741
Providence, RI 02940-9741

Write a "letter of instruction" with your name, the Fund's name, your Fund
account number, the dollar amount or number of shares to be redeemed, and any
additional requirements that apply to each particular account. You will need the
letter of instruction signed by all persons required to sign for transactions,
exactly as their names appear on the Account Application. A signature guarantee
is required if: you wish to redeem more than $10,000 worth of shares; your Fund
account registration has changed within the last 60 days; the check is not being
mailed to the address on your account; the check is not being made out to the
account owner; or if the redemption proceeds are being transferred to another
Victory Group account with a different registration. The following institutions
should be able to provide you with a signature guarantee: banks, brokers,
dealers, credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature guarantee
may not be provided by a notary public. A signature guarantee is designed to
protect you, the Fund, and its agents from fraud. The Transfer Agent reserves
the right to reject any signature guarantee if (1) it has reason to believe that
the signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

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<PAGE>

at any time by sending a letter of instruction with a signature guarantee to the
Transfer Agent, Primary Funds Service Corporation, P.O. Box 9741, Providence, RI
02940-9741.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The NAV is calculated by adding the value of all the Fund's
investments, plus cash and other assets, deducting liabilities of the Fund, and
then dividing the result by the number of shares outstanding. The NAV of the
Fund is determined and its shares are priced as of the close of regular trading
of the NYSE (normally 4:00 p.m., Eastern time) (the "Valuation Time") 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 its 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 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 and Christmas .

- 20 -

<PAGE>

o Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form . From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

o The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

o Payment for redeemed shares is made ordinarily in cash and forwarded by check
within three business days after the Transfer Agent receives redemption
instructions in proper form, except under unusual circumstances determined by
the Commission delaying or suspending such payments. The Transfer Agent may
delay forwarding a check for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 15 days from the date
the shares were purchased. That delay may be avoided if you arrange with your
bank to provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.

o "Backup Withholding" of Federal income tax may be applied at the rate of 31%
from dividends, distributions and redemption proceeds (including exchanges) if
you fail to furnish the Victory Portfolios with a certified Social Security or
taxpayer identification number when you sign your Account Application or if you
violate Internal Revenue Service regulations on tax reporting of dividends.

o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

o The Distributor, at its expense, may also provide additional cash compensation
to dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is 4.00% of the offering price. In
addition, the Distributor may, from time to time and at its own expense, provide
compensation, including financial assistance, to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns regarding one or more Victory Portfolios and/or
other dealer-sponsored special events including payment for travel expenses,
including lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Compensation
will include the following types of non-cash compensation offered through sales
contests: (1) vacation trips including the provision of travel arrangements and
lodging; (2) tickets for entertainment events (such as concerts, cruises and
sporting events) and (3) merchandise (such as clothing, trophies, clocks and
pens). Dealers may not use sales of the Fund's shares to qualify for this
compensation if prohibited by the laws of any state or any self-regulatory
organization, such as the

- 21 -

KL2:129878.1

<PAGE>

National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at the NAV as
of the day after the record date, and have your income dividends paid in
cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain dividends,
or only capital gain dividends, automatically reinvested in shares of
another fund of the Victory Group. Shares will be purchased at the NAV as
of the day after the record date. If you are reinvesting dividends of a
fund sold without a sales charge in shares of a fund sold with a sales
charge, the shares will be purchased at the public offering price. If you
are reinvesting dividends of a fund sold with a sales charge in shares of a
fund sold with or without a sales charge, the shares will be purchased at
the net asset value of the fund. Dividend distributions can be directed
only to an existing account with a registration that is identical to that
of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital gain
dividends, or only your income dividends, automatically transferred to your
bank checking or savings account. The amount will be determined on the
dividend record date and will normally be transferred to your account
within 7 days of the dividend record date. Dividend distributions can be
directed only to an existing account with a registration that is identical
to that of your Fund account. Please call or write the Transfer Agent to
learn more about this dividend distribution option.

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<PAGE>

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

At least twice a year, you will receive the Fund's financial reports.

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares.
Distributions received by shareholders of the Fund in January of a given year
will be treated as received on December 31 of the preceding year provided that
they were declared to shareholders of record on a date in October, November, or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

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<PAGE>

REDEMPTIONS OR EXCHANGES

O OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws in the shareholder's jurisdiction. Some states exempt mutual fund dividends
derived from U.S. Government obligations (distinct from state and local bonds)
from their state and local income taxes. However, some states do not provide
this benefit (e.g., Pennsylvania) and other states may limit it (e.g., New York,
which generally requires at least 50% of a fund's total assets to be invested in
such obligations for the exemption to apply). In addition, certain types of
securities, such as repurchase agreements and certain agency-backed securities,
may not qualify for this U.S. Government interest exemption. Some states may
impose intangible property taxes. Shareholders will be notified annually of the
extent to which the Fund's ordinary income dividends were derived from U.S.
Government obligations. INVESTORS CONSIDERING AN INVESTMENT IN THE FUND SHOULD
CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS SUITABLE TO THEIR
PARTICULAR TAX SITUATIONS.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

PERFORMANCE

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<PAGE>

rankings such as those prepared by Dow Jones & Co., Inc. and Standard & Poor's
Corporation, in publications issued by Lipper Analytical Services, Inc., and in
the following publications: IBC's Money Fund Reports, Value Line Mutual Fund
Survey, 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 and local newspapers. In addition,
general information about the Fund that appears in publications such as those
mentioned above may also be quoted or reproduced in advertisements, sales
literature or in reports to shareholders.

Additional information regarding the performance of each fund of the Victory
Portfolios is included in the Victory Portfolios' annual report and semi-annual
reports, which are available free of charge by calling 800-539-3863.

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust,
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996 the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

For the services provided and expenses incurred pursuant to the investment
advisory agreement between the Victory Portfolios respecting the Fund, Key
Advisers is entitled to receive a fee, computed

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<PAGE>

daily and paid monthly, at an annual rate of seventy- five one-hundredths of one
percent (.75%) of the average daily net assets of the Fund. The advisory fees
for the Fund have been determined to be fair and reasonable in light of the
services provided to the Fund. Key Advisers may periodically waive all or a
portion of its advisory fee with respect to the Fund . Prior to January , 1996,
Society Asset Management, Inc. served as investment adviser to the Fund. During
the Fund's fiscal period ended October 31, 1995, Society Asset Management, Inc.
earned investment advisory fees aggregating .52% of the average daily net assets
of the Fund.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
sub-advisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

For its services under the investment sub-advisory agreement, Key Advisers pays
the Sub-Adviser sub-advisory fees at an annual rate as a percentage of the
Fund's average daily net assets as follows: .40% of the first $10 million of
average daily net assets; .30% of the next $15 million of average daily net
assets; .25% of the next $25 million of average daily net assets; and .20% of
average daily net assets in excess of $50 million.

The person primarily responsible for the investment management of the Fund, as
well as his previous experience, is as follows:

PORTFOLIO MANAGING PREVIOUS
MANAGER PORTFOLIO SINCE EXPERIENCE

Richard T. Heine Commencement Vice President and Portfolio
of Operations Manager for Society Asset
Management, Inc. beginning in
1993; Vice President and
Portfolio Manager for Society
National Bank since 1992; with
Ameritrust Company National
Association from 1973 to 1992.

EFFECT OF BANKING LAWS

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<PAGE>

of its shares, and from issuing, underwriting, selling or distributing
securities in general. Such laws and regulations do not prohibit such a holding
company or affiliate from acting as investment adviser, transfer agent,
custodian or shareholder servicing agent to such an investment company or from
purchasing shares of such a company as agent for and upon the order of their
customers, nor should they prevent Key Advisers, the Sub-Adviser or the Fund
from compensating third parties for performing such functions. Key Advisers, the
Sub-Adviser and their affiliates are subject to such banking laws and
regulations.

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

Victory Broker-Dealer Services, Inc. sells shares of the Fund as agent on behalf
of the Victory Portfolio at no cost to the Fund. Key Advisers and the
Sub-Adviser neither participate in nor are responsible for the underwriting of
Fund shares.

TRANSFER AGENT

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<PAGE>

SHAREHOLDER SERVICING PLAN

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Victory Portfolios' Board of Trustees, recordkeeping services, services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory , compliance , and other administrative and support
services.

EXPENSES

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<PAGE>

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were 1.10% of the Fund's average net assets, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts , the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not so held
in trust. The trustee will forward to these shareholders all communications
received by the trustee, including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust . Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have each adopted a
Code of Ethics (the "Codes") which requires investment personnel (a) to
pre-clear all personal securities transactions, (b) to file reports regarding
such transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub-Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

DELAWARE LAW

The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of personal liability
extended to stockholders of Delaware corporations and the Trust Instrument
provides that shareholders will not be personally liable for liabilities of the
Victory Portfolios. In light of Delaware law, the nature of the Victory
Portfolios' business, and the nature of its assets, management of Victory
Portfolios believe that the risk of personal liability to a Fund shareholder
would be extremely remote.

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<PAGE>

request, the Victory Portfolios will defend any claim made and pay any judgment
against a shareholder for any act or obligation of the Victory Portfolios.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Victory Portfolios itself cannot meet its obligations to indemnify
shareholders and pay judgments against them.

MISCELLANEOUS

Shareholders will receive Semi-Annual Reports, which are unaudited, and Annual
Reports, which are audited by independent public accountants ( "Reports"),
describing the investment operations of the Fund. Each of these Reports, when
available for a particular fiscal year end or the end of a semi-annual period,
is incorporated herein by reference. The Victory Portfolios may include
information in their Reports to shareholders that (a) describes general economic
trends, (b) describes general trends within the financial services industry or
the mutual fund industry, (c) describes past or anticipated portfolio holdings
for the Fund or (d) describes investment management strategies for the Victory
Portfolios. Such information is provided to inform shareholders of the
activities of the Victory Portfolios for the most recent fiscal year or
semi-annual period and to provide the views of Key Advisers, the Sub-Adviser
and/or the Victory Portfolios' officers regarding expected trends and
strategies.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

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<PAGE>

THE
VICTORY
PORTFOLIOS
LIMITED TERM INCOME FUND

PROSPECTUS For current yield, purchase, and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the LIMITED TERM INCOME FUND (the "Fund"), a diversified
portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment adviser to the Fund ("Key Advisers" or
the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"SubAdviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund seeks to provide income consistent with limited fluctuation of
principal. The Fund pursues this objective by investing in a portfolio of high
grade, fixed income securities with a dollar-weighted average maturity of one to
five years, based on remaining maturities.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP BANK,
ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses........................................................2
Financial Highlights.................................................3
Investment Objective............................................... 4
Investment Policies and Risk Factors............................... 4
How to Invest, Exchange and Redeem...................................9
Dividends, Distributions and Taxes..................................15
Performance.........................................................17
Fund Organization and Fees..........................................17
Additional Information..............................................20

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<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases (as a
percentage of the offering price)................................2.00%
Maximum Sales Charge Imposed on Reinvested Dividends.............none
Deferred Sales Charge............................................none
Redemption Fees...................................................none
Exchange Fee......................................................none

ANNUAL FUND OPERATING EXPENSES (as a percentage of average daily net assets)

Management Fees................................................ 50%
Administration Fees........................................... 15%
Other Expenses(2)............................................. 21%
Total Fund Operating Expenses(2)............................... 86%

(1) Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent, including affiliated banks and non-bank
affiliates of Key Advisers and KeyCorp. (See "How to Invest, Exchange and
Redeem.")

(2) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay (see "Fund Organization and Fees - Shareholder
Servicing Plan").

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Limited Term Income Fund................ $29 $47 $67 $124

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

-3-

<PAGE>

FINANCIAL HIGHLIGHTS

THE VICTORY LIMITED TERM INCOME FUND

OCTOBER 20,
1989 TO
YEAR ENDED OCTOBER 31, OCTOBER 31,
1995(A) 1994 1993 1992 1991 1990 1989(d)
---- ---- ---- ---- ---- ---- ------

NET ASSET VALUE, BEGINNING
<S> <C> <C> <C> <C> <C> <C> <C>
OF PERIOD $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02 $ 10.04 $ 10.00
---- ----- ----- ----- ----- ----- -----
Investment Activities
Net investment income 0.57 0.54 0.57 0.64 0.73 0.76 0.02
Net realized and unrealized
gains (losses) from
investments 0.27 (0.61) 0.08 0.13 0.31 (0.01) 0.02
------- ------- ------- -------- ------- ------- -------
Total from Investment
Activities 0.84 (0.07) 0.65 0.77 1.04 0.75 0.04
------- ------- ------- -------- ------- ------- -------
Distributions
Net investment income (0.57) (0.54) (0.57) (0.64) (0.73) (0.77)
Net realized gains (0.04) (0.01)
------- ------- ------- --------
Total Distributions (0.57) (0.58) (0.57) (0.65) (0.73) (0.77)
-------- ------- ------- -------- ------- -------
NET ASSET VALUE, END
OF PERIOD $ 10.15 $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02 $ 10.04
======== ======= ======= ======== ======= ======= =======
Total Return (Excludes
Sales Charge) 8.77% (0.66%) 6.39% 7.77% 10.82% 7.75% 0.40%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of
Period (000) $172,002 $79,150 $81,771 $55,565 $43,763 $31,303 $29,834
Ratio of expenses to
average net assets 0.78% 0.79% 0.77% 0.78% 0.80% 0.82% 0.64%(b)
Ratio of net investment
income to average
net assets 5.77% 5.29% 5.49% 6.18% 7.20% 7.63% 7.56%(b)
Ratio of expenses to
average net assets (c) 0.79% 0.97% 0.78%
Ratio of net investment
income to average
net assets (c) 5.76% 5.10% 5.48%
Portfolio turnover 97.25% 41.26% 50.27% 14.97% 9.79%

</TABLE>

- ----------

(a) Effective June 5, 1995, the Victory Short-Term Government Income
Portfolio merged into the Limited Term Income Fund. Financial
highlights for the periods prior to June 5, 1995 represent the Limited
Term Income Fund.

(b) Annualized.

(c) During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.

(d) Period from commencement of operations.

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<PAGE>

INVESTMENT OBJECTIVE

The investment objective of the Fund is to seek to provide income consistent
with limited fluctuation of principal. The investment objective of the Fund is
fundamental and may not be changed without a vote of the holders of a majority
of its outstanding voting securities (as defined in the Statement of Additional
Information). There can be no assurance that the Fund will achieve its
investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund will invest in a portfolio of high grade, fixed income securities with
a dollar-weighted average maturity of one to five years, based upon remaining
maturities.

While the Fund cannot guarantee that it will maintain a stable net asset value,
its investments will be consistent with the preservation of principal. The Fund
will normally invest in debt securities such as corporate bonds, debentures and
notes, equipment lease and trust certificates, collateralized mortgage
obligations, obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, and fixed-income securities convertible into, or
exchangeable for, common stocks, as well as repurchase agreements collateralized
by such instruments. In addition, a portion of the Fund may from time to time be
invested in first mortgage loans, income participation loans, and participation
certificates in pools of mortgages, all of which are issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, or debt securities backed
by pools of automobile or other commercial or consumer finance loans
("asset-backed securities," as further described below). Some of the securities
in which the Fund invests may have warrants or options attached.

The Fund will invest only in those debt securities which are rated at the time
of purchase in one of the three highest rating groups assigned by a nationally
recognized statistical ratings organization ("NRSRO") or, if unrated, which Key
Advisers or the Sub-Adviser deems to be of comparable quality. For a description
of such NRSROs, see the Appendix to the Statement of Additional Information.

Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.
Because the Fund invests primarily in debt securities, which fluctuate in value,
the Fund's shares will fluctuate in value.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

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<PAGE>

approximately one year or more, debentures, mortgage-related securities,
stripped government securities and zero coupon obligations. Bonds, notes and
debentures in which the Fund may invest may differ in interest rates, maturities
and times of issuance. The market value of the Fund's fixed income investments
will change in response to interest rate changes and other factors. During
periods of falling interest rates, the values of outstanding fixed income
securities generally rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Moreover, while securities with
longer maturities tend to produce higher yields, the price of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the rating of any
fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Except under
conditions of default, changes in the value of Fund securities will not affect
cash income derived from these securities but will affect the Fund's net asset
value.

o ZERO COUPON BONDS. The Fund is permitted to purchase zero coupon U.S.
Government securities ("Zero Coupon Bonds"). Zero Coupon Bonds are purchased at
a discount from the face amount because the buyer receives only the right to a
fixed payment on a certain date in the future and does not receive any periodic
interest payments. The effect of owning instruments which do not make current
interest payments is that a fixed yield is earned not only on the original
investment but also, in effect, on accretion during the life of the obligations.
This implicit reinvestment of earnings at the same rate eliminates the risk of
being unable to reinvest distributions at a rate as high as the implicit yields
on the Zero Coupon Bond, but at the same time eliminates the holder's ability to
reinvest at higher rates . For this reason, Zero Coupon Bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are comparable securities which pay interest periodically.
The amount of price fluctuation tends to increase as maturity of the security
increase.

O SHORT-TERM OBLIGATIONS. There may be times when, in Key Advisers' or the
Sub-Adviser's opinion market conditions warrant that, for temporary defensive
purposes, the Fund may hold more than 20% of its total assets in short-term
obligations. To the extent that the Fund's assets are so invested, they will not
be invested so as to meet its investment objective. The instruments may include
"High Quality" liquid debt securities such as commercial paper, certificates of
deposit, bankers' acceptances, repurchase agreements which mature in less than
seven days and United States Treasury Bills. Bankers' acceptances are
instruments of United States banks which are drafts or bills of exchange
"accepted" by a bank or trust company as an obligation to pay on maturity. See
"Repurchase Agreements".

O FOREIGN SECURITIES. The Fund may invest in equity securities of foreign
issuers, including securities traded in the form of American Depository
Receipts. The Fund will limit its investments in such securities to 20% of its
total assets. The Fund will not hold foreign currency as a result of investment
in foreign securities.

-6-

<PAGE>

Securities of some foreign companies are less liquid, and their prices more
volatile, than securities of comparable U.S. companies. Settlement of
transactions in some foreign markets may be delayed or may be less frequent than
in the U.S., which could affect the liquidity of the Fund's investment. In
addition, with respect to some foreign countries, there is the possibility of
nationalization, expropriation or confiscatory taxation; limitations on the
removal of securities, property or other assets of the Fund; political or social
instability; increased difficulty in obtaining legal judgments; or diplomatic
developments which could affect U.S. investments in those countries. Key
Advisers or the Sub-Adviser will take such factors into consideration in
managing the Fund's investments.

o ASSET-BACKED SECURITIES. These are debt securities backed by pools of
automobile or other commercial or consumer finance loans. The collateral backing
asset-backed securities cannot be foreclosed upon. These issues are normally
traded over-the-counter and typically have a short to intermediate maturity
structure, depending on the paydown characteristics of the underlying financial
assets which are passed through to the security holder.

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. The Fund will limit its investment in such instrument to
20% of its total assets.

-7-

<PAGE>

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 backed by pools of FHA-insured or VA-guaranteed
mortgages.

-8-

<PAGE>

the policies. The Fund may buy mortgage-related securities without insurance or
guarantees if, through an examination of the loan experience and practices of
the poolers, Key Advisers or the Sub-Adviser determines that the securities meet
the Fund's quality standards. Although the market for such securities is
becoming increasingly liquid, securities issued by certain private organizations
may not be readily marketable. The Fund will not purchase mortgage-related
securities or any other assets which in the opinion of Key Advisers or the
Sub-Adviser are illiquid if, as a result, more than 15% of the value of the
Fund's net assets will be invested in illiquid securities.

The Fund may purchase mortgage-related securities with stated maturities in
excess of 10 years. Mortgage-related securities include CMOs and participation
certificates in pools of mortgages. The average life of mortgage-related
securities varies with the maturities of the underlying mortgage instruments,
which have maximum maturities of 40 years. The average life is likely to be
substantially less than the original maturity of the mortgage pools underlying
the securities as the result of mortgage prepayments. The rate of such
prepayments, and hence the average life of the certificates, will be a function
of current market interest rates and current conditions in the relevant housing
markets. The impact of prepayment of mortgages is described under "Government
Mortgage-Backed Securities". Estimated average life will be determined by Key
Advisers or the Sub-Adviser. Various independent mortgage-related securities
dealers publish estimated average life data using proprietary models, and in
making such determinations, Key Advisers or the Sub-Adviser will rely on such
data except to the extent such data are deemed unreliable by Key Advisers or the
Sub-Adviser. Key Advisers or the Sub- Adviser might deem data unreliable which
appeared to present a significantly different estimated average life for a
security than data relating to the estimated average life of comparable
securities as provided by other independent mortgage-related securities dealers.

o SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities. The Fund must receive collateral
equal to 100% of the securities' value in the form of cash or U.S. Government
securities, plus any interest due, which collateral must be marked to market
daily by Key Advisers or the Sub-Adviser. 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 pays the
Fund amounts equal to any dividends or interest paid on such securities plus any
interest negotiated between the parties to the lending agreement. Loans are
subject to termination by the Fund or the borrower at any time. While the Fund
does not have the right to vote securities on loan, the Fund intends to
terminate any loan and regain the right to vote if that is considered important
with respect to the Fund's 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' Board of Trustees (the "Trustees"). The Fund will
limit its securities lending to 331/3% of total assets.

-9-

<PAGE>

o VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase investment grade
variable and floating rate notes. "Investment grade" obligations are those rated
at the time of purchase within the four highest rating categories assigned by an
NRSRO or, if unrated, are obligations that Key Advisers or the SubAdviser
determine to be of comparable quality. The interest rates on these securities
may be reset daily, weekly, quarterly, or some other reset period, and may be
subject to a floor or ceiling. There is a risk that the current interest rate on
such obligations may not accurately reflect existing market interest rates.
There may be no active secondary market with respect to a particular variable or
floating rate note. Variable and floating rate notes for which no readily
available market exists will be purchased in an amount which, together with
other illiquid securities held by the Fund, does not exceed 15% of the Fund's
net assets unless such notes are subject to a demand feature that will permit
the Fund to receive payment of the principal within seven days after demand
therefor. These securities are included among those which are sometimes referred
to as "derivative securities."

-10-

<PAGE>

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 holding such obligation 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 was delayed pending court action.

o INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and, to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
SubAdviser will waive its investment advisory fees 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, to the extent such fees are not
waived by Key Advisers or the Sub-Adviser.

o PRIVATE PLACEMENT INVESTMENTS. The Fund may invest in high quality commercial
paper issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act"). Section 4(2)
commercial paper ("Commercial Paper") is generally sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Commercial Paper is normally
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in Commercial
Paper, thus providing liquidity. The Fund believes that Commercial Paper and
possibly certain other Restricted Securities as defined in the Statement of
Additional Information that meet the criteria for liquidity established by the
Trustees are quite liquid. The Fund intends, therefore, to treat the restricted
securities that meet the criteria for liquidity established by the Trustees,
including Commercial Paper, as determined by Key Advisers or the Sub-Adviser, as
liquid and not subject to the investment limitation applicable to illiquid
securities. See "Investment Limitations" below.

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal year ended October 31, 1995, the
portfolio turnover rate was 97.25% compared to 41.26% in the prior fiscal year.

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<PAGE>

INVESTMENT LIMITATIONS

The investment policy described above pertaining to borrowing is fundamental,
while the investment policy pertaining to illiquid securities is
non-fundamental. Non-fundamental limitations may be changed without shareholder
approval. Whenever an investment policy or limitation states a maximum
percentage of the Fund's assets that may be invested, such percentage limitation
will be determined immediately after and as a result of the investment and any
subsequent changes in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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). If the value of the Fund's 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 Trustees will consider
what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

-12-

<PAGE>

The minimum investment is $500 ($250 for Individual Retirement Accounts) for the
initial purchase and $25 thereafter. Accounts set up through a bank trust
department or an Investment Professional may be subject to different minimums.

o INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. An "Investment Professional"
is a salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets. Your
Investment Professional will place your order with the Transfer Agent (see "Fund
Organization and Fees - Transfer Agent") on your behalf. You may be required to
establish a brokerage or agency account. Your Investment Professional will
inform you whether subsequent trades should be directed to the Investment
Professional or directly to the Fund's Transfer Agent. Accounts established with
Investment Professionals may have different features, requirements and fees. In
addition, Investment Professionals may charge for their services. Information
regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone through your Investment Professional.
Subsequent investments by telephone may be made directly. See "Special Investor
Services" for more information about telephone transactions.

Contact your bank trust department for instructions.

INVESTING DIRECTLY

The Victory Limited Term Income Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

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<PAGE>

Boston Safe Deposit & Trust Co.

ABA #011001234
Credit PFSC DDA#16-918-8
The Victory Limited Term Income Fund

Shares are sold at the public offering price based on the net asset value that
is next determined after the Transfer Agent receives the purchase order. In most
cases, to receive that day's offering price, the Transfer Agent must receive
your order as of the close of regular trading of the New York Stock Exchange
("NYSE") (normally 4:00 p.m. Eastern time) (the "Valuation Time") on each
Business Day (as defined in "Shareholder Account Rules and Policies -- Share
Price"). If you buy shares through an Investment Professional, the Investment
Professional must receive your order in a timely fashion on a regular Business
Day and transmit it to the Transfer Agent so that it is received before the
close of business that day. The Transfer Agent may reject any purchase order for
the Fund's shares, in its sole discretion. It is the responsibility of your
Investment Professional to transmit your order to purchase shares to the
Transfer Agent in a timely fashion in order for you to receive that day's share
price.

INVESTMENT REQUIREMENTS

SALES CHARGE SALES DEALER
AS A % OF AS A % OF REALLOWANCE
OFFERING NET AMOUNT AS A % OF
PRICE INVESTED OFFERING PRICE

AMOUNT OF PURCHASE
REALLOWANCE

$0-$49,999 2.00% 2.04% 1.50%
$50,000-$99,999 1.75% 1.78% 1.25%
$100,000-$249,999 1.50% 1.52% 1.00%
$250,000-$499,999 1.25% 1.27% 0.75%
$500,000-$999,999 1.00% 1.01% 0.50%
$1,000,000 and above 0.00% 0.00% (1)

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<PAGE>

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25% on
such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

A Letter of Intent is not a binding obligation upon the investor to purchase the
full amount indicated. The minimum initial investment under a Letter of Intent
is 5% of the total amount. Shares purchased with the first 5% of such amount
will be held in escrow (while remaining registered in the name of the investor)
to secure payment of the higher sales charge applicable to the shares actually
purchased if the full amount indicated is not purchased, and such escrowed
shares will be involuntarily redeemed to pay the additional sales charge, if
necessary.
Dividends (if any) on escrowed shares, whether paid in cash or reinvested in
additional shares, are not subject to escrow. The escrowed shares will not be
available for redemption, exchange or other disposal by the investor until all
purchases pursuant to the Letter of Intent have been made or the higher sales
charge has been paid. When the full amount indicated has been purchased, the
escrow will be released. A Letter of Intent may include purchases of shares made
not more than 90 days prior to the date the investor signs a Letter of Intent;
however, the 13-month period during which the Letter of Intent is in effect will
begin on the date of the earliest purchase to be included. An investor may
combine purchases that are made in an individual capacity with (1) purchases
that are made by members of the investor's immediate family and (2) purchases
made by businesses that the investor owns as sole proprietorships, for purposes
of obtaining reduced sales charges by means of a written Letter of Intent. In
order to accomplish this, however, investors must designate on the Account
Application the accounts that are to be combined for this purpose. Investors can
only designate accounts that are open at the time the Letter of Intent is
executed.

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<PAGE>

O WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to the
following categories of persons (which categories may be changed or

eliminated at any time):

(1) Current or retired Trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an "Affiliated
Provider " ("Affiliated Providers" refer to affiliates and subsidiaries of
KeyCorp and service providers to the Victory Portfolios and the Victory
Shares (collectively, the "Victory Group")), dealers having an agreement
with the Distributor and any trade organization to which Key Advisers, the
Sub -Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or certain
other advisory accounts established with KeyCorp or any of its affiliates;

(5) Shareholders of the former Investors Preference Fund For Income, Inc. and
the Investors Preference New York Tax-Free Fund, Inc. who have continuously
maintained accounts with a fund or funds of the Victory Group with a
balance of $250,000 or more (investors with less than $250,000 will pay any
applicable sales loads); and

(6) Investment advisers or financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; and clients of such investment
advisers or financial planners who place trades for their own accounts if
the accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker or agent. Such
accounts include retirement and deferred compensation plans and

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<PAGE>

trusts used to fund those plans, including, but not limited to, those
described in section 401(a), 403(b), or 457 of the Internal Revenue
Code and "rabbi trusts."

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

O TELEPHONE TRANSACTIONS. You can initiate most transactions by telephone. You
may call the Transfer Agent toll-free at 800-539-3863 or call your Investment
Professional or bank trust department. Telephone transaction privileges for
purchases, exchanges or redemptions may be modified, suspended or terminated by
the Fund at any time. If an account has more than one owner, the Fund and the
Transfer Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer representative of
record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

-17-

<PAGE>

communicated by telephone are genuine and if they do not employ reasonable
procedures they may be liable for any losses due to unauthorized or fraudulent
instructions. The identification procedures may include, but are not limited to,
the following: account number, registration and address, personalized security
codes, taxpayer identification number and other information particular to the
account. Your Investment Professional, bank trust department or the Transfer
Agent may also record calls, and you should verify the accuracy of your
confirmation statements immediately after you receive them.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in your
state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you purchase
by exchange.

(5) The registration and tax identification numbers of the two accounts must be
identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH TO
PURCHASE BY EXCHANGE.

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange shares of
this fund only for Class A shares of another, as the shares of a fund having
only one class of shares are deemed to be "Class A" shares for exchange
purposes. Certain funds offer Class A or Class B shares and a list can be
obtained by calling the Transfer Agent at 800-539-3863. In some cases, sales
charges may be imposed on exchange transactions. Please refer to the Statement
of Additional Information for more details about this policy.

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in
the exchange transaction on the same Business Day on which the Transfer
Agent

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<PAGE>

receives an exchange request by Valuation Time (normally as of 4:00 p.m.
Eastern time) that is in proper form, but either fund may delay the
issuance of shares of the fund into which you are exchanging if it
determines it would be disadvantaged by a same-day transfer of the proceeds
to buy shares. For example, the receipt of multiple exchange requests from
a dealer in a "market-timing" strategy might create excessive turnover in
the Fund's portfolio and associated expenses disadvantageous to the Fund.

o Because excessive trading can hurt fund performance and therefore harm
shareholders, the Victory Portfolios reserves the right to refuse any
exchange request that will impede the Fund's ability to invest effectively
or otherwise have the potential to disadvantage the Fund, or to refuse
multiple exchange requests submitted by a shareholder or dealer.

o The Victory Portfolios may amend, suspend or terminate the exchange
privilege at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of
a restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (See the definition of "Business Day" under "Shareholder Account
Rules and Policies"). Shares will be redeemed at the NAV next calculated after
the Transfer Agent has received the redemption request. If the Fund account is
closed, any accrued dividends will be paid at the beginning of the following
month.

You may redeem shares in several ways:

o BY MAIL. Send a written request to:

The Victory Limited Term Income Fund
Primary Funds Service Corporation

P.O. Box 9741
Providence, RI 02940-9741

Write a "letter of instruction" with your name, the Fund's name, your Fund
account number, the dollar amount or number of shares to be redeemed, and any
additional requirements that apply to each particular account. You will need the
letter of instruction signed by all persons required to sign for transactions,
exactly as their names appear on the Account Application. A signature guarantee
is required if: you wish to redeem more than $10,000 worth of shares; your Fund
account registration has changed within the last 60 days; the check is not being
mailed to the address on your account; the check is not being made out to the
account owner; or the redemption proceeds are being transferred to another
Victory Group account with a different registration. The following institutions
should be able to provide you with a signature guarantee: banks, brokers,
dealers, credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature guarantee
may not be provided by a notary public. A signature guarantee is designed to
protect you, the Fund, and its agents from fraud. The Transfer Agent reserves
the right to reject any signature guarantee if (1) it has reason to believe that
the signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor

-19-

<PAGE>

institution is a broker or dealer that is neither a member of a clearing
corporation nor maintains net capital of at least $100,000.

O BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before Valuation Time (normally 4:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of
instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

o ADDITIONAL REDEMPTION REQUIREMENTS. The Fund may hold payment on redemptions
until it is reasonably satisfied that investments made by check have been
collected, which can take up to 15 days. Also, when the New York Stock Exchange
("NYSE") is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closings, or under any emergency circumstances as
determined by the Commission to merit such action, the right of redemption may
be suspended or the date of payment postponed for a period of time that may
exceed 7 days. In addition, the Fund reserves the right to advance the time on
that day by which purchase and redemption orders must be received. To the extent
that portfolio securities are traded in other markets on days when the NYSE is
closed, the Fund's NAV may be affected on days when investors do not have access
to the Fund to purchase or redeem shares.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV ," means the value
of one share. The NAV of each class of shares is calculated by adding the value
of all the Fund's investments, plus cash and other assets, deducting liabilities
of the Fund, and then dividing the result by the number of shares of the class
outstanding. The NAV of the Fund is determined and its shares are priced as of
the close of regular trading of the NYSE (normally 4:00 p.m. Eastern time) (the
"Valuation Time") 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 its 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 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 and Christmas .

-20-

<PAGE>

o Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form . From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

o The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

-21-

<PAGE>

representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Compensation
will include the following types of non-cash compensation offered through sales
contests: (1) vacation trips including the provision of travel arrangements and
lodging; (2) tickets for entertainment events (such as concerts, cruises and
sporting events); and (3) merchandise (such as clothing, trophies, clocks and
pens). Dealers may not use sales of the Fund's shares to qualify for this
compensation if prohibited by the laws of any state or any self-regulatory
organization, such as the National Association of Securities Dealers, Inc. None
of the aforementioned compensation is paid for by the Fund or its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at the NAV as
of the day after record date, and have your income dividends paid in cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain dividends,
or only capital gain dividends, automatically reinvested in shares of
another fund of the Victory Group. Shares will be purchased at the NAV as
of the dividend record date. If you are reinvesting dividends of a fund
sold without a sales charge in shares of a fund sold with a sales charge,
the shares will be purchased at the public offering price. If you are
reinvesting dividends of a fund sold with a sales charge in shares of a
fund sold with or without a sales charge, the shares will be purchased at
the net asset value of the fund. Dividend distributions can be directed
only to an existing account with a registration that is identical to that
of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital gain
dividends, or only your income dividends, automatically transferred to your
bank checking or savings account. The amount will be determined on the
dividend record date and will normally be transferred to your account
within 7 days of the dividend record date. Dividend distributions can be
directed only to an existing account with a registration that is identical
to that of your Fund account. Please call or write the Transfer Agent to
learn more about this dividend distribution option.

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<PAGE>

800-539-3863, and will become effective with respect to dividends having record
dates after receipt of the Account Application or request by the Transfer Agent.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

o COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES

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<PAGE>

they were declared to shareholders of record on a date in October, November, or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

REDEMPTIONS OR EXCHANGES

O OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws in the shareholder's jurisdiction. Some states exempt mutual fund dividends
derived from U.S. Government obligations (distinct from state and local bonds)
from their state and local income taxes. However, some states do not provide
this benefit (e.g., Pennsylvania) and other states may limit it (e.g., New York,
which generally requires at least 50% of a fund's total assets to be invested in
such obligations for the exemption to apply). In addition, certain types of
securities, such as repurchase agreements and certain agency-backed securities,
may not qualify for this U.S. Government interest exemption. Some states may
impose intangible property taxes. Shareholders will be notified annually of the
extent to which the Fund's ordinary income dividends were derived from U.S.
Government obligations. INVESTORS CONSIDERING AN INVESTMENT IN THE FUND SHOULD
CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS SUITABLE TO THEIR
PARTICULAR TAX SITUATIONS.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

PERFORMANCE

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<PAGE>

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

-25-

<PAGE>

fees for the Fund have been determined to be fair and reasonable in light of the
services provided to the Fund. Key Advisers may periodically waive all or a
portion of its advisory fee with respect to the Fund . Prior to January 1, 1996,
Society Asset Management, Inc. served as investment adviser to the Fund. During
the Fund's fiscal period ended October 31, 1995, Society Asset Management, Inc.
earned investment advisory fees aggregating .49% of the average daily net assets
of the Fund.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
sub-advisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

The person primarily responsible for the investment management of the Fund, as
well as his previous experience, is as follows:

MANAGING
PORTFOLIO MANAGER PORTFOLIO SINCE PREVIOUS EXPERIENCE

Robert H. Fernald January, 1995 Vice President and Portfolio
Manager for Society Asset
Management, Inc., beginning
in 1993 ; Society National
Bank since 1992;
Portfolio Manager for
Ameritrust Company National
Association from
1991-1992 .

EFFECT OF BANKING LAWS

-26-

<PAGE>

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

The Victory Portfolios has adopted a Shareholder Servicing Plan for the Fund. In
accordance with the Shareholder Servicing Plan, the Fund may enter into
Shareholder Service Agreements under which the Fund pays fees of up to .25% of
the average daily net assets for fees incurred in connection with the personal
service and maintenance of accounts holding the shares of the Fund. Such
agreements are entered into between the Victory Portfolios and various
shareholder servicing agents, including the Distributor, Key Trust Company of
Ohio, N.A. and its affiliates, and other financial institutions and securities
brokers (each, a "Shareholder Servicing Agent"). Each Shareholder Servicing
Agent generally will provide support services to shareholders by establishing
and maintaining accounts and records, processing dividend and distribution
payments, providing account information, arranging for bank wires, responding to
routine inquires, forwarding shareholder communication, assisting in the
processing of purchase, exchange and redemption requests, and assisting
shareholders in changing dividend options, account designations and
addresses.Shareholder Servicing Agents may periodically waive all or a portion
of their respective shareholder servicing fees with respect to the Fund.

-27-

<PAGE>

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Victory Portfolios' Board of Trustees, recordkeeping services, services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory , compliance , and other administrative and support
services.

For such services, the Sub-Adviser pays fees to Key Advisers as follows: .25% on
the first $10 million of average daily net assets; .15% of the next $15 million
of average daily net assets; .10% of the next $25 million of average daily net
assets; and .05% of average daily net assets in excess of $50 million.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were 0.79% of the Fund's average net assets , excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently, there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts , the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not held in
trust. The trustee will forward to these shareholders all communications
received by the trustee, including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust. Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

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<PAGE>

Key Advisers, the Sub-Adviser and the Victory Portfolios have each adopted a
Code of Ethics (the "Codes") which requires investment personnel (a) to preclear
all personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub-Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

DELAWARE LAW

MISCELLANEOUS

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<PAGE>

the Sub-Adviser and/or the Victory Portfolios' officers regarding expected
trends and strategies.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

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<PAGE>
THE
VICTORY
PORTFOLIOS
NATIONAL MUNICIPAL BOND FUND

PROSPECTUS For current yield, purchase, and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the NATIONAL MUNICIPAL BOND FUND (the "Fund"), a
non-diversified fund. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment adviser to the Fund ("Key
Advisers" or the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"Sub-Adviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund seeks to provide a high level of current interest income exempt from
federal income tax, as is consistent with the preservation of capital.

The Fund offers two classes of shares: (1) Class A shares, which are offered at
net asset value plus the applicable sales charge (maximum of 4.75% of public
offering price) and (2) Class B shares, which are offered at net asset value
with a maximum contingent deferred sales charge ("CDSC") of 5.0% imposed on
certain redemptions. At the end of the sixth year after purchase , the CDSC will
no longer apply to redemptions. Class B shares have higher ongoing expenses than
Class A shares, but automatically convert to Class A shares eight years after
purchase.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP BANK,
ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

KL2:129880.1

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses.......................................................... 3
Financial Highlights..................................................... 5
Investment Objective..................................................... 6
Investment Policies and Risk Factors.....................................6
How to Invest, Exchange and Redeem..................................... 11
Dividends, Distributions and Taxes...................................... 22
Performance............................................................. 26
Fund Organization and Fees.............................................. 26
Additional Information.................................................. 30

- 2 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1).

CLASS A CLASS B

Maximum Sales Charge Imposed on
Purchases (as a percentage of
the offering price)..................... 4.75% none
Maximum Sales Charge Imposed on
Reinvested Dividends.................... none none
Deferred Sales Charge................... none 5% in the first
year, declining
to 1% in the
sixth year and
eliminated
thereafter

Redemption Fees....................... none none
Exchange Fee........................... none none

ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE WAIVERS AND REIMBURSEMENTS (as a
Percentage of Average Daily Net Assets)

CLASS A CLASS B

Management Fees(2)........................... 0.00% 0.00%
Administration Fees(2)....................... 0.00% 0.00%
Rule 12b-1 Distribution Fees............... 0.00% 0.75%
Other Expenses(3)............................ 0.00% 0.25%
---- ----
Total Fund Operating Expenses(2)(3)........ 0.00% 1.00%
==== ====

(1) Investors may be charged a fee if they effect transactions in Fund
shares through a broker or agent, including affiliated banks and non-
bank affiliates of Key Advisers and KeyCorp. (See "How to Invest,
Exchange and Redeem")

(2) The Adviser and the Administrator have agreed to reduce their fees for
the indefinite future and reimburse the Fund for these expenses. Absent
the voluntary reduction of investment advisory and administration fees,
"Management Fees" and "Administration Fees" as a percentage of average
daily net assets would be .55% and .15%, respectively.

(3) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay. (See "Fund Organization and Fees--Shareholder
Servicing Plan") Absent the voluntary reductions and reimbursements
referred to in footnote (2) above , "Total Fund Operating Expenses" as
a percentage of average daily net assets for Class A and Class B shares
would be .95% and 1.70%, respectively.

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period:

- 3 -

<PAGE>

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

National Municipal Bond Fund - Class A Shares.. $48 $48 $48 $48
National Municipal Bond Fund - Class B Shares.. $60 $62 $75 $94

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

- 4 -

<PAGE>

FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect to the
financial highlights for the Fund and its predecessor, a portfolio of The
Victory Funds (the "Predecessor Fund"), for the period indicated. The
information below has been derived from financial statements audited by Coopers
& Lybrand L.L.P. (for the fiscal period ended October 31, 1995) and by KPMG Peat
Marwick L.L.P. (for earlier periods), respectively, as independent auditors for
the Victory Portfolios, whose reports thereon, together with the financial
statements of the Fund and the Predecessor Fund , are incorporated by reference
into the Statement of Additional Information. No Class B shares were publicly
issued prior to September 26, 1994, and therefore no information on Class B
shares is reflected in the table below for periods prior to September 26, 1994.
The information set forth below is for a share outstanding for each period
indicated.

THE VICTORY NATIONAL MUNICIPAL BOND FUND

Class B Class A

Six Months September 26, Six Months February 3,
Ended 1994 to Ended Year Ended 1994 to
October 31, April 30, October 31, April 30, April 30,
1995(e) 1995(a)(d) 1995(e) 1995(d) 1994(a)(d)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.59 $ 9.53 $ 9.59 $ 9.64 $ 10.00
---- ---- ---- ---- -----

Investment Activities

Net investment income 0.20 0.28 0.24 0.44 0.08

Net realized and unrealized gains
(losses) from investments 0.47 0.05 0.46 (0.05) (0.36)
---- ---- ---- ------ ------

Total from Investment Activities 0.67 0.33 0.70 0.39 (0.28)

Distributions

Net investment income (0.19) (0.27) (0.23) (0.44) (0.08)
------ ------ ------ ------ ------

NET ASSET VALUE, END OF PERIOD $ 10.07 $ 9.59 $ 10.06 $ 9.59 $ 9.64

Total Return (excludes sales charges) 6.99%(b) 3.54%(b) 7.39%(b) 4.21% (2.82%)(b)

RATIOS/SUPPLEMENTAL DATA:

Net Assets, End of Period (000) $ 456 $ 147 $ 11,964 $ 5,118 $ 494

Ratio of expenses to average net assets 0.96%(c) (0.05%)(c) 0.02%(c) 0.20% 0.65%(c)

Ratio of net investment income (loss) to
average net assets 4.15%(c) 4.35%(c) 5.11%(c) 5.01% 3.15%(c)

Ratio of expenses to average net assets (f) 3.67%(c) 2.63%(c) 2.57%(c) 3.95% 26.10%(c)

Ratio of net investment income (loss) to
average net assets(f) 1.44%(c) 1.67%(c) 2.56%(c) 1.26% (22.30%)(c)

Portfolio turnover 72.46% 52.00% 72.46% 52.00% 13.00%
</TABLE>

(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by auditors other than Coopers & Lybrand L.L.P.
(e) Effective June 5, 1995, the Victory National Municipal Bond Portfolio became
the National Municipal Bond Fund.
(f) During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

- 5 -

<PAGE>

INVESTMENT OBJECTIVE

The Fund seeks to provide a high level of current interest income, exempt from
federal income taxes, as is consistent with the preservation of capital. The
investment objective of the Fund is fundamental and may not be changed without a
vote of the holders of a majority of its outstanding voting securities (as
defined in the Statement of Additional Information). There can be no assurance
that the Fund will achieve its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund invests primarily in municipal bonds of varying maturities issued by or
on behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies, authorities and
instrumentalities, the interest from which, in the opinion of bond counsel for
the issuer, is exempt from federal income tax. Key Advisers and the Sub-Adviser
anticipate that the Fund ordinarily will be fully invested in obligations of
municipalities whose interest is exempt from federal income tax; under normal
conditions, 80% or more of its income distributions will be exempt from federal
income taxes, including the alternative minimum tax. The ability of the Fund to
meet its investment objective is affected by the ability of municipal issuers to
meet their payment obligations.

The Fund is designed for investors in higher tax brackets seeking income free
from federal income taxes. By itself, the Fund does not constitute a balanced
investment plan; the Fund stresses tax-exempt income.

The Fund will invest in municipal securities judged by Key Advisers or the
Sub-Adviser to be the equivalent to those described by Standard & Poor's
Corporation ("S&P") and/or Moody's Investors Service, Inc. ("Moody's") as
characteristic of their ratings of A and above. The Fund may continue to hold up
to 5% of its total assets in municipal bonds which have been downgraded below an
A rating. For a description of S&P's and Moody's ratings of municipal
securities, see the Appendix to the Statement of Additional Information.

The Fund's share price, yield, and total return will fluctuate, and your
investment may be worth more or less than your original cost when you redeem
your shares. Share price volatility and investment return depend in part on
interest rate changes. The value of the Fund's shares will tend to decrease when
interest rates rise and increase when interest rates fall. Longer-term bonds
generally are more sensitive to interest rate changes (and therefore result in
greater volatility in value), but generally offer higher yields than
shorter-term bonds.

It is anticipated that the Fund will primarily be invested in municipal bonds so
that its dollar-weighted effective average maturity generally will range from
five to eleven years, although it may invest in obligations of any maturity. If
Key Advisers or the Sub-Adviser determines that market conditions warrant a
shorter or longer average maturity, the Fund will be adjusted accordingly.

Municipal securities are issued to raise money for various public purposes,
including general purpose financing for state and local governments as well as
financing for specific projects or public facilities. Municipal securities may
be backed by the full taxing power of a state or municipality (general
obligation bonds), or may be backed only by the revenues from a specific tax,
project or facility (revenue bonds). Some municipal securities are insured by
private insurance companies, while others may be supported by letters of credit
furnished by domestic or foreign banks. Key Advisers or the Sub-Adviser monitors
the financial condition of parties (including insurance companies, banks, and

- 6 -

<PAGE>

corporations) whose creditworthiness is relied upon in determining the credit
quality of securities the Fund may purchase.

Generally, the Fund's investments in municipal securities may include fixed,
variable, or floating rate general obligation and revenue bonds (including
municipal lease obligations and resource recovery bonds); zero coupon; tax,
revenue, and bond anticipation notes; and tax-exempt commercial paper. The Fund
may buy or sell municipal securities on a when-issued or delayed-delivery basis
(including refunding contracts). See "Additional Information Regarding the
Fund's Investments" for further discussion of the Fund's investments.

The Fund may temporarily change its investment focus for defensive purposes.
During periods when, in the opinion of Key Advisers or the Sub-Adviser, a
temporary defensive posture in the market is appropriate, the Fund may hold cash
that is not earning interest or invest in obligations of issuers whose interest
may be taxable at the state and/or federal level. The Fund may also invest in
short-term municipal obligations and money market instruments (including other
investment companies). Under such circumstances, the Fund may temporarily invest
so that less than 80% of its income distributions will be federally or state
tax-free. Federally taxable obligations include, but are not limited to,
obligations issued by the U.S. Government or any of its agencies or
instrumentalities and repurchase agreements. The Fund does not intend to invest
in federally taxable obligations under normal conditions.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

o MUNICIPAL LEASE OBLIGATIONS. The Fund may invest in municipal lease
obligations, which are issued by a state or local government or authority to
acquire land and a wide variety of equipment and facilities. These obligations
typically are not fully backed by the municipality's credit, and their interest
may become taxable if the lease is assigned. If funds are not appropriated for
the following year's lease payments, the lease may terminate, with the

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possibility of default on the lease obligation and significant loss to the Fund.
Certificates of participation in municipal lease obligations or installment
sales contracts entitle the holder to a proportionate interest in the
lease-purchase payments made.

O INDUSTRIAL DEVELOPMENT BONDS. The Fund may invest in industrial development
bonds, which are a type of revenue bond backed by the credit of a private issuer
and may involve greater risk.

O REFUNDING CONTRACTS. The Fund may purchase securities on a when-issued basis
in connection with the refinancing of an issuer's outstanding indebtedness.
Refunding contracts require the issuer to sell and the Fund to buy refunded
municipal obligations at a stated price and yield on a settlement date that may
be several months or several years in the future.

O RESOURCE RECOVERY BONDS. The Fund may invest in resource recovery bonds, which
are a type of revenue bond issued to build facilities such as solid waste
incinerators or waste-to-energy plants. Typically, a private corporation will be
involved, at least during the construction phase, and the revenue stream will be
secured by fees or rents paid by municipalities for use of the facilities. The
viability of a resource recovery project, environmental protection regulations,
and project operator tax incentives may affect the value and credit quality of
resource recovery bonds.

o TAX AND REVENUE ANTICIPATION NOTES AND BOND ANTICIPATION NOTES. The Fund may
invest in tax and revenue anticipation notes, which are issued by municipalities
in expectation of future tax or other revenues, and, which are payable from
those specific taxes or revenues. The Fund may invest in bond anticipation
notes, which normally provide interim financing in advance of an issue of bonds
or notes, the proceeds of which are used to repay the anticipation notes. The
Fund may invest in tax-exempt commercial paper which is issued by municipalities
to help finance short-term capital or operating needs.

o DEMAND FEATURES. A "demand feature" is a put that entitles the security holder
to repayment of the principal amount of the underlying security on no more than
30 days' notice at any time or at specified intervals. Issuers or financial
intermediaries who provide demand features or standby commitments often support
their ability to buy securities on demand by obtaining letters of credit
("LOCs") or other guarantees from domestic or foreign banks. LOCs also may be
used as credit supports for other types of municipal instruments. Key Advisers
or the Sub-Adviser may rely upon its evaluation of a bank's credit in
determining whether to purchase an instrument supported by an LOC. In evaluating
a foreign bank's credit, Key Advisers or the Sub-Adviser will consider whether
adequate public information about the bank is available and whether the bank may
be subject to unfavorable political or economic developments, currency controls,
or other governmental restrictions that might affect the bank's ability to honor
its credit commitment.

O FUTURES CONTRACTS. The Fund may enter into futures contracts in an effort to
hedge against market risks. For example, when interest rates are expected to
rise or market values of portfolio securities are expected to fall, the Fund can
seek to offset a decline in the value of its portfolio securities by entering
into futures contract transactions. 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.

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Futures transactions involve brokerage costs and require the Fund to segregate
assets to cover contracts that would require it to purchase securities or
currencies. The Fund may lose the expected benefit of futures transactions if
interest 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
the Fund's futures positions may not prove to be perfectly or even highly
correlated with the value of its portfolio securities, limiting the Fund's
ability to hedge effectively against interest 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.

O ZERO COUPON BONDS. The Fund is permitted to purchase zero coupon Municipal
bond securities ("Zero Coupon Bonds"). These bonds are purchased at a discount
from the face amount because the buyer receives only the right to a fixed
payment on a certain date in the future and does not receive any periodic
interest payments. The effect of owning instruments which do not make current
interest payments is that a fixed yield is earned not only on the original
investment but also, in effect, on accretion during the life of the obligations.
This implicit reinvestment of earnings at the same rate eliminates the risk of
being unable to reinvest distributions at a rate as high as the implicit yields
on the zero coupon bond, but at the same time eliminates the holder's ability to
reinvest at higher rates. For this reason, zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are comparable securities which pay interest currently,
which fluctuation increases in accordance with the length of the period to
maturity.

O DELAYED-DELIVERY TRANSACTIONS. The Fund may buy and sell securities on a
when-issued or delayed-delivery basis, with payment and delivery taking place at
a future date. The market value of securities purchased in this way may change
before the delivery date, which could increase fluctuations in the Fund's yield.
Ordinarily, the Fund will not earn interest on securities purchased until they
are delivered.

O VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase investment grade
variable and floating rate notes. The interest rates on these securities may be
reset daily, weekly, quarterly, or some other reset period, and may be subject
to a floor or ceiling. There is a risk that the current interest rate on such
obligations may not accurately reflect existing market interest rates. There may
be no active secondary market with respect to a particular variable or floating
rate note. Variable and floating rate notes for which no readily available
market exists will be purchased in an amount which, together with other illiquid
securities held by the Fund, does not exceed 15% of the Fund's net assets unless
such notes are subject to a demand feature that will permit the Fund to receive
payment of the principal within seven days after demand therefor. These
securities are included among those which are sometimes referred to as
"derivative securities." "Investment grade" obligations are those rated at the
time of purchase within the four highest rating categories assigned by a
nationally recognized statistical rating organization ("NRSRO") or, if unrated,
are obligations that Key Advisers or the Sub-Adviser determine to be of
comparable quality.

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<PAGE>

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. Key Advisers or
the Sub-Adviser will waive its fee attributable to the Fund's assets invested in
a fund of the Victory Portfolios, and, to the extent required by the laws of any
state in which shares of the Fund are sold, Key Advisers or the Sub- Adviser
will waive its investment advisory fees 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, to the extent such fees are not
waived by Key Advisers or the Sub-Adviser. The Fund will only invest in shares
of money market funds with investment policies consistent with those of the
Fund.

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover generally will result in higher brokerage costs and possible tax
consequences for the Fund. In the six months ended October 31, 1995, the
portfolio turnover rate was 72.46% compared to 52.00% in the period ended April
30, 1995.

INVESTMENT LIMITATIONS

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KL2:129880.1

<PAGE>

it may be difficult or impossible for the Fund to sell them promptly at an
acceptable price.

3. The Fund is non-diversified within the meaning of the 1940 Act. To meet
federal tax requirements for qualification as a "regulated investment
company," the Fund limits its investments so that at the close of each
quarter of its taxable year: (a) no more than 25% of total assets are
invested in the securities of a single issuer; and (b) with regard to at
least 50% of total assets, no more than 5% of total assets are invested in
the securities of a single issuer.

Each of the investment limitations indicated above are fundamental, except for
the limitation pertaining to illiquid securities . Non-fundamental limitations
may be changed without shareholder approval. Whenever an investment policy or
limitation states a maximum percentage of the Fund's assets that may be
invested, such percentage limitation will be determined immediately after and as
a result of the investment and any subsequent change in values, assets, or other
circumstances will not be considered when determining whether the investment
complies with the Fund's investment policies and limitations, 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). If the value of the Fund's 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
Trustees will consider what actions, if any, are appropriate to maintain
adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

o WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser:

1. AMOUNT OF INVESTMENT. If you plan to invest a substantial amount, the
reduced sales charges available for larger purchases of Class A shares
may be more beneficial to you. Any order for $1 million or more will
only be accepted as Class A shares for that reason.

2. INVESTMENT HORIZON. While future financial needs cannot be predicted
with certainty, investors who prefer not to pay an initial sales charge
and who plan to hold their shares for more than six years might
consider Class B shares. Investors who plan to redeem shares within
eight years might prefer Class A shares.

3.DIFFERENCES IN ACCOUNT FEATURES. The dividends payable to Class B
shareholders will be reduced by the additional expenses borne solely by
that class, such as the asset-based sales charge to which Class B shares

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<PAGE>

are subject, as described below and in the Statement of Additional
Information.

A salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets (an
"Investment Professional") or other person who is entitled to receive
compensation for selling Fund shares may receive different compensation for
selling one class than for selling another class. Both the CDSC (an asset-based
sales charge) for Class B sharesand he front-end sales charge on sales of Class
A shares are used primarily to compensate such persons.

o HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities brokers or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments who have
qualified trust accounts. The minimum investment is $500 ($250 for Individual
Retirement Accounts) for the initial purchase and $25 thereafter. Accounts set
up through a bank trust department or an Investment Professional may be subject
to different minimums. When you buy shares, be sure to specify Class A or Class
B shares. If you do not make a selection, your investment will be made in Class
A shares.

o INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. Your Investment Professional
will place your order with the Transfer Agent (see "Fund Organization and
FeesTransfer Agent") on your behalf. You may be required to establish a
brokerage or agency account. Your Investment Professional will notify you
whether subsequent trades should be directed to the Investment Professional or
directly to the Fund's Transfer Agent. Accounts established with Investment
Professionals may have different features, requirements and fees. In addition,
Investment Professionals may charge for their services. Information regarding
these features, requirements and fees will be provided by the Investment
Professional. If you are purchasing shares of any Fund through a program of
services offered or administered by your Investment Professional, you should
read the program materials in conjunction with this Prospectus. You may initiate
any transaction by telephone either through your bank trust department or
through your Investment Professional. Subsequent investments by telephone may be
made directly. See "Special Investor Services" for more information about
telephone transactions.

Contact your bank trust department for instructions.

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<PAGE>

INVESTING DIRECTLY

o BY MAIL. You may purchase shares by completing and signing an Account
Application (initial purchase only) and mailing it, together with a check (or
other negotiable bank draft or money order) in the amount of at least the
minimum investment requirement to:

The Victory National Municipal Bond Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

BY WIRE: Call 800-539-3863 to set up your Fund account to accommodate wire
transactions. YOU MUST CALL THE TRANSFER AGENT BEFORE WIRING FUNDS. Federal
funds (monies transferred from one bank to another through the Federal Reserve
System with same-day availability) should be wired to:

Boston Safe Deposit & Trust Co.
ABA #011001234
Credit PFSC DDA#16-918-8
The Victory National Municipal Bond Fund

Class A shares are sold at the public offering price based on the net asset
value that is next determined after the Transfer Agent receives the purchase
order. In most cases, to receive that day's offering price, the Transfer Agent
must receive your order as of the close of regular trading of the New York Stock
Exchange ("NYSE") (normally 4:00 p.m. Eastern time) (the "Valuation Time") on
each Business Day (as defined in "Shareholder Account Rules and Policies --
Share Price" below) of the Fund. If you buy shares through an Investment
Professional, the Investment Professional must receive your order in a timely
fashion on a regular Business Day and transmit it to the Transfer Agent so that
it is received before the close of business that day. The Transfer Agent may
reject any purchase order for the Fund's shares, in its sole discretion. It is
the responsibility of your Investment Professional to transmit your order to
purchase shares to the Transfer Agent in a timely fashion in order for you to
receive that day's share price.

INVESTMENT REQUIREMENTS

CLASS A SHARES. Class A shares are sold at their offering price, which is
normally net asset value plus an initial sales charge. However, in some cases,
described below, where purchases are not subject to an initial sales charge, the
offering price may be net asset value. In some cases, reduced sales charges may
be available, as described below. When you invest, the Fund receives the net
asset value for your account. The sales charge varies depending on the amount of
your purchase and a portion may be retained by the Distributor and allocated to
your Investment Professional. The Victory Portfolios has a reinstatement

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<PAGE>

policy which allows an investor who redeems shares originally purchased with a
sales charge to reinvest within 90 days without incurring an additional sales
charge. The current sales charge rates and commissions paid to Investment
Professionals are as follows:

Class A Sales Charge Dealer Reallowance
As a % As a % of As a % of
of Net Offering
Offering Amount Price
Price Invested

Amount of Purchase

Less than $49,999.................. 4.75% 4.99% 4.00%
$50,000 to $99,999................... 4.50% 4.71% 4.00%
$100,000 to $249,999................. 3.50% 3.63% 3.00%
$250,000 to $499,999................ 2.25% 2.30% 2.00%
$500,000 to $999,999................. 1.75% 1.78% 1.50%
$1,000,000 and above................. 0.00% 0.00% (1)

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25%
of such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

o Reduced Sales Charges for Class A Shares. You may be eligible to buy Class A
shares at reduced sales charge rates in one or more of the following ways:

o Letter of Intent for Class A Shares. An investor may obtain a reduced sales
charge by means of a written Letter of Intent which expresses the investor's
intention to purchase shares of the Fund at a specified total public offering
price within a 13-month period.

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<PAGE>

purchases pursuant to the Letter of Intent have been made or the higher sales
charge has been paid. When the full amount indicated has been purchased, the
escrow will be released. A Letter of Intent may include purchases of shares made
not more than 90 days prior to the date the investor signs a Letter of Intent;
however, the 13-month period during which the Letter of Intent is in effect will
begin on the date of the earliest purchase to be included. An investor may
combine purchases that are made in an individual capacity with (1) purchases
that are made by members of the investor's immediate family and (2) purchases
made by businesses that the investor owns as sole proprietorships, for purposes
of obtaining reduced sales charges by means of a written Letter of Intent. In
order to accomplish this, however, investors must designate on the Account
Application the accounts that are to be combined for this purpose. Investors can
only designate accounts that are open at the time the Letter of Intent is
executed.

o RIGHT OF ACCUMULATION AND CONCURRENT PURCHASES. A shareholder may qualify for
a reduced sales charge on purchases of Class A Shares of the Fund and other
funds of the Victory Portfolios by combining a current purchase with purchases
of another fund(s) or with certain prior purchases of shares of the Victory
Portfolios. The applicable sales charge is based on the sum of (i) the
purchaser's current purchase plus (ii) the current public offering price of the
purchaser's previous purchases of (a) all shares held by the purchaser in the
Fund and (b) all shares held by the purchaser in any other fund of the Victory
Portfolios (except money market funds).

o WAIVERS OF CLASS A SALES CHARGES. No sales charge is imposed on sales of Class
A shares to the following categories of persons (which categories may be changed
or eliminated at any time):

(1) Current or retired Trustees of the Victory Portfolios and Victory Shares;
employees, directors, trustees, and their family members of KeyCorp or an
"Affiliated Provider " ("Affiliated Providers" refer to affiliates and
subsidiaries of KeyCorp and service providers to the Victory Portfolios and
the Victory Shares (collectively, the "Victory Group")), dealers having an
agreement with the Distributor and any trade organization to which Key
Advisers, the Sub-Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or certain
other advisory accounts established with KeyCorp or any of its affiliates;

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<PAGE>

(5) Shareholders of the former Investors Preference Fund For Income, Inc. and
the Investors Preference New York Tax-Free Fund, Inc. who have continuously
maintained accounts with a fund or funds of the Victory Group with a
balance of $250,000 or more (investors with less than $250,000 will pay any
applicable sales charges); and

(6) Investment advisers or financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; and clients of such investment
advisers or financial planners who place trades for their own accounts if
the accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker or agent. Such
accounts include retirement and deferred compensation plans and trusts used
to fund those plans, including, but not limited to, those defined in
section 401(k), 403(b), or 457 of the Internal Revenue Code and "rabbi
trusts."

CONTINGENT DEFERRED SALES CHARGE

YEARS SINCE PURCHASE ON REDEMPTIONS IN THAT YEAR

PAYMENT WAS MADE (AS % OF AMOUNT SUBJECT TO CHARGE)

0-1 5.0%
1-2 4.0%
2-3 3.0%
3-4 3.0%
4-5 2.0%
5-6 1.0%
6 and following None

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In the table, a "year" is a 12-month period. All purchases are considered to
have been made on the first regular business day of the month in which the
purchase was made.

o WAIVERS OF CLASS B CDSC. The Class B CDSC will be waived if the shareholder
requests it for any of the following redemptions: (1) distributions to
participants or beneficiaries from Retirement Plans, if the distributions are
made (a) under an Automatic Withdrawal Plan after the participant reaches age 59
1/2 , as long as the payments are no more than 12% of the account value annually
(measured from the date the Transfer Agent receives the request), or (b)
following the death or disability (as defined in the Internal Revenue Code) of
the participant or the beneficial owner; (2) redemptions from accounts other
than Retirement Plans following the death or disability of the shareholder (as
evidenced by a determination of disability by the Social Security
Administration); (3) returns of excess contributions to Retirement Plans; and
(4) distributions of not more than 12% of the account value annually.

o AUTOMATIC CONVERSION OF CLASS B SHARES. Eight years after Class B shares are
purchased, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution Plan, described
below. The conversion is based on the relative net asset value of the two
classes, and no sales charge or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class B Conversion
Feature" in the Statement of Additional Information.

o DISTRIBUTION PLAN FOR CLASS B SHARES. The Victory Portfolios has adopted a
Distribution Plan (the "Plan") under Rule 12b-1 of the 1940 Act for Class B
shares to compensate the Distributor for its services and costs in distributing
Class B shares and servicing accounts. Under the Plan, the Victory Portfolios
pays the Distributor an annual "asset-based sales charge" of 0.75% per year on
Class B shares . This fee is computed on the average daily net assets of Class B
shares and paid monthly. The asset-based sales charge allows investors to buy
Class B shares without a front-end sales charge while allowing the Distributor
to compensate dealers that sell Class B shares. The asset-based sales charge
increases Class B expenses by up to 0.75% of average net assets per year.

The Distributor pays sales commissions of up to 4.00% of the purchase price to
dealers from its own resources at the time of sale. For maintaining and
servicing accounts of customers invested in the Fund, First Albany and PFIC
Securities Corporation may receive payments from the Distributor equal to
two-thirds of the excess of the scheduled CDSC over any commission payment to
the selling broker . The Distributor retains the asset-based sales charge to
recoup the sales commissions it pays and its financing costs. If the Plan is
terminated by the Victory Portfolios, it provides that the Trustees may elect to
continue payments for certain expenses already incurred. The payments under the
Plan increase the annual expenses of Class B shares. For more details, please
refer to "Advisory and Other Contracts - Class B Shares Distribution Plan" in
the Statement of Additional Information.

SPECIAL INVESTOR SERVICES

o THE SYSTEMATIC INVESTMENT PLAN. You can make regular investments in the Fund
with the Systematic Investment Plan by completing the appropriate section of

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the Account Application and attaching a voided personal check with your bank's
magnetic ink coding number across the front. If your bank account is jointly
owned, be sure that all owners sign. You must first meet the Fund's initial
investment requirement of $500, then investments may be made monthly by
automatically deducting $25 or more from your bank checking account. For
officers, trustees, directors and employees, including retired directors and
employees, of the Victory Group, KeyCorp and its affiliates, and the
Administrator and its affiliates (and family members of each of the foregoing)
who participate in the Systematic Investment Plan, there is no minimum initial
investment required. You may change the amount of your monthly purchase at any
time. Your bank checking account will be debited on the date indicated on your
Account Application. Shares will be purchased at the offering price next
determined following receipt of the order by the Transfer Agent. You may cancel
the Systematic Investment Plan at any time without payment of a cancellation
fee. Your monthly account statement will reflect systematic investment
transactions, and a debit entry will appear on your bank statement.

o THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

Your account will be debited on the date you indicate on your Account
Application. Shares will be redeemed at the net asset value per share ("NAV") as
determined on the debit date indicated on your Account Application. You may
cancel the Systematic Withdrawal Plan at any time without payment of a
cancellation fee. Each Systematic Withdrawal Plan transaction will appear as a
debit entry on your monthly account statement.

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<PAGE>

Agent may also record calls, and you should verify the accuracy of your
confirmation statements immediately after you receive them.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale
in your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account
is open 7 days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you
purchase by exchange.

(5) The registration and tax identification numbers of the two accounts
must be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU
WISH TO PURCHASE BY EXCHANGE.

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and purchased from the other fund
in the exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally as of 4:00 p.m. Eastern
time) that is in proper form, but either fund may delay the issuance of shares
of the fund into which you are exchanging if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might create excessive turnover in the Fund's portfolio and associated
expenses disadvantageous to the Fund.

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<PAGE>

have the potential to disadvantage the Fund, or to refuse multiple exchange
requests submitted by a shareholder or dealer.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (see the definition of "Business Day" under "Shareholder Account
Rules and Policies - Share Price" below). Shares will be redeemed at the NAV
next calculated after the Transfer Agent has received the redemption request. If
the Fund account is closed, any accrued dividends will be paid at the beginning
of the following month.

You may redeem shares in several ways:

o BY MAIL. Send a written request to:

The Victory National Municipal Bond Fund
Primary Funds Service Corporation

P.O. Box 9741
Providence, RI 02940-9741

o BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before Valuation Time (normally 4:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of

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instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

o BY TELEPHONE. To redeem by telephone, you may call the Transfer Agent toll
free at 800-539-3863 or call your Investment Professional or bank trust
department. See "Special Investor Services" for more information about telephone
transactions.

SHAREHOLDER ACCOUNT RULES AND POLICIES

o SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The NAV of each class of shares is calculated by adding the value
of all of the Fund's investments, plus cash and other assets, deducting
liabilities of the Fund and of the class, and then dividing the result by the
number of shares of the class outstanding. The NAV of the Fund is determined and
its shares are priced as of the close of regular trading of the NYSE, (normally
4:00 p.m. Eastern time) (the "Valuation Time") 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 its 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 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 , and Christmas .

- 21 -

<PAGE>

information concerning market transactions and dealers quotations for
comparable securities.

o The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

o The Victory Portfolios does not charge a redemption fee, but if your
Investment Professional handles your redemption, the Investment Professional may
charge a separate service fee. Under the circumstances described in "How to
Invest," you may be subject to a CDSC when redeeming Class B shares.

- 22 -

<PAGE>

within or outside of the United States for meetings or seminars of a business
nature. Compensation will include the following types of non-cash compensation
offered through sales contests: (1) vacation trips including the provision of
travel arrangements and lodging; (2) tickets for entertainment events (such as
concerts, cruises and sporting events) and (3) merchandise (such as clothing,
trophies, clocks and pens). Dealers may not use sales of the Fund's shares to
qualify for this compensation if prohibited by the laws of any state or any
self-regulatory organization, such as the National Association of Securities
Dealers, Inc. None of the aforementioned compensation is paid for by the Fund or
its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at the NAV of
the day after the record date, and have your income dividends paid in cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain dividends,
or only capital gain dividends, automatically reinvested in shares of
another fund of the Victory Group. Shares will be purchased at the NAV as
of the day after the record date. If you are reinvesting dividends of a
fund sold without a sales charge in shares of a fund sold with a sales
charge, the shares will be purchased at the public offering price. If you
are reinvesting dividends of a fund sold with a sales charge in shares of a
fund sold with or without a sales charge, the shares will be purchased at
the net asset value of the fund. Dividend distributions can be directed
only to an existing account with a registration that is identical to that
of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital gain
dividends, or only your income dividends, automatically transferred to your
bank checking or savings account. The amount will be determined on the
dividend record date and will normally be transferred to your account
within 7 days of the dividend record date. Dividend distributions can be
directed only to an existing account with a registration that is identical
to that of your Fund account. Please call or write the Transfer Agent to
learn more about this dividend distribution option.

- 23 -

<PAGE>

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

o COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES

Interest on state or local bonds is excluded from gross income for federal
income tax purposes. Such interest earned by the Fund retains its federally
tax-exempt character when distributed to shareholders as "exempt-interest
dividends." However, distributions by the Fund of any taxable investment income
(e.g., from interest on certificates of deposit or repurchase agreements) and
the excess, if any, of its net short-term capital gain over its net long-term
capital loss are designated as ordinary dividends and are taxable to
shareholders as ordinary income. Distributions by the Fund of the excess, if
any, of its net long-term capital gain over its net short-term capital loss are
designated as "capital gain

- 24 -

<PAGE>

dividends" and are taxable to shareholders as long-term capital gain, regardless
of the length of time shareholders have held their shares. It is anticipated
that no part of any Fund distribution will be eligible for the
dividends-received deduction for corporations.

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares.
Distributions received by shareholders of the Fund in January of a given year
will be treated as received on December 31 of the preceding year provided that
they were declared to shareholders of record on a date in October, November, or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

Although excluded from gross income for regular federal income tax purposes,
exempt-interest dividends, together with other tax-exempt interest, are required
to be reported on shareholders' federal income tax returns, and are taken into
account in determining the portion, if any, of social security benefits which
must be included in gross income for federal income tax purposes. In addition,
exempt-interest dividends paid out of interest on certain municipal securities
may be treated as a tax preference item for both individual and corporate
shareholders potentially subject to the alternative minimum tax ("AMT"), and all
exempt-interest dividends are included in computing a corporate shareholder's
adjusted current earnings, upon which a separate corporate preference item is
based which may be subject to AMT and to the environmental supertax. Interest on
indebtedness incurred, or continued, to purchase or carry shares of the Fund is
not deductible. Further, entities or persons who may be "substantial users" (or
persons related to "substantial users") of facilities financed by municipal
securities should consult with their own tax advisers before purchasing shares
of the Fund.

REDEMPTIONS OR EXCHANGES

If a shareholder disposes of shares in the Fund at a loss before holding such
shares for more than six months, the loss will be disallowed to the extent of
any exempt-interest dividends received on such shares and (to the extent not
disallowed) will be treated as a long-term capital loss to the extent that the
shareholder has received a capital gain dividend on those shares. All or a
portion of any loss realized upon a taxable disposition of shares of the Fund
may be disallowed if other shares of the Fund are purchased within 30 days
before or after such disposition.

O OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws in the shareholder's jurisdiction. Although exempt-interest dividends are
excluded from gross income for federal income tax purposes, they are not
necessarily excluded from the income or other tax laws of state or local taxing
authorities. Additionally, some states exempt mutual fund dividends derived from
U.S. Government obligations (distinct from state and local bonds) from their
state and local income taxes. However, some states do not provide this benefit
(e.g., Pennsylvania) and other states may limit it (e.g., New York, which
generally requires at least 50% of a fund's total assets to be invested in such
obligations for the exemption to apply). In addition, certain types of
securities, such as repurchase agreements and certain agency-backed securities,
may not qualify for this U.S. Government interest exemption. Some states may
impose intangible property taxes. Shareholders will be notified annually of the
extent to which the Fund's ordinary income dividends were derived from U.S.

- 25 -

<PAGE>

Government obligations. INVESTORS CONSIDERING AN INVESTMENT IN THE FUND SHOULD
CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS SUITABLE TO THEIR
PARTICULAR TAX SITUATIONS.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

PERFORMANCE

The Fund may also quote taxable-equivalent yields, which show the taxable yields
an investor would have to earn, before taxes, to equal the tax-free yields for a
class of shares of the Fund. A tax-equivalent yield is calculated by dividing
the Fund's tax-exempt yield for each class of shares of the Fund by the result
of one minus the sum of the stated federal, state and city tax rates, and taking
into account the deductibility of state and city taxes from federal tax. If only
a portion of the Fund's income is tax-exempt, only that portion is adjusted in
the calculation.

- 26 -

<PAGE>

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996 the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

For the services provided and expenses incurred pursuant to the investment
advisory agreement between the Victory Portfolios respecting the Fund, Key
Advisers is entitled to receive a fee, computed daily and paid monthly, at an
annual rate of fifty- five one hundredths of one percent (.55%) of the average
daily net assets of the Fund. The investment advisory fee paid by the Fund is
higher than the advisory fees paid by most mutual funds, although the Victory
Portfolios' Board of Trustees believes such fees to be comparable to advisory
fees paid by many funds having similar objectives and policies. The advisory
fees for the Fund have been determined to be fair and reasonable in light of the
services provided to the Fund. Key Advisers may periodically waive all or a
portion of its advisory fee with respect to the Fund . Prior to January , 1996,
Society Asset Management, Inc. served as investment adviser to the Fund. During
the fiscal year ended October 31, 1995, Society Asset Management, Inc. waived
all of its advisory fees.

- 27 -

<PAGE>

functioning as part of an organized group of persons, managed by authorized
officers of Key Advisers and the Sub-Adviser, respectively, and Key Advisers and
the Sub-Adviser, respectively, will be as fully responsible to the Fund for the
acts and omissions of such persons as they are for their own acts and omissions.

The person primarily responsible for the investment management of the Fund, as
well as his previous experience is as follows:

PORTFOLIO MANAGING PREVIOUS
MANAGER FUND SINCE EXPERIENCE

Paul A. Toft September, 1994 Vice President and Portfolio
Manager, Society Asset Management,
Inc. since September, 1994; Vice
President and Manager, Nike
Securities, L.P., 1991-1994;
formerly, Assistant Vice President,
Van Kampen Merrett, 1990-1991

EFFECT OF BANKING LAWS

- 28 -

<PAGE>

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the Administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

The Victory Portfolios has adopted a Shareholder Servicing Plan for each class
of shares of the Fund. In accordance with the Shareholder Servicing Plan, the
Fund may enter into Shareholder Service Agreements under which the Fund pays
fees of up to .25% of the average daily net assets of each class incurred in
connection with the personal service and maintenance of accounts holding the
shares of such class. Such agreements are entered into between the Victory
Portfolios and various shareholder servicing agents, including the Distributor,
Key Trust Company of Ohio, N.A. and its affiliates, and other financial
institutions and securities brokers (each, a "Shareholder Servicing Agent").
Each Shareholder Servicing Agent generally will provide support services to
shareholders by establishing and maintaining accounts and records, processing
dividend and distribution payments, providing account information, arranging for
bank wires, responding to routine inquires, forwarding shareholder
communication, assisting in the processing of purchase, exchange and redemption
requests, and assisting shareholders in changing dividend options, account
designations and addresses. Shareholder Servicing Agents may periodically waive
all or a portion of their respective shareholder servicing fees with respect to
the Fund .

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A., an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

- 29 -

<PAGE>

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 Victory Portfolios' Board of Trustees, recordkeeping services, services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory, compliance, and other administrative and support
services.

EXPENSES

For the fiscal period ended October 31, 1995, the Fund's total operating
expenses for Class A and Class B shares were 2.57% and 3.67% of the Fund's
average daily net assets, respectively, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Shares of each class of the Fund participate equally in dividends and
distributions and have equal voting, liquidation and other rights. When issued
and paid for, shares will be fully paid and nonassessable by the Victory
Portfolios and will have no preference, conversion, exchange or preemptive
rights. Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares owned. For those investors with qualified
trust accounts , the trustee will vote the shares at meetings of the Fund's
shareholders in accordance with the shareholder's instructions or will vote in
the same percentage as shares that are not so held in trust. The trustee will
forward to these shareholders all communications received by the trustee,
including proxy statements and financial reports. The Victory Portfolios and the
Fund are not required to hold annual meetings of shareholders and in ordinary
circumstances do not intend to hold such meetings. The Trustees may call special
meetings of shareholders for action by shareholder vote as may be required by
the 1940 Act or the Declaration of Trust. Under certain circumstances, the
Trustees may be removed by action of the Trustees or by the shareholders.
Shareholders holding 10% or more of the Victory Portfolios' outstanding shares
may call a special meeting of shareholders for the purpose of voting upon the
question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have adopted a Code of
Ethics (the "Code") which requires investment personnel (a) to pre-clear all
personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub-Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

- 30 -

<PAGE>

DELAWARE LAW

Delaware law authorizes electronic or telephone communications between
shareholders and the Victory Portfolios. Under Delaware law, the Victory
Portfolio has the flexibility to respond to future business contingencies. For
example, the Trustees will have the power to incorporate the Victory Portfolios,
to merge or consolidate it with another entity, to cause each fund to become a
separate trust, and to change the Victory Portfolio's domicile without a
shareholder vote. This flexibility could help reduce the expense and frequency
of future shareholder meetings for non-investment related issues.

MISCELLANEOUS

Shareholders will receive Semi-Annual Reports, which are unaudited, and Annual
Reports, which are audited by independent public accountants ("Reports"),
describing the investment operations of the Fund. Each of these Reports, when
available for a particular fiscal year end or the end of a semi-annual fiscal
period, is incorporated herein by reference. The Victory Portfolios may include
information in their Reports to shareholders that (a) describes general economic
trends, (b) describes general trends within the financial services industry or
the mutual fund industry, (c) describes past or anticipated portfolio holdings
for the Fund or (d) describes investment management strategies for the Victory
Portfolios. Such information is provided to inform shareholders of the
activities of the Victory Portfolios for the most recent fiscal year or
semi-annual fiscal period and to provide the views of Key Advisers, the
Sub-Adviser and/or the Victory Portfolios' officers regarding expected trends
and strategies.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

- 31 -

<PAGE>

- 32 -

<PAGE>

THE VICTORY NATIONAL MUNICIPAL BOND FUND

MARCH 1, 1996

<PAGE>

THE
VICTORY
PORTFOLIOS
NEW YORK TAX-FREE FUND

PROSPECTUS For current yield, purchase, and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the NEW YORK TAX-FREE FUND (the "Fund"), a non-diversified
portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment adviser to the Fund ("Key Advisers" or
the "Adviser") . Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund ("Society" or
the "Sub-Adviser"). Concord Holding Corporation is the Fund's administrator (the
"Administrator"). Victory Broker-Dealer Services, Inc. is the Fund's distributor
(the "Distributor").

The Fund seeks to provide a high level of current income exempt from federal,
New York State, and New York City income taxes, consistent with the preservation
of shareholders' capital. In normal markets, the Fund will invest at least 80%
of its portfolio in federally tax-exempt securities and at least 65% of the
portfolio in insured investments of New York State and its public authorities,
instrumentalities, and municipalities. The Fund is designed expressly for those
investors who are subject to income taxes imposed by the state of New York
and/or its municipalities. (See "Investment Policies and Risk Factors," for more
detailed investment information.)

The Fund offers two classes of shares: (1) Class A shares, which are offered at
net asset value plus the applicable sales charge (maximum of 4.75% of public
offering price) and (2) Class B shares, which are offered at net asset value
with a maximum contingent deferred sales charge ("CDSC") of 5.0% imposed on
certain redemptions. At the end of the sixth year after purchase, the CDSC will
no longer apply to redemptions. Class B shares have higher ongoing expenses than
Class A shares, but automatically convert to Class A shares eight years after
purchase.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent") P.O. Box
9741, Providence, RI 02940- 9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses................................................. 3
Financial Highlights.......................................... 5
Investment Objective ........................................ 7
Investment Policies and Risk Factors......................... 8
How to Invest, Exchange and Redeem............................ 15
Dividends, Distributions and Taxes............................ 24
Performance................................................... 26
Fund Organization and Fees.................................... 27
Additional Information........................................ 30

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES (1)

CLASS A CLASS B

Maximum Sales Charge Imposed on Purchases
(as a percentage of the offering price)........ 4.75% none
Maximum Sales Charge Imposed on
Reinvested Dividends........................... none none
Deferred Sales Charge............................ none 5% in the first
year, declining to
1% in the sixth
year and eliminated
thereafter
Redemption Fees.................................. none none
Exchange Fee..................................... none none

ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE WAIVER AND REIMBURSEMENT (as a
percentage of average daily net assets)

CLASS A CLASS B

Management Fees (2)........................ .12% .12%
Administration Fees(3)..................... .06% .06%
Rule 12b-1 Distribution Fees............... none .75%
Other Expenses (4).......................... .77% .82%
---- ----
Total Fund Operating Expenses (3)(4)........ .95% 1.75%
==== =====

(1) Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent, including affiliated banks and non-bank
affiliates of Key Advisers and KeyCorp. (See "How to Invest, Exchange and
Redeem").

(2) The Adviser has agreed to reduce its investment advisory fees for the
indefinite future. Absent the voluntary reduction of investment advisory
fees, "Management Fees" as a percentage of average daily net assets would
be 0.55%, and "Total Fund Operating Expenses" as a percentage of average
daily net assets for Class A and Class B shares would be 1.47% and 2.27%,
respectively.

(3) The Administrator has agreed to reduce its administration fees. Absent the
voluntary reduction of administration fees, "Administration Fees" as a
percentage of average daily net assets would be 0.15%.

(4) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay. (See "Fund Organization and Fees - Shareholder
Servicing Plan").

<PAGE>

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

New York Tax-Free Fund - Class A Shares $57 $76 $98 $159

New York Tax-Free Fund - Class B Shares $68 $85 $115 $185

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

<PAGE>

FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect to the
financial highlights for the Fund and its predecessor, a portfolio of The
Victory Funds (the "Predecessor Fund"), and (except as indicated) has been
audited by Coopers & Lybrand, L.L.P. only for the fiscal period ended October
31, 1995. The information in the table below relating to the periods September
25, 1994 to October 31, 1994 (for Class B shares) and January 1, 1994 to October
31, 1994 (for Class A shares) represents selected data for a single share
outstanding for the New York Tax-Free Portfolio, the Predecessor Fund. The
information for the other periods shown represents selected data for a single
share outstanding of the Investors Preference New York Tax-Free Fund, Inc., the
predecessor to the New York Tax- Free Portfolio. The information for the periods
September 25, 1994 to October 31, 1994 and January 1, 1994 to October 31, 1994
has been audited by KPMG Peat Marwick LLP. Information for prior periods shown
has been audited by LeMaster & Daniels, independent auditors. The financial
statements and independent auditors' reports thereon contained in the Statement
of Additional Information are incorporated herein by reference. The information
set forth below is for a share of the Fund outstanding for each period
indicated.

THE VICTORY NEW YORK TAX-FREE FUND

Class B Class A
Period
from Period From Period From
Year September Year January 1, Year Year February 11,
Ended 25, 1994 to Ended 1994 to Ended Ended 1991 to
October 31, October 31, October 31, October 31, December 31, December 31, December 31,
1995(e) 1994(d) 1995(d) 1994(d) 1993(d) 1992(d) 1991(a)(d)

<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $12.39 $12.62 $12.39 $13.54 $12.76 $12.50 $12.00

Income from Investment Activities:
Net investment income 0.85 0.07 0.87 0.57 0.70 0.74 0.64
Net realized and unrealized gains
(losses) from investments 0.36 (0.23) 0.42 (1.15) 0.84 0.26 0.50
---- ------ ---- ------ ---- ---- ----
Total from investment
activities 1.21 (0.16) 1.29 (0.58) 1.54 1.00 1.14
---- ------ ---- ------ ---- ---- ----

Distributions:
Net investment income (0.74) (0.07) (0.83) (0.57) (0 .70) (0.74) (0.64)
Net realized gains -- -- -- -- (0.06) -- --
------ ------ ------ ------ ------ ------ ------
Total distributions (0.74) (0.07) (0.83) (0.57) (0.76) (0 .74) (0.64)
------ ------ ------ ------ ------ ------- ------
NET ASSET VALUE, END OF PERIOD $12.86 12.39 $12.85 $12.39 $13.54 $12.76 $12.50
====== ===== ====== ====== ====== ====== ======
Total Return (excludes sales charge) 10.18% (1 .25%)(b) 10.82% (4.31%)(b) 12.34% 8.26% 11.06%(b)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, End of Period (000) $1,953 [__(f)] $15,374 $17,840 $28,530 $26,034 $20,995
Ratio of expenses to
average net assets 2.02% 0.52%(c) 1.16% 0.91%(c) 0.87% 0.66% 0.45%(c)

Ratio of net investment income to
average net assets 5.94% 5.94%(c) 5.50% 5.33%(c) 5.28% 5.89% 6.28%(c)
Ratio of expenses to
average net assets(f) 2.25% 0.86%(c) 1.96% 1.25%(c) 0.96% 0.96% 0.95%(c)

Ratio of net investment income to
average net assets(f) 5.71% 5.60%(c) 4.70% 4.99%(c) 5.19% 5.59% 5.78%(c)

PORTFOLIO TURNOVER 18.33% 18.00% 18.33% 18.00% 12.00% 14.00% 61.00%

</TABLE>

- -------------------------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Effective June 5, 1995, the Victory New York Tax-Free Portfolio became the
New York Tax-Free Fund.
(f) Amount is less than $1,000.

<PAGE>

(g) During the period, certain fees were voluntarily reduced. If such fee
reductions had not occurred, the ratios would have been as indicated.

<PAGE>

INVESTMENT OBJECTIVE

The Fund seeks to provide a high level of current income exempt from federal,
New York State and New York City income taxes, consistent with the preservation
of shareholders' capital. The investment objective of the Fund is fundamental
and may not be changed without a vote of the holders of a majority of its
outstanding voting securities (as defined in the Statement of Additional
Information). There can be no assurance that the Fund will achieve its
investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its objective by investing primarily in a portfolio of
municipal securities. In normal markets, the Fund will invest at least 80% (and
generally all) of its portfolio in federally tax-exempt securities and will
maintain at least 65% of the portfolio in insured investments of New York State
and its public authorities, instrumentalities, and municipalities. The Fund
generally invests all of its portfolio in federally tax-exempt and insured
municipal securities. The Fund expects that these insured investments will have
the highest rating of Standard & Poor's and/or Moody's; however, it may invest,
without percentage limitation, in securities having at the time of purchase one
of the three highest ratings by these agencies (AAA, AA, A, or Aaa, Aa, A,
respectively). Any securities owned which are downgraded below the fourth
highest rating (BBB or Baa) will be held only temporarily. (See the Statement of
Additional Information for a detailed description of the ratings.) This policy
will limit the Fund's ability to invest in lower-rated securities from which a
higher yield, but at a higher risk, may be derived. As a matter of investment
policy, the Fund does not invest in securities the interest on which constitutes
a preference item, and consequently, may be subject to the federal alternative
minimum tax on individuals.

In adverse markets, the Fund may take temporary defensive positions and invest
up to 50% of its portfolio in short-term investments which may be uninsured. To
the extent that these short-term investments are not tax-exempt securities, the
income received by the Fund may be taxable to investors. These investments will
be limited to:

o Obligations of the United States government and its agencies and
instrumentalities. These investments, limited to short maturities as temporary
investments, would not be made routinely, nor to any significant extent.

o Commercial paper rated in the highest grade by either Moody's or Standard &
Poor's. (See the Statement of Additional Information for ratings.)

o High-quality obligations of U.S. banks belonging to the Federal Reserve System
having assets of $10 billion or more.

o Municipal bonds or any of the previously mentioned investments subject to
short-term repurchase agreements.

Because the Fund generally invests such a significant portion of its portfolio
in New York City and State securities, it has elected to be non-diversified. As
more than 5% of its assets may be invested in the securities of a single issuer,
and as assets may be concentrated in the same economic sector, the
susceptibility of investments to a single economic, political, or regulatory
occurrence will be increased.

In determining the issuer of a tax-exempt security, each state and each
political subdivision, agency, and instrumentality of each state and each
multi-state agency of which such state is a member is a separate issuer. Where
securities are backed only by assets and revenues of a particular
instrumentality, facility, or subdivision, such entity is considered the issuer.
Percentage limitations referred to in this section and elsewhere in this
Prospectus are determined as of the time an investment is made.

Bonds held by the Fund are covered by an insurance policy applicable to the
specific security, either obtained by the issuer of the security or by a third
party from a private insurer. Insurance premiums for the municipal bonds

<PAGE>

are paid in advance by the issuer or the third party obtaining such insurance.
Such policies are noncancellable and continue in force as long as the municipal
bonds are outstanding and the respective insurers remain in business.

The insurer unconditionally guarantees the timely payment of the principal of
and interest on the insured municipal bonds when and as such payments become due
but shall not be paid by the issuer, except that in the event of any
acceleration of the due date of the principal by reason of mandatory or optional
redemption (other than acceleration by reason of a mandatory sinking fund
payment), default, or otherwise, the payments guaranteed will be made in such
amounts and at such times as payments of principal would have been due had there
not been such acceleration. The insurer will be responsible for such payments
less any amounts received by the Fund from any trustee for the municipal bond
issuers or from any other source. The insurance does not guarantee the payment
of any redemption premium, the value of the shares of the Fund, or payments of
any tender purchase price upon the tender of the municipal bonds. With respect
to small issue industrial development municipal bonds and pollution control
revenue municipal bonds, the insurer guarantees the full and complete payments
required to be made by or on behalf of an issuer of such municipal bonds if
there occurs any change in the tax-exempt status of interest on such municipal
bonds, including principal, interest, or premium payments, if any, as and when
required to be made by or on behalf of the issuer pursuant to the terms of such
municipal bonds. This insurance is intended to reduce financial risk, but the
cost thereof will reduce the yield available to shareholders of the Fund.

In general, the longer the maturity of a municipal bond, the higher the rate of
interest it pays. A longer maturity is also generally associated with a higher
level of volatility in the market value of a municipal bond. There is generally
an inverse relationship between interest rates on the value of debt obligations,
i.e., as interest rates rise the value of debt obligations falls, and falling
rates should produce higher values. Since the portfolio's objective is to
provide high current income consistent with capital preservation, the Fund will
invest in municipal obligations with a slightly greater emphasis on income than
on the stability of the portfolio's net asset value. The average maturity of the
portfolio will vary depending on market conditions. The Fund will generally
invest in bonds that have a maturity of 20-30 years.

Municipal bonds generally have a provision permitting the issuer to redeem or
call the bonds prior to their maturity dates at a specified price which
typically reflects a premium over the bond's original issue price. Most
municipal bonds have call protection (e.g., a period of time during which the
bonds may not be called) which usually lasts seven to 10 years. An issuer
generally may be expected to call its bonds, or a portion of them, during
periods of declining interest rates, when borrowings may be replaced at lower
rates than those obtained in prior years. Proceeds of a bond called under such
circumstances may be reinvested at lower yields. When pricing the portfolio,
each callable bond's call features are considered so that the call of some or
all of the Fund's callable bonds is not expected to have a material impact on
the Fund's net asset value. This pricing procedure and the amortization
procedures required by the Internal Revenue Service should reduce any material
adverse impact in connection with a call of bonds purchased at a premium.
Nevertheless, there is no guarantee that a call may not have a substantial price
impact or that the Fund's objectives will be achieved. As previously stated,
however, the Fund intends to invest only in insured obligations earning the
highest credit rating which substantially reduces the credit risk of the issuer.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

O WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund does not intend to
invest in forward commitments for speculative purposes: however, the Fund
may purchase and sell municipal securities on a "when-issued" and

<PAGE>

"delayed delivery" basis. These are arrangements in which the Fund purchases
securities with payment and delivery scheduled for a future date. If completed,
the transaction will generally settle within 60 days. Purchases of municipal
securities on a "when-issued" or "delayed delivery" basis will generally settle
within 60 days. Purchases of municipal securities on a "when-issued" or "delayed
delivery" basis are subject to market fluctuation and are subject to the risk
that the value or yields at delivery may be more or less than the purchase price
or the yields available when the transaction was initiated. Although the Fund
will generally purchase municipal securities on a "when-issued" basis with the
intention of acquiring such securities, it may sell such securities before the
settlement date if it is deemed advisable. When the Fund is the buyer in such a
transaction, it will maintain cash or high-grade readily marketable debt
securities sufficient to pay for such purchase commitments. To the extent the
Fund engages in "when-issued" and "delayed delivery" transactions, it will do so
only for the purpose of acquiring portfolio securities consistent with the
Fund's investment objectives and policies, and not for the purpose of leverage
in "when-issued" and "delayed delivery" transactions. The Fund relies on the
seller to complete the transaction. The other party's failure may cause the Fund
to miss a price or yield considered advantageous. Securities purchased on a
"when-issued" or "delayed delivery" basis generally do not earn interest until
their scheduled settlement date.

O VARIABLE RATE DEMAND NOTES. The Fund may purchase variable rate demand notes
("VRDNs"), which are tax-exempt obligations containing a floating or variable
interest rate adjustment formula, together with an unconditional right of the
Fund to demand payment of the unpaid principal balance plus accrued interest
upon a short notice period, generally not to exceed seven days. The Fund may
also invest in participation VRDNs, which provide the Fund with an undivided
interest in underlying VRDNs held by major investment banking institutions. Any
purchase of VRDNs will meet applicable diversification and concentration
requirements.

O REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

O MUNICIPAL SECURITIES. Municipal securities include debt obligations issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities such as bridges, highways, housing, hospitals, mass
transportation, schools, streets, and water and sewer works. Other public
purposes for which municipal securities or bonds may be issued include the
refunding of outstanding obligations, obtaining funds for general operating
expenses and the obtaining of funds to loan to other public institutions and
facilities. In addition, certain types of industrial development bonds are
issued by or on behalf of public authorities to obtain funds to provide
privately operated housing facilities, sports facilities, convention or trade
show facilities, airport, mass transit, port or parking facilities, air or water
pollution control facilities, and certain local facilities for water supply,
gas, electricity or sewage or solid waste disposal. Such obligations are
included within the term municipal bonds if the interest rate paid thereon
qualifies as exempt from federal income tax. Other types of industrial
development bonds, the proceeds of which are used for the constructing,
equipment, repair, or improvement of privately operated industrial or commercial
facilities, may constitute municipal bonds, although the current federal tax
laws place substantial limitations on the size of such issues.

The two principal classifications of municipal securities are "general
obligation bonds" and "revenue bonds." General obligation bonds are secured by
the issuer's pledge of its faith, credit, and taxing power for the payment of
principal and interest. Revenue bonds are payable only from the revenues derived
from a particular facility or class of facility or, in some cases, from the
proceeds of a special excise or specific revenue source. A type of revenue bond
common to New York State is a "moral obligation" bond. Under applicable State
law, the State may be called upon to restore deficits in reserve capital funds
of such agencies or authorities created with respect to the bonds. Any such
restoration requires appropriations by the state legislature and, accordingly,
the bonds do not constitute the pledge of the credit of the issuer of such
bonds. Of course, there are variations in the security of municipal bonds, both
within a particular classification and between classifications, depending on
numerous factors.

<PAGE>

The values of outstanding municipal bonds will vary as a result of changing
evaluations of the ability of their issuers to meet the interest and principal
payments. Such values will also change in response to changes in the interest
rates payable on new issues of municipal bonds. Should such interest rates rise,
the values of outstanding bonds, including those held in the Fund's portfolio
will decline and (if purchased at principal amount) would sell at discount.
Conversely, if such interest rates fall, the values of outstanding bonds will
increase and (if purchased at principal amount) would sell at a premium. Changes
in the value of municipal bonds held in the portfolio arising from these or
other factors would sell at a premium. Changes in the value of municipal bonds
held in the portfolio arising from these or other factors will cause changes in
the net asset value per share of the Fund. The Fund will not invest more than 5%
of its assets in securities where the principal amount and interest are the
responsibility of an industrial user with less than three year's operational
history.

O DEMAND FEATURE. A demand feature is a put that entitles the security holder to
repayment of the principal amount of the underlying security on no more than 30
days' notice at any time or at specified intervals. Issuers or financial
intermediaries who provide demand features or standby commitments often support
their ability to buy securities on demand by obtaining letters of credit (LOCs)
or other guarantees from domestic or foreign banks. LOCs also may be used as
credit supports for other types of municipal instruments. Key Advisers or the
Sub-Adviser may rely upon its evaluation of a bank's credit in determining
whether to purchase an instrument supported by an LOC. In evaluating a foreign
bank's credit, Key Advisers or the Sub-Adviser will consider whether adequate
public information about the bank is available and whether the bank may be
subject to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to honor
its credit commitment.

O MUNICIPAL LEASE OBLIGATIONS. The Fund may invest in municipal lease
obligations which are issued by a state or local government or authority to
acquire land and a wide variety of equipment and facilities. These obligations
typically are not fully backed by the municipality's credit, and their interest
may become taxable if the lease is assigned. If funds are not appropriated for
the following year's lease payments, the lease may terminate, with the
possibility of default on the lease obligation and significant loss to the Fund.
Certificates of Participation in municipal lease obligations or installment
sales contracts entitle the holder to a proportionate interest in the
lease-purchase payments made.

O RESOURCE RECOVERY BONDS. The Fund may invest in resource recovery bonds which
are a type of revenue bond issued to build facilities such as solid waste
incinerators or waste-to-energy plants. Typically, a private corporation will be
involved, at least during the construction phase, and the revenue stream will be
secured by fees or rents paid by municipalities for use of the facilities. The
viability of a resource recovery project, environmental protection regulations,
and project operator tax incentives may affect the value and credit quality of
resource recovery bonds.

O TAX AND REVENUE ANTICIPATION NOTES. The Fund may invest in tax and revenue
anticipation notes which are issued by municipalities in expectation of future
tax or other revenues, and are payable from those specific taxes or revenues.
Bond anticipation notes normally provide interim financing in advance of an
issue of bonds or notes, the proceeds of which are used to repay the
anticipation notes. The Fund may also invest in tax-exempt commercial paper is
issued by municipalities to help finance short-term capital or operating needs.

<PAGE>

and may be subject to a floor or ceiling. There is a risk that the current
interest rate on such obligations may not accurately reflect existing market
interest rates. There may be no active secondary market with respect to a
particular variable or floating rate note. Variable and floating rate notes for
which no readily available market exists will be purchased in an amount which,
together with other illiquid securities held by the Fund, does not exceed 15% of
the Fund's net assets unless such notes are subject to a demand feature that
will permit the Fund to receive payment of the principal within seven days after
demand therefor. These securities are included among those which are sometimes
referred to as "derivative securities."

O ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities and zero coupon corporate securities ("Zero Coupon
Bonds"). Zero Coupon Bonds are purchased at a discount from the face amount
because the buyer receives only the right to a fixed payment on a certain date
in the future and does not receive any periodic interest payments. The effect of
owning instruments which do not make current interest payments is that a fixed
yield is earned not only on the original investment but also, in effect, on
accretion during the life of the obligations. This implicit reinvestment of
earnings at the same rate eliminates the risk of being unable to reinvest
distributions at a rate as high as the implicit yields on the Zero Coupon Bond,
but at the same time eliminates the holder's ability to reinvest at higher
rates. For this reason, Zero Coupon Bonds are subject to substantially greater
price fluctuations during periods of changing market interest rates than are
comparable securities which pay interest periodically. The amount of price
fluctuation tends to increase as maturity of the security increases.

O INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and, to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
Sub-Adviser will waive its investment advisory fees 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, to the extent such fees are not
waived by Key Advisers or the Sub-Adviser.

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal year ended October 31, 1995, the
portfolio turnover rate was 18.33% compared to 18.00% in the fiscal period ended
October 31, 1994.

RISK FACTORS

You should consider carefully the special risks inherent in investing in New
York municipal obligations. These risks result from the financial condition of
New York State, certain of its public bodies and municipalities, and New York
City. Beginning in early 1975, New York State, New York City and other State
entities faced serious financial difficulties which jeopardized the credit
standing and impaired the borrowing abilities of such entities and contributed
to high interest rates on, and lower market prices for, debt obligations issued
by them. A recurrence of such financial difficulties or a failure of certain
financial recovery programs could result in defaults or declines in the market
values of various New York municipal obligations in which the Fund may invest.
If there should be a default or other financial crisis relating to New York
State, New York City, a State or City agency, or a State municipality, the
market value and marketability of outstanding New York municipal obligations in
the Fund's portfolio and the interest income to the Fund could be adversely
affected. Moreover, the national recession and the significant slowdown in the
New York and regional economies in the early 1990's added substantial
uncertainty to estimates of the State's tax revenues, which, in part, caused the
State to incur cash-basis operating deficits in the General Fund and issue
deficit notes during the fiscal periods 1989 through 1992. The State's financial
operations

<PAGE>

have improved, however, during recent fiscal years. After reflecting a 1993
year-end deposit to the refund reserve account of $671 million, reported 1993
General Fund receipts were $45 million higher than originally projected in April
1992. The State completed the 1994 and 1995 fiscal years with operating
surpluses of $914 million and $158 million, respectively. There can be no
assurance that New York will not face substantial potential budget gaps in
future years. In January 1992, Moody's lowered to Baal from A the ratings on
certain appropriation-backed debt of New York State and its agencies. The
State's general obligation, state guaranteed and New York State Local Government
Assistance Corporation bonds continued to be rated A by Moody's. In January
1992, S&P lowered to A- from A its ratings of New York State general obligation
bonds and stated that it continued to assess the ratings outlook as negative.
The ratings of various agency debt, state moral obligations, contractual
obligations, lease purchase obligations and state guarantees also were lowered.
In February 1991, Moody's lowered its rating on New York City's general
obligation bonds to Baal from A and in July 1995, S&P lowered its rating on such
bonds to BBB+ from A-. The rating changes reflect the rating agencies' concerns
about the financial condition of New York State and City, the heavy debt load of
the State and City, and economic uncertainties in the region. You should obtain
and review a copy of the Statement of Additional Information which more fully
sets forth these and other risk factors attendant to an investment in the Fund.

INVESTMENT LIMITATIONS

1. The Fund is non-diversified within the meaning of the 1940 Act. To meet
federal income tax requirements for qualification as a "regulated
investment company," the Fund limits its investments so that at the
close of every quarter of its taxable year: (a) no more than 25% of
total assets are invested in securities of a single issuer, and (b)
with regard to at least 50% of total assets, no more than 5% of total
assets are invested in the securities of a single issuer.

2. The Fund may not borrow money other than (a) by entering 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 such
commitments do not exceed 33 1/3% of the Fund's total assets; and (b)
for temporary or emergency purposes in an amount not exceeding 10% of
the value of the Fund's total assets .

3. The Fund will not purchase a security if, as a result, more than 15% of
its net assets would be invested in illiquid securities. Illiquid
securities are investments that cannot be readily sold within seven
days in the usual course of business at approximately the price at
which the Fund has valued them. Under the supervision of the Trustees,
Key Advisers or the Sub-Adviser determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and legal
expenses, and it may be difficult or impossible for the Fund to sell
them promptly at an acceptable price.

<PAGE>

Whenever an investment policy or limitation states a maximum percentage of the
Fund's assets that may be invested, such percentage limitation will be
determined immediately after and as a result of the investment and any
subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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). If the value of the Fund's 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 Trustees will consider
what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

1. AMOUNT OF INVESTMENT. If you plan to invest a substantial amount, the reduced
sales charges available for larger purchases of Class A shares may be more
beneficial to you. Any order for $1 million or more will only be accepted as
Class A shares for that reason.

2. INVESTMENT HORIZON. While future financial needs cannot be predicted with
certainty, investors who prefer not to pay an initial sales charge and who plan
to hold their shares for more than six years might consider Class B shares.
Investors who plan to redeem shares within eight years might prefer Class A
shares.

3. DIFFERENCES IN ACCOUNT FEATURES. The dividends payable to Class B
shareholders will be reduced by the additional expenses borne solely by that
class, such as the asset-based sales charge to which Class B shares are subject,
as described below and in the Statement of Additional Information.

A salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets (an
"Investment Professional") or other person who is entitled to receive
compensation for selling shares may receive different compensation for selling
one class than for selling another class. Both the CDSC (an asset-based sales
charge) for Class B shares and the front-end sales charge on sales of Class A
shares are used primarily to compensate such persons.

O HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums. When you buy
shares, be sure to specify Class A or Class B shares. If you do not make a
selection, your investment will be made in Class A shares.

<PAGE>

to establish a brokerage or agency account. Your Investment Professional will
notify you whether subsequent trades should be directed to the Investment
Professional or directly to the Fund's Transfer Agent. Accounts established with
Investment Professionals may have different features, requirements and fees. In
addition, Investment Professionals may charge for their services. Information
regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone through your Investment Professional.
Subsequent investments by telephone may be made directly. See "Special Investor
Services" for more information about telephone transactions.

The services rendered by a bank trust department, including Key Trust Company of
Ohio, N.A. and other affiliates of Key Advisers or the Sub-Adviser, are not
duplicative of any of the services for which Key Advisers or the Sub-Adviser as
the investment adviser or sub-adviser, respectively, is compensated for advising
the Fund. The charges paid by clients of bank trust departments, or their
affiliates, should also be considered by the investor in addition to the net
yield and return on the investment in the Fund, although such charges do not
affect the Fund's dividends or distributions.

INVESTING DIRECTLY

The Victory New York Tax-Free
Fund Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741.

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.

ABA #011001234
Credit PFSC DDA #16-918-8
The Victory New York Tax-Free Fund

<PAGE>

Shares are sold at the public offering price based on the net asset value that
is next determined after the Transfer Agent receives the purchase order. In most
cases, to receive that day's offering price, the Transfer Agent must receive
your order as of the close of regular trading of the New York Stock Exchange
("NYSE") (normally 4:00 p.m. Eastern time) (the "Valuation Time") on each
Business Day (as defined in "Shareholder Account Rules and Policies - Share
Price") of the Fund. If you buy shares through an Investment Professional, the
Investment Professional must receive your order in a timely fashion on a regular
Business Day and transmit it to the Transfer Agent so that it is received before
the close of business that day. The Transfer Agent may reject any purchase order
for the Fund's shares, in its sole discretion. It is the responsibility of your
Investment Professional to transmit your order to purchase shares to the
Transfer Agent in a timely fashion in order for you to receive that day's share
price.

INVESTMENT REQUIREMENTS

CLASS A CLASS A DEALER
SALES CHARGE SALES CHARGE REALLOWANCE
AS A % OF AS A % OF AS A %
OFFERING NET AMOUNT OF THE
AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE

Less than $49,999 4.75% 4.99% 4.00%
$50,000 to $99,999 4.50% 4.71% 4.00%
$100,000 to $249,999 3.50% 3.63% 3.00%
$250,000 to $499,999 2.25% 2.30% 2.00%
$500,000 to $999,999 1.75% 1.78% 1.50%
$1,000,000 and above 0.00% 0.00% -(1)

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25% of
such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

<PAGE>

First Albany Corporation ("First Albany") and PFIC Securities Corporation
("PFIC") may receive payments from the Distributor equal to two- thirds of the
Dealer Retention (as defined below) on any shares of the Fund (and other funds
of the Victory Portfolios) sold by First Albany or PFIC and their broker-dealer
affiliates. "Dealer Retention" is an amount equal to the difference between the
applicable sales charge and such part of the sales charge which is reallowed to
broker-dealers.

O REDUCED SALES CHARGES FOR CLASS A SHARES. You may be eligible to buy Class A
shares at reduced sales charge rates in one or more of the following ways:

O LETTER OF INTENT FOR CLASS A SHARES. An investor may obtain a reduced sales
charge by means of a written Letter of Intent which expresses the investor's
intention to purchase shares of the Fund at a specified total public offering
price within a 13-month period.

O RIGHT OF ACCUMULATION AND CONCURRENT PURCHASES. A shareholder may qualify for
a reduced sales charge on purchases of Class A Shares of the Fund, and other
funds of the Victory Portfolios, by combining a current purchase with purchases
of another fund(s) , certain prior purchases of shares of the Victory
Portfolios. The applicable sales charge is based on the sum of (1) the
purchaser's current purchase plus (2) the current public offering price of the
purchaser's previous purchases of (a) all shares held by the purchaser in the
Fund and (b) all shares held by the purchaser in any other fund of the Victory
Portfolios (except money market funds).

<PAGE>

Accumulation privileges may be amended or terminated without notice at any time
by the Distributor. See "Combined Purchases" and "Rights of Accumulation" in the
Statement of Additional Information.

O WAIVERS OF CLASS A SALES CHARGES. No sales charge is imposed on sales of Class
A shares to the following categories of persons (which categories may be changed
or eliminated at any time):

(1) Current or retired Trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an
"Affiliated Provider" ("Affiliated Providers" refer to affiliates and
subsidiaries of KeyCorp and service providers to the Victory Portfolios
and the Victory Shares (collectively, the "Victory Group")), dealers
having an agreement with the Distributor and any trade organization to
which Key Advisers, the Sub-Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or
certain other advisory accounts established with KeyCorp or any of its
affiliates;

(3) Investors who reinvest assets received in a distribution from a
qualified, non-qualified or deferred compensation plan, agency, trust
or custody account that was either (a) maintained by KeyCorp or an
Affiliated Provider, or (b) invested in a fund of the Victory Group;

(6) Investment advisers or financial planners who place trades for their
own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; and clients of
such investment advisers or financial planners who place trades for
their own accounts if the accounts are linked to the master account of
such investment adviser or financial planner on the books and records
of the broker or agent. Such accounts include retirement and deferred
compensation plans and trusts used to fund those plans, including, but
not limited to, those described in section 401(a), 403(b), or 457 of
the Internal Revenue Code and "rabbi trusts."

<PAGE>

CONTINGENT DEFERRED SALES CHARGE
YEARS SINCE PURCHASE ON REDEMPTIONS IN THAT YEAR
PAYMENT WAS MADE (AS % OF AMOUNT SUBJECT TO CHARGE)

0-1 5.0%
1-2 4.0%
2-3 3.0%
3-4 3.0%
4-5 2.0%
5-6 1.0%
6 and following None

In the table, a "year" is a 12-month period. All purchases are considered to
have been made on the first regular business day of the month in which the
purchase was made.

O WAIVERS OF CLASS B CDSC. The Class B CDSC will be waived if the shareholder
requests it for any of the following redemptions: (1) distributions to
participants or beneficiaries from Retirement Plans, if the distributions are
made (a) under an Automatic Withdrawal Plan after the participant reaches age 59
1/2, as long as the payments are no more than 12% of the account value annually
(measured from the date the Transfer Agent receives the request), or (b)
following the death or disability (as defined in the Internal Revenue Code) of
the participant or the beneficial owner, (2) redemptions from accounts other
than Retirement Plans following the death or disability of the shareholder (as
evidenced by a determination of disability by the Social Security
Administration), (3) returns of excess contributions to Retirement Plans, and
(4) distributions of not more than 12% of the account value annually.

The CDSC is also waived on Class B shares in the following cases: (1) shares
sold to Key Advisers, the SubAdviser or their affiliates; (2) shares issued in
plans of reorganization to which the Victory Portfolios is a party; and (3)
shares redeemed in involuntary redemptions as described above.

O AUTOMATIC CONVERSION OF CLASS B SHARES. Eight years after Class B shares are
purchased, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution Plan, described
below. The conversion is based on the relative net asset value of the two
classes, and no sales charge or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements--Class B Conversion Feature"
in the Statement of Additional Information.

The Distributor pays sales commissions of 4.00% of the purchase price to dealers
from its own resources at the time of sale. For maintaining and servicing
accounts of customers invested in the Fund, First Albany and PFIC Securities
Corporation may receive payments from the Distributor equal to two-thirds of the
excess of the scheduled CDSC over any commission paid to the selling broker on
such share. The Distributor retains the asset-based sales charge to recoup the
sales commissions it pays and its financing costs. If the Plan is terminated by
the Victory Portfolios, it provides that the Trustees may elect to continue
payments for certain expenses already incurred. The payments under the Plan
increase the annual expenses of Class B shares. For more details, please refer
to "Advisory and Other Contracts Class B Shares Distribution Plan" in the
Statement of Additional Information.

<PAGE>

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

<PAGE>

let you invest for retirement and shelter your investment income from current
taxes. Plans include Individual Retirement Accounts (IRAs) and Rollover IRAs.
Other fees may be charged by the IRA custodian or trustee.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in your
state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you purchase
by exchange.

(5) The registration and tax identification numbers of the two accounts must be
identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH TO
PURCHASE BY EXCHANGE.

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued from the other fund in
the exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally 4:00 p.m. Eastern time)
that is in proper form, but either fund may delay the issuance of shares of the
fund into which you are exchanging if it determines it would be disadvantaged by
a same-day transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy might
create excessive turnover in the Fund's portfolio and associated expenses
disadvantageous to the Fund.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

<PAGE>

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

Shareholders of the former Investors Preference Fund for Income, Inc. and
Investors Preference New York Tax-Free Fund, Inc. will not be subject to any
additional sales load upon an exchange of shares attributable to an Investors
Preference Funds account for shares of other funds of the Victory Portfolios.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business. (See the definition of "Business Day" under "Shareholder Account
Rules and Policies -- Share Price"). "Share Price" below). Shares will be
redeemed at the NAV next calculated after the Transfer Agent has received the
redemption request. If the Fund account is closed, any accrued dividends will be
paid at the beginning of the following month.

You may redeem shares in several ways:

O BY MAIL. Send a written request to: The Victory New York Tax-Free Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

O BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before Valuation Time (normally 4:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of
instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

<PAGE>

redemption orders must be received. To the extent that portfolio securities are
traded in other markets on days when the NYSE is closed, the Fund's NAV may be
affected on days when investors do not have access to the Fund to purchase or
redeem shares.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The NAV of each class of shares is calculated by adding the value
of all the Fund's investments, plus cash and other assets, deducting liabilities
of the Fund and of the class, and then dividing the result by the number of
shares of the class outstanding. The NAV of the Fund is determined and its
shares are priced as of the close of regular trading of the NYSE (normally 4:00
p.m. Eastern time) (the "Valuation Time"), 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 its 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 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 and Christmas .

o Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form . From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

o The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

<PAGE>

recently purchased shares, but only until the purchase payment has cleared. That
delay may be as much as 15 days from the date the shares were purchased. That
delay may be avoided if you arrange with your bank to provide telephone or
written assurance to the Transfer Agent that your purchase payment has cleared.

o The Distributor, at its expense, may also provide additional cash compensation
to dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is 4.00% of the offering price. In
addition, the Distributor may, from time to time and at its own expense, provide
compensation, including financial assistance, to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns regarding one or more Victory Portfolios and/or
other dealer-sponsored special events including payment for travel expenses,
including lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Compensation
will include the following types of non-cash compensation offered through sales
contests: (1) vacation trips including the provision of travel arrangements and
lodging; (2) tickets for entertainment events (such as concerts, cruises and
sporting events) and (3) merchandise (such as clothing, trophies, clocks and
pens).
Dealers may not use sales of the Fund's shares to qualify for this compensation
if prohibited by the laws of any state or any self-regulatory organization, such
as the National Association of Securities Dealers, Inc. None of the
aforementioned compensation is paid for by the Fund or its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends,
if any, will be automatically reinvested in additional shares
of the Fund. Income and capital gain dividends will be
reinvested at the net asset value of your class of shares of
the Fund as of the day after the record date. If you do not
indicate a choice on your application, you will be assigned
this option.

<PAGE>

2. CASH OPTION. You will receive a check for each income or
capital gain dividend, if any. Distribution checks will be
mailed no later than 7 days after the dividend payment date
which may be more than 7 days after the dividend record date.

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at
the NAV as of the day after the record date, and have your
income dividends paid in cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital
gain dividends, or only capital gain dividends, automatically
reinvested in shares of another fund of the Victory Group.
Shares will be purchased at the NAV as of the day after the
record date. If you are reinvesting dividends of a fund sold
without a sales charge in shares of a fund sold with a sales
charge, the shares will be purchased at the public offering
price. If you are reinvesting dividends of a fund sold with a
sales charge in shares of a fund sold with or without a sales
charge, the shares will be purchased at the net asset value of
the fund. Dividend distributions can be directed only to an
existing account with a registration that is identical to that
of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and
capital gain dividends, or only your income dividends,
automatically transferred to your bank checking or savings
account. The amount will be determined on the dividend record
date and will normally be transferred to your account within 7
days of the dividend record date. Dividend distributions can
be directed only to an existing account with a registration
that is identical to that of your Fund account. Please call or
write the Transfer Agent to learn more about this dividend
distribution option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

<PAGE>

date ("Buying a Dividend") will pay the full price for the shares and then
receive a portion of the purchase price back as a taxable distribution.

FEDERAL TAXES

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares.
Distributions received by shareholders of the Fund in January of a given year
will be treated as received on December 31 of the preceding year provided that
they were declared to shareholders of record on a date in October, November, or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

Although exempt-interest dividends are excluded from gross income for federal
income tax purposes , they are not necessarily excluded from the income or other
tax laws of state or local taxing authorities. However, to the extent that
exempt- interest dividends on shares of the Fund are derived from interest
received by the Fund on obligations of New York State, its political
subdivisions, or its duly constituted authorities, they will be exempt from New
York State and New York City personal income taxes for a New York resident
individual shareholder. Exemptinterest dividends will not be excluded in
determining New York State or New York City franchise taxes applicable to
corporations or financial institutions. Exempt-interest dividends from the Fund
is not necessarily exempt from state income taxes in states other than New York.
Investors considering an investment in the Fund should consult their tax
advisers concerning the application of state and local taxes to an investment in
the Fund, which may differ from the federal income tax consequences described
above.

REDEMPTIONS OR EXCHANGES

<PAGE>

disallowed) will be treated as a long-term capital loss to the extent that the
shareholder has received a capital gain dividend on those shares. All or a
portion of any loss realized upon a taxable disposition of shares of the Fund
may be disallowed if other shares of the Fund are purchased within 30 days
before or after such disposition.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

PERFORMANCE

<PAGE>

Any fees charged by service providers with respect to customer accounts for
investing in shares of the Fund will not be reflected in performance
calculations.

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, OH 43219-3035.

REORGANIZATION WITH PREDECESSOR FUND

The Predecessor Fund was a portfolio of The Victory Funds. On May 26, 1995, the
Shareholders of the Predecessor Fund, approved an Agreement and Plan of
Reorganization (the "Reorganization Plan"). Under the Reorganization Plan, the
Predecessor Fund transferred all its assets and liabilities to the Fund in
exchange for shares of the Fund, which were distributed pro rata to shareholders
of the Predecessor Fund, who then became shareholders of the Fund (the
"Reorganization"). The Predecessor Fund has ceased operations. The Fund had no
assets and did not begin operations until the Reorganization occurred.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

Key Advisers was organized as an Ohio corporation on July 27, 1995 and is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended. 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 $66 billion for numerous clients including large corporate and
public retirement plans, Taft-Hartley plans, foundations and endowments, high
net worth individuals and mutual funds.

<PAGE>

Inc., a registered investment adviser, on behalf of the Fund. The Sub-Adviser is
a wholly- owned subsidiary of KeyCorp Asset Management Holdings, Inc. The
Investment Advisory Agreement and the sub-advisory agreement, respectively,
provide that Key Advisers and the Sub-Adviser, respectively, may render services
through their 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
and the Sub-Adviser, respectively, and Key Advisers and the Sub-Adviser,
respectively, will be as fully responsible to the Fund for the acts and
omissions of such persons as they are for their own acts and omissions.

For its services under the investment sub-advisory agreement, Key Advisers pays
the Sub-Adviser fees as a percentage of average daily net assets as follows:
0.40% of the first $10 million of average daily net assets; 0.30% of the next
$15 million of average daily net assets; 0.25% of the next $25 million of
average daily net assets; and 0.20% of average daily net assets in excess of $50
million.

The person primarily responsible for the investment management of the Fund, as
well as their previous experience is as follows:

PORTFOLIO MANAGING PREVIOUS
MANAGER FUND SINCE EXPERIENCE

Paul A. Toft September, 1994 Vice President, Society Asset Management,
Inc.; Portfolio Manager, Society Asset
Management, Inc. since September,
1994; Vice President and Manager, Nike
Securities, L.P., 1991 -1994; formerly,
Assistant Vice President, Van Kampen
Merrett, 1990 -1991.

EFFECT OF BANKING LAWS

ADMINISTRATOR AND DISTRIBUTOR

<PAGE>

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

The Victory Portfolios has adopted a Shareholder Servicing Plan for each class
of shares of the Fund. In accordance with the Shareholder Servicing Plan, the
Fund may enter into Shareholder Service Agreements under which the Fund pays
fees of up to .25% of the average daily net assets of each class for fees
incurred in connection with the personal service and maintenance of accounts
holding the shares of such class. Such agreements are entered into between the
Victory Portfolios and various shareholder servicing agents, including the
Distributor, Key Trust Company of Ohio, N.A. and its affiliates, and other
financial institutions and securities brokers (each, a "Shareholder Servicing
Agent").
Each Shareholder Servicing Agent generally will provide support services to
shareholders by establishing and maintaining accounts and records, processing
dividend and distribution payments, providing account information, arranging for
bank wires, responding to routine inquires, forwarding shareholder
communication, assisting in the processing of purchase, exchange and redemption
requests, and assisting shareholders in changing dividend options, account
designations and addresses. Shareholder Servicing Agents may periodically waive
all or a portion of their respective shareholder servicing fees with respect to
the Fund .

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

BUSINESS MANAGEMENT AGREEMENT

<PAGE>

Portfolios' Board of Trustees, recordkeeping services, services rendered in
connection with the preparation of regulatory filings and other reports, and
regulatory , compliance , and other administrative and support services.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were 1.96% of Class A Shares' average daily net assets and 2.25% of Class B
Shares' average daily net assets, without giving effect to certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Shares of each class of the Fund participate equally in dividends and
distributions and have equal voting, liquidation and other rights. When issued
and paid for, shares will be fully paid and nonassessable by the Victory
Portfolios and will have no preference, conversion, exchange or preemptive
rights. Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares owned. For those investors with qualified
trust accounts , the trustee will vote the shares at meetings of the Fund's
shareholders in accordance with the shareholder's instructions or will vote in
the same percentage as shares that are not so held in trust. The trustee will
forward to these shareholders all communications received by the trustee,
including proxy statements and financial reports. The Victory Portfolios and the
Fund are not required to hold annual meetings of shareholders and in ordinary
circumstances do not intend to hold such meetings. The Trustees may call special
meetings of shareholders for action by shareholder vote as may be required by
the 1940 Act or the Declaration of Trust . Under certain circumstances, the
Trustees may be removed by action of the Trustees or by the shareholders.
Shareholders holding 10% or more of the Victory Portfolios' outstanding shares
may call a special meeting of shareholders for the purpose of voting upon the
question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have each adopted a
Code of Ethics ( the "Codes") which require investment personnel (a) to
pre-clear all personal securities transactions, (b) to file reports regarding
such transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The
Codes also prohibit investment personnel from purchasing securities in an
initial public offering. Personal trading reports are reviewed periodically by
Key Advisers and the Sub-Adviser, and the Board of Trustees reviews their Codes
and any substantial violations of the Codes). Violations of the Codes may result
in censure, monetary penalties, suspension or termination of employment.

DELAWARE LAW

<PAGE>

a shareholder for any act or obligation of the Victory Portfolios. Therefore,
financial loss resulting from liability as a shareholder will occur only if the
Delaware successor to the Victory Portfolios itself cannot meet its obligations
to indemnify shareholders and pay judgments against them.

MISCELLANEOUS

Shareholders will receive Semi-Annual Reports, which are unaudited, and Annual
Reports, which are audited by independent public accountants ( "Reports"),
describing the investment operations of the Fund. Each of these Reports, when
available for a particular fiscal year end or the end of a semi-annual period,
is incorporated herein by reference. The Victory Portfolios may include
information in their Reports to shareholders that (a) describes general economic
trends, (b) describes general trends within the financial services industry or
the mutual fund industry, (c) describes past or anticipated portfolio holdings
for the Fund or (d) describes investment management strategies for the Victory
Portfolios. Such information is provided to inform shareholders of the
activities of the Victory Portfolios for the most recent fiscal year or semi
- -annual period and to provide the views of Key Advisers, the Sub-Adviser and/or
the Victory Portfolios' officers regarding expected trends and strategies.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

<PAGE>

THE
VICTORY
PORTFOLIOS

OHIO MUNICIPAL BOND FUND

PROSPECTUS For current yield, purchase, and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the OHIO MUNICIPAL BOND FUND (the "Fund"), a
non-diversified fund. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment adviser to the Fund ("Key
Advisers" or the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment sub-adviser to the Fund
("Society" or the "Sub- Adviser"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund seeks to produce a high level of current interest income which is
exempt from both federal income tax and Ohio personal income tax.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940, 9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP BANK,
ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses........................................ 3
Financial Highlights................................... 4
Investment Objective................................. 5
Investment Policies and Risk Factors................... 5
How to Invest, Exchange and Redeem..................... 13
Dividends, Distributions and Taxes..................... 23
Performance............................................ 26
Fund Organization and Fees............................. 27
Additional Information................................. 30

- 2 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases (as a percentage
of the offering price)........................................ 4.75%
Maximum Sales Charge Imposed on Reinvested Dividends.......... none
Deferred Sales Charge......................................... none
Redemption Fees................................................. none
Exchange Fee.................................................. none

ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE WAIVERS AND REIMBURSEMENTS (as a
percentage of average daily net assets)

Management Fees (2)........................................ .46%
Administration Fees........................................ .15%
Other Expenses............................................. .29%
----
Total Fund Operating Expenses(2)(3)...................... .90%
====

(1) Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent, including affiliated banks and non-bank
affiliates of Key Advisers and Key Corp. (See "How To Invest, Exchange
and Redeem.")

(2) The Adviser has agreed to reduce its investment advisory fees for the
indefinite future. Absent the voluntary reduction of investment
advisory fees, "Management Fees" as a percentage of average daily net
assets would be .60% and "Total Fund Operating Expenses" as a
percentage of average daily net assets would be 1.04%.

(3) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay. (See "Fund Organization and Fees - Shareholder
Servicing Plan."

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Ohio Municipal Bond Fund.............. $56 $75 $95 $153

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

- 3 -

<PAGE>

FINANCIAL HIGHLIGHTS

THE VICTORY OHIO MUNICIPAL BOND FUND

1990 TO
YEARS ENDED OCTOBER 31, OCTOBER 31,
1995 1994 1993 1992 1991 1990(A)
------ ---- ---- ---- ---- -------

NET ASSET VALUE, BEGINNING
<S> <C> <C> <C> <C> <C> <C>
OF PERIOD $10.33 $ 11.52 $ 10.52 $ 10.37 $10.06 $10.00
----- ------- ------- ------- ------ ------
INCOME FROM INVESTMENT ACTIVITIES
Net investment income 0.52 0.49 0.52 0.60 0.65 0.28
Net realized and unrealized gains
(losses) from investments 1.00 (0.94) 1.00 0.15 0.31 0.04
---------- ------- ------- -------- ------ ------
Total from Investment
Activities 1.52 (0.45) 1.52 0.75 0.96 0.32
--------- ------- ------- -------- ------ ------
Distributions
Net investment income (0.53) (0.49) (0.52) (0.60) (0.65) (0.26)
Net realized gains (0.25)
--------- ------ ------ ------ ------ ------
Total Distributions (0.53) (0.74) (0.52) (0.60) (0.65) (0.26)
--------- ------- ------ -------- ------ ------
NET ASSET VALUE, END OF PERIOD $11.32 $ 10.33 $ 11.52 $ 10.52 $10.37 $10.06
======== ======= ======= ======== ====== =======
Total Return
(excludes sales charge) 15.03% (4.08%) 14.75% 7.34% 9.87% 3.27%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $60,031 $57,704 $50,676 $17,676 $8,042 $6,315
Ratio of expenses to
average net assets 0.66% 0.51% 0.42% 0.09% 0.01% 0.38%(b)
Ratio of net investment income
to average net assets 4.78% 4.58% 4.77% 5.76% 6.39% 6.11%(b)
Ratio of expenses to average
net assets (c) 0.94% 1.09% 0.86% 0.84% 1.17%(b)
Ratio of net investment income
to average net assets (c) 4.49% 4.01% 4.33% 5.01% 5.32%(b)
Portfolio turnover 124.79% 52.59% 150.76% 47.28% 15.06% 17.62%

</TABLE>

(a) Period from commencement of operations.
(b) Annualized.

(c) During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.

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<PAGE>

INVESTMENT OBJECTIVE

The investment objective of the Fund is to produce a high level of current
interest income which is exempt from both federal income tax and Ohio personal
income tax. The investment objective of the Fund is fundamental and may not be
changed without a vote of the holders of a majority of the Fund's outstanding
voting securities (as defined in the Statement of Additional Information). There
can be no assurance the investment objective of the Fund will be achieved.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

Under normal market conditions, the Fund will invest at least 80% of its total
assets in investment grade obligations issued by or on behalf of the State of
Ohio and its political subdivisions, the interest on which, in the opinion of
the issuer's bond counsel at the time of issuance, is exempt from both federal
income tax and Ohio personal income tax and not treated as a preference item for
purposes of the federal alternative minimum tax ("Ohio Tax-Exempt Obligations").
Under normal market conditions, the Fund will invest at least 65% of its total
assets in Ohio Tax-Exempt Obligations that are bonds. The Fund will maintain an
effective dollar-weighted average portfolio maturity of between five and fifteen
years.

Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.
Because the Fund invests primarily in debt securities, which fluctuate in value,
the Fund's shares will fluctuate in value.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

O OHIO TAX-EXEMPT OBLIGATIONS. The two principal classifications of Ohio
Tax-Exempt Obligations which may be held by the Fund are "general obligation"
securities and "revenue" securities. General obligation securities are secured
by the issuer's pledge of its full faith, and credit and taxing power for the
payment of principal and interest. Revenue securities are payable only from the
revenues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a specific revenue source such as the user of the
facility being financed. Private activity bonds held by the Fund are in most
cases revenue securities and are not payable from the revenues of the issuer.
Consequently, the credit quality of private activity bonds is usually directly
related to the credit standing of the corporate user of the facility involved.

Among other types of Ohio Tax-Exempt Obligations, the Fund may purchase Tax
Anticipation Notes, Bond Anticipation Notes, Revenue Anticipation Notes,
Tax-Exempt Commercial Paper and other forms of short-term tax-exempt loans. Such

- 5 -

<PAGE>

instruments are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bonds to be sold or other revenues.

The Fund may also invest in "moral obligation" securities which are normally
issued by special purpose public authorities. If the issuer of moral obligation
securities is unable to meet its debt service obligations from current revenues,
it may draw on a reserve fund, the restoration of which is a moral commitment
but not a legal obligation of the state or municipality which created the
issuer.

Investments by the Fund in refunded municipal bonds that are secured by escrowed
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities are considered to be investments in U.S. Government securities
for purposes of the diversification requirements to which the Fund is subject
under the Investment Company Act of 1940. As a result, more than 5% of the
Fund's assets may be invested in such refunded bonds issued by a particular
municipal issuer.

The Fund invests in Ohio Tax-Exempt Obligations which are rated at the time of
purchase within the three highest rating categories by a nationally recognized
statistical ratings organization ("NRSRO"), in the case of bonds (for example,
"A" or higher by Moody's Investors Service ("Moody's") or Standard & Poor's
("S&P")); rated "A-2" or higher by S&P or "P-2" or higher by Moody's in the case
of notes; rated "SP-1" or higher by S&P or "MIG-2" by Moody's in the case of
tax-exempt commercial paper; or rated "VMIG-2" by Moody's in the case of
variable rate demand obligations. Such ratings requirements do not constitute a
fundamental investment objective or restriction. The Fund may also purchase Ohio
Tax-Exempt Obligations which are unrated at the time of purchase but are
determined to be of comparable quality by Key Advisers or the Sub-Adviser
pursuant to guidelines approved by the Victory Portfolios' Board of Trustees.
Opinions relating to the validity of Ohio Tax-Exempt Obligations and to the
exemption of interest thereon from federal and Ohio state income tax are
rendered by bond counsel to the respective issuers at the time of issuance.
Neither the Fund nor Key Advisers or the Sub-Adviser will review the proceedings
relating to the issuance of Ohio Tax-Exempt Obligations or the basis for such
opinions.

O GOVERNMENT MORTGAGE-BACKED SECURITIES. The principal governmental (i.e.,
backed by the full faith and credit of the United States Government) guarantor
of mortgage-related securities is GNMA. GNMA is a wholly-owned United States
Government corporation within the Department of Housing and Urban Development.
GNMA is authorized to guarantee with the full faith and credit of the United
States Government, the timely payment of principal and interest on securities

- 6 -

<PAGE>

issued by institutions approved by GNMA (such as savings and loan institutions,
commercial banks and mortgage bankers) and backed by pools of FHA-insured or
VA-guaranteed mortgages.

Government-related (i.e., not backed by the full faith and credit of the United
States 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 but are not backed by the
full faith and credit of the United States Government.

The investment characteristics of mortgage-related securities differ from
traditional debt securities. These differences can result in significantly
greater price and yield volatility than is the case with traditional fixed
income securities. The major differences typically include more frequent
interest and principal payments, usually monthly, the adjustability of interest
rates, and the possibility that prepayments of principal may be made at any
time. Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors. During periods of
declining interest rates, prepayment rates can be expected to accelerate. Under
certain interest rate and prepayment rate scenarios, the Fund may fail to recoup
fully its investment in mortgage-backed securities (and incur capital losses)
notwithstanding a direct or indirect governmental or agency guarantee. In
general, changes in the rate of prepayments on a mortgage-related security will
change that security's market value and its yield to maturity. When interest
rates fall, high prepayments could force the Fund to reinvest principal at a
time when investment opportunities are not attractive. Thus, mortgage-backed
securities may not be an effective means for the Fund to lock in long-term
interest rates. Conversely, during periods when interest rates rise, slow
prepayments could cause the average life of the security to lengthen and the
value to decline more than anticipated. However during periods of rising
interest rates, principal repayments by mortgage-backed securities allow the
Fund to reinvest at increased interest rates.

O MORTGAGE-RELATED SECURITIES ISSUED BY NON-GOVERNMENTAL ENTITIES. The Fund may
invest in mortgage-related securities issued by non-governmental entities.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may
also be the originators of the underlying mortgage loans as well as the
guarantors of the mortgage-related securities. Pools created by such
non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are not direct or indirect
government guarantees of payments in the former pools. However, timely payment
of interest and principal of these pools is supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance. The insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. Such insurance and guarantees and the

- 7 -

<PAGE>

creditworthiness of the issuers thereof will be considered in determining
whether a mortgage-related security meets the Fund's investment quality
standards. There can be no assurance that the private insurers can meet their
obligations under the policies. The Fund may buy mortgage-related securities
without insurance or guarantees if, through an examination of the loan
experience and practices of the poolers, Key Advisers or the Sub-Adviser
determines that the securities meet the Fund's quality standards. Although the
market for such securities is becoming increasingly liquid, securities issued by
certain private organizations may not be readily marketable. The Fund will not
purchase mortgage-related securities or any other assets which in Key Advisers
or the Sub-Adviser's opinion are illiquid if, as a result, more than 15% of the
value of the Fund's total assets will be invested in illiquid securities.

The Fund may purchase mortgage-related securities with stated maturities in
excess of 10 years. Mortgage-related securities include collateralized mortgage
obligations and participation certificates in pools of mortgages. The average
life of mortgage-related securities varies with the maturities of the underlying
mortgage instruments, which have maximum maturities of 40 years. The average
life is likely to be substantially less than the original maturity of the
mortgage pools underlying the securities as the result of mortgage prepayments.
The rate of such prepayments, and hence the average life of the certificates,
will be a function of current market interest rates and current conditions in
the relevant housing markets. The impact of prepayment of mortgages is described
under "Government Mortgage-Backed Securities" above. Estimated average life will
be determined by Key Advisers or the Sub-Adviser. Various independent
mortgage-related securities dealers publish estimated average life data using
proprietary models, and in making such determinations, Key Advisers or the
SubAdviser will rely on such data except to the extent such data are deemed
unreliable by Key Advisers or the Sub-Adviser. Key Advisers or the SubAdviser
might deem data unreliable which appeared to present a significantly different
estimated average life for a security than data relating to the estimated
average life of comparable securities as provided by other independent
mortgage-related securities dealers.

O TAXABLE OBLIGATIONS. The Fund may invest up to 20% of its net assets in
taxable obligations or debt securities the interest income from which may be
treated as an item of tax preference for purposes of the federal alternative
minimum tax if, for example, suitable tax-exempt obligations are unavailable or
if the acquisition of such securities is deemed appropriate for temporary
defensive purposes. Taxable obligations may include obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities (some of
which may be subject to repurchase agreements), certificates of deposit and
bankers' acceptances of domestic banks and domestic branches of foreign banks,
commercial paper meeting the Fund's quality standards (as described above) for
tax-exempt commercial paper, and shares issued by other open-end registered
investment companies issuing taxable dividends where the Fund's investment
adviser waives a pro rata portion of its advisory fee; notwithstanding this
waiver, such investments involve a layering of certain costs and expenses. To
the extent required by the laws of any state in which shares of the Fund are
sold, Key Advisers or the Sub- Adviser will waive its investment advisory fee as
to all assets invested in other investment companies. These obligations are
described further in the Statement of Additional Information.

The Fund may hold uninvested cash reserves pending investment, during temporary
defensive periods or if, in the opinion of Key Advisers or the Sub-Adviser,
suitable Ohio Tax-Exempt Obligations are unavailable. There is no percentage
limitation on the amount of assets which may be held uninvested. Uninvested cash
reserves will not earn income, and thus are not being utilized so as to meet the
Fund's investment objective.

- 8 -

<PAGE>

Futures transactions involve brokerage costs and require the Fund to segregate
assets to cover contracts that would require it to purchase securities or
currencies. The Fund may lose the expected benefit of futures transactions if
interest 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
the Fund's futures positions may not prove to be perfectly or even highly
correlated with the value of its portfolio securities limiting the Fund's
ability to hedge effectively against interest 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.

O PUTS. The Fund may acquire "puts" with respect to Ohio Tax-Exempt Obligations
held in its portfolio. Under a put, the Fund has the right to sell a specified
Ohio Tax-Exempt Obligation within a specified period of time at a specified
price. A put will be sold, transferred, or assigned only with the underlying
Ohio Tax-Exempt Obligation. The Fund will acquire puts solely to facilitate
portfolio liquidity, shorten the maturity of underlying Ohio Tax-Exempt
Obligations, or permit the investment of its assets at a more favorable rate of
return. The Fund expects that it will generally acquire puts only where the puts
are available without the payment of any direct or indirect consideration.
However, if necessary or advisable, the Fund may pay for a put either separately
in cash or by paying a higher price for portfolio securities which are acquired
subject to the put (thus reducing the yield to maturity otherwise available for
the same securities).

O STAND-BY COMMITMENTS. The Fund may acquire "stand-by commitments" with respect
to Ohio Tax-Exempt Obligations held in its portfolio. Under a stand-by
commitment, a dealer would agree to purchase at the Fund's option specified Ohio
Tax-Exempt Obligations at a specified price. The Fund will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. Stand-by commitments
acquired by the Fund may also be referred to as "put" options.

- 9 -

<PAGE>

are issued by banks and brokerage firms and are created by depositing Treasury
notes and Treasury bonds into a special account at a custodian bank; the
custodian holds the interest and principal payments for the benefit of the
registered owners of the certificates or receipts. The custodian arranges for
the issuance of the certificates or receipts evidencing ownership and maintains
the register. Receipts include Treasury Receipts ("TRs"), Treasury Investment
Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury Securities
("CATS").

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity dates without interim cash payments of interest or principal.
This discount is amortized over the life of the security, and such amortization
will constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations.

O VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase investment grade
variable and floating rate tax-exempt notes . The interest rates on these
securities may be reset daily, weekly, quarterly, or some other reset period,
and may be subject to a floor or ceiling. There is a risk that the current
interest rate on such obligations may not accurately reflect existing market
interest rates. There may be no active secondary market with respect to a
particular variable or floating rate note. Variable and floating rate notes for
which no readily available market exists will be purchased in an amount which,
together with other illiquid securities held by the Fund, does not exceed 15% of
the Fund's net assets unless such notes are subject to a demand feature that
will permit the Fund to receive payment of the principal within seven days after
demand by the Fund therefor. These securities are included among those which are
sometimes referred to as "derivative securities." "Investment grade" securities
are those rated at the time of purchase within the four highest rating
categories assigned by NRSRO, or if unrated, are obligations that Key Advisers
or the Sub-Adviser determine to be of comparable quality.

O REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

- 10 -

<PAGE>

O REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund sells portfolio securities to financial institutions such
as banks and broker-dealers, and agrees to repurchase them at a mutually
agreed-upon date and price. At the time the Fund enters into a reverse
repurchase agreement, it must place in a segregated custodial account assets
having a value equal to the repurchase price (including 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").

O INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and, to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
SubAdviser will waive its investment advisory fees 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, to the extent such fees are not waived
by Key Advisers or the Sub-Adviser.

O PRIVATE PLACEMENT INVESTMENTS. The Fund may invest in high quality commercial
paper issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act"). Section 4(2)
Commercial Paper ("Commercial Paper") is generally sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) commercial paper is
normally resold to other institutional investors like the Fund through or with
the assistance of the issuer or investment dealers who make a market in
Commercial Paper, thus providing liquidity. The Fund believes that Commercial
Paper and possibly certain other Restricted Securities (as defined in the
Statement of Additional Information) that meet the criteria for liquidity
established by the Trustees are quite liquid. The Fund intends, therefore, to
treat the restricted securities that meet the criteria for liquidity established
by the Trustees, including Commercial Paper, as determined by Key Advisers or
the Sub-Adviser, as liquid and not subject to the investment limitation
applicable to illiquid securities. See "Investment Limitations" below.

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal year ended October 31, 1995, the
portfolio turnover rate was 124.79% compared to 52.59% in the prior fiscal year.

From time to time, the Fund, to the extent consistent with its investment
objective, policies and restrictions, may invest in securities of issuers with

- 11 -

<PAGE>

which Key Advisers or the Sub-Adviser or its affiliates have a lending
relationship.

CERTAIN INVESTMENT RISKS PERTAINING TO OHIO INVESTMENTS

O DIVERSIFICATION AND CONCENTRATION. Because of the relatively small number of
issuers of high grade Ohio Tax-Exempt Obligations, the Fund may concentrate its
assets in the securities of a few issuers which Key Advisers or the SubAdviser
considers to be attractive investments, rather than invest in a larger number of
securities. While Key Advisers or the Sub-Adviser believes that this ability to
concentrate the investments of the Fund in particular issuers is an advantage
when investing in Ohio Tax-Exempt Obligations, such concentration involves an
increased risk of loss to the Fund should the issuer be unable to make interest
or principal payments thereon or should the market value of such securities
decline.

The Fund may invest more than 25% of its assets in industrial development
revenue bonds in general. It is the policy of the Fund not to invest more than
25% of its assets in industrial development revenue bonds which are based,
directly or indirectly, on the credit of private entities in any one industry or
in securities of private issuers in any one industry (governmental issuers are
not considered to be part of any "industry").

O THE OHIO ECONOMY. The economy of Ohio, while having become increasingly
reliant on the service sector, continues to rely in part on durable goods
manufacturing, which is largely concentrated in motor vehicles and equipment,
steel, rubber products and household appliances. As a result, general economic
activity in Ohio, as in many other industrial states, tends to be more cyclical
than in some other states and in the nation as a whole. Agriculture also is an
important segment of the Ohio economy, and the state has instituted several
programs to provide financial assistance to farmers. Ohio's economy, which in
recent years has been characterized by an unemployment rate usually somewhat
lower than the national average, varies among the different geographic areas of
the state and the political subdivisions located in such geographic areas.
Although revenue obligations of the state or its political subdivisions may be
payable from a specific source or project, there can be no assurance that future
economic difficulties and the resulting impact on state and local government
finances will not adversely affect the market value of the Ohio Tax-Exempt
Obligations in the Fund's portfolio or the ability of the respective obligors to
make timely payment of interest and principal on such obligations. See the
Statement of Additional Information for further discussion of special
considerations regarding investments in Ohio Tax-Exempt Obligations. The Fund,
in addition to investing primarily in Ohio Tax-Exempt Obligations, may invest in
a relatively high percentage of such bonds having other similar characteristics.
The issuers may be located in the same city or county, or may pay their
obligations from revenues of similar projects. In addition to fiscal
considerations applicable to issuers of Ohio Tax-Exempt Obligations generally,
this may make the Fund more susceptible to economic, political, or regulatory
occurrences. As the similarity in issuers increases, the potential for
fluctuation in the net asset value of the Fund's securities from such
occurrences also increases.

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<PAGE>

INVESTMENT LIMITATIONS

1. The Fund may not borrow money other than (a) by entering 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 such
commitments do not exceed 331/3% of the Fund's total assets; and (b)
for temporary or emergency purposes in an amount not exceeding 5% of
the value of the Fund's total assets .

2. The Fund will not purchase a security if, as a result, more than 15% of
its net assets would be invested in illiquid securities . Illiquid
securities are investments that cannot be readily sold within seven days
in the usual course of business at approximately the price at which the
Fund has valued them . Under the supervision of the Trustees, Key
Advisers or the Sub -Adviser determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of illiquid
investments may involve time -consuming negotiation and legal expenses,
and it may be difficult or impossible for the Fund to sell them promptly
at an acceptable price.

3. [INSERT 13A -- MISSING]

Each of the investment limitations indicated above in this subsection are
fundamental, except for the limitation pertaining to illiquid securities.
Nonfundamental limitations may be changed without shareholder approval. Whenever
an investment policy or limitation states a maximum percentage of the Fund's
assets that may be invested, such percentage limitation will be determined
immediately after and as a result of the investment and any subsequent change in
values, assets, or other circumstances will not be considered when determining
whether the investment complies with the Fund's investment policies and
limitations, 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). If
the value of the Fund's 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 Trustees will consider what actions, if any, are
appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

O HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Account) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

O INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. An "Investment Professional"
is a sales person, financial planner, investment adviser or trust officer who

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<PAGE>

provides you with information regarding the investment of your assets. Your
Investment Professional will place your order with the Transfer Agent (see "Fund
Organization and Fees- Transfer Agent") on your behalf. You may be required to
establish a brokerage or agency account. Your Investment Professional will
notify you whether subsequent trades should be directed to the Investment
Professional or directly to the Fund's Transfer Agent. Accounts established with
Investment Professionals may have different features, requirements and fees. In
addition, Investment Professionals may charge for their services. Information
regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone either through your bank trust department
or through your Investment Professional. Subsequent investments by telephone may
be made directly. See "Special Investor Services" for more information about
telephone transactions.

The services rendered by a bank trust department, including Key Trust Company of
Ohio, N.A., and other affiliates of Key Advisers or the Sub-Adviser are not
duplicative of any of the services for which Key Advisers or the Sub-Adviser as
the investment adviser or sub-adviser, respectively, is compensated for advising
the Fund. The charges paid by clients of bank trust departments, or their
affiliates, should also be considered by the investor in addition to the net
yield and return on the investment in the Fund, although such charges do not
affect the Fund's dividends or distributions.

INVESTING DIRECTLY

The Victory Ohio Municipal Bond Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

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<PAGE>

Boston Safe Deposit & Trust Co.
ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Ohio Municipal Bond Fund

Shares are sold at the public offering price based on the net asset value that
is next determined after the Transfer Agent receives the purchase order. In most
cases, to receive that day's offering price, the Transfer Agent must receive
your order as of the close of regular trading of the New York Stock Exchange
("NYSE") (normally 4:00 p.m. Eastern time) (the "Valuation Time") on each
Business Day (as defined in "Shareholder Account Rules and Policies--Share
Price" below). If you buy shares through an Investment Professional, the
Investment Professional must receive your order in a timely fashion on a regular
Business Day and transmit it to the Transfer Agent so that it is received before
the close of business that day. The Transfer Agent may reject any purchase order
for the Fund's shares, in its sole discretion. It is the responsibility of your
Investment Professional to transmit your order to purchase shares to the
Transfer Agent in a timely fashion in order for you to receive that day's share
price.

INVESTMENT REQUIREMENTS

Sales Charge Sales Charge Dealer
As a % of As a % of Reallowance
Offering Net Amount As a % of
Amount of Purchase Price Invested Offering
Price

- 15 -

<PAGE>

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25%
on such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

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<PAGE>

O WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to the
following categories of persons (which categories may be changed or eliminated
at any time):

(1) Current or retired Trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an "Affiliated
Provider " ("Affiliated Providers" refer to affiliates and subsidiaries of
KeyCorp and service providers to the Victory Portfolios and the Victory
Shares (collectively, the "Victory Group")), dealers having an agreement
with the Distributor and any trade organization to which Key Advisers, the
Sub -Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or certain
other advisory accounts established with KeyCorp or any of its affiliates;

(3) Investors who reinvest assets received in a distribution from a
qualified, non-qualified or deferred compensation plan, agency, trust
or custody account that was either (a) maintained by KeyCorp or an
Affiliated Provider, or (b) invested in a fund of the Victory Group;

(5) Shareholders of the former Investors Preference Fund For Income, Inc. and
the Investors Preference New York Tax-Free Fund, Inc. who have
continuously maintained accounts with a fund or funds of the Victory Group
with a balance of $250,000 or more (investors with less than $250,000 will
pay any applicable sales loads); and

- 17 -

<PAGE>

advisers or financial planners who place trades for their own accounts
if the accounts are linked to the master account of such investment
adviser or financial planner on the books and records of the broker or
agent. Such accounts include retirement and deferred compensation plans
and trusts used to fund those plans, including, but not limited to,
those defined in section 401(k), 403(b), or 457 of the Internal Revenue
Code and "rabbi trusts."

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

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<PAGE>

Transfer Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer representative of
record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

O RETIREMENT PLANS. Retirement plans can be among the best tax -planning
vehicles available to individuals. Call your Investment Professional for more
information on the plans and their benefits, provisions and fees. Your
Investment Professional can set up your new account in the Fund under one of
several tax-sheltered plans. These plans let you invest for retirement and
shelter your investment income from current taxes. Plans include Individual
Retirement Accounts (IRAs) and Rollover IRAs. Other fees may be charged by the
IRA custodian or trustee.

Investment in the Fund would not be appropriate for tax-deferred plans, such as
IRA and Keogh plans. Investors should consult a tax or other financial adviser
to determine whether investment in the Fund would be suitable for them.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you purchase
by exchange.

(5) The registration and tax identification numbers of the two accounts must
be identical.

(6) BEFORE EXCHANGING OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH TO
PURCHASE BY EXCHANGE.

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<PAGE>

that does not have a class designation, they are "Class A" shares for exchange
purposes. In some cases, sales charges may be imposed on exchange transactions.
Certain funds offer Class A or Class B shares and a list can be obtained by
calling the Transfer Agent at 800-539-3863. Please refer to the Statement of
Additional Information for more details about this policy.

There are certain exchange policies you should be aware of:

O Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally as of 4:00 p.m. Eastern
time) that is in proper form, but either fund may delay the issuance of shares
of the fund into which you are exchanging if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might create excessive turnover in the Fund's portfolio and associated
expenses disadvantageous to the Fund.

o Because excessive trading can impede fund performance and therefore harm
shareholders, the Victory Portfolios reserves the right to refuse any exchange
request that will impede the Fund's ability to invest effectively or otherwise
have the potential to disadvantage the Fund, or to refuse multiple exchange
requests submitted by a shareholder or dealer.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (see the definition of "Business Day" under "Shareholder Account
Rules and Policies -- Share Price" below). Shares will be redeemed at the NAV
next calculated after the Transfer Agent has received the redemption request. If
the Fund account is closed, any accrued dividends will be paid at the beginning
of the following month.

You may redeem shares in several ways:

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<PAGE>

O BY MAIL. Send a written request to:

The Victory Ohio Municipal Bond Fund
P.O. Box 9741
Providence, RI 02940-9741

Write a "letter of instruction" with your name, the Fund's name, your Fund
account number, the dollar amount or number of shares to be redeemed, and any
additional requirements that apply to each particular account. You will need the
letter of instruction signed by all persons required to sign for transactions,
exactly as their names appear on the Account Application. A signature guarantee
is required if: you wish to redeem more than $10,000 worth of shares; your Fund
account registration has changed within the last 60 days; the check is not being
mailed to the address on your account; the check is not being made out to the
account owner; or the redemption proceeds are being transferred to another
Victory Group account with a different registration. The following institutions
should be able to provide you with a signature guarantee: banks, brokers,
dealers, credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature guarantee
may not be provided by a notary public. A signature guarantee is designed to
protect you, the Fund, and its agents from fraud. The Transfer Agent reserves
the right to reject any signature guarantee if (1) it has reason to believe that
the signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

O BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before Valuation Time (normally 4:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of
instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

O ADDITIONAL REDEMPTION REQUIREMENTS. The Fund may withhold payment on
redemptions until it is reasonably satisfied that investments made by check have
been collected, which can take up to 15 days. Also, when the New York Stock
Exchange (the "NYSE")is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any emergency
circumstances as determined by the Commission to merit such action, the right of
redemption may be suspended or the date of payment postponed for a period of
time that may exceed 7 days. In addition, the Fund reserves the right to advance
the time on that day by which purchase and redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the Fund's NAV may be affected on days when investors do not
have access to the Fund to purchase or redeem shares.

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<PAGE>

minimum balance (except with respect to officers, trustees, directors and
employees, including retired directors and employees, of the Victory Portfolios,
KeyCorp and its affiliates, and the Administrator and its affiliates (and family
members of each of the foregoing) participating in the Systematic Investment
Plan, to whom no minimum balance requirement applies). If you do not increase
your balance, your account may be closed and the proceeds mailed to you at the
address on record. Shares will be redeemed at the last calculated NAV on the day
the account is closed. SHAREHOLDER ACCOUNT RULES AND POLICIES

O The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

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<PAGE>

you arrange with your bank to provide telephone or written assurance to the
Transfer Agent that your purchase payment has cleared.

O The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

O The Distributor, at its expense, may also provide additional cash compensation
to dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is currently 4.00% of the offering
price. In addition, the Distributor may, from time to time and at its own
expense, provide compensation, including financial assistance, to dealers in
connection with conferences, sales or training programs for their employees,
seminars for the public, advertising campaigns regarding one or more Victory
Portfolios and/or other dealer-sponsored special events including payment for
travel expenses, including lodging, incurred in connection with trips taken by
invited registered representatives and members of their families to locations
within or outside of the United States for meetings or seminars of a business
nature. Compensation will include the following types of non-cash compensation
offered through sales contests: (1) vacation trips including the provision of
travel arrangements and lodging; (2) tickets for entertainment events (such as
concerts, cruises and sporting events) and (3) merchandise (such as clothing,
trophies, clocks and pens). Dealers may not use sales of the Fund's shares to
qualify for this compensation if prohibited by the laws of any state or any
self-regulatory organization, such as the National Association of Securities
Dealers, Inc. None of the aforementioned compensation is paid for by the Fund or
its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any, will
be automatically reinvested in additional shares of the Fund. Income and

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<PAGE>

capital gain dividends will be reinvested at the net asset value of the
Fund as of the day after the record date. If you do not indicate a
choice on your Account Application, you will be assigned this option.

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at the NAV as
of the day after record date and have your income dividends paid in cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain
dividends, or only capital gain dividends, automatically reinvested in
shares of another fund of the Victory Group. Shares will be purchased at
the NAV as of the day after the record date. If you are reinvesting
dividends of a fund sold without a sales charge in shares of a fund sold
with a sales charge, the shares will be purchased at the public offering
price. If you are reinvesting dividends of a fund sold with a sales
charge in shares of a fund sold with or without a sales charge, the shares
will be purchased at the net asset value of the fund. Dividend
distributions can be directed only to an existing account with a
registration that is identical to that of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital gain
dividends, or only your income dividends, automatically transferred to
your bank checking or savings account. The amount will be determined on
the dividend record date and will normally be transferred to your account
within 7 days of the dividend record date. Dividend distributions can be
directed only to an existing account with a registration that is identical
to that of your Fund account. Please call or write the Transfer Agent to
learn more about this dividend distribution option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

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<PAGE>

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES [to be reviewed by Tax Dept.]

The federal tax-exempt and Ohio tax-exempt portions of dividends paid by the
fund for each year will be designated within 60 days after the end of that year
and will be based upon the ratios of such net tax-exempt income to total net
income earned by the Fund during the entire year. Those ratios may be
substantially different from those realized in any portion of the year. Thus, a
shareholder who holds shares for only a part of the year may be allocated more
or less tax-exempt dividends than would be the case if the allocation were based
on the ratio of net tax-exempt income to total net income actually earned by the
Fund while he or she was a shareholder.

Provided that the Fund elects to be treated, and continues to qualify as a
regulated investment company under the IRS Code and that at all times at least
50% of the value of the total assets of the Fund consists of obligations issued
by or on behalf of the State of Ohio, political subdivisions thereof or agencies
or instrumentalities of Ohio or its political subdivisions, or similar
obligations of other states or their subdivisions (but excluding obligations of
United States territories or possessions for purposes of the 50% test),
dividends received from the Fund that are properly attributable to interest on
Ohio Tax-Exempt Obligations are exempt from the Ohio personal income tax. The
description in this paragraph is based upon current statutes and regulations and
upon current policies of the Ohio Department of Taxation, all of which are
subject to change.

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<PAGE>

Under the IRS Code, if a shareholder receives an exempt-interest dividend with
respect to any share and such share is held for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend.

To the extent that dividends paid to shareholders are derived from taxable
income (for example, from interest on certificates of deposit or repurchase
agreements), or from long-term or short-term capital gains, such dividends will
be subject to federal income tax, whether such dividends are paid in the form of
cash or additional shares. Distributions will be taxable as described above even
if the NAV per share of the Fund is reduced below the shareholder's cost by the
distribution and the distribution is, as an economic matter, a return of
capital. It is anticipated that none of the distributions from the Fund will be
eligible for the dividends-received deduction for corporations.

Income from certain "private activity bonds" issued after August 7, 1986 is an
item of tax preference for purposes of the individual and corporate alternative
minimum tax. These private activity bonds include certain bonds issued to obtain
funds to provide certain water, sewage and solid waste facilities, qualified
residential rental projects, certain local electric, gas and other heating or
cooling facilities, qualified hazardous waste facilities, and government-owned
airports, docks and wharves and mass commuting facilities; certain qualified
mortgage, student loan and redevelopment bonds; and certain bonds issued as part
of "small issues" for industrial facilities. If the Fund invests in such private
activity bonds, shareholders may become subject to the alternative minimum tax
on the portion of the Fund's distributions derived from interest income on such
bonds. It is the policy of the Fund not to invest more than 20% of its net
assets in obligations the interest on which is treated as a preference item for
purposes of the federal alternative minimum tax and in other Taxable
Obligations. Also, interest income on all Ohio Tax-Exempt Obligations and
private activity bonds is included in "adjusted current earnings" for purposes
of computing the alternative minimum tax applicable to corporate shareholders of
the Fund. State or local income tax consequences of dividends on shares of the
Fund may be different than those associated with direct ownership of securities
held or acquired by the Fund.

The receipt of exempt-interest dividends may cause persons receiving Social
Security or Railroad Retirement benefits to be taxable on a portion of such
benefits. In addition, exempt-interest dividends that are attributable to
interest earned on certain private activity bonds will be taxable to any
shareholder who is a "substantial user" of a facility being financed by such
bonds or a "related person" to such a substantial user.

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<PAGE>

PERFORMANCE

From time to time performance information for the Fund showing the yield for
each class of shares may also be presented in advertisements, sales literature
and in reports to shareholders. Yields reflect the deduction of the maximum
sales charge. Such performance figures are based on historical earnings and are
not intended to indicate future performance. Yield will be computed by dividing
the Fund's net investment income per share earned during a recent thirty-day
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 and annualizing the result.

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios, four of which are inactive. The Victory Portfolios has been
operating continuously since 1986, when it was created under Massachusetts law
as a Massachusetts business trust although certain of its funds have a prior
operating history from their predecessor funds. On February 29, 1996, the
Victory Portfolios converted from a Massachusetts business trust to a Delaware

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<PAGE>

business trust. The Victory Portfolios' offices are located at 3435 Stelzer
Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

For the services provided and expenses incurred pursuant to the investment
advisory agreement between the Victory Portfolios respecting the Fund, Key
Advisers is entitled to receive a fee, computed daily and paid monthly, at an
annual rate of sixty one-hundredths of one percent (0.60%) of the average daily
net assets of the Fund. The investment advisory fee paid by the Fund is higher
than the advisory fees paid by most mutual funds, although the Victory
Portfolios' Board of Trustees believes such fees to be comparable to advisory
fees paid by many funds having similar objectives and policies. The advisory
fees for the Fund have been determined to be fair and reasonable in light of the
services provided to the Fund. Key Advisers may periodically waive all or a
portion of its advisory fee with respect to the Fund . Prior to January , 1996,
Society Asset Management, Inc. served as investment adviser to the Fund. During
the Fund's fiscal period ended October 31, 1995, Society Asset Management, Inc.
earned investment advisory fees aggregating 0.32% of the average daily net
assets of the Fund.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
subadvisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions. For its services under the investment
sub-advisory agreement, Key Advisers pays the Sub-Adviser fees as a percentage
of average daily net assets as follows: .40% of the first $10 million of average
daily net assets; .30% of the next $15 million of average daily net assets; .25%
of the next $25 million of average daily net assets; and .20% of average daily
net assets in excess of $50 million.

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<PAGE>

The person primarily responsible for the investment management of the Fund, as
well as his previous experience, is as follows:

PORTFOLIO MANAGING PREVIOUS

MANAGER FUND SINCE EXPERIENCE

Paul A. Toft September, 1994 Vice President and
Manager, Nike
Securities, L.P. since
1991; Assis tant Vice
President from 1990 to
1991 and Senior
Administrator from
1986-989 or Van Kampen
Merritt.

EFFECT OF BANKING LAWS

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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<PAGE>

of the Fund's average daily net assets. The Administrator may periodically waive
all or a portion of its administrative fee with respect to the Fund .

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

BUSINESS MANAGEMENT AGREEMENT

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<PAGE>

reports to the Victory Portfolios' Board of Trustees, recordkeeping services,
services rendered in connection with the preparation of regulatory filings and
other reports, and regulatory , compliance , and other administrative and
support services.

For such services, the Sub-Adviser pays fees to Key Advisers as follows: .25% on
the first $10 million of average daily net assets; .15% of the next $15 million
of average daily net assets; .10% of the next $25 million of average daily net
assets; and .05% of average daily net assets in excess of $50 million.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were .94% of the Fund's average net assets, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts , the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not so held
in trust. The trustee will forward to these shareholders all communications
received by the trustee, including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust. Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have each adopted a
Code of Ethics (the "Codes") which require investment personnel (a) to preclear
all personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The
Codes also prohibit investment personnel from purchasing securities in an
initial public offering. Personal trading reports are reviewed periodically each
of the advisers for their respective employees and the Board of Trustees of the
Fund reviews their Codes and any substantial violations of the Codes. Violations
of the respective Codes may result in censure, monetary penalties, suspension or
termination of employment.

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<PAGE>

DELAWARE LAW

MISCELLANEOUS

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

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<PAGE>

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<PAGE>

THE VICTORY PRIME OBLIGATIONS FUND

March 1, 1996

<PAGE>

THE VICTORY
PORTFOLIOS
PRIME OBLIGATIONS FUND

PROSPECTUS FOR CURRENT YIELD, PURCHASE AND REDEMPTION INFORMATION,
MARCH 1, 1996 CALL 800-539-FUND OR 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the PRIME OBLIGATIONS FUND (the "Fund"), a diversified
portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment adviser to the Fund ("Key Advisers" or
the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"Sub-Adviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund seeks to provide current income consistent with liquidity and stability
of principal. The Fund pursues this objective by investing in short-term,
high-quality debt instruments.

The Fund seeks to maintain a constant net asset value of $1.00 per unit of
beneficial interest, and shares of the Fund are offered at net asset value.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 has been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741 or by calling 800-539-3863.

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER UNIT.

SHARES OF THE FUND ARE:

- - NOT INSURED BY THE FDIC;

- - NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP BANK,
ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

- - SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

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TABLE OF CONTENTS PAGE

Fund Expenses 3
Financial Highlights 4
Investment Objective 6
Investment Policies and Risk Factors 6
How to Invest, Exchange and Redeem 11
Dividends, Distribution and Taxes 17
Performance 19
Fund Organization and Fees 20
Additional Information 22

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FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases
(as a percentage of the offering price).....................none
Maximum Sales Charge Imposed on Reinvested Dividends.........none
Deferred Sales Charge ..................................... none
Redemption Fees............................................ none
Exchange Fee................................................ none

ANNUAL FUND OPERATING EXPENSES (as a percentage of average daily net assets)

Management Fees .35%
Administration Fees .15%
Other Expenses(2) .40%
Total Operating Expenses(2) .90%

(1) Investors may be charged a fee if they effect transactions in Fund
shares through a broker or agent, including affiliated banks and non-bank
affiliates of Key Advisers and Key Corp. (See "How to Invest, Exchange
and Redeem.")

(2) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay. (See "Fund Organization and Fees - Shareholder
Servicing Plan.")

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming:
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Prime Obligations Fund $9 $29 $50 $111

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

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FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect to the
financial highlights for the Fund for the periods indicated. The information
below has been derived from financial statements audited by Coopers & Lybrand
L.L.P., independent public accountants for the Victory Portfolios, whose report
thereon , together with the financial statements of the Fund, are incorporated
by reference into the Statement of Additional Information. The information set
forth below is for a share of the Fund outstanding throughout each period
indicated.

THE VICTORY PRIME OBLIGATIONS FUND

YEAR ENDED OCTOBER 31,
1995 1994 1993 1992 1991 1990 1989
----- ---- ---- ---- ---- ---- ----

NET ASSET VALUE, BEGINNING
<S> <C> <C> <C> <C> <C> <C> <C>
OF PERIOD $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.051 0.035 0.030 0.037 0.061 0.078 0.087
Net realized losses from
Investment Transactions (0.003)
Total from Investment
Activities 0.051 0.0320 0.0300 0.0370 0.0610 0.0780 0.0870
Distributions
Net investment income (0.051) (0.035) (0.030) (0.037) (0.061) (0.078) (0.087)
----- -------- -------- -------- -------- -------- --------
Capital transactions 0.003
NET ASSET VALUE, END OF PERIOD $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ========= ========= ========= ========= ========== =========
Total Return 5.26% 3.57% 3.05% 3.77% 6.32% 8.06% 9.02%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $456,266 $782,303 $720,024 $524,338 $442,263 $444,238 $304,186
Ratio of expenses to average
net assets 0.74% 0.62% 0.60% 0.61% 0.62% 0.62% 0.61%
Ratio of net investment
income to average net assets 5.09% 3.52% 2.96% 3.68% 6.14% 7.76% 8.69%
Ratio of expenses to average
net assets(a) 0.79%
Ratio of net investment
income to average net assets(a) 3.35%

</TABLE>

(a) During the period , certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.

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INVESTMENT OBJECTIVE

The Fund seeks to provide current income consistent with liquidity and stability
of principal. The investment objective of the Fund is fundamental and may not be
changed without a vote of the holders of a majority of its outstanding voting
securities (as defined in the Statement of Additional Information). There is no
assurance that the Fund will achieve its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its objective by investing in short-term, high quality debt
instruments which are determined by Key Advisers and the Sub-Adviser to present
minimal credit risks under guidelines adopted by the Victory Portfolios' Board
of Trustees (the "Trustees"). All securities or instruments in which the Fund
may invest must have remaining maturities of up to 397 days, although securities
subject to repurchase agreements and certain variable interest rate instruments
may bear longer maturities. The average weighted maturity of the securities in
the Fund will not exceed 90 days.

The Fund invests in United States dollar-denominated, high-quality, short-term
debt instruments. The Fund's investments will be limited to those obligations
which, at the time of purchase, (a) possess the highest short-term rating from
at least two nationally recognized statistical ratings organizations ("NRSRO")
(for example, commercial paper rated "A-1" by Standard & Poor's Corporation
("S&P") or "P-1" by Moody's Investors Service, Inc. ("Moody's")) or (b) do not
possess a rating (i.e., are unrated) but are determined by Key Advisers and the
Sub-Adviser to be of comparable quality to rated instruments eligible for
purchase by the Fund under guidelines adopted by the Trustees.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

The following paragraphs provide a brief description of some of the types of
securities in which the Fund may invest, in accordance with its investment
objective, policies and limitations, including certain transactions it may make
and strategies it may adopt. The Fund also contains a brief description of
certain risk factors. The Fund may, following notice to its shareholders, 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 this Prospectus.

O COMMERCIAL PAPER. The Fund may invest in short-term obligations issued by
domestic and foreign banks, broker-dealers, corporations and other entities for
purposes such as financing their current operations.

O CERTIFICATES OF DEPOSIT OF U.S. AND FOREIGN BANKS. The Fund may invest in
negotiable certificates representing a commercial bank's obligations to repay
funds deposited with it, earning specified rates of interest over given periods.

O BANKERS' ACCEPTANCES [OF U.S. AND FOREIGN BANKS]. The Fund may invest in
negotiable obligations of a bank to pay a draft which has been drawn on it by a
customer. These obligations are backed by large banks and usually backed by
goods in international trade.

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<PAGE>

O TIME DEPOSITS OF U.S. AND FOREIGN BANKS. The Fund may invest in non-negotiable
deposits in a banking institution earning a specified interest rate over a given
period of time.

O SHORT-TERM CORPORATE OBLIGATIONS ISSUED BY DOMESTIC AND FOREIGN CORPORATIONS.
Corporate obligations are bonds issued by corporations and other business
organizations in order to finance their long-term credit needs. Corporate bonds
in which a Fund may invest generally consist of those rated in the two highest
rating categories of an NRSRO that possess many favorable investment attributes.
In the lower end of this category, credit quality may be more susceptible to
potential future changes in circumstances.

O VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase variable and
floating rate notes. The interest rates on these securities may be reset daily,
weekly, quarterly, or some other reset period, and may be subject to a floor or
ceiling. There is a risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. There may be no active
secondary market with respect to a particular variable or floating rate note.
Variable and floating rate notes for which no readily available market exists
will be purchased in an amount which, together with other illiquid securities
held by the Fund, does not exceed 10% of the total assets unless such notes are
subject to a demand feature that will permit the Fund to receive payment of the
principal within seven days after demand therefor. These securities are included
among those which are sometimes referred to as "derivative securities."

O REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

- 7 -

<PAGE>

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").

[O PARTICIPATION INTERESTS. The Fund may purchase interests in securities from
financial institutions such as commercial and investment banks, savings and loan
associations and insurance companies. These interests may take the form of
participation, beneficial interests in a trust, partnership interests or any
other form of indirect ownership. The Fund invests in these participation
interests in order to obtain credit enhancement or demand features that would
not be available through direct ownership of the underlying securities.]

[O EXTENDIBLE DEBT SECURITIES. The Fund may purchase extendible debt securities.
Extendible debt securities purchased by the Fund are securities that can be
retired at the option of a Fund at various dates prior to maturity. In
calculating average portfolio maturity, the Fund may treat extendible debt
securities as maturing on the next optional retirement date.]

[O MASTER DEMAND NOTES. Master demand notes are unsecured obligations that
permit the investment of fluctuating amounts by the Fund at varying rates of
interest pursuant to direct arrangements between the Fund, as lender, and the
issuer as borrower.]

O MORTGAGE-BACKED SECURITIES. Mortgage-backed securities purchased by the Fund
are securities issued or guaranteed by agencies or instrumentalities of the U.S.
government and non-government entities such as banks, mortgage lenders, or other
financial institutions. A mortgage-backed security may be an obligation of the
issuer backed by a mortgage or pool of mortgages or a direct interest in an
underlying pool of mortgages. Some mortgage-backed securities make payments of
both principal and interest at a variety of intervals; others make semi-annual
interest payments at a predetermined rate and repay principal at maturity (like
a typical bond). Mortgage-backed securities are based on different types of
mortgages including those on commercial real estate or residential properties.
Other types of mortgage-backed securities will likely be developed in the
future, and the Fund may invest in them if Key Advisers or the Sub-Adviser
determines they are consistent with the Fund's investment objective and
policies. The Fund will not acquire "residual" interests in real estate mortgage
investment conduits ("REMICs") under current tax law in order to avoid certain
potential adverse tax consequences.

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<PAGE>

yield is earned not only on the original investment but also, in effect, on
accretion during the life of the obligations. This implicit reinvestment of
earnings at the same rate eliminates the risk of being unable to reinvest
distributions at a rate as high as the implicit yields on the Zero Coupon Bond,
but at the same time eliminates the holder's ability to reinvest at higher
rates. For this reason, Zero Coupon Bonds are subject to substantially greater
price fluctuations during periods of changing market interest rates than are
comparable securities which pay interest periodically. The amount of price
fluctuation tends to increase as maturity of the security increases.

[O RECEIPTS. In addition to bills, notes and bonds issued by the U.S. Treasury,
the Fund may also purchase separately traded interest and principal component
parts of such obligations that are transferable through the Federal book entry
system, known as Separately Traded Registered Interest and Principal Securities
("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES"). These instruments
are issued by banks and brokerage firms and are created by depositing Treasury
notes and Treasury bonds into a special account at a custodian bank; the
custodian holds the interest and principal payments for the benefit of the
registered owners of the certificates or receipts. The custodian arranges for
the issuance of the certificates or receipts evidencing ownership and maintains
the register. Receipts include Treasury Receipts ("TRs"), Treasury Investment
Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury Securities
("CATS").

O U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government National Mortgage Association ("GNMA") and 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 the Federal National
Mortgage Association ("FNMA") are supported by the right of the issuer to borrow
from the Treasury; others, such as those of the Student Loan Marketing
Association ("SLMA"), 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 the Federal Home Loan Mortgage Corporation
("FHLMC"), are supported only by the credit of the 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 or
instrumentalities only when Key Advisers or the Sub-Adviser believes that the
credit risk with respect thereto is minimal.

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<PAGE>

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, to the extent such fees are not waived by Key Advisers
or the Sub-Adviser.

O FOREIGN INVESTMENTS. Investments in Eurodollar Certificates of Deposits,
Eurodollar Time Deposits, Canadian Time Deposits, Yankee Certificates of
Deposits, Canadian Commercial Paper and Europaper may subject the Fund to
investment risks that differ in some respects from those related to investments
in obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest income, possible seizure, nationalization, or expropriation of
foreign deposits, the possible establishment of exchange controls, or the
adoption of other foreign governmental restrictions which might adversely affect
the payment of principal and interest on such obligations. In addition, foreign
branches of U.S. banks and foreign banks may be subject to less stringent
reserve requirements and to different accounting, auditing, reporting, and
recordkeeping standards than those applicable to domestic branches of U.S.
banks. The Fund will acquire securities issued by foreign branches of U.S.
banks, foreign banks, or other foreign issuers only when Key Advisers and the
Sub-Adviser believe that the risks associated with such instruments are minimal.

O SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities . The Fund must receive

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<PAGE>

collateral equal to 100% of the securities' value plus any interest due in the
form of cash or U.S. Government securities, plus any interest due, which
collateral must be marked to market daily by Key Advisers and the Sub-Adviser.
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 pays the Fund an amount equal to any dividends or
interest paid on such securities plus any interest negotiated between the
parties to the lending agreement. Loans are subject to termination by the Fund
or the borrower at any time. While the Fund does not have the right to vote
securities on loan, the Fund 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 and the Sub-Adviser have determined are
creditworthy under guidelines established by the Trustees. The Fund will limit
its securities lending to 33 1/3% of total assets. This limitation does not
apply to purchases of publicly issued debt securities or to repurchase
agreements.

INVESTMENT LIMITATIONS

1. The Fund may not borrow money other than (a) by entering 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 such commitments do not
exceed 33 1/3% of the Fund's total assets; and (b) for temporary or
emergency purposes in an amount not exceeding 5% of the value of the Fund's
total assets. Any borrowings representing more than 5% of a Fund's total
assets must be repaid before the Fund may make additional investments.

2. The Fund will not purchase a security if, as a result, more than 10% of its
net assets would be invested in illiquid securities. Illiquid securities
are investments that cannot be readily sold within seven days in the usual
course of business at approximately the price at which the Fund has valued
them . Under the supervision of the Trustees, Key Advisers or the Sub
-Adviser determines the liquidity of the Fund's investments. The absence of
a trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve time -
consuming negotiation and legal expenses, and it may be difficult or
impossible for the Fund to sell them promptly at an acceptable price.

- 11 -

<PAGE>

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. (Note: In accordance with Rule 2a-7 under the
1940 Act, the Fund may invest up to 25% of its total assets in securities
of a single issuer for a period of up to three business days.)

4. The Fund's policy regarding concentration of investments provides that 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, or repurchase agreements secured thereby) if, as a
result, more than 25% of its total assets would be invested in the
securities of companies whose principal business activities are in the same
industry. Notwithstanding the foregoing, there is no limitation with
respect to certificates of deposit and bankers' acceptances issued by
domestic banks, or repurchase agreements secured thereby. 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.

Each of the investment limitations indicated above in this subsection are
fundamental, except for the limitations pertaining to illiquid securities.
Nonfundamental limitations may be changed without shareholder approval. Whenever
an investment policy or limitation states a maximum percentage of the Fund's
assets that may be invested, such percentage limitation will be determined
immediately after and as a result of the investment and any subsequent change in
values, assets, or other circumstances will not be considered when determining
whether the investment complies with the Fund's investment policies and
limitations, 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). If
the value of the Fund's 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 Trustees will consider what actions, if any are
appropriate to maintain adequate liquidity.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Sub-Adviser is responsible for decisions to buy and sell securities for the
Fund, broker-dealer selection and negotiation of commission rates. Since
purchases and sales of portfolio securities by the Fund are usually principal
transactions, the Fund incurs little or no brokerage commissions. Portfolio
securities are normally purchased directly from the issuer or from a market
maker for the securities. The purchase price paid to dealers serving as market
makers may include a spread between the bid and asked prices. The Fund may also
purchase securities from underwriters at prices which include a concession paid
by the issuer to the underwriter.

The Sub-Adviser's primary consideration in effecting a security transaction is
to obtain the best net price and the most favorable execution of the order. To
the extent that the executions and prices offered by more than one dealer are
comparable, the Sub-Adviser may, in its discretion, effect transactions with
dealers that furnish statistical, research or other information or services
which are deemed by the Sub-Adviser to be beneficial to the Fund's investment
program. Certain research services furnished by dealers may be useful to the
Sub-Adviser with respect to clients other than the Fund. Similarly, any research
services received by the Sub-Adviser through placement of portfolio transactions
of other

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<PAGE>

clients may be of value to the Sub-Adviser in fulfilling its obligations to the
Fund.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

O HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

O INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. An "Investment Professional"
is a salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets. Your
Investment Professional will place your order with the Transfer Agent (see "Fund
Organization and Fees--Transfer Agent") on your behalf. You may be required to
establish a brokerage or agency account. Your Investment Professional will
notify you whether subsequent trades should be directed to the Investment
Professional or directly to the Fund's Transfer Agent. Accounts established with
Investment Professionals may have different features, requirements and fees. In
addition, Investment Professionals may charge for their services. Information
regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone either through your bank trust department
or through your Investment Professional. Subsequent investments by telephone may
be made directly. See "Special Investor Services" for more information about
telephone transactions.

Contact your bank trust department for instructions.

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<PAGE>

INVESTING DIRECTLY

The Victory Prime Obligations Fund Primary
Funds Service Corporation P.O. Box 9741
Providence, RI 02940-9741.

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.

ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Prime Obligations Fund

INVESTMENT REQUIREMENTS

All purchases must be made in U.S. dollars. Checks must be drawn on U.S. banks.
No cash will be accepted. If you make a purchase with more than one check, each
check must have a value of at least $25, and the minimum investment requirement
still applies. The Fund reserves the right to limit the number of checks
processed at one time. If your check does not clear, your purchase will be
canceled and you could be liable for any losses or fees incurred. Payment for
the purchase is expected at the time of the date of the order. If payment is not
received within three business days of the order, the order may be canceled, and
you could be held liable for resulting fees and/or losses.

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC INVESTMENT PLAN. You can make regular investments in the
Fund with the Systematic Investment Plan by completing the appropriate section

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<PAGE>

of the Account Application and attaching a voided personal check with your
bank's magnetic ink coding number across the front. If your bank account is
jointly owned, be sure that all owners sign. You must first meet the Fund's
initial investment requirement of $500, then investments may be made monthly by
automatically deducting $25 or more from your bank checking account. For
officers, trustees, directors and employees, including retired directors and
employees, of the Victory Group, KeyCorp and its affiliates, and the
Administrator and its affiliates (and family members of each of the foregoing)
who participate in the Systematic Investment Plan, there is no minimum initial
investment required. You may change the amount of your monthly purchase at any
time. Your bank checking account will be debited on the date indicated on your
Account Application. Shares will be purchased at the net asset value next
determined following receipt of the order by the Transfer Agent. You may cancel
the Systematic Investment Plan at any time without payment of a cancellation
fee. Your monthly account statement will reflect systematic investment
transactions, and a debit entry will appear on your bank statement.

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your bank account is jointly owned, be
sure that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting your Investment Professional. Your Systematic
Withdrawal Plan payments are drawn from share redemptions. If Systematic
Withdrawal Plan redemptions exceed income dividends and capital gain dividend
distributions earned on your Fund shares, your account eventually may be
exhausted.

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<PAGE>

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you purchase
by exchange.

(5) The registration and tax identification numbers of the two accounts must
be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH TO
PURCHASE BY EXCHANGE.

Telephone exchange requests may be made either by calling your Investment
Professional or the Transfer Agent at 800-539-3863 prior to the applicable

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<PAGE>

valuation time for both Funds involved in the exchange on any Business Day (See
"Shareholder Account Rules and Policies--Share Price").

There are certain exchange policies you should be aware of:

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (See the definition of "Business Day" under "Shareholder Account
Rules and Policies--Share Price") . Shares will be redeemed at the NAV next
calculated after the Transfer Agent has received the redemption request.

You may redeem shares in several ways:

O BY MAIL. Send a written request to:

The Victory Prime Obligations Fund
P.O. Box 9741
Providence, RI 02940-9741

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<PAGE>

your Fund account registration has changed within the last 60 days; the check is
not being mailed to the address on your account; the check is not being made out
to the account owner; or if the redemption proceeds are being transferred to
another Victory Group account with a different registration. The following
institutions should be able to provide you with a signature guarantee: banks,
brokers, dealers, credit unions (if authorized under state law), securities
exchanges and associations, clearing agencies, and savings associations. A
signature guarantee may not be provided by a notary public. A signature
guarantee is designed to protect you, the Fund and its agents from fraud. The
Transfer Agent reserves the right to reject any signature guarantee if (1) it
has reason to believe that the signature is not genuine, (2) it has reason to
believe that the transaction would otherwise be improper, or (3) the guarantor
institution is a broker or dealer that is neither a member of a clearing
corporation nor maintains net capital of at least $100,000.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV ," means the value
of one share. The Fund's NAV per share is calculated by adding the value of all
the Fund's investments, plus cash and other assets, deducting liabilities of the
Fund, and then dividing the result by the number of shares of

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the Fund outstanding. The NAV of the Fund is determined and its shares are
normally priced as of 2:00 p.m. (Eastern time) (the "Valuation Time") 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 its 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 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 and Christmas .

o Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form . From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

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o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

o The Distributor, at its expense, may also provide cash compensation to dealers
in connection with sales of shares of the Fund. In addition, the Distributor
will, from time to time and at its own expense, provide compensation, including
financial assistance, to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding one or more Victory Portfolios and/or other dealer-sponsored
special events including payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Compensation will include
the following types of non-cash compensation offered through sales contests: (1)
vacation trips including the provision of travel arrangements and lodging; (2)
tickets for entertainment events (such as concerts, cruises and sporting events)
and (3) merchandise (such as clothing, trophies, clocks and pens). Dealers may
not use sales of the Fund's shares to qualify for this compensation if
prohibited by the laws of any state or any self-regulatory organization, such as
the National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and capital gain dividends will be reinvested at the net asset
value of the Fund as of the dividend payment date. If you do not
indicate a choice on your Account Application, you will be assigned
this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than 7 days
after the last day of the preceding month.

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund and have your
income dividends paid in cash.

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<PAGE>

fund sold with or without a sales charge, the shares will be purchased
at the net asset value of the fund. Dividend distributions can be
directed only to an existing account with a registration that is
identical to that of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital gain
dividends, or only your income dividends, automatically transferred to
your bank checking or savings account. The amount will be determined on
the dividend record date and will normally be transferred to your account
within 7 days of the dividend payment date. Dividend distributions can
be directed only to an existing account with a registration that is
identical to that of your Fund account. Please call or write the Transfer
Agent to learn more about this dividend distribution option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

O FEDERAL TAXES

It is anticipated that no part of any Fund distribution will be eligible for the
dividends received deduction for corporations.

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<PAGE>

shareholders have held their shares. The Fund does not expect to realize any
such capital gain.

The Fund's distributions may be exempt from state and local taxes to the extent
that they consist of interest from obligations of the U.S. Government and
certain of its agencies and instrumentalities . The Fund intends to advise
shareholders of the proportion of their dividend distributions which consist of
such interest. Shareholders are urged to consult their own tax advisers
regarding the possible exclusion of a portion of their dividend distributions
for state and local tax purposes in their respective jurisdictions.

PERFORMANCE

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<PAGE>

calculated similarly to average annual total return, except that the resulting
difference is not annualized.

Additional information regarding the performance of each of the Victory
Portfolios is included in the Victory Portfolios' annual and semi-annual report,
which are available free of charge by calling 800-539-3863.

FUND ORGANIZATION AND FEES

The Victory Portfolios, a business trust organized under the laws of Delaware,
is an open-end management investment company, commonly known as a mutual fund,
and currently consisting of twenty-eight series portfolios. The Victory
Portfolios has been operating continuously since 1986, when it was created under
Massachusetts law as a Massachusetts business trust although certain of its
funds have a prior operating history from their predecessor funds. On February
29, 1996, the Victory Portfolios converted from a Massachusetts business trust
to a Delaware business trust. The Victory Portfolios' offices are located at
3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund's investments.

Key Advisers was organized as an Ohio corporation on July 27, 1995 and is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended. 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 $66 billion for numerous clients including large corporate and

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<PAGE>

public retirement plans, Taft-Hartley plans, foundations and endowments, high
net worth individuals and mutual funds.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
sub-advisory agreement, respectively, provide that Key Advisers and the Sub-
Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

For its services under the investment advisory agreement, Key Advisers pays the
Sub-Adviser fees as a percentage of average daily net assets as follows: .25% of
the first $10 million of average daily net assets; .20% of the next $15 million
of average daily net assets; .15% of the next $25 million of average daily net
assets, and .125% of average daily net assets in excess of $50 million.

EFFECT OF BANKING LAWS

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<PAGE>

affiliates, as well as further judicial or administrative decisions or
interpretations of present or future statutes and regulations could prevent the
Key Advisers, the Sub-Adviser and their affiliates from continuing to perform
all or a part of the above services for their customers and/or the Fund. In such
event, changes in the operation of the Fund may occur, including the possible
alteration or termination of any service then being provided by Key Advisers,
the Sub-Adviser and their affiliates, and the Trustees would consider alternate
investment advisers and other means of continuing available services. It is not
expected that the Fund's shareholders would suffer any adverse financial
consequences (if other service providers are retained) as a result of any of
these occurrences.

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and

Distributor.

SHAREHOLDER SERVICING PLAN

The Victory Portfolios has adopted a Shareholder Servicing Plan for the Fund. In
accordance with the Shareholder Servicing Plan, the Fund may enter into
Shareholder Service Agreements under which the Fund pays fees of up to .25% of
the net assets of such class incurred in connection with the personal service
and maintenance of accounts holding the shares of such class. Such agreements
are entered into between the Victory Portfolios and various shareholder
servicing agents, including the Distributor, Key Trust Company of Ohio, N.A. and
its affiliates, and other financial institutions and securities brokers (each, a
"Shareholder Servicing Agent"). Each Shareholder Servicing Agent generally will
provide support services to shareholders by establishing and maintaining
accounts and records, processing dividend and distribution payments, providing
account information, arranging for bank wires, responding to routine inquires,
forwarding shareholder communication, assisting in the processing of purchase,
exchange and redemption requests, and assisting shareholders in changing
dividend options, account designations and addresses. Shareholder Servicing
Agents may periodically waive all or a portion of their respective shareholder
servicing fees with respect to the Fund. During the fiscal year ended October
31, 1995, the Fund paid shareholder servicing fees of .15% of the Fund's average
daily net assets.

TRANSFER AGENT

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<PAGE>

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Victory Portfolios' Board of Trustees, recordkeeping services, services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory , compliance , and other administrative and support
services.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were .74% of the Fund's average net assets, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently, there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts , the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not so held
in trust. The trustee will forward to these shareholders all communications
received by the trustee including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust. Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory Portfolios'

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<PAGE>

outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have adopted a Code of
Ethics ( the "Code") which requires investment personnel (a) to pre-clear all
personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub-Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

DELAWARE LAW

MISCELLANEOUS

As of the date of this Prospectus, the Fund offers only the class of shares
presented in this Prospectus. Subsequent to the date of this Prospectus, the
Fund may offer additional classes of shares through a separate prospectus. Any
such additional classes may have different sales charges and other expenses,
which would affect investment performance. Further information may be obtained
by contacting your Investment Professional or by calling 800-539-3863.

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<PAGE>

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

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<PAGE>

THE VICTORY SPECIAL GROWTH FUND

MARCH 1, 1996

<PAGE>

THE
VICTORY
PORTFOLIOS
SPECIAL GROWTH FUND

PROSPECTUS For current yield, purchase and redemption information,
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the SPECIAL GROWTH FUND (the "Fund"), a diversified
portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment adviser to the Fund ("Key Advisers" or
"the "Adviser"). T. Rowe Price Associates, Inc. is the investment sub-adviser to
the Fund (the "Sub -Adviser" or "T. Rowe Price"). Concord Holding Corporation is
the Fund's administrator (the "Administrator"). Victory Broker-Dealer Services,
Inc. is the Fund's distributor (the "Distributor").

The Fund seeks capital appreciation. The Fund pursues this investment objective
by investing primarily in equity securities of companies that have market
capitalizations of $750 million or less at the time of purchase.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

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TABLE OF CONTENTS PAGE

Fund Expenses.............................................................. 2
Financial Highlights....................................................... 3
Investment Objective....................................................... 3
Investment Policies and Risk Factors....................................... 4
How to Invest, Exchange and Redeem......................................... 9
Dividends, Distributions and Taxes......................................... 15
Performance................................................................ 17
Fund Organization and Fees................................................. 18
Additional Information..................................................... 20

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FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases
(as a percentage of the offering price).........................4.75%
Maximum Sales Charge Imposed on Reinvested Dividends..............none
Deferred Sales Charge ............................................none
Redemption Fees.................................................none
Exchange Fee......................................................none

ANNUAL FUND OPERATING EXPENSES (as a percentage of average daily net assets)

Management Fees ................................................. 1.00%
Administration Fees.............................................. .15%
Other Expenses(2).............................................. .38%
----
Total Fund Operating Expenses (2)............................... 1.53%
====

(1) Investors may be charged a fee if they effect transactions in Fund
shares through a broker or agent, including affiliated banks and non-
bank affiliates of Key Advisers and KeyCorp. (See "How to Invest,
Exchange and Redeem.")

(2) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay (see "Fund Organization and Fees -Shareholder
Servicing Plan").

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
SPECIAL GROWTH FUND......$62 $94 $127 $221

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

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FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect to the
financial highlights for the Fund and for the Aggressive Growth Portfolio (the
accounting survivor of the merger). The information below has been derived from
financial statements audited by Coopers & Lybrand L.L.P. (for the period ended
October 31, 1995) and KPMG Peat Marwick LLP (for earlier periods), independent
auditors, whose report thereon, together with the financial statements of the
Fund and for the Aggressive Growth Portfolio are incorporated by reference into
the Statement of Additional Information. The information set forth below is for
a share of the Fund outstanding throughout each period indicated.

THE VICTORY SPECIAL GROWTH FUND

SIX MONTHS JANUARY 11,
ENDED YEAR ENDED 1994
OCTOBER 31, APRIL 30, TO APRIL 30,
1995 1995(d)(e) 1994(a)(d)(e)
---- ---------- -------------

NET ASSET VALUE, BEGINNING OF PERIOD $10.54 $9.82 $10.00
Investment Activities:
Net investment income (loss) 0.02 (0.01)
Net realized and unrealized gains
(losses) from investments 1.27 0.72 (0.17

Total from Investment Act 1.27 0.74 (0.18

Distributions:
Net investment income (0.02)
Net realized gains
Total Distributions (0.02)

NET ASSET VALUE, END OF PERIOD $11.81 $10.54 $9.82

Total Return (Excludes Sales Charges) 12.05%(b) 7.51% (1.80)%(b)

RATIOS/SUPPLEMENTAL DATA

Net assets, End of Peri $54,335 $20,796 $30,867

Ratio of expenses to average net assets 0.65%(c) 1.04% 0.82%(c)

Ratio of net investment income to
average net assets (0.13)%(c) 0.17% (0.27%)(c)

Ratio of expenses to
average net assets (f) 1.40%(c) 1.35% 1.47%(c)

Ratio of net investment income (loss) to
average net assets (f) (0.88%)(c) (0.14%) (0.92%)

Portfolio turnover 54.37% 102.00% 61.00%

(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Effective June 5, 1995, the Victory Aggressive Growth
Portfolio merged into the Special Growth Fund. Financial
highlights for the periods prior to June 5, 1995 represent the
Aggressive Growth Portfolio.
(f) During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratios
would have been as indicated.

INVESTMENT OBJECTIVE

The Fund seeks capital appreciation. The investment objective of the Fund is
fundamental and may not be changed without a vote of the holders of a majority
of its outstanding voting securities (as defined in the Statement of Additional
Information). There can be no assurance that the Fund will achieve its
investment objective.

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INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues this objective by investing primarily in equity securities of
companies that have market capitalizations of $750 million or less at the time
of purchase. Under normal circumstances at least 65% of the Fund's total assets
will be invested in equity securities of such companies.

The Fund may invest in all types of equity securities, consisting of common
stock, preferred stock, convertible preferred, debt convertible into equity
securities and securities convertible into common stock. Under normal conditions
the Fund's assets will be invested in companies with smaller market
capitalizations (i.e., those with market capitalization of $750 million or less
at the time of purchase; however, the Fund may invest a portion of its assets in
equity securities of companies with larger market capitalizations. When Key
Advisers or the Sub-Adviser determine that adverse market conditions exist,
including any period during which they believe that the return on the following
instruments would be more favorable than that obtainable through the Fund's
normal investment program, the Fund may, for temporary defensive purposes,
invest in investment-grade corporate bonds and notes, warrants, and high quality
short-term debt obligations (including variable amount master demand notes),
bankers acceptances, certificates of deposit, repurchase agreements, obligations
issued or guaranteed by the U.S. Government, its agencies and instrumentalities,
and demand and time deposits of domestic and foreign banks and savings and loan
associations.

The Fund may invest in obligations which are rated at the time of purchase
within the four highest rating categories assigned by a nationally recognized
statistical ratings organization (investment grade) or, if unrated, which Key
Advisers or the Sub -Adviser determine to be of comparable quality. The Fund may
also invest up to 5% of its total assets in lower-rated debt securities,
commonly referred to as "junk bonds" (for example, those rated Ba to C by
Moody's Investors Service or BB to C by Standard & Poor's Corporation), or such
other debt securities which have poor protection against default in the payment
of principal or interest, or which are in default.

In addition, the Fund is permitted to make investments in the securities of
foreign issuers, including American Depository Receipts.

The Fund is designed for long-term stock investors. The Fund may be appropriate
for investors who are comfortable with assuming the added risks associated with
small capitalization stocks in return for the possibility of long-term rewards.
Smaller capitalization companies may have limited product lines, markets, or
financial resources. These conditions may make them more susceptible to setbacks
and reversals. Therefore their securities may be subject to more abrupt or
erratic movements than securities of larger companies. Small capitalization
stocks as a group may not respond to general market rallies or downturns as much
as other types of equity securities. By itself, the Fund does not constitute a
balanced investment plan; it stresses capital appreciation from stocks and other
equity securities, and should be considered a long-term investment for investors
who can afford to weather changes in the stock market. The Fund's share price
and total return fluctuate, and your investment may be worth more or less than
your original cost when you redeem your shares.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

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<PAGE>

and strategies it may adopt. The following also contains a brief description of
certain risk factors. The Fund may, following notice to its shareholders, 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 this Prospectus.

O WARRANTS. The Fund may invest in warrants which entitle the holder to buy
equity securities at a specific price for a specific period of time. Warrants
may be considered more speculative than certain other types of investments
because they do not entitle a holder to dividends or voting rights with respect
to the securities which may be purchased, nor do they represent any rights in
the assets of the issuing company. The value of a warrant may be more volatile
than the value of the securities underlying the warrants. Also, the value of the
warrant does not necessarily change with the value of the underlying securities
and a warrant ceases to have value if it is not exercised prior to the
expiration date.

O LOWER-RATED DEBT SECURITIES. The Fund may invest up to 5% of its total assets
in lower-rated debt securities, "junk bonds," that have poor protection against
default in the payment of principal and interest, or may be in default. These
securities are often considered to be speculative and involve greater risk of
loss or price changes due to changes in the issuer's capacity to pay. The market
prices of lower-rated debt securities may fluctuate more than those of
higher-rated debt securities, and may decline significantly in periods of
general economic difficulty, which may follow periods of rising interest rates.

O INVESTMENT GRADE AND HIGH QUALITY SECURITIES. "Investment grade" obligations
are those rated at the time of purchase within the four highest rating
categories assigned by a nationally recognized statistical ratings organization
("NRSRO") or, if unrated, obligations that Key Advisers or the Sub- Adviser
determine to be of comparable quality. The applicable securities ratings are
described in the Appendix to the Statement of Additional Information.
"High-quality" short-term obligations are those obligations which, at the time
of purchase, (1) possess a rating in one of the two highest ratings categories
from at least one NRSRO (for example, commercial paper rated "A-1" or "A-2" by
Standard & Poor's Corporation or "P-1" or "P-2" by Moody's Investors Service,
Inc.) or (2) are unrated by an NRSRO but are determined by Key Advisers or the
Sub-Adviser to present minimal credit risks and to be of comparable quality to
rated instruments eligible for purchase by the Fund under guidelines adopted by
the Trustees.

O FOREIGN SECURITIES. The Fund may invest in equity securities of foreign
issuers, including securities traded in the form of American Depository
Receipts.The Fund will not hold foreign currency as a result of investment in
foreign securities.

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<PAGE>

O OPTIONS. The Fund may invest in derivative securities, which are securities
whose values are based on other securities. The Fund may engage in writing put
and call options from time to time. Such options may be listed on a national
securities exchange and issued by the Options Clearing Corporation or traded
over-the-counter. In order to close out a call option it has written, the Fund
will enter into a "closing purchase transaction," i.e., the purchase of a call
option on the same security with the same exercise price and expiration date as
the call option which the Fund previously wrote on any particular security. When
a portfolio security subject to a call option is sold, the Fund will effect a
closing purchase transaction to close out any existing call option on that
security. If the Fund is unable to effect a closing purchase transaction, it
will not be able to sell the underlying security until the option expires or the
Fund delivers the underlying security upon exercise. The Fund may seek to
terminate its position in a put option it writes before exercise by closing out
the option in the secondary market at its current price. If the secondary market
is not liquid for a put option the Fund has written, however, the Fund must
continue to be prepared to pay the strike price while the option is outstanding,
regardless of price changes, and must continue to set aside assets to cover its
position. Upon the exercise of an option, the Fund is not entitled to the gains,
if any, on securities underlying the options.

The Fund may also purchase put options on securities for the purpose of hedging
against market risks related to its securities. The Fund may also purchase index
put and call options and write index options. Through the writing or purchase of
index options, the Fund can achieve many of the same objectives as through the
use of options on individual securities. Utilizing options is a specialized
investment technique that entails a substantial risk of a complete loss of the
amounts paid as premiums to writers of options.

The Fund will not: (a) sell futures contracts, purchase put options, or write
call options if, as a result, more than 25% of the Fund's total assets would be
hedged with futures and options under normal conditions; (b) purchase futures
contracts or write put options if, as a result, the Fund's total obligations
upon settlement or exercise of purchased futures contracts and written put
options would exceed 25% of its total assets; or (c) purchase call options if,
as a result, the current value of option premiums for call options purchased by
the Fund would exceed 5% of the Fund's total assets. These limitations do not
apply to options attached to or acquired or traded together with their
underlying securities.

O FUTURES CONTRACTS. The Fund may also enter into contracts for the future
delivery of securities or foreign currencies and futures contracts based on a

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<PAGE>

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.

O ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities and zero coupon corporate securities ("Zero Coupon
Bonds"). Zero Coupon Bonds are purchased at a discount from the face amount
because the buyer receives only the right to receive a fixed payment on a
certain date in the future and does not receive any periodic interest payments.
The effect of owning instruments which do not make current interest payments is
that a fixed yield is earned not only on the original investment but also, in
effect, on all discount accretion during the life of the obligations. This
implicit reinvestment of earnings at the same rate eliminates the risk of being
unable to reinvest distributions at a rate as high as the implicit yields on the
Zero Coupon Bond, but at the same time eliminates the holder's ability to
reinvest at higher rates in the future. For this reason, Zero Coupon Bonds are
subject to substantially greater price fluctuations during periods of changing
market interest rates than are comparable securities which pay interest
periodically. The amount of price fluctuation tends to increase as maturity of
the security increases.

O RECEIPTS. In addition to bills, notes and bonds issued by the U.S. Treasury,
the Fund may also purchase separately traded interest and principal component

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<PAGE>

parts of such obligations that are transferable through the Federal book entry
system, known as Separately Traded Registered Interest and Principal Securities
("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES"). These instruments
are issued by banks and brokerage firms and are created by depositing Treasury
notes and Treasury bonds into a special account at a custodian bank; the
custodian holds the interest and principal payments for the benefit of the
registered owners of the certificates or receipts. The custodian arranges for
the issuance of the certificates or receipts evidencing ownership and maintains
the register. Receipts include Treasury Receipts ("TRs"), Treasury Investment
Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury Securities
("CATS").

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest paying U.S.
Treasury obligations. The Fund will limit its investment in such instruments to
20% of its total assets.

O SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities. The Fund must receive collateral
equal to 100% of the securities' value in the form of cash or U.S. Government
securities, plus any interest due, which collateral must be marked to market
daily by Key Advisers or the Sub-Adviser. 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 pays the
Fund amounts equal to any dividends or interest paid on such securities plus any
interest negotiated between the parties to the lending agreement. Loans are
subject to termination by the Fund or the borrower at any time. While the Fund
does not have the right to vote securities on loan, the Fund intends to
terminate any loan and regain the right to vote if that is considered important
with respect to the Fund's 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' Board of Trustees (the "Trustees"). The Fund will
limit its securities lending to 33 1/3% of total assets.

O VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase Investment Grade
variable and floating rate notes . The interest rates on these securities may be
reset daily, weekly, quarterly, or some other reset period, and may be subject
to a floor or ceiling. There is a risk that the current interest rate on such
obligations may not accurately reflect existing market interest rates. There may
be no active secondary market with respect to a particular variable or floating
rate note. Variable and floating rate notes for which no readily available
market exists will be purchased in an amount which, together with other illiquid
securities held by the Fund, does not exceed 15%

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<PAGE>

of the Fund's net assets unless such notes are subject to a demand feature that
will permit the Fund to receive payment of the principal within seven days after
demand therefor. These securities are included among those which are sometimes
referred to as "derivative securities."

O REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

O REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund sells portfolio securities to financial institutions such
as banks and broker-dealers, and agrees to repurchase them at a mutually
agreed-upon date and price. At the time the Fund enters into a reverse
repurchase agreement, it must place in a segregated custodial account assets
having a value equal to the repurchase price (including 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").

O PRIVATE PLACEMENT INVESTMENTS. The Fund may invest in High Quality commercial
paper issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933 as amended (the "1933 Act"). Section 4(2)
commercial paper ("Commercial Paper") is generally sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Commercial Paper is normally
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in Commercial
Paper, thus providing liquidity. The Fund believes that Commercial Paper and
possibly certain other Restricted Securities (as defined in the Statement of
Additional Information) that meet the criteria for liquidity established by the
Trustees are quite liquid. The Fund intends, therefore, to treat the restricted
securities that meet the criteria for liquidity established by the Trustees,
including Commercial Paper, as determined by Key Advisers or the Sub-Adviser, as
liquid and not subject to the investment limitation applicable to illiquid
securities. Therefore, the Fund will generally purchase Commercial Paper without
regard to the Fund's restriction on illiquid securities. See "Investment
Limitations" below.

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<PAGE>

short-term trading is to take advantage of what Key Advisers or the Sub-Adviser
believes are changes in market, industry or individual company conditions or
outlook. Any such trading would increase the Fund's turnover rate and its
transaction costs. High turnover will generally result in higher brokerage costs
and possible tax consequences for the Fund. In the six-month fiscal period ended
October 31, 1995, the portfolio turnover rate was 54.37% compared to 102.00% in
the fiscal year ended April 30, 1995.

INVESTMENT LIMITATIONS

1. The Fund will not purchase a security if, as a result, more than 15% of
its net assets would be invested in illiquid securities. Illiquid
securities are investments that cannot be readily sold within seven
days in the usual course of business at approximately the price at
which the Fund has valued them . Under the supervision of the Trustees,
Key Advisers or the Sub -Adviser determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and legal
expenses, and it may be difficult or impossible for the Fund to sell
them promptly at an acceptable price.

2. The Fund is "diversified" within the meaning of the 1940 Act. With
respect to 75% of its 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.

3. The Fund's policy regarding concentration of investments provides that
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, or repurchase agreements secured
thereby) if, as a result, more than 25% of its total assets would be
invested in the securities of companies whose principal business
activities are in the same industry.

Each of the investment limitations indicated above in this subsection is
fundamental, except for the limitation pertaining to illiquid securities.
Non-fundamental limitations may be changed without shareholder approval.
Whenever an investment policy or limitation states a maximum percentage of the
Fund's assets that may be invested, such percentage limitation will be
determined immediately after and as a result of the investment and any
subsequent changes in values, assets or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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). If the value of the Fund's 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 Trustees will consider
what actions, if any, are appropriate to maintain adequate liquidity.

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<PAGE>

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

O INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. An "Investment Professional"
is a salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets. Your
Investment Professional will place your order with the Transfer Agent (see "Fund
Organization and Fees - Transfer Agent" below) on your behalf. You may be
required to establish a brokerage or agency account. Your Investment
Professional will notify you whether subsequent trades should be directed to the
Investment Professional or directly to the Fund's Transfer Agent. Accounts
established with Investment Professionals may have different features,
requirements and fees. In addition, Investment Professionals may charge for
their services. Information regarding these features, requirements and fees will
be provided by the Investment Professional. If you are purchasing shares of any
Fund through a program of services offered or administered by your Investment
Professional, you should read the program materials in conjunction with this
Prospectus. You may initiate any transaction by telephone either through your
bank trust department or through your Investment Professional. Subsequent
investments by telephone may be made directly. See "Special Investor Services"
for more information about telephone transactions.

o INVESTING THROUGH YOUR BANK TRUST DEPARTMENT. Your bank trust department may
require a minimum investment and may charge additional fees. Fee schedules for
such accounts are available upon request and are detailed in the agreements by
which a client opens the desired account. Your bank trust department may require
a completed and signed application for the Fund in which an investment is made.
Additional documents may be required from corporations, associations, and
certain fiduciaries. Any account information, such as balances, should be
obtained through your bank trust department. Additional purchases, exchanges or
redemptions should also be coordinated through your bank trust department.
Contact your bank trust department for instructions.

The services rendered by a bank trust department, including Key Trust Company of
Ohio, N.A. and other affiliates of Key Advisers or the Sub-Adviser are not
duplicative of any of the services for which Key Advisers or the SubAdviser as
the investment adviser or sub-adviser, respectively, is compensated for advising
the Fund. The charges paid by clients of bank trust departments, or their
affiliates, should also be considered by the investor in addition to the net
yield and return on the investment in the Fund, although such charges do not
affect the Fund's dividends or distributions.

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<PAGE>

INVESTING DIRECTLY

The Victory Special Growth Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.
ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Special Growth Fund

Shares are sold at the public offering price based on the net asset value that
is next determined after the Transfer Agent receives the purchase order. In most
cases, to receive that day's offering price, the Transfer Agent must receive
your order as of the close of regular trading of the New York Stock Exchange
("NYSE") normally 4:00 p.m. Eastern time) (the "Valuation Time") on each
Business Day (as defined in "Shareholder Account Rules and Policies -- Share
Price" below) of the Fund. If you buy shares through an Investment Professional,
the Investment Professional must receive your order in a timely fashion on a
regular Business Day and transmit it to the Transfer Agent so that it is
received before the close of business that day. The Transfer Agent may reject
any purchase order for the Fund's shares, in its sole discretion. It is the
responsibility of your Investment Professional to transmit your order to
purchase shares to the Transfer Agent in a timely fashion in order for you to
receive that day's share price.

INVESTMENT REQUIREMENTS

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<PAGE>

Victory Portfolios has a reinstatement policy which allows an investor who
redeems shares originally purchased with a sales charge to reinvest within 90
days without incurring an additional sales charge. The current sales charge
rates and commissions paid to Investment Professionals are as follows:

SALES CHARGE SALES CHARGE DEALER
AS A % OF AS A % OF REALLOWANCE
OFFERING NET AMOUNT AS A % OF
AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE
- ------------------ ----- -------- --------------

- -----------------

(1) There is no initial sales charge on purchases of $1 million or more.
Investment professionals will be compensated at the rate of 0.25% on
such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under federal
securities laws.

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

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<PAGE>

of the Fund on behalf of the investor; thus the total purchases (included in the
Letter of Intent) will reflect the applicable reduced sales charge of the Letter
of Intent.

O WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to the
following categories of persons (which categories may be changed or eliminated
at any time):

(1) Current or retired trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an
"Affiliated Provider " ("Affiliated Providers" refer to affiliates and
subsidiaries of KeyCorp and service providers to the Victory Portfolios
and the Victory Shares (collectively, the "Victory Group")), dealers
having an agreement with the Distributor and any trade organization to
which Key Advisers, the Sub -Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or
certain other advisory accounts established with KeyCorp or any of its
affiliates;

(3) Investors who reinvest assets received in a distribution from a
qualified, non-qualified or deferred compensation plan, agency, trust
or custody account that was either (a) maintained by KeyCorp or an
Affiliated Provider, or (b) invested in a fund of the Victory Group;

(6) Investment advisers or financial planners who place trades for their
own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; and clients of
such investment advisers or financial planners who place trades for
their own accounts if the accounts are linked to the master account of
such investment adviser or financial planner on the books and records
of the broker or agent. Such accounts include retirement and deferred
compensation plans and trusts used to fund those plans, including, but
not limited to, those defined in section 401(a), 403(b), or 457 of the
Internal Revenue Code and "rabbi trusts."

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<PAGE>

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

- 17 -

<PAGE>

O RETIREMENT PLANS. Retirement plans can be among the best tax -planning
vehicles available to individuals. Call your Investment Professional for more
information on the plans and their benefits, provisions and fees. Your
Investment Professional can set up your new account in the Fund under one of
several tax-sheltered plans. These plans let you invest for retirement and
shelter your investment income from current taxes. Plans include Individual
Retirement Accounts (IRAs) and Rollover IRAs. Other fees may be charged by the
IRA custodian or trustee.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you
purchase by exchange.

(5) The registration and tax identification numbers of the two accounts
must be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH
TO PURCHASE BY EXCHANGE.

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange shares of
this Fund only for Class A shares of another fund, as funds having only one
class of shares are deemed to be "Class A" shares for exchange purposes. At
present, not all of the funds offer the same classes of shares. Certain funds
offer Class A or Class B shares and a list can be obtained by calling the
Transfer Agent at 800-539-3863. In some cases, sales charges may be imposed on
exchange transactions. Please refer to the Statement of Additional Information
for more details about this policy.

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time ( normally 4:00 p.m. Eastern
time) that is in proper form, but either fund may delay the issuance of shares
of the fund into which you are exchanging if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might create excessive turnover in the Fund's portfolio and associated
expenses disadvantageous to the Fund.

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<PAGE>

otherwise have the potential to disadvantage the Fund, or to refuse multiple
exchange requests submitted by a shareholder or dealer.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (see the definition of "Business Day" under "Shareholder Account
Rules and Policies--Share Price" below). Shares will be redeemed at the NAV next
calculated after the Transfer Agent has received the redemption request. If the
Fund account is closed, any accrued dividends will be paid at the beginning of
the following month.

You may redeem shares in several ways:

O BY MAIL. Send a written request to:

The Victory Special Growth Fund
Primary Funds Service Corp.
P.O. Box 9741
Providence, RI 02940-9741

Write a "letter of instruction" with your name, the Fund's name, your Fund
account number, the dollar amount or number of shares to be redeemed, and any
additional requirements that apply to each particular account. You will need the
letter of instruction signed by all persons required to sign for transactions,
exactly as their names appear on the Account Application. A signature guarantee
is required if: you wish to redeem more than $10,000 worth of shares; your Fund
account registration has changed within the last 60 days; the check is not being
mailed to the address on your account; the check is not being made out to the
account owner; or the redemption proceeds are being transferred to another
Victory Group account with a different registration. The following institutions
should be able to provide you with a signature guarantee: banks, brokers,
dealers, credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature guarantee
may not be provided by a notary public. A signature guarantee is designed to
protect you, the Fund, and its agents from fraud. The Transfer Agent reserves
the right to reject any signature guarantee if (1) it has reason to believe that
the signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

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<PAGE>

at any time by sending a letter of instruction with a signature guarantee to the
Transfer Agent, Primary Funds Service Corporation, P.O. Box 9741, Providence, RI
02940-9741.

O ADDITIONAL REDEMPTION REQUIREMENTS. The Fund may hold payment on redemptions
until it is reasonably satisfied that investments made by check have been
collected, which can take up to 15 days. Also, when the New York Stock Exchange
(the "NYSE") is closed (or when trading is restricted) for any reason other than
its customary weekend or holiday closings, or under any emergency circumstances
as determined by the Commission to merit such action, the right of redemption
may be suspended or the date of payment postponed for a period of time that may
exceed 7 days. In addition, the Fund reserves the right to advance the time on
that day by which purchase and redemption orders must be received. To the extent
that portfolio securities are traded in other markets on days when the NYSE is
closed, the Fund's NAV may be affected on days when investors do not have access
to the Fund to purchase or redeem shares.

O SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The NAV of each class of shares is calculated by adding the value
of all the Fund's investments, plus cash and other assets, deducting liabilities
of the Fund, and then dividing the result by the number of shares of the Fund
outstanding. The NAV of the Fund is determined and its shares are priced as of
the close of regular trading of the NYSE (normally 4:00 p.m. Eastern time) (the
"Valuation Time") 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 its 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 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 and Christmas .

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<PAGE>

o Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form . From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.

o The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

o The Distributor, at its expense, may also provide additional cash compensation
to dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is 4.00% of the offering price. In
addition, the Distributor may, from time to time and at its own expense, provide
compensation, including financial assistance, to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns regarding one or more Victory Portfolios and/or
other dealer-sponsored special events including payment for travel expenses,
including lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Compensation
will include the following types of non-cash compensation offered through sales
contests: (1) vacation trips including the provision of travel arrangements and
lodging; (2) tickets for entertainment events (such as concerts, cruises and
sporting events) and (3) merchandise (such as clothing, trophies, clocks and
pens). Dealers may not use sales of the Fund's shares to qualify for this
compensation if prohibited by the laws of any state or any self-regulatory
organization, such as the National Association of Securities Dealers, Inc. None
of the aforementioned compensation is paid for by the Fund or its shareholders.]

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<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

The Fund ordinarily declares and pays dividends from its net investment income
quarterly. The Fund may make distributions at least annually out of any realized
capital gains, and the Fund may make supplemental distributions of dividend and
capital gains following the end of its fiscal year.

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and capital gain dividends will be reinvested at the net asset
value of the Fund as of the day after the record date. If you do not
indicate a choice on your Account Application, you will be assigned
this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than 7
days after the dividend payment date which may be more than 7 days
after the dividend record date.

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at the NAV
as of the day after the record date, and have your income dividends
paid in cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain
dividends, or only capital gain dividends, automatically reinvested in
shares of another fund of the Victory Group. Shares will be purchased
at the NAV as of the day after the record date. If you are reinvesting
dividends of a fund sold without a sales charge in shares of a fund
sold with a sales charge, the shares will be purchased at the public
offering price. If you are reinvesting dividends of a fund sold with a
sales charge in shares of a fund sold with or without a sales charge,
the shares will be purchased at the net asset value of the fund.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital
gain dividends, or only your income dividends, automatically
transferred to your bank checking or savings account. The amount will
be determined on the dividend record date and will normally be
transferred to your account within 7 days of the dividend record date.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account. Please
call or write the Transfer Agent to learn more about this dividend
distribution option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

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<PAGE>

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

FEDERAL TAXES

The Fund intends to qualify as a regulated investment company by satisfying the
requirements under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "IRS Code"). The Fund contemplates the distribution of all of its net
investment income and capital gains, if any, in accordance with the timing
requirements imposed by the IRS Code, so that the Fund will not be subject to
federal income taxes or the 4% excise tax on undistributed income.

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares.
Distributions received by shareholders of the Fund in January of a given year
will be treated as received on December 31 of the preceding year provided that
they were declared to shareholders of record on a date in October, November, or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

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<PAGE>

Income from securities of foreign issuers may be subject to foreign withholding
taxes. Credit for such foreign taxes, if any, will not pass through to the
shareholders.

o OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws of the shareholder's jurisdiction. INVESTORS CONSIDERING AN INVESTMENT IN
THE FUND SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS
SUITABLE TO THEIR PARTICULAR TAX SITUATION.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

PERFORMANCE

From time to time, performance information for the Fund showing total return 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 of more than one year. Average annual total return is
measured by comparing the value of an investment 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 analyzing that figure.
Cumulative total return is calculated similarly to average annual total return,
except that the resulting difference is not annualized.

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<PAGE>

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Victory Portfolios' assets, subject at
all times to the supervision of the Victory Portfolios' Board of Trustees. Key
Advisers continually conducts investment research and supervision for the Fund
and is responsible for the purchase and sale of the Fund investments.

For the services provided and expenses incurred pursuant to its investment
advisory agreement with the Victory Portfolios respecting the Fund, Key Advisers
receives 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. The advisory fees
for the Fund have been determined to be fair and reasonable in light of the
services provided to the Fund. Key Advisers may periodically waive all or a
portion of its advisory fee with respect to the Fund . Prior to January , 1996,
Society Asset Management, Inc. served as investment adviser to the Fund. During
the Fund's fiscal period ended October 31, 1995, Society Asset Management, Inc.
received investment advisory fees aggregating .33% of the average daily net
assets of the Fund.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a subadviser. Key
Advisers has entered into an investment sub-advisory agreement with T. Rowe
Price, on behalf of the Fund. For its services under the investment sub-advisory
agreement, Key Advisers pays the Sub- Adviser sub-advisory fees as a percentage
of average daily net assets as follows: .25% of average daily net assets up to
$100 million and .20% of average daily net assets in excess of $100 million.

T. Rowe Price serves as the investment sub-adviser for the Fund pursuant to an
investment sub-advisory agreement dated January 1, 1996 between Key Advisers and
the Sub-Adviser, which was approved by the shareholders of the Fund at the
shareholders' meeting held on December 1, 1995. The Sub-Adviser, 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 September 30, 1995, the
firm and its affiliates managed over $65 billion for over 3 million individual
and institutional investor accounts.

The Investment Advisory Committee of the Sub-Adviser, which consists of Jonathan
M. Greene, Chairman, Richard T. Whitney, Donald J. Peters and K. D. Farrow, is
primarily responsible for the investment management

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<PAGE>

of the Fund. The Committee Chairman has day to day responsibility for managing
the Fund and works with the Committee in developing and executing the Fund's
investment program.

PORTFOLIO MANAGER MANAGING FUND SINCE PREVIOUS EXPERIENCE

Vice President, T. Rowe Price
Jonathan M. Green Commencement of Operations Associates since 1979.

EFFECT OF BANKING LAWS

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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 responsible for the underwriting of
Fund shares.

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<PAGE>

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A., an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were 1.40% of the Fund's average net assets, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

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<PAGE>

ordinary circumstances do not intend to hold such meetings. The Trustees may
call special meetings of shareholders for action by shareholder vote as may be
required by the 1940 Act or the Declaration of Trust. Under certain
circumstances, the Trustees may be removed by action of the Trustees or by the
shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have adopted a Code of
Ethics (the "Code") which require investment personnel (a) to pre-clear all
personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub-Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

DELAWARE LAW

The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of personal liability
extended to stockholders of Delaware corporations and the Trust instrument
provides that shareholders will not be personally liable for liabilities of the
Victory Portfolios. In light of Delaware law, the nature of the Victory
Portfolios' business, and the nature of its assets, management of Victory
Portfolios believe that the risk of personal liability to a Fund shareholder
would be extremely remote.

MISCELLANEOUS

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<PAGE>

by reference. The Victory Portfolios may include information in their Reports to
shareholders that (a) describes general economic trends, (b) describes general
trends within the financial services industry or the mutual fund industry, (c)
describes past or anticipated portfolio holdings for the Fund or (d) describes
investment management strategies for the Victory Portfolios. Such information is
provided to inform shareholders of the activities of the Victory Portfolios for
the most recent fiscal year or semi-annual period and to provide the views of
Key Advisers, the Sub-Adviser and/or the Victory Portfolios' officers regarding
expected trends and strategies.

The Fund intends to eliminate duplicate mailings of Reports to an address at
which more than one shareholder of record with the same last name has indicated
that mail is to be delivered. Shareholders may receive additional copies of any
Reports at no cost by writing to the Fund at the address listed on Page 1 of
this Prospectus or by calling 800-539-3863.

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<PAGE>

THE
VICTORY
PORTFOLIOS
STOCK INDEX FUND

PROSPECTUS For current yield, purchase, and redemption information
March 1, 1996 call 800-539-FUND or 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the STOCK INDEX FUND (the "Fund"), a diversified
portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment adviser to the Fund ("Key Advisers" or
the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"Sub-Adviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund seeks to provide long-term capital appreciation by attempting to match
the investment performance of the Standard & Poor's 500 Composite Stock Index
(the "S&P 500 Index" or the "Index").(1)

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940- 9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

(1) "Standard & Poor's 500" is a registered service mark of Standard &
Poor's Corporation, which does not sponsor and is in no way affiliated
with the Fund.

<PAGE>

TABLE OF CONTENTSPAGE

Fund Expenses................................................................ 3
Financial Highlights......................................................... 4
Investment Objective......................................................... 5
Investment Policies and Risk Factors......................................... 5
How to Invest, Exchange and Redeem........................................... 11
Dividends, Distributions and Taxes........................................... 20
Performance.................................................................. 22
Fund Organization and Fees................................................... 22
Additional Information....................................................... 25

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<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES (1)
Maximum Sales Charge Imposed on Purchases (as a percentage of
the offering price).................................................4.75%
Maximum Sales Charge Imposed on Reinvested Dividends..................none
Deferred Sales Charge.................................................none
Redemption Fees.......................................................none
Exchange Fee............................................................none

ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE WAIVERS AND REIMBURSEMENTS (as a
percentage of average daily net assets)
Management Fees (2).............................................45%
Administration Fees (2)...........................................00%
Other Expenses....................................................11%
=====
Total Fund Operating Expenses(3)..................................56%
===

(2) The Adviser and the Administrator have agreed to reduce their fees for
the indefinite future. Absent the voluntary reduction of investment
advisory and administration fees, "Management Fees" and "Administration
Fees" as a percentage of average daily net assets would be .60% and
.15%, respectively.

(3) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay, (see "Fund Organization and Fees-Shareholder
Servicing Plan"). Absent the voluntary reductions referred to in
footnote (2) above, "Total Fund Operating Expenses" as a percentage of
average daily net assets would be .86%.

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Stock Index Fund........ $53 $65 $77 $114

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

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<PAGE>

FINANCIAL HIGHLIGHTS

THE VICTORY STOCK INDEX FUND

DECEMBER 3,
YEAR ENDED 1993
OCTOBER 31, TO OCTOBER 31,
1995 1994 (A)
----------- --------------

NET ASSET VALUE, BEGINNING
OF PERIOD $10.18 $10.00
------ ------
Investment Activities

Net investment income 0.27 0.20
Net realized and unrealized gains (losses)
on investments 2.31 0.16
------ ----
Total from Investment Activities 2.58 0.36
------ ----

Distributions

Net investment income (0.26) (0.18)
NET ASSET VALUE, END OF PERIOD $ 12.50 $10.18
===== =====
Total Return (excludes sales charge) 25.72% 3.66%(b)

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000) $160,822 $89,686
Ratio of expenses to average net assets 0.55% 0.58%(c)
Ratio of net investment income to
average net assets 2.53% 2.35%(c)
Ratio of expenses to average net
assets (d) 0.87% 1.10%(c)
Ratio of net investment income to
average net assets (d) 2.21% 1.82%(c)
Portfolio Turnover 11.91% 1.44%

(a) Period from commencement of operations.
(b) Not Annualized.

(d) During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had
not occurred, the ratios would have been as indicated.

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<PAGE>

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term capital appreciation by attempting to match
the investment performance of the S&P 500 Index. The investment objective of the
Fund is fundamental and may not be changed without a vote of the holders of a
majority of the outstanding voting securities (as defined in the Statement of
Additional Information). There can be no assurance that the Fund will achieve
its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its objective by following a policy of attempting to duplicate
the capital performance and dividend income of the S&P 500 Index by investing
primarily in many of the stocks which comprise the S&P 500 Index and secondarily
in stock futures, while minimizing transaction costs. The S&P 500 Index is
composed of 500 common stocks chosen on the basis of market value and industry
diversification. While most issuers are among the 500 largest U.S. companies in
terms of aggregate market value, some other stocks are included for purposes of
diversification. The Fund attempts to duplicate the investment results of the
S&P 500 Index. No attempt is made to manage the Fund in the traditional sense
using economic, financial and market analysis. The Fund may hold only a
representative portion of the stocks in the Index due to the illiquidity of some
stocks or other factors. The Fund may compensate for the omission of certain
stocks by purchasing stocks not included in the Index that are similar to those
omitted if Key Advisers or the Sub-Adviser believes those purchases will reduce
"tracking error" (the difference between the Fund's investment results (before
expenses) and that of the Index). To minimize tracking error when the Fund does
not hold all stocks in the Index in proportion to their Index weighting, Key
Advisers or the Sub-Adviser may use statistical analyses in selecting stocks. In
connection with engaging in futures transactions, the Fund may hold cash, cash
equivalents, and/or U.S. Government Securities. See "Futures Contracts" in this
prospectus and in the Statement of Additional Information.

Because of the Fund's objective, securities may be purchased, retained, and sold
by the Fund when such transactions would not be consistent with traditional
investment criteria. Adverse performance will ordinarily not result in the
elimination of a stock from the Fund's portfolio. The Fund will generally remain
fully invested in common stocks even when stock prices are generally falling. In
addition, Key Advisers or the Sub-Adviser may eliminate one or more securities
or elect not to increase the Fund's position in such securities notwithstanding
the continued listing of such securities in the S&P 500 Index in the following
circumstances: (a) the stock is no longer publicly traded as in the case of a
leveraged buyout or merger; or (b) an unexpected adverse development occurs with
respect to a company such as bankruptcy or insolvency. Accordingly, an investor
is exposed to a greater risk of loss (and a corresponding greater prospect of
gain) from fluctuations in the value of such securities than would be the case
if the Fund was not so invested in such securities. In addition, the share price
of the Fund is expected to be volatile, and investors should be able to sustain
sudden and sometimes substantial fluctuations in the value of their investment.
Brokerage costs, fees, operating expenses and tracking error may cause the
Fund's total return to be lower than that of the S&P 500 Index.

The Fund may invest in preferred stocks, investment-grade corporate bonds and
notes, warrants, and high quality short-term debt obligations (including
variable amount master demand notes), bankers' acceptances, certificates of
deposit, repurchase agreements, obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, and demand and time deposits of
domestic and foreign banks and savings and loan associations.

Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.
Because the Fund invests primarily in equity securities, which fluctuate in
value, the Fund's shares will fluctuate in value.

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<PAGE>

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

O SHORT-TERM OBLIGATIONS. There may be times when, in Key Advisers' or the
Sub-Adviser's opinion, market conditions warrant that, for temporary defensive
purposes, the Fund may hold more than 20% of its total assets in short-term
obligations. To the extent that the Fund's assets are so invested, they will not
be invested so as to meet its investment objective. The instruments will include
[only] "investment grade" liquid debt securities such as commercial paper,
certificates of deposit, bankers' acceptances, repurchase agreements which
mature in less than seven days and United States Treasury Bills. Bankers'
acceptances are instruments of United States banks which are drafts or bills of
exchange "accepted" by a bank or trust company as an obligation to pay on
maturity. For a discussion of repurchase agreements, see below. "Investment
grade" obligations are those rated at the time of purchase within the four
highest rating categories assigned by a nationally recognized statistical
ratings organization ("NRSRO") or, if unrated, obligations that Key Advisers or
the Sub-Adviser determine to be of comparable quality. The applicable securities
ratings are described in the Appendix to the Statement of Additional
Information.

- 6 -

<PAGE>

in the secondary market for purposes of closing out futures positions.

O ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities and zero coupon corporate securities ("Zero Coupon
Bonds"). Zero Coupon Bonds are purchased at a discount from the face amount
because the buyer receives only the right to a fixed payment on a certain date
in the future and does not receive any periodic interest payments. The effect of
owning instruments which do not make current interest payments is that a fixed
yield is earned not only on the original investment but also, in effect, on
accretion during the life of the obligations. This implicit reinvestment of
earnings at the same rate eliminates the risk of being unable to reinvest
distributions at a rate as high as the implicit yields on the Zero Coupon Bond,
but at the same time eliminates the holder's ability to reinvest at higher rates
. For this reason, Zero Coupon Bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
comparable securities which pay interest periodically. The amount of price
fluctuation tends to increase as maturity of the security increases.

STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon securities, which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, these securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. The Fund will limit its investment in such instruments to
20% of its total assets.

O SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities. The Fund must receive collateral
equal to 100% of the securities' value in the form of cash or U.S. Government
securities, plus any interest due which collateral must be marked to market
daily by Key Advisers or the Sub-Adviser. 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 pays the
Fund amounts equal to any dividends or interest paid on such securities plus any
interest negotiated between the parties to the lending agreement. Loans are
subject to termination by the Fund or the borrower at any time. While the Fund
does not have the right to vote securities on loan, the Fund intends to
terminate any loan and regain the right to vote if that is considered important
with respect to the Fund's 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' Board of Trustees (the "Trustees"). The Fund will
limit its securities lending to 33 1/3% of total assets.

- 7 -

<PAGE>

accrues until their receipt. The Fund engages in when-issued and delayed
delivery transactions only for the purpose of acquiring portfolio securities
consistent with its investment objective and policies, and not for investment
leverage. In when-issued and delayed delivery transactions, the Fund relies on
the seller to complete the transaction; its failure to do so may cause the Fund
to miss a price or yield considered to be advantageous.

O REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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 was delayed pending court action.

O REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund sells portfolio securities to financial institutions such
as banks and broker-dealers, and agrees to repurchase them at a mutually
agreed-upon date and price. At the time the Fund enters into a reverse
repurchase agreement, it must place in a segregated custodial account assets
having a value equal to the repurchase price (including 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").

O INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and, to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
Sub-Adviser will waive its investment advisory fees 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, to the extent such fees are not
waived by Key Advisers or the Sub-Adviser.

- 8 -

<PAGE>

Section 4(2) commercial paper, thus providing liquidity. The Fund believes that
Section 4(2) commercial paper and possibly certain other Restricted Securities
(as defined in the Statement of Additional Information) that meet the criteria
for liquidity established by the Trustees are quite liquid. The Fund intends,
therefore, to treat the restricted securities that meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by Key Advisers or the Sub-Adviser, as liquid and not subject to
the investment limitation applicable to illiquid securities. See "Investment
Limitations" below.

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal year ended October 31, 1995, the
portfolio turnover rate was 11.91% compared to 1.44% in the fiscal period from
December 3, 1993 to October 31, 1994.

INVESTMENT LIMITATIONS

1. The Fund may not borrow money other than (a) by entering 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 such
commitments do not exceed 331/3% of the Fund's total assets; and (b)
for temporary or emergency purposes in an amount not exceeding 5% of
the value of the Fund's total assets.

2. The Fund will not purchase a security if, as a result, more than 15% of
its net assets would be invested in illiquid securities. Illiquid
securities are investments that cannot be readily sold within seven
days in the usual course of business at approximately the price at
which the Fund has valued them. Under the supervision of the Trustees,
Key Advisers or the Sub-Adviser determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and legal
expenses, and it may be difficult or impossible for the Fund to sell
them promptly at an acceptable price.

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<PAGE>

Each of the investment limitations indicated above in this subsection are
fundamental, except for the limitation pertaining to illiquid securities.
Non-fundamental limitations may be changed without shareholder approval.
Whenever an investment policy or limitation states a maximum percentage of the
Fund's assets that may be invested, such percentage limitation will be
determined immediately after and as a result of the investment, and any
subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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). If the value of the Fund's 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 Trustees will consider
what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

O HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments . The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

o INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. An "Investment Professional"
is a salesperson, financial planner, investment adviser or trust officer who
provides you with information regarding the investment of your assets. Your
Investment Professional will place your order with the Transfer Agent (see "Fund
Organization and Fees - Transfer Agent") on your behalf. You may be required to
establish a brokerage or agency account. Your Investment Professional will
notify you whether subsequent trades should be directed to the Investment
Professional or directly to the Fund's Transfer Agent. Accounts established with
Investment Professionals may have different features, requirements and fees. In
addition, Investment Professionals may charge for their services. Information
regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone either through your bank trust department
or through your Investment Professional. Subsequent investments by telephone may
be made directly. See "Special Investor Services" for more information about
telephone transactions.

o INVESTING THROUGH YOUR BANK TRUST DEPARTMENT. Your bank trust department may
require a minimum investment and may charge additional fees. Fee schedules for
such accounts are available upon request and are detailed in the agreements by
which a client opens the desired account. Your bank trust department may require
a completed and signed application for the Fund in which an investment is made.
Additional documents may be required from corporations, associations, and
certain fiduciaries. Any account information, such as balances, should be
obtained through your bank trust department. Additional purchases, exchanges or
redemptions should also be coordinated through your bank trust department.
Contact your bank trust department for instructions.

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<PAGE>

The services rendered by a bank trust department, including Key Trust Company of
Ohio, N.A. and other affiliates of Key Advisers or the Sub-Adviser are not
duplicative of any of the services for which Key Advisers or the SubAdviser as
the investment adviser or sub-adviser, respectively, is compensated for advising
the Fund. The charges paid by clients of bank trust departments, or their
affiliates, should also be considered by the investor in addition to the net
yield and return on the investment in the Fund, although such charges do not
affect the Fund's dividends or distributions.

INVESTING DIRECTLY

The Victory Stock Index Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741
Subsequent purchases may be made in the same manner.

O BY WIRE: Call 800-539-3863 to set up your Fund account to accommodate wire
transactions. YOU MUST CALL THE TRANSFER AGENT BEFORE WIRING FUNDS. Federal
funds (monies transferred from one bank to another through the Federal Reserve
System with same-day availability) should be wired to:

Boston Safe Deposit & Trust Co.
ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Stock Index Fund

Shares are sold at the public offering price based on the net asset value that
is next determined after the Transfer Agent receives the purchase order. In most
cases, to receive that day's offering price, the Transfer Agent must receive
your order as of the close of regular trading of the New York Stock Exchange
("NYSE") (normally 4:00 p.m. Eastern time) (the "Valuation Time") on each
Business Day (as defined in "Shareholder Account Rules and Policies -- Share
Price" below"). If you buy shares through an Investment Professional, the
Investment Professional must receive your order in a timely fashion on a regular
Business Day and transmit it to the Transfer Agent so that it is received before
the close of business that day. The Transfer Agent may reject any purchase order
for the Fund's shares, in its sole discretion. It is the responsibility of your
Investment Professional to transmit your order to purchase shares to the
Transfer Agent in a timely fashion in order for you to receive that day's share
price.

INVESTMENT REQUIREMENTS

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<PAGE>

SALES CHARGE SALES CHARGE DEALER
AS A % OF AS A % OF REALLOWANCE
OFFERING NET AMOUNT AS A % OF
AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE
- ------------------ ----- -------- --------------

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25%
on such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

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<PAGE>

O WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to the
following categories of persons (which categories may be changed or eliminated
at any time):

(1) Current or retired Trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an
"Affiliated Provider" ("Affiliated Providers" refer to affiliates and
subsidiaries of KeyCorp and service providers to the Victory Portfolios
and the Victory Shares (collectively, the "Victory Group")), dealers
having an agreement with the Distributor and any trade organization to
which Key Advisers, the Sub-Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or
certain other advisory accounts established with KeyCorp or any of its
affiliates;

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<PAGE>

(3) Investors who reinvest assets received in a distribution from a
qualified, non-qualified or deferred compensation plan, agency, trust
or custody account that was either (a) maintained by KeyCorp or an
Affiliated Provider, or (b) invested in a fund of the Victory Group;

(6) Investment advisers or financial planners who place trades for their
own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; and clients of
such investment advisers or financial planners who place trades for
their own accounts if the accounts are linked to the master account of
such investment adviser or financial planner on the books and records
of the broker or agent. Such accounts include retirement and deferred
compensation plans and trusts used to fund those plans, including, but
not limited to, those defined in section 401(a), 403(b), or 457 of the
Internal Revenue Code and "rabbi trusts."

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC INVESTMENT PLAN. You can make regular investments in the Fund
with the Systematic Investment Plan by completing the appropriate section of the
Account Application and attaching a voided personal check with your bank's
magnetic ink coding number across the front. If your bank account is jointly
owned, be sure that all owners sign. You must first meet the Fund's initial
investment requirement of $500, then investments may be made monthly by
automatically deducting $25 or more from your bank checking account. For
officers, trustees, directors and employees, including retired directors and
employees, of the Victory Group, KeyCorp and its affiliates, and the
Administrator and its affiliates (and family members of each of the foregoing)
who participate in the Systematic Investment Plan, there is no minimum initial
investment required. You may change the amount of your monthly purchase at any
time. Your bank checking account will be debited on the date indicated on your
Account Application. Shares will be purchased at the offering price next
determined following receipt of the order by the Transfer Agent. You may cancel
the Systematic Investment Plan at any time without payment of a cancellation
fee. Your monthly account statement will reflect systematic investment
transactions, and a debit entry will appear on your bank statement. O THE
SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your account
with the Systematic Withdrawal Plan by completing the appropriate section of the
Account Application. If you own shares in a fund worth $5,000 or more, you can
have monthly, quarterly, semi-annual or annual checks sent from your account
directly to you, to a person named by you, or to your bank checking account. The
minimum withdrawal is $25. If you are having checks sent to your bank checking
account, attach a voided personal check with your bank's magnetic ink coding
number across the front . If your account is jointly owned, be sure that all
owners sign . You may obtain information about the Systematic Withdrawal Plan by
contacting the Transfer Agent. Your Systematic Withdrawal Plan payments are
drawn from share redemptions. If Systematic Withdrawal Plan redemptions exceed
income dividends and capital gain dividend distributions earned on your Fund
shares, your

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<PAGE>

account eventually may be exhausted. If any applicable sales charges are applied
to new purchases of shares of the Fund, it is to your disadvantage to buy shares
of the Fund while also making systematic redemptions.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you
purchase by exchange.

(5) The registration and tax identification numbers of the two accounts
must be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH
TO PURCHASE BY EXCHANGE.

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<PAGE>

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange shares of
this Fund only for Class A shares of another fund. At present, not all of the
funds offer the same classes of shares. If a fund has only one class of shares
that does not have a class designation, they are deemed to be "Class A" shares
for exchange purposes. In some cases, sales charges may be imposed on exchange
transactions. Certain funds offer Class A or Class B shares and a list can be
obtained by calling the Transfer Agent at 800-539-3863. Please refer to the
Statement of Additional Information for more details about this policy.

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally as of 4:00 p.m. Eastern
time) that is in proper form, but either fund may delay the issuance of shares
of the fund into which you are exchanging if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might create excessive turnover in the Fund's portfolio and associated
expenses disadvantageous to the Fund.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

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<PAGE>

You may redeem shares in several ways:

O BY MAIL. Send a written request to: The Victory Stock Index Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

Write a "letter of instruction" with your name, the Fund's name, your Fund
account number, the dollar amount or number of shares to be redeemed, and any
additional requirements that apply to each particular account. You will need the
letter of instruction signed by all persons required to sign for transactions,
exactly as their names appear on the Account Application. A signature guarantee
is required if: you wish to redeem more than $10,000 worth of shares; your Fund
account registration has changed within the last 60 days; the check is not being
mailed to the address on your account; the check is not being made out to the
account owner; or if the redemption proceeds are being transferred to another
Victory Group account with a different registration. The following institutions
should be able to provide you with a signature guarantee: banks, brokers,
dealers, credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature guarantee
may not be provided by a notary public. A signature guarantee is designed to
protect you, the Fund, and its agents from fraud. The Transfer Agent reserves
the right to reject any signature guarantee if (1) it has reason to believe that
the signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

O BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before Valuation Time (normally 4:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of
instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

O ADDITIONAL REDEMPTION REQUIREMENTS. The Fund may hold payment on redemptions
until it is reasonably satisfied that investments made by check have been
collected, which can take up to 15 days. Also, when the NYSE is closed (or when
trading is restricted) for any reason other than its customary weekend or
holiday closings, or under any emergency circumstances as determined by the
Commission to merit such action, the right of redemption may be suspended or the
date of payment postponed for a period of time that may exceed 7 days. In
addition, the Fund reserves the right to advance the time on that day by which
purchase and redemption orders must be received. To the extent that portfolio
securities are traded in other markets on days when the NYSE is closed, the
Fund's NAV may be affected on days when investors do not have access to the Fund
to purchase or redeem shares.

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<PAGE>

account may be closed and the proceeds mailed to you at the address on record.
Shares will be redeemed at the last calculated NAV on the day the account is
closed.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The NAV is calculated by adding the value of all the Fund's
investments, plus cash and other assets, deducting liabilities of the Fund, and
then dividing the result by the number of shares of the class outstanding. The
NAV of the Fund is determined and its shares are priced as of the close of
regular trading of the NYSE (normally 4:00 p.m. Eastern time) (the "Valuation
Time") 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 its 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 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 and
Christmas .

O The offering of shares may be suspended during any period in which the
determination of NAV is suspended, and the offering may be suspended by the
Trustees at any time the Trustees believe it is in the Fund's best interest to
do so. O Redemption or transfer requests will not be honored until the Transfer
Agent receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements for
redemptions stated in this Prospectus.

O The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

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<PAGE>

from the cancellation of share purchase orders. Under unusual circumstances,
shares of the Fund may be redeemed "in kind," which means that the redemption
proceeds will be paid with securities from the Fund. Please refer to the
Statement of Additional Information for more details.

O The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

O The Distributor, at its expense, may also provide additional cash compensation
to dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is 4.00% of the offering price. In
addition, the Distributor may, from time to time and at its own expense, provide
compensation, including financial assistance, to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns regarding one or more Victory Portfolios and/or
other dealer-sponsored special events including payment for travel expenses,
including lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Compensation
will include the following types of non-cash compensation offered through sales
contests: (1) vacation trips including the provision of travel arrangements and
lodging; (2) tickets for entertainment events (such as concerts, cruises and
sporting events) and (3) merchandise (such as clothing, trophies, clocks and
pens). Dealers may not use sales of the Fund's shares to qualify for this
compensation if prohibited by the laws of any state or any self-regulatory
organization, such as the National Association of Securities Dealers, Inc. None
of the aforementioned compensation is paid for by the Fund or its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and capital gain dividends will be reinvested at the net asset
value of the Fund as of the day after the record date. If you do not
indicate a choice on your Account Application, you will be assigned
this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than 7
days after the dividend payment date which may be more than 7 days
after the dividend record date.

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<PAGE>

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at the NAV
as of the day after the record date, and have your income dividends
paid in cash.

4. DIRECTED DIVIDENDS OPTION. You will have income and capital gain
dividends, or only capital gain dividends, automatically reinvested in
shares of another fund of the Victory Group. Shares will be purchased
at the NAV as of the day after the record date. If you are reinvesting
dividends of a fund sold without a sales charge in shares of a fund
sold with a sales charge, the shares will be purchased at the public
offering price. If you are reinvesting dividends of a fund sold with a
sales charge in shares of a fund sold with or without a sales charge,
the shares will be purchased at the net asset value of the fund.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital
gain dividends, or only your income dividends, automatically
transferred to your bank checking or savings account. The amount will
be determined on the dividend record date and will normally be
transferred to your account within 7 days of the dividend record date.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account. Please
call or write the Transfer Agent to learn more about this dividend
distribution option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

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<PAGE>

FEDERAL TAXES

The Fund intends to qualify as a regulated investment company by satisfying the
requirements under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "IRS Code"). The Fund contemplates the distribution of all of its net
investment income and capital gains, if any, in accordance with the timing
requirements imposed by the IRS Code, so that the Fund will not be subject to
federal income taxes or the 4% excise tax on undistributed income.

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares.
Distributions received by shareholders of the Fund in January of a given year
will be treated as received on December 31 of the preceding year provided that
they were declared to shareholders of record on a date in October, November, or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

o OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws of the shareholder's jurisdiction. INVESTORS CONSIDERING AN INVESTMENT IN
THE FUND SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS
SUITABLE TO THEIR PARTICULAR TAX SITUATION.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

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<PAGE>

PERFORMANCE

Performance is a function of the type and quality of instruments held in the
Fund's portfolio, operating expenses, and market conditions. Consequently,
performance will fluctuate and data reported are not necessarily representative
of future results. Any fees charged by service providers with respect to
customer accounts for investing in shares of the Fund will not be reflected in
performance calculations.

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

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<PAGE>

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

For the services provided and expenses incurred pursuant to the investment
advisory agreement between the Victory Portfolios respecting the Fund, Key
Advisers is entitled to receive a fee, computed daily and paid monthly, at an
annual rate of sixty one-hundredths of one percent (.60%) of the average daily
net assets of the Fund. The investment advisory fee paid by the Fund is higher
than the advisory fees paid by most mutual funds, although the Victory
Portfolios' Board of Trustees believes such fees to be comparable to advisory
fees paid by many funds having similar objectives and policies. The investment
advisory fee paid by the Fund is higher than the advisory fees paid by most
mutual funds, although the Victory Portfolios' Board of Trustees believes such
fees to be comparable to advisory fees paid by many funds having similar
objectives and policies. The advisory fees for the Fund have been determined to
be fair and reasonable in light of the services provided to the Fund. Key
Advisers may periodically waive all or a portion of its advisory fee with
respect to the Fund . Prior to January , 1996, Society Asset Management, Inc.
served as investment adviser to the Fund. During the Fund's fiscal period ended
October 31, 1995, Society earned investment advisory fees aggregating .43% of
the average daily net assets of the Fund.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
sub-advisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

For its services under the investment sub-advisory agreement, Key Advisers pays
the Sub-Adviser fees as a percentage of average daily net assets as follows:
.65% of the first $10 million of average

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<PAGE>

daily net assets; .50% of the next $15 million of average daily net assets; .40%
of the next $25 million of average daily net assets; and .35% of average daily
net assets in excess of $50 million.

EFFECT OF BANKING LAWS

The person primarily responsible for the investment management of the Fund as
well as her previous experience is as folllows:

PORTFOLIO MANAGER MANAGING FUND SHARES PREVIOUS EXPERIENCE
----------------- -------------------- -------------------

Denise Coyne Since Inception Vice President and Portfolio
Manager for Society Asset
Management, Inc. since 1985.

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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<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 responsible for the underwriting of
Fund shares.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A., an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

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<PAGE>

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Victory Portfolios' Board of Trustees, recordkeeping services, and services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory and compliance systems and other administrative and
support services.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were .87% of the Fund's average net assets, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts , the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not so held
in trust. The trustee will forward to these shareholders all communications
received by the trustee, including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust. Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

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<PAGE>

trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub-Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

DELAWARE LAW

MISCELLANEOUS

- 27 -

<PAGE>

for the most recent fiscal year or semi-annual period and to provide the views
of Key Advisers, the Sub-Adviser and/or the Victory Portfolios' officers
regarding expected trends and strategies.

- 28 -

- 29 -

<PAGE>
THE
VICTORY

PORTFOLIOS
TAX-FREE MONEY MARKET FUND

Prospectus For current yield, purchase and redemption information, March 1, 1996
call 800-539-FUND or 800-539-3863.

The Victory Portfolios (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the TAX-FREE MONEY MARKET FUNDS (the "Fund"), a
diversified portfolio. KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment adviser to the Fund ("Key
Advisers" or the "Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an
indirect subsidiary of KeyCorp, is the investment sub-adviser to the Fund (the
"Sub-Adviser" or "Society"). Concord Holding Corporation is the Fund's
administrator (the "Administrator"). Victory Broker-Dealer Services, Inc. is the
Fund's distributor (the "Distributor").

The Fund seeks to provide current interest income free from federal income taxes
consistent with relative liquidity and stability of principal. The Fund pursues
this objective by investing in short-term, high-quality municipal securities.

The Fund seeks to maintain a constant net asset value of $1.00 per unit of
beneficial interest, and shares of the Fund are offered at net asset value.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741, or by calling 800-539-3863.

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER UNIT.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses...................................................... 3
Financial Highlights............................................... 4
Investment Objective............................................... 5
Investment Policies and Risk Factors .............................. 5
How to Invest, Exchange and Redeem................................. 10
Dividends, Distributions and Taxes................................. 16
Performance........................................................ 18
Fund Organization and Fees......................................... 19
Additional Information............................................. 21

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<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases
(as a percentage of the offering price)....................... none
Maximum Sales Charge Imposed on Reinvested Dividends............ none
Deferred Sales Charge......................................... none
Redemption Fees............................................... none
Exchange Fee.................................................... none

ANNUAL FUND OPERATING EXPENSES (as a percentage of average daily net
assets)

Management Fees .............................................. .35%
Administration Fees .......................................... .15%
Other Expenses(2) ........................................... .29%
---
Total Fund Operating Expenses(2) ............................. .79%
===

(2) These amounts include an estimate of the shareholder servicing fees
that the Fund expects to pay (see "Fund Organization and Fees -
Shareholder Servicing Plan").

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming:
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Tax-Free Money Market
Fund........................ $8 $25 $44 $98

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

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<PAGE>

FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect to the
financial highlights for the periods indicated. The information below has been
derived from financial statements audited by Coopers & Lybrand L.L.P.,
independent accountants for the Victory Portfolios, whose report thereon,
together with the financial statements of the Fund, is incorporated by reference
into the Statement of Additional Information. The information set forth below is
for a Fund share outstanding for each period indicated.

THE VICTORY TAX-FREE MONEY MARKET FUND

Years ended October 31,
1995 1994 1993 1992 1991 1990 1989
------ ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ----------- ----------- ------------ ---------- ----------- -------
OF PERIOD

Income from Investment Activities
Net investment income 0.034 0.021 .020 0.027 0.043 0.054 0.059

Distributions
Net investment income (0.034) (0.021) (0.020) (0.027) (0.043) (0.054) (0.059)
--------- -------- -------- -------- -------- -------- -------

NET ASSET VALUE,
END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000$ 1.000 $ 1.000
========== =========== =========== =========== ======================= ==========

Total Return 3.42% 2.17% 2.06% 2.77% 4.44% 5.48% 6.04%

Ratios/Supplemental Data:

NET ASSETS, END OF
PERIOD (000) $307,726 $ 198,561 $ 189,351 $ 151,012 $ 129,601 $134,652 $ 85,556

Ratio of expenses to average
net assets 0.61% 0.60% 0.59% 0.61% 0.62% 0.63% 0.58%

Ratio of net investment
income to average net assets 3.36% 2.14% 2.04% 2.70% 4.29% 5.32% 5.88%

Ratio of expenses to
average net assets (a) 0.62% 0.79% 0.60% 0.67%

Ratio of net investment
income to average net assets (a) 3.35% 1.95% 2.02% 5.79%
</TABLE>

(a) During the period , certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would be as
indicated.

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<PAGE>

INVESTMENTS OBJECTIVE

The Fund seeks to provide current interest income free from federal income taxes
consistent with relative liquidity and stability of principal. The investment
objective of the Fund is fundamental and therefore may not be changed without a
vote of the holders of a majority of the Fund's outstanding voting securities
(as defined in the Statement of Additional Information). There can be no
assurance that the Fund will achieve its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its objective by investing only in obligations which are
determined by Key Advisers or the Sub-Adviser to present minimal credit risks
under guidelines adopted by the Victory Portfolios' Board of Trustees (the
"Trustees"). All securities or instruments in which the Fund may invest must
have remaining maturities of 397 days or less, although securities subject to
repurchase agreements and certain variable interest rate instruments may bear
longer maturities. The average weighted maturity of the securities in the Fund
will not exceed 90 days.

Under normal market conditions, the Fund will invest at least 80% of its total
assets in bonds and notes issued by or on behalf of states (including the
District of Columbia), territories, and possessions of the United States and
their respective authorities, agencies, instrumentalities and political
sub-divisions, the interest on which is both exempt from federal income tax and
not treated as a preference item for purposes of the federal alternative minimum
tax ("Municipal Securities"). At times when Key Advisers or the Sub-Adviser
judges that unstable conditions in the markets for Municipal Securities make
pursuing the Fund's basic investment objective inconsistent with the best
interests of shareholders, Key Advisers or the Sub-Adviser may use temporary
"defensive" strategies, by purchasing short-term taxable obligations and by
holding uninvested cash reserves.

Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.

The two principal types of Municipal Securities that may be held by the Fund are
"general obligation" securities and "revenue" securities. General obligation
securities are secured by the issuer's pledge of its full faith, credit and
taxing power for the payment of principal and interest. Revenue securities are
payable only from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise tax or other
specific revenue source such as the user of the facility being financed. Private
activity bonds held by the Fund are in most cases revenue securities and are not
payable from the unrestricted revenues of the issuer. Consequently, the credit
quality of private activity bonds is usually directly related to the credit
standing of the corporate user of the facility involved.

The Fund may also invest in "moral obligation" securities, which are normally
issued by special purpose public authorities. If the issuer of moral obligation
securities is unable to meet its debt service obligations from current revenues,
it may draw on a reserve fund, the restoration of which is a moral commitment
but not a legal obligation of the state or municipality which created the
issuer.

- 5 -

<PAGE>

Investments by the Fund in refunded municipal bonds that are secured by escrowed
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities are considered to be investments in U.S. Government Securities
for purposes of the diversification requirements to which the Fund is subject
under the Investment Company Act of 1940, as amended (the "1940 Act"). As a
result, more than five percent of the Fund's assets may be invested in such
refunded bonds issued by a particular municipal issuer.

NOTE: Opinions relating to the validity of Municipal Securities and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the Fund nor
its investment adviser will review the proceedings relating to the issuance of
Municipal Securities or the basis for such opinions.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

O TIME DEPOSITS. The Fund may invest in non-negotiable deposits in a banking
institution earning a specified interest rate over a given period of time.

O WHEN -ISSUED SECURITIES. The Fund may purchase securities on a when-issued or
delayed delivery basis. These transactions are arrangements in which the Fund
purchases securities with payment and delivery scheduled for a future time. When
the Fund agrees to purchase securities on a when-issued basis, the Fund's
custodian must set aside cash or liquid portfolio securities equal to the amount
of that commitment in a separate account, and may be required to subsequently
place additional assets in the separate account to reflect any increase in the
Fund's commitment. Prior to delivery of when-issued securities, their value is
subject to fluctuation and no income accrues until their receipt. The Fund
engages in when-issued and delayed delivery transactions only for the purpose of
acquiring portfolio securities consistent with its investment objective and
policies, and not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction; its
failure to do so may cause the Fund to miss a price or yield considered to be
advantageous.

- 6 -

<PAGE>

O VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase variable and
floating rate notes. The interest rates on these securities may be reset daily,
weekly, quarterly, or some other reset period, and may be subject to a floor or
ceiling. There is a risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. There may be no active
secondary market with respect to a particular variable or floating rate note.
Variable and floating rate notes for which no readily available market exists
will be purchased in an amount which, together with other illiquid securities
held by the Fund, does not exceed 10% of the Fund's net assets unless such notes
are subject to a demand feature that will permit the Fund to receive payment of
the principal within seven days after demand therefor. These securities are
included among those which are sometimes referred to as "derivative securities."

O U.S. GOVERNMENT SECURITIES. The Fund may invest all obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government national Mortgage Association ("GNMA") and the
ExportImport of the U.S. the United States, are supported by the full faith and
credits of the U.S. Treasury; others, such as those of the Federal National
Mortgage Association (FNMA") are supported by the right of the Issuer to borrow
from the Treasury; others, such as those of the Student Loan Marketing
Association ("SLMA"), 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 the Federal Home Loan Mortgage Corporation
("FHLMC") are supported only by the credit of the 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 this obligations of such agencies or
instrumentalities only when Ken Advisers or the Sub-Advisor believes that the
credit risk with respect thereto is minimal.

- 7 -

<PAGE>

may invest in the money market funds of the Victory Portfolios. Key Advisers or
the Sub-Adviser will waive its fee attributable to the Fund's assets invested in
a fund of the Victory Portfolios, and, to the extent required by the laws of any
state in which shares of the Fund are sold, Key Advisers or the Sub-Adviser will
waive its investment advisory fees 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.

O PRIVATE PLACEMENT INVESTMENTS. The Fund may invest in high-quality commercial
paper issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act"). Section 4(2)
commercial paper ("Commercial Paper") is generally sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Commercial Paper is normally
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in Commercial
Paper, thus providing liquidity. The Fund believes that Commercial Paper and
possibly certain other Restricted Securities (as defined in the Statement of
Additional Information) that meet the criteria for liquidity established by the
Trustees are quite liquid. The Fund intends, therefore, to treat the restricted
securities that meet the criteria for liquidity established by the Trustees,
including Commercial Paper, as determined by Key Advisers or the Sub-Adviser, as
liquid and not subject to the investment limitation applicable to illiquid
securities. See "Investment Limitations" below.

O ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities and zero coupon corporate securities ("Zero Coupon
Bonds"). Zero Coupon Bonds are purchased at a discount from the face amount
because the buyer receives only the right to a fixed payment on a certain date
in the future and does not receive any periodic interest payments. The effect of
owning instruments which do not make current interest payments is that a fixed
yield is earned not only on the original investment but also, in effect, on
accretion during the life of the obligations. This implicit reinvestment of
earnings at the same rate eliminates the risk of being unable to reinvest
distributions at a rate as high as the implicit yields on the Zero Coupon Bond,
but at the same time eliminates the holder's ability to reinvest at higher rates
. For this reason, Zero Coupon Bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
comparable securities which pay interest periodically. The amount of price
fluctuation tends to increase as maturity of the security increases.

O PUTS. The Fund may acquire "puts" with respect to Municipal Securities held in
its portfolio. Under a put, the Fund has the right to sell specified Municipal
Securities within a specified period of time at a specified price. A put will be
sold, transferred, or assigned only with the underlying Municipal Securities.
The Fund will acquire puts solely to facilitate portfolio liquidity, shorten the
maturity of underlying Municipal Securities, or permit the investment of its
assets at a more favorable rate of return. The Fund expects that it will
generally acquire puts only where the puts are available without the payment of
any direct or indirect consideration. However, if necessary or advisable, the
Fund may pay for a put either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to the put (thus reducing the
yield to maturity otherwise available for the same securities).

- 8 -

<PAGE>

guaranteed by the U.S. Government or its agencies or instrumentalities (some of
which may be subject to repurchase agreements), certificates of deposit and
bankers' acceptances of domestic banks and domestic branches of foreign banks,
commercial paper meeting the Fund's quality standards (as described above) for
tax-exempt commercial paper, and shares issued by other open-end registered
investment companies issuing taxable dividends where the Fund's Investment
Adviser waives a pro rata portion of its advisory fee; notwithstanding this
waiver, such investments involve a layering of certain costs and expenses. To
the extent required by the laws of any state in which shares of the Fund are
sold, Key Advisers will waive its investment advisory fee as to all assets
invested in other investment companies. These obligations are described further
in the Statement of Additional Information.

O COMMERCIAL PAPER. The Fund may invest in short-term obligations issued by
banks, broker-dealers, corporations and other entities for purposes such as
financing their current operations.

- 9 -

<PAGE>

O THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT
THE INVESTMENT PRACTICES OF THE FUND AND RISK FACTORS. The investment policies
and limitations of the Fund may be changed by the Trustees without any vote of
shareholders unless (1) a policy is expressly deemed to be a fundamental policy
of the Fund or (2) a policy is expressly deemed to be changeable only by a
majority vote of shareholders.

INVESTMENTS LIMITATIONS

1. The Fund may not borrow money other than (a) by entering 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 such
commitments do not exceed 33 1/3% of the Fund's total assets; and (b)
for temporary or emergency purposes in an amount not exceeding 5% of
the value of the Fund's total assets. The Fund does not engage in
borrowing for the purpose of leverage.

- 10 -

<PAGE>

same industry; provided that this limitation shall not apply to
Municipal Securities or governmental guarantees of Municipal
Securities; but for these purposes only, industrial development bonds
that are backed by the assets and revenues of a non-governmental user
shall not be deemed to be Municipal Securities. Notwithstanding the
foregoing, there is no limitation with respect to certificates of
deposit and bankers' acceptances issued by domestic banks, or
repurchase agreements secured thereby. 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.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Each of the investment limitations indicated above in this subsection are
fundamental, except for the limitation pertaining to illiquid securities and
compliance with Rule 2a-7. Nonfundamental limitations may be changed without
shareholder approval. Whenever an investment policy or limitation states a
maximum percentage of the Fund's assets that may be invested, such percentage
limitation will be determined immediately after and as a result of the
investment and any subsequent change in values, assets, or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations, 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). If the value of the Fund's illiquid securities at
any timeexceeds the percentage limitation applicable at the time of acquisition
due to subsequent fluctuations in value or other reasons, the Trustees will
consider what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

HOW TO INVEST

HOW ARE SHARES PURCHASED? Shares may be purchased directly or through an
Investment Professional of a securities broker or other financial institution
that has entered into a selling agreement with the Fund or the Distributor.
Shares are also available to clients of bank trust departments. The minimum
investment is $500 ($250 for Individual Retirement Accounts) for the initial
purchase and $25 thereafter. Accounts set up through a bank trust department or
an Investment Professional may be subject to different minimums.

- 11 -

<PAGE>

regarding these features, requirements and fees will be provided by the
Investment Professional. If you are purchasing shares of any Fund through a
program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone either through your bank trust department
or through your Investment Professional. Subsequent investments by telephone may
be made directly. See "Special Investor Services" for more information about
telephone transactions.

O INVESTING THROUGH YOUR BANK TRUST DEPARTMENT. Your bank trust department may
require a minimum investment and may charge additional fees. Fee schedules for
such accounts are available upon request and are detailed in the agreements by
which a client opens the desired account. Your bank trust department may require
a completed and signed application for the Fund in which an investment is made.
Additional documents may be required from corporations, associations, and
certain fiduciaries. Any account information, such as balances, should be
obtained through your bank trust department. Additional purchases, exchanges, or
redemptions should also be coordinated through your bank trust department.
Contact your bank trust department for instructions.

The services rendered by a bank trust department, including Key Trust Company of
Ohio, N.A. and other affiliates of Key Advisers or the Sub-Adviser are not
duplicative of any of the services for which Key Advisers or the Sub-Adviser as
the investment adviser or sub-adviser, respectively, is compensated for advising
the Fund. The charges paid by clients of bank trust departments, or their
affiliates, should also be considered by the investor in addition to the net
yield on the investment in the Fund, although such charges do not affect the
Fund's dividends or distributions.

INVESTING DIRECTLY

The Victory Tax-Free Money Market Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741.

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co
ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Tax-Free Money Market Fund

- 12 -

<PAGE>

Shares are sold at the net asset value that is next determined after the
Transfer Agent receives the purchase order. The net asset value of each share of
the Fund is determined on each Business Day (as defined in "Shareholder Account
Rules and Policies -- Share Price" below) normally 2:00 p.m. (Eastern time) and
all net income of the Fund is declared as a dividend to the Fund's shareholders
of record as of that time. If you buy shares through an Investment Professional,
the Investment Professional must receive your order in a timely fashion on a
regular Business Day and transmit it to the Transfer Agent so that it is
received before the close of business that day. The Transfer Agent may reject
any purchase order for the Fund's shares, in its sole discretion. It is the
responsibility of your Investment Professional to transmit your order to
purchase shares to the Transfer Agent in a timely fashion in order for you to
begin earning dividends on the Business Day when the order to purchase such
shares is deemed to have been received as provided above.

INVESTMENT REQUIREMENTS

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front. If your account is jointly owned, be sure
that all owners sign. You may obtain information about the Systematic Withdrawal
Plan by contacting the Transfer Agent. Your Systematic Withdrawal Plan payments
are drawn from share redemptions. If Systematic Withdrawal Plan redemptions

- 13 -

<PAGE>

exceed income dividends and capital gain dividend distributions earned on your
Fund shares, your account eventually may be exhausted.

O TELEPHONE TRANSACTIONS. You can initiate most transactions by telephone. You
may call the Transfer Agent toll-free at 800-539-3863 or call your Investment
Professional or bank trust department. Telephone transaction privileges for
purchases, exchanges or redemptions may be modified, suspended or terminated by
the Fund at any time. If an account has more than one owner, the Fund and the
Transfer Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer representative of
record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

- 14 -

<PAGE>

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you
purchase by exchange.

(5) The registration and tax identification numbers of the two accounts
must be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH
TO PURCHASE BY EXCHANGE.

There are certain exchange policies you should be aware of:

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

Shareholders of the former Investors Preference Fund for Income, Inc. and
Investors Preference New York Tax-Free Fund, Inc. will not be subject to any

- 15 -

<PAGE>

additional sales charge upon an exchange of shares attributable to an Investors
Preference Funds account for shares of other funds of the Victory Portfolios.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business (See the definition of "Business Day" under "Shareholder Account
Rules and Policies--Share Price" below). Shares will be redeemed at the NAV next
calculated after the Transfer Agent has received the redemption request.

You may redeem shares in several ways:

O BY MAIL. Send a written request to:

The Victory Tax-Free Money Market Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

- 16 -

<PAGE>

that may exceed 7 days. In addition, the Fund reserves the right to advance the
time on that day by which purchase and redemption orders must be received.

SHAREHOLDER ACCOUNT RULES AND POLICIES

O SHARE PRICE. The term "net asset value per share," or "NAV", means the value
of one share. The Fund's NAV per share is calculated by adding the value of all
the Fund's investments, plus cash and other assets, deducting liabilities of the
Fund, and then dividing the result by the number of shares of the Fund
outstanding. The NAV of the Fund is determined and its shares are normally
priced as of 2:00 p.m. (Eastern time) (the "Valuation Time") 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 its 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 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 and Christmas .

- 17 -

<PAGE>

Securities and Exchange Commission delaying or suspending such payments. The
Transfer Agent may delay forwarding a check for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as 15
days from the date the shares were purchased. That delay may be avoided if you
arrange with your bank to provide telephone or written assurance to the Transfer
Agent that your purchase payment has cleared.

o The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

o The Distributor at its expense, may also provide cash compensation to dealers
in connection with sales of shares of the Fund. In addition, the Distributor
may, from time to time and at its own expense, provide compensation, including
financial assistance, to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding one or more Victory Portfolios and/or other dealer-sponsored
special events including payment for travel expenses, including lodging incurred
in connection with trips taken by invited registered representatives and members
of their families to locations within or outside of the United States for
meetings or seminars of a business nature. Compensation will include the
following types of non-cash compensation offered through sales contests: (1)
vacation trips including the provision of travel arrangements and lodging; (2)
tickets for entertainment events (such as concerts, cruises and sporting events)
and (3) merchandise (such as clothing, trophies, clocks and pens). Dealers may
not use sales of the Fund's shares to qualify for this compensation if
prohibited by the laws of any state or any self-regulatory organization, such as
the National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

- 18 -

<PAGE>

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and capital gain dividends will be reinvested at the net asset
value of the Fund as of the dividend payment date. If you do not
indicate a choice on your Account Application, you will be assigned
this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than 7
days after the last day of the preceding month.

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund and have
your income dividends paid in cash.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

- 19 -

<PAGE>

Investment Professional or financial institution will be detailed in regular
statements or through confirmation procedures of the financial institution.
Certificates representing shares of the Fund will not be issued. An Internal
Revenue Service ("IRS") Form 1099-DIV with federal tax information will be
mailed to you by January 31 of each tax year and also will be filed with the
IRS. At least twice a year, you will receive the Fund's financial reports.

o COMPLETE REDEMPTIONS. If you request a complete redemption of all your fund
shares, any dividends accrued to your account will be included in the redemption
check.

FEDERAL TAXES

The Fund intends to qualify each year as a regulated investment company by
satisfying the requirements under Subchapter M of the Internal Revenue Code of
1986, as amended (the "IRS Code"), for so long as such qualification is in the
best interest of its shareholders. The Fund contemplates distribution of all of
its net investment income in accordance with the timing requirements imposed by
the Code, so that the Fund will not be subject to federal income taxes or the 4%
excise tax on undistributed income. Since all of the Fund's net investment
income is expected to be derived from earned interest, it is anticipated that no
part of any distribution will be eligible for the dividends received deduction
for corporations. The Fund does not expect to realize any long-term capital
gains.

To the extent that dividends paid to shareholders are derived from taxable
income (for example, interest on certificates of deposit or repurchase
agreements) or from capital gains, such dividends will be subject to federal
income tax whether received in cash or additional shares and may also be subject
to state and local taxes.

Dividends derived from exempt-interest income and designated as such by the Fund
may be treated by the Fund's shareholders as items of interest excludable from
their gross income for federal tax purposes. However, such dividends may be
taxable to shareholders under state or local law as ordinary income even though
all or a portion of the amounts may be derived from interest on tax-exempt
obligations which, if realized directly, would be exempt from such taxes.
(Shareholders are advised to consult their tax advisers whether exempt-interest
dividends would be excludable from gross income if a shareholder was treated
under the IRS Code as a "substantial user" of facilities financed by an
obligation held by the Fund or as a "related person" to such user.)

Interest on indebtedness incurred by a shareholder to purchase or carry shares
is not deductible for federal income tax purposes to the extent the Fund
distributes exempt-interest dividends during the shareholder's taxable year.

Under the IRS Code, dividends attributable to interest on certain private
activity bonds issued after August 7, 1986 must be included in alternative
minimum taxable income for the purpose of determining liability (if any) for the
alternative minimum tax for individuals and corporations. Also, interest income
on all Municipal Securities and private activity bonds is included in "adjusted
current earnings" for purposes of computing the alternative minimum taxable
income of corporate shareholders. The receipt of exempt-interest dividends may
cause persons receiving Social Security or Railroad Retirement benefits to be
taxed on a portion of such benefits.

- 20 -

<PAGE>

Dividends received by shareholders of the Fund in January of a given year will
be treated as received on December 31 of the preceding year provided that such
dividends were declared to shareholders of record on a date in October, November
or December of such preceding year.

The foregoing discussion is limited to federal income tax consequences and is
based on tax laws and regulations which are in effect as of the date of this
Prospectus; such laws and regulations may be changed by legislative or
administrative actions. Additional information regarding federal taxes is
contained in the Statement of Additional Information under the headings
"ADDITIONAL PURCHASE AND REDEMPTION INFORMATION--Additional Tax Information."
The foregoing and the additional material in the Statement of Additional
Information are only brief summaries of some of the important tax considerations
generally affecting the Fund and its shareholders. Accordingly, potential
investors are urged to consult their tax advisers with specific reference to
their own federal, state and other local tax situation.

The Victory Portfolios will provide shareholders at least annually with
information as to the federal income tax consequences of distributions made to
them during the year.

INVESTING FOR RETIREMENT

You may wish to invest in the Victory Portfolios in connection with Individual
Retirement Accounts (IRAs) and other retirement plans such as Simplified
Employee Pension Plans (SEP/IRA), Salary Reduction Simplified Employee Pension
Plans (SAR-SEP/IRA), 401(k) Defined Contribution Plans, and 403(b) Defined
Compensation Plans. For more information about investing in the Victory
Portfolios through tax-favored accounts, call the Transfer Agent at
800-539-3863. Investment in the Fund would not be appropriate for tax-deferred
plans, such as Individual Retirement Accounts ("IRA") and Keogh plans.

PERFORMANCE

Performance information showing the total return 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 of more than one year. Average annual total return is measured
by comparing the value of an investment in the Fund at the beginning of the
relevant period to the redemption value of the investment at the end of the
period (assuming immediate reinvestment of any dividends or capital gains
distributions) and annualizing that figure. Cumulative total return is
calculated similarly to average annual total return, except that the resulting
difference is not annualized.

- 21 -

<PAGE>

those prepared by Dow Jones & Co., Inc. and Standard & Poor's Corporation, in
publications issued by Lipper Analytical Services, Inc., and in the following
publications: IBC's Money Fund Reports, Value Line Mutual Fund Survey,
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 and local newspapers. In addition, general
information about the Fund that appears in publications such as those mentioned
above may also be quoted or reproduced in advertisements, sales literature or in
reports to shareholders.

Performance is a function of the type and quality of instruments held in the
Fund's portfolio, operating expenses, and market conditions. Consequently,
current performance will fluctuate and data reported are not necessarily
representative of future results. Any fees charged by service providers with
respect to customer accounts for investing in shares of the Fund will not be
reflected in performance calculations.

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund's investments.

Key Advisers was organized as an Ohio corporation on July 27, 1995 and is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended. 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 $66 billion for numerous clients including large corporate and
public retirement plans, Taft-Hartley plans, foundations and endowments, high
net worth individuals and mutual funds.

- 22 -

<PAGE>

Management, Inc. served as investment adviser to the Fund. During the Fund's
fiscal year ended October 31, 1995, Society Asset Management, Inc. earned
investment advisory fees aggregating .34% of the average daily net assets of the
Fund.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc. a registered investment adviser, on
behalf of the Fund. The Sub- Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
subadvisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

The person primarily responsible for the investment management of the Fund as
well as her previous experience is as follows:

PORTFOLIO MANAGER MANAGING FUND SINCE PREVIOUS EXPERIENCE

Judith Jones Since Inception Vice President and Portfolio
Manager for Society Asset
Manager, Inc., since 19

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

- 23 -

<PAGE>

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

The Victory Portfolios has adopted a Shareholder Servicing Plan for the Fund. In
accordance with the Shareholder Servicing Plan, the Fund may enter into
Shareholder Service Agreements under which the Fund pays fees of up to .25% of
the average daily net assets for fees incurred in connection with the personal
service and maintenance of accounts holding the shares. Such agreements are
entered into between the Victory Portfolios and various shareholder servicing
agents, including the Distributor, Key Trust Company of Ohio, N.A. and its
affiliates, and other financial institutions and securities brokers (each, a
"Shareholder Servicing Agent"). Each Shareholder Servicing Agent generally will
provide support services to shareholders by establishing and maintaining
accounts and records, processing dividend and distribution payments, providing
account information, arranging for bank wires, responding to routine inquires,
forwarding shareholder communication, assisting in the processing of purchase,
exchange and redemption requests, and assisting shareholders in changing
dividend options, account designations and addresses. Shareholder Servicing
Agents may periodically waive all or a portion of their respective shareholder
servicing fees with respect to the Fund .

EFFECT OF BANKING LAWS

- 24 -

<PAGE>

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A., an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Victory Portfolios' Board of Trustees, recordkeeping services, services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory, compliance, and other administrative and support
services.

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were .62% of average daily net assets, excluding certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

- 25 -

<PAGE>

outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other Funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have each adopted a
Code of Ethics (the "Codes") which require investment personnel (a) to preclear
all personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The
Codes also prohibit investment personnel from purchasing securities in an
initial public offering. Personal trading reports are reviewed periodically by
Key Advisers and the Sub-Adviser, and the Board of Trustees reviews their Codes
and any substantial violations of the Codes. Violations of the Codes may result
in censure, monetary penalties, suspension or termination of employment.

DELAWARE LAW

MISCELLANEOUS

- 26 -

<PAGE>

available for a particular fiscal year end or the end of a semi-annual period,
is incorporated herein by reference. The Victory Portfolios may include
information in their Reports to shareholders that (a) describes general economic
trends, (b) describes general trends within the financial services industry or
the mutual fund industry, (c) describes past or anticipated portfolio holdings
for the Fund or (d) describes investment management strategies for the Victory
Portfolios. Such information is provided to inform shareholders of the
activities of the Victory Portfolios for the most recent fiscal year or
semi-annual period and to provide the views of Key Advisers, the Sub-Adviser
and/or the Victory Portfolios' officers regarding expected trends and
strategies.

- 27 -

<PAGE>

*THE
VICTORY
PORTFOLIOS
VALUE FUND

PROSPECTUS FOR CURRENT YIELD, PURCHASE, AND REDEMPTION INFORMATION,
MARCH 1, 1996 CALL 800-539-FUND OR 800-539-3863

THE VICTORY PORTFOLIOS (the "Victory Portfolios") is a registered open-end
management investment company that offers investors a selection of money market,
fixed-income, municipal bond, domestic and international equity portfolios. This
Prospectus relates to the VALUE FUND (the "Fund"), a diversified portfolio.
KeyCorp Mutual Fund Advisers, Inc., Cleveland, Ohio, an indirect subsidiary of
KeyCorp, is the investment adviser to the Fund ("Key Advisers" or the
"Adviser"). Society Asset Management, Inc., Cleveland, Ohio, an indirect
subsidiary of KeyCorp, is the investment sub-adviser to the Fund ("Society" or
the "Sub-Adviser"). Concord Holding Corporation is the Fund's administrator (the
"Administrator"). Victory Broker-Dealer Services, Inc. is the Fund's distributor
(the "Distributor").

The Fund seeks to provide long-term growth of capital and dividend income. The
Fund pursues this objective by investing primarily in a diversified group of
common stocks with an emphasis on companies with above average total return
potential.

Please read this Prospectus before investing. It is designed to provide you with
information and to help you decide if the Fund's goals match your own. Retain
this document for future reference. A Statement of Additional Information (dated
March 1, 1996) for the Fund and an audited annual report for the Fund's fiscal
year ended October 31, 1995 have been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing to Primary Funds Service Corporation (the "Transfer Agent"), P.O. Box
9741, Providence, RI 02940-9741, or by calling 800-539-3863.

SHARES OF THE FUND ARE:

O NOT INSURED BY THE FDIC;

O NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY KEYCORP
BANK, ANY OF ITS AFFILIATES, OR ANY OTHER BANK;

O SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

<PAGE>

TABLE OF CONTENTS PAGE

Fund Expenses.........................................................3
Financial Highlights..................................................4
Investment Objective..................................................5
Investment Policies and Risk Factors..................................5
How to Invest, Exchange and Redeem................................... 12
Dividends, Distributions and Taxes................................... 21
Performance.......................................................... 24
Fund Organization and Fees........................................... 24
Additional Information............................................... 28

- 2 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

Maximum Sales Charge Imposed on Purchases (as a
percentage of the offering price).................................... 4.75%
Maximum Sales Charge Imposed on Reinvested Dividends ................ none
Deferred Sales Charge ............................................... none
Redemption Fees ..................................................... none
Exchange Fee........................................................... none

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)

Management Fees ............................................... 1.00%
Administration Fees ........................................... .15%
Other Expenses (2) ........................................... .25%
----
Total Fund Operating Expenses (2) ............................ 1.40%
====

(2) These amounts include an estimate of the shareholder servicing fees the
Fund expects to pay. (See "Fund Organization and Fees--Shareholder
Servicing Plan").

EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) full redemption at the end of each time period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Value Fund.............. $61 $90 $120 $207

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. See "Fund Organization and Fees" for a more complete discussion of
annual operating expenses of the Fund. The foregoing example is based upon
expenses for the fiscal year ended October 31, 1995 and expenses that the Fund
is expected to incur during the current fiscal year. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

- 3 -

<PAGE>

FINANCIAL HIGHLIGHTS

THE VICTORY VALUE FUND

YEAR DECEMBER 3, 1993
ENDED TO OCTOBER 31,
OCTOBER 31, 1995(D) 1994(A)
------------------- -------
<S> <C> <C>

NET ASSET VALUE, BEGINNING OF
PERIOD $ 10.13 $ 10.00
---------- -------
Income from Investment Activities
Net investment income 0.27 0.21
Net realized and unrealized gains
on investments 1.92 0.11
------- -------
Total from Investment
Activities 2.19 0.32
------- -------
Distributions
Net investment income (0.28) (0.19)
Net realized gains (losses) (0.17)
----- -----
Total Distributions (0.45) (0.19)
--------- -------
NET ASSET VALUE, END OF PERIOD $ 11.87 $ 10.13
========== =======
Total Return (excludes sales charge) 22.28% 3.27%(b)

RATIOS/SUPPLEMENTAL DATA:

Net Assets, End of Period (000) $295,871 $188,184
Ratio of expenses to average net assets 0.99% 0.92%(c)
Ratio of net investment income to
average net assets 2.55% 2.32%(c)
Ratio of expenses to average
net assets(e) 1.30% 1.48%(c)
Ratio of net investment income to
average net assets(e) 2.24% 1.76%(c)
Portfolio turnover 23.03% 39.05%

</TABLE>

- ----------
(a) Period from commencement of operations.

(b) Not Annualized.

(d) Effective June 5, 1995, the Victory Equity Income Portfolio merged into
the Value Fund. Financial highlights for the periods prior to June 5,
1995 represent the Value Fund.

(e) During the period the investment advisory, administration, and/or
shareholder servicing fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated.

- 4 -

<PAGE>

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term growth of capital and dividend income. The
investment objective of the Fund is fundamental and may not be changed without a
vote of the holders of a majority of its outstanding voting securities (as
defined in the Statement of Additional Information). There can be no assurance
that the Fund will achieve its investment objective.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its objective by investing primarily in a diversified group of
common stocks with an emphasis on companies with above average total return
potential.

Under normal market conditions the Fund will invest primarily in a diversified
portfolio of common stocks of issuers listed on a nationally recognized exchange
with a preference for stocks with above average yields and below average
price/earnings, price/book value, and price/cash flow ratios, that are
statistically cheap and are believed to have improving investor sentiment.
Stocks will be purchased on the basis of a proprietary scoring system of
valuation models which incorporates Key Advisers or the Sub-Adviser's appraisal
of value of the shares, measures of statistical value, and a measure which
reflects revisions of earnings estimates.

Changes in the value of portfolio securities will not affect cash income, if
any, derived from these securities but will affect the Fund's net asset value.
Because the Fund invests primarily in equity securities, which fluctuate in
value, the Fund's shares will fluctuate in value.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

The following paragraphs provide a brief description of some of the types of
securities in which the Fund may invest, in accordance with its investment
objective, policies and limitations, including certain transactions it may make
and strategies it may adopt. The following also contains a brief description of
certain risk factors. The Fund may, following notice to its shareholders, 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 this Prospectus.

- 5 -

<PAGE>

instruments of United States banks which are drafts or bills of exchange
"accepted" by a bank or trust company as an obligation to pay on maturity.

O INVESTMENT GRADE SECURITIES. The Fund may invest in "investment grade"
obligations -- those rated at the time of purchase within the four highest
rating categories assigned by a nationally recognized statistical ratings
organization ("NRSRO") or, if unrated, are obligations that Key Advisers or the
Sub-Adviser determine to be of comparable quality. The applicable securities
ratings are described in the Appendix to the Statement of Additional
Information. "High-Quality" short-term obligations are those obligations which,
at the time of purchase, (1) possess a rating in one of the two highest ratings
categories from at least one NRSRO (for example, commercial paper rated "A-1" or
"A-2" by Standard & Poor's Corporation or "P-1" or "P-2" by Moody's Investors
Service, Inc.) or (2) are unrated by an NRSRO but are determined by Key Advisers
or the Sub-Adviser to present minimal credit risks and to be of comparable
quality to rated instruments eligible for purchase by the Fund under guidelines
adopted by the Trustees.

- 6 -

<PAGE>

O ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities and zero coupon corporate securities ("Zero Coupon
Bonds"). Zero Coupon Bonds are purchased at a discount from the face amount
because the buyer receives only the right to receive a fixed payment on a
certain date in the future and does not receive any periodic interest payments.
The effect of owning instruments which do not make current interest payments is
that a fixed yield is earned not only on the original investment but also, in
effect, on accretion during the life of the obligations. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable to
reinvest distributions at a rate as high as the implicit yields on the Zero
Coupon Bond, but at the same time eliminates the holder's ability to reinvest at
higher rates . For this reason, Zero Coupon Bonds are subject to substantially
greater price fluctuations during periods of changing market interest rates than
are comparable securities which pay interest periodically. The amount of price
fluctuation tends to increase as maturity of the security increases.

- 7 -

<PAGE>

fluctuations in value due to changes in interest rates than interest-paying U.S.
Treasury obligations. The Fund will limit its investment in such instruments to
20% of its total assets.

O SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities . The Fund must receive collateral
equal to 100% of the securities' value in the form of cash or U.S. Government
securities, plus any interest due, which collateral must be marked to market
daily by Key Advisers or the Sub-Adviser. 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 pays the
Fund amounts equal to any dividends or interest paid on such securities plus any
interest negotiated between the parties to the lending agreement. Loans are
subject to termination by the Fund or the borrower at any time. While the Fund
does not have the right to vote securities on loan, the Fund intends to
terminate any loan and regain the right to vote if that is considered important
with respect to the Fund's 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' Board of Trustees (the "Trustees"). The Fund will
limit its securities lending to 331/3% of total assets.

O VARIABLE AND FLOATING RATE SECURITIES. The Fund may purchase Investment Grade
variable and floating rate notes . The interest rates on these securities may be
reset daily, weekly, quarterly, or some other reset period and may be subject to
a floor or ceiling. There is a risk that the current interest rate on such
obligations may not accurately reflect existing market interest rates. There may
be no active secondary market with respect to a particular variable or floating
rate note. Variable and floating rate notes for which no readily available
market exists will be purchased in an amount which, together with other illiquid
securities held by the Fund, does not exceed 15% of the Fund's net assets unless
such notes are subject to a demand feature that will permit the Fund to receive
payment of the principal within seven days after demand therefor. These
securities are included among those which are sometimes referred to as
"derivative securities."

O REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
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

- 8 -

<PAGE>

the repurchase price, or to the extent that the disposition of such securities
by the Fund was delayed pending court action.

O REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Fund sells portfolio securities to financial institutions such
as banks and broker-dealers, and agrees to repurchase them at a mutually
agreed-upon date and price. At the time the Fund enters into a reverse
repurchase agreement, it must place in a segregated custodial account assets
having a value equal to the repurchase price (including 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").

O INVESTMENT COMPANY SECURITIES. 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. Key
Advisers or the Sub-Adviser will waive its fee attributable to the Fund's assets
invested in a fund of the Victory Portfolios, and, to the extent required by the
laws of any state in which shares of the Fund are sold, Key Advisers or the
Sub-Adviser will waive its investment advisory fees 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, to the extent such fees are not
waived by Key Advisers or the Sub-Adviser.

O OPTIONS. The Fund may write call options from time to time. The Fund will
write only covered call options (options on securities owned by the Fund and
index options). Such options must be listed on a national securities exchange
and issued by the Options Clearing Corporation. In order to close out a call
option it has written, the Fund will enter into a "closing purchase
transaction", i.e., the purchase of a call option on the same security with the
same exercise price and expiration date as the call option which the Fund
previously wrote on any particular security. When a portfolio security subject
to a call option is sold, the Fund will effect a closing purchase transaction to
close out any existing

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<PAGE>

call option on that security. If the Fund is unable to effect a closing purchase
transaction, it will not be able to sell the underlying security until the
option expires or the Fund delivers the underlying security upon exercise. Upon
the exercise of an option, the Fund is not entitled to the gains, if any, on
securities underlying the options. The Fund intends to limit its investment in
call and index options to 25% of its total assets.

Certain investment management techniques which the Fund may use, such as the
purchase and sale of futures and options (described above) may expose the Fund
to special risks. These products may be used to adjust the risk and return
characteristics of the Fund's portfolio of investments. These various products
may increase or decrease exposure to fluctuation in security prices, interest
rates, or other factors that affect security values, regardless of the issuer's
credit risk. Regardless of whether the intent was to decrease risk or increase
return, if market conditions do not perform consistently with expectations,
these products may result in a loss. In addition, losses may occur if
counterparties involved in transactions do not perform as promised. These
products may expose the Fund to potentially greater risk of loss than more
traditional equity investments.

O PORTFOLIO TRANSACTIONS. The Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short time,
ranging from several months to less than a day. The object of such short-term
trading is to take advantage of what Key Advisers or the Sub-Adviser believes
are changes in market, industry or individual company conditions or outlook. Any
such trading would increase the Fund's turnover rate and its transaction costs.
High turnover will generally result in higher brokerage costs and possible tax
consequences for the Fund. In the fiscal year ended October 31, 1995, the
portfolio turnover rate was 23.03% compared to 39.05% in the fiscal period from
December 3, 1993 to October 31, 1994.

NOTE : The Statement of Additional Information contains additional information
about the investment practices of the Fund and risk factors. The investment
policies and limitations of the Fund may be changed by the Trustees without any
vote of shareholders unless (1) a policy is expressly deemed to be a fundamental
policy of the Fund or (2) a policy is expressly deemed to be changeable only by
such majority vote.

INVESTMENT LIMITATIONS

1. The Fund may not borrow money other than (a) by entering 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 such commitments do not
exceed 331/3% of the Fund's total assets; and (b) for temporary or
emergency purposes in an amount not exceeding 5% of the value of the Fund's
total assets.

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<PAGE>

course of business at approximately the price at which the Fund has valued
them. Under the supervision of the Trustees, Key Advisers or the SubAdviser
determines the liquidity of the Fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for the Fund to sell them promptly at an acceptable price.

3. The Fund is "diversified" within the meaning of the 1940 Act. With respect
to 75% of its 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.

Each of the investment limitations indicated above in this subsection are
fundamental, except for the limitation pertaining to illiquid securities.
Non-fundamental limitations may be changed without shareholder approval.
Whenever an investment policy or limitation states a maximum percentage of the
Fund's assets that may be invested, such percentage limitation will be
determined immediately after and as a result of the investment, and any
subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations, 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). If the value of the Fund's illiquid securities at any time
exceeds the percentage limitation applicable at the time of acquisition due to
subsequent fluctuations in value or for other reasons, the Trustees will
consider what actions, if any, are appropriate to maintain adequate liquidity.

HOW TO INVEST, EXCHANGE AND REDEEM

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<PAGE>

program of services offered or administered by your Investment Professional, you
should read the program materials in conjunction with this Prospectus. You may
initiate any transaction by telephone through your Investment Professional.
Subsequent investments by telephone may be made directly. See "Special Investor
Services" for more information about telephone transactions.

Contact your bank trust department for instructions.

INVESTING DIRECTLY

The Victory Value Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741.

Subsequent purchases may be made in the same manner.

Boston Safe Deposit & Trust Co.
ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Value Fund

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order as of the close of regular trading of the New York Stock Exchange ("NYSE")
(normally 4:00 p.m. Eastern time) (the "Valuation Time") on each Business Day
(as defined in "Shareholder Account Rules and Policies -- Share Price"). If you
buy shares through an Investment Professional, the Investment Professional must
receive your order in a timely fashion on a regular Business Day and transmit it
to the Transfer Agent so that it is received before the close of business that
day. The Transfer Agent may reject any purchase order for the Fund's shares, in
its sole discretion. It is the responsibility of your Investment Professional to
transmit your order to purchase shares to the Transfer Agent in a timely fashion
in order for you to receive that day's share price.

INVESTMENT REQUIREMENTS

SALES SALES
CHARGE CHARGE DEALER
AS A % OF AS A % OF REALLOWANCE
OFFERING NET AMOUNT AS A % OF
AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE

(1) There is no initial sales charge on purchases of $1 million or more.
Investment Professionals will be compensated at the rate of up to 0.25%
on such purchases.

The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.

The Distributor may pay all or a portion of any applicable sales charges and
service fees to Investment Professionals who sell shares of the Fund and provide

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<PAGE>

ongoing sales support services or shareholder support services. For the
three-year period commencing April 30, 1994, for maintaining and servicing
accounts of customers invested in the Fund, First Albany Corporation ("First
Albany") and PFIC Securities Corporation ("PFIC") may receive payments from the
Distributor equal to two-thirds of the Dealer Retention (as defined below) on
any shares of the Fund (and other funds of the Victory Portfolios) sold by First
Albany or PFIC and their broker-dealer affiliates. "Dealer Retention" is an
amount equal to the difference between the applicable sales charge and such part
of the sales charge which is reallowed to broker-dealers.

O REDUCED SALES CHARGES. You may be eligible to buy shares at reduced sales
charge rates in one or more of the following ways:

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<PAGE>

O WAIVERS OF SALES CHARGES. No sales charge is imposed on sales of shares to the
following categories of persons (which categories may be changed or eliminated
at any time):

(1) Current or retired Trustees of the Victory Portfolios; employees,
directors, trustees, and their family members of KeyCorp or an
"Affiliated Provider " ("Affiliated Providers" refer to affiliates and
subsidiaries of KeyCorp and service providers to the Victory Portfolios
and the Victory Shares (collectively, the "Victory Group")), dealers
having an agreement with the Distributor and any trade organization to
which Key Advisers, the Sub -Adviser or the Administrator belongs;

(2) Investors who purchase shares for trust, investment management or
certain other advisory accounts established with KeyCorp or any of its
affiliates;

(3) Investors who reinvest assets received in a distribution from a
qualified, non-qualified or deferred compensation plan, agency, trust
or custody account that was either (a) maintained by KeyCorp or an
Affiliated Provider, or (b) invested in a fund of the Victory Group;

(6) Investment advisers or financial planners who place trades for their
own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; and clients of
such investment advisers or financial planners who place trades for
their own accounts if the accounts are linked to the master account of
such investment adviser or financial planner on the books and records
of the broker or agent. Such accounts include retirement and deferred
compensation plans and trusts used to fund those plans, including, but
not limited to, those defined in section 401(a), 403(b), or 457 of the
Internal Revenue Code and "rabbi trusts."

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<PAGE>

SPECIAL INVESTOR SERVICES

O THE SYSTEMATIC WITHDRAWAL PLAN. You can make regular withdrawals from your
account with the Systematic Withdrawal Plan by completing the appropriate
section of the Account Application. If you own shares in a fund worth $5,000 or
more, you can have monthly, quarterly, semi-annual or annual checks sent from
your account directly to you, to a person named by you, or to your bank checking
account. The minimum withdrawal is $25. If you are having checks sent to your
bank checking account, attach a voided personal check with your bank's magnetic
ink coding number across the front . If your account is jointly owned, be sure
that all owners sign . You may obtain information about the Systematic
Withdrawal Plan by contacting the Transfer Agent. Your Systematic Withdrawal
Plan payments are drawn from share redemptions. If Systematic Withdrawal Plan
redemptions exceed income dividends and capital gain dividend distributions
earned on your Fund shares, your account eventually may be exhausted. If any
applicable sales charges are applied to new purchases of shares of the Fund, it
is to your disadvantage to buy shares of the Fund while also making systematic
redemptions.

O TELEPHONE TRANSACTIONS. You can initiate most transactions by telephone. You
may call the Transfer Agent toll-free at 800-539-3863 or call your Investment
Professional or bank trust department. Telephone transaction privileges for
purchases, exchanges or redemptions may be modified, suspended or terminated by
the Fund at any time. If an account has more than one owner, the Fund and the
Transfer Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer representative of
record for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

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<PAGE>

O RETIREMENT PLANS. Retirement plans can be among the best tax- planning
vehicles available to individuals. Call your Investment Professional for more
information on the plans and their benefits, provisions and fees. Your
Investment Professional can set up your new account in the Fund under one of
several tax-sheltered plans. These plans let you invest for retirement and
shelter your investment income from current taxes. Plans include Individual
Retirement Accounts (IRAs) and Rollover IRAs. Other fees may be charged by the
IRA custodian or trustee.

HOW TO EXCHANGE

(1) Shares of the fund selected for exchange must be available for sale in
your state of residence.

(2) The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege.

(3) You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares on any Business Day.

(4) You must meet the minimum purchase requirements for the fund you
purchase by exchange.

(5) The registration and tax identification numbers of the two accounts
must be identical.

(6) BEFORE EXCHANGING, OBTAIN AND READ THE PROSPECTUS FOR THE FUND YOU WISH
TO PURCHASE BY EXCHANGE.

SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME CLASS
IN THE OTHER FUNDS OF THE VICTORY GROUP. For example, you can exchange shares of
this Fund only for Class A shares of another fund. At present, not all of the
funds offer the same classes of shares. If a fund has only one class of shares
that doesn't have a class designation they are deemed to be "Class A" shares for
exchange purposes. Certain funds offer Class A or Class B shares and a list can
be obtained by calling the Transfer Agent at 800-539-3863. In some cases, sales
charges may be imposed on exchange transactions. Please refer to the Statement
of Additional Information for more details about this policy.

Telephone exchange requests may be made either by calling your Investment
Professional or the Transfer Agent at 800-539-3863 prior to Valuation Time on
any Business Day. (See "Shareholder Account Rules and Policies - Share Price"
below).

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<PAGE>

There are certain exchange policies you should be aware of:

o Shares are normally redeemed from one fund and issued by the other fund in the
exchange transaction on the same Business Day on which the Transfer Agent
receives an exchange request by Valuation Time (normally 4:00 p.m. Eastern time)
that is in proper form, but either fund may delay the issuance of shares of the
fund into which you are exchanging if it determines it would be disadvantaged by
a same-day transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy might
create excessive turnover in the Fund's portfolio and associated expenses
disadvantageous to the Fund.

o The Victory Portfolios may amend, suspend or terminate the exchange privilege
at any time upon 60 days' written notice to shareholders.

o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.

o Each exchange may produce a gain or loss for tax purposes.

HOW TO REDEEM

You may redeem all or a portion of your shares on any day that the Fund is open
for business. (See the definition of "Business Day" under "Shareholder Account
Rules and Policies -- Share Price" below). Shares will be redeemed at the NAV
next calculated after the Transfer Agent has received the redemption request. If
the Fund account is closed, any accrued dividends will be paid at the beginning
of the following month.

You may redeem shares in several ways:

O BY MAIL. Send a written request to: The Victory Value Fund
P.O. Box 9741
Providence, RI 02940-9741

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<PAGE>

another Victory Group account with a different registration. The following
institutions should be able to provide you with a signature guarantee: banks,
brokers, dealers, credit unions (if authorized under state law), securities
exchanges and associations, clearing agencies, and savings associations. A
signature guarantee may not be provided by a notary public. A signature
guarantee is designed to protect you, the Fund, and its agents from fraud. The
Transfer Agent reserves the right to reject any signature guarantee if (1) it
has reason to believe that the signature is not genuine, (2) it has reason to
believe that the transaction would otherwise be improper, or (3) the guarantor
institution is a broker or dealer that is neither a member of a clearing
corporation nor maintains net capital of at least $100,000.

O BY WIRE. You may make redemptions by wire provided you have established a Fund
account to accommodate wire transactions. If telephone instructions are received
before Valuation Time (normally 4:00 p.m. Eastern time), proceeds of the
redemption will be wired as federal funds on the next Business Day to the bank
account designated with the Transfer Agent. You may change the bank account
designated to receive an amount redeemed at any time by sending a letter of
instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

If you are unable to reach the Transfer Agent by telephone (for example, during
times of unusual market activity), consider placing your order by mail directly
to the Transfer Agent. In case of suspension of the right of redemption, you may
either withdraw your request for redemption or receive payment based on the NAV
next determined after the termination of the suspension. If your balance in the
fund falls below $500, you may be given 60 days' notice to reestablish the
minimum balance (except with respect to officers, trustees, directors and
employees, including retired directors and employees, of the Victory Portfolios,
KeyCorp and its affiliates, and the Administrator and its affiliates (and family
members of each of the foregoing), participating in the Systematic Investment
Plan, to whom no minimum balance requirement applies). If you do not increase
your balance, your account may be closed and the proceeds mailed to you at the
address on record. Shares will be redeemed at the last calculated NAV on the day
the account is closed.

SHAREHOLDER ACCOUNT RULES AND POLICIES

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<PAGE>

of the Fund is determined and its shares are priced as of the close of regular
trading of the NYSE (normally 4:00 p.m. Eastern time) (the "Valuation Time") 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 its 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 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 and
Christmas .

The Fund's securities are valued primarily on the basis of market quotations or,
if quotations are not readily available, by a method that the Board of Trustees
believes accurately reflects fair value. Fair value of these portfolio
securities is determined by an independent pricing service approved by the
Trustees based primarily upon information concerning market transactions and
dealers quotations for comparable securities.

O The redemption price for shares will vary from day to day because the value of
the securities in the Fund fluctuates, and the value of your shares may be more
or less than their original cost.

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<PAGE>

taxpayer identification number when you sign your Account Application, or if you
violate Internal Revenue Service regulations on tax reporting of dividends.

O The Victory Portfolios does not charge a redemption fee, but if an Investment
Professional handles your redemption, the Investment Professional may charge a
separate service fee.

O The Distributor, at its expense, may also provide additional cash compensation
to dealers in connection with sales of shares of the Fund. The maximum cash
compensation payable by the Distributor is 4.00% of the offering price. In
addition, the Distributor will, from time to time and at its own expense,
provide compensation, including financial assistance, to dealers in connection
with conferences, sales or training programs for their employees, seminars for
the public, advertising campaigns regarding one or more Victory Portfolios
and/or other dealer-sponsored special events including payment for travel
expenses, including lodging incurred in connection with trips taken by invited
registered representatives and members of their families to locations within or
outside of the United States for meetings or seminars of a business nature.
Compensation will include the following types of non-cash compensation offered
through sales contests: (1) vacation trips including the provision of travel
arrangements and lodging; (2) tickets for entertainment events (such as
concerts, cruises and sporting events) and (3) merchandise (such as clothing,
trophies, clocks and pens). Dealers may not use sales of the Fund's shares to
qualify for this compensation if prohibited by the laws of any state or any
self-regulatory organization, such as the National Association of Securities
Dealers, Inc. None of the aforementioned compensation is paid for by the Fund or
its shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

DISTRIBUTION OPTIONS

When you fill out your Account Application, you can specify how you want to
receive your dividend distributions. Currently, there are five available
options:

1. REINVESTMENT OPTION. Your income and capital gain dividends, if any,
will be automatically reinvested in additional shares of the Fund.
Income and capital gain dividends will be reinvested at the net asset
value of the Fund as of the day after the record date. If you do not
indicate a choice on your Account Application, you will be assigned
this option.

2. CASH OPTION. You will receive a check for each income or capital gain
dividend, if any. Distribution checks will be mailed no later than 7
days after the dividend payment date which may be more than 7 days
after the dividend record date.

3. INCOME EARNED OPTION. You will have your capital gain dividend
distributions, if any, reinvested automatically in the Fund at the NAV
as of the day after the record date, and have your income dividends
paid in cash.

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<PAGE>

the NAV as of the day after the record date. If you are reinvesting
dividends of a fund sold without a sales charge in shares of a fund
sold with a sales charge, the shares will be purchased at the public
offering price. If you are reinvesting dividends of a fund sold with a
sales charge in shares of a fund sold with or without a sales charge,
the shares will be purchased at the net asset value of the fund.
Dividend distributions can be directed only to an existing account
with a registration that is identical to that of your Fund account.

5. DIRECTED BANK ACCOUNT OPTION. You will have your income and capital
gain dividends, or only your income dividends, automatically
transferred to your bank checking or savings account. The amount will
be determined on the dividend record date and will normally be
transferred to your account within 7 days of the dividend record date.
Dividend distributions can be directed only to an existing account with
a registration that is identical to that of your Fund account. Please
call or write the Transfer Agent to learn more about this dividend
distribution option.

Reinvested dividend distributions receive the same tax treatment as dividend
distributions paid in cash.

O STATEMENTS AND REPORTS. You will receive a monthly statement reflecting all
transactions that affect the share balance or the registration of your Fund
account. You will receive a confirmation after every transaction that affected
the share balance of your Fund account, except for dividend reinvestment,
systematic investment and systematic withdrawal transactions. These transactions
will be detailed in your Fund account statement. Transactions that affect the
share balance of your Fund investment in an account established with an
Investment Professional or financial institution will be detailed in regular
statements or through confirmation procedures of the financial institution.
Certificates representing shares of the Fund will not be issued. An Internal
Revenue Service ("IRS") Form 1099- DIV with federal tax information will be
mailed to you by January 31 of each tax year and also will be filed with the
IRS. At least twice a year, you will receive the Fund's financial reports.

O COMPLETE REDEMPTIONS. If you request a complete redemption of all your Fund
shares, any dividend accrued to your account will be included in the redemption
check.

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FEDERAL TAXES

The Fund intends to qualify as a regulated investment company by satisfying the
requirements under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "IRS Code"). The Fund contemplates the distribution of all of its net
investment income and capital gains, if any, in accordance with the timing
requirements imposed by the IRS Code, so that the Fund will not be subject to
federal income taxes or the 4% excise tax on undistributed income.

Distributions to shareholders of the Fund will be treated in the same manner for
federal income tax purposes whether received in cash or in additional shares.
Distributions received by shareholders of the Fund in January of a given year
will be treated as received on December 31 of the preceding year provided that
they were declared to shareholders of record on a date in October, November, or
December of such preceding year. The Fund sends tax statements to its
shareholders (with copies to the Internal Revenue Service (the "IRS")) by
January 31 showing the amounts and tax status of distributions made (or deemed
made) during the preceding calendar year.

Income from securities of foreign issuers may be subject to foreign withholding
taxes. Credit for such foreign taxes, if any, will not pass through to the
shareholders.

o OTHER TAX INFORMATION. The information above is only a summary of some of the
federal income tax consequences generally affecting the Fund and its U.S.
shareholders, and no attempt has been made to discuss individual tax
consequences. A prospective investor should also review the more detailed
discussion of federal income tax considerations in the Statement of Additional
Information. In addition to the federal income tax, a shareholder may be subject
to state or local taxes on his or her investment in the Fund, depending on the
laws of the shareholder's jurisdiction. INVESTORS CONSIDERING AN INVESTMENT IN
THE FUND SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THE FUND IS
SUITABLE TO THEIR PARTICULAR TAX SITUATION.

Because a shareholder's tax treatment depends on the shareholder's purchase
price and tax position, shareholders should keep their regular account
statements for use in determining their tax.

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<PAGE>

PERFORMANCE

Performance is a function of the type and quality of instruments held in the
Fund's portfolio, operating expenses, and market conditions. Consequently,
performance will fluctuate and data reported are not necessarily representative
of future results. Any fees charged by service providers with respect to
customer accounts for investing in shares of the Fund will not be reflected in
performance calculations.

FUND ORGANIZATION AND FEES

The Victory Portfolios is an open-end management investment company, commonly
known as a mutual fund, and currently consisting of twenty-eight series
portfolios. The Victory Portfolios has been operating continuously since 1986,
when it was created under Massachusetts law as a Massachusetts business trust
although certain of its funds have a prior operating history from their
predecessor funds. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios' offices are located at 3435 Stelzer Road, Columbus, Ohio 43219-
3035.

Overall responsibility for management of the Victory Portfolios rests with its
Board of Trustees, who are elected by the shareholders of the Victory
Portfolios.

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<PAGE>

INVESTMENT ADVISER AND SUB-ADVISER

KeyCorp Mutual Fund Advisers, Inc. is the investment adviser to the Fund. Key
Advisers directs the investment of the Fund's assets, subject at all times to
the supervision of the Victory Portfolios' Board of Trustees. Key Advisers
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of the Fund investments.

For the services provided and expenses incurred pursuant to the investment
advisory agreement between the Victory Portfolios respecting the Fund, Key
Advisers is entitled to receive a fee, computed daily and paid monthly, at an
annual rate of one percent (1.00%) of the average daily net assets of the Fund.
The investment advisory fee paid by the Fund is higher than the advisory fees
paid by most mutual funds, although the Victory Portfolios' Board of Trustees
believes such fees to be comparable to advisory fees paid by many funds having
similar objectives and policies. The advisory fees for the Fund have been
determined to be fair and reasonable in light of the services provided to the
Fund. Key Advisers may periodically waive all or a portion of its advisory fee
with respect to the Fund . Prior to January , 1996, Society Asset Management,
Inc. served as investment adviser to the Fund. During the Fund's fiscal period
ended October 31, 1995, Society Asset Management, Inc. earned investment
advisory fees aggregating .69% of the average daily net assets of the Fund.

Under the investment advisory agreement between the Victory Portfolios, on
behalf of the Fund, and Key Advisers (the "Investment Advisory Agreement"), the
Adviser may delegate a portion of its responsibilities to a sub-adviser. Key
Advisers has entered into an investment sub-advisory agreement with its
affiliate, Society Asset Management, Inc., a registered investment adviser, on
behalf of the Fund. The Sub-Adviser is a wholly-owned subsidiary of KeyCorp
Asset Management Holdings, Inc. The Investment Advisory Agreement and the
sub-advisory agreement, respectively, provide that Key Advisers and the
Sub-Adviser, respectively, may render services through their 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 and the Sub-Adviser,
respectively, and Key Advisers and the Sub-Adviser, respectively, will be as
fully responsible to the Fund for the acts and omissions of such persons as they
are for their own acts and omissions.

The person primarily responsible for the investment management of the Fund as
well as her previous experience is as follows:

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PORTFOLIO MANAGING PREVIOUS
MANAGER FUND SINCE EXPERIENCE

Judith A. Jones Commencement of Portfolio Manager with Society
Operations Asset Management since 1993;
Portfolio Manager with
Ameritrust from 1965 to 1992.

EFFECT OF BANKING LAWS

ADMINISTRATOR AND DISTRIBUTOR

Concord Holding Corporation is the administrator for the Fund. Victory
Broker-Dealer Services, Inc. is the Fund's principal underwriter and
Distributor.

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TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

FUND ACCOUNTANT

BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219, provides
certain accounting services for the Fund pursuant to a Fund Accounting Agreement
and receives a fee for such services.

CUSTODIAN

Key Trust Company of Ohio, N.A. , an affiliate of the Adviser and Sub-Adviser,
serves as custodian for the Fund and receives fees for the services it performs
as custodian.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. serves as independent accountants to the Fund.

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 Victory Portfolios' Board of Trustees, recordkeeping services, and services
rendered in connection with the preparation of regulatory filings and other
reports, and regulatory and compliance systems and other administrative and
support services.

For such services, the Sub-Adviser pays fees to Key Advisers as follows: .30% on
the first $10 million of average daily net assets; .15% of the next $15 million
of average daily net assets; .05% of the next $25 million of average daily net
assets; and .0% of average daily net assets in excess of $50 million.

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<PAGE>

EXPENSES

For the fiscal year ended October 31, 1995, the Fund's total operating expenses
were 1.30% of the Fund's average net assets , including certain voluntary fee
reductions or reimbursements.

ADDITIONAL INFORMATION

The Victory Portfolios may issue an unlimited number of shares and classes of
the Fund. Currently there is one class of shares of the Fund, shares of which
participate equally in dividends and distributions and have equal voting,
liquidation and other rights. When issued and paid for, shares will be fully
paid and nonassessable by the Victory Portfolios and will have no preference,
conversion, exchange or preemptive rights. Shareholders are entitled to one vote
for each full share owned and fractional votes for fractional shares owned. For
those investors with qualified trust accounts , the trustee will vote the shares
at meetings of the Fund's shareholders in accordance with the shareholder's
instructions or will vote in the same percentage as shares that are not so held
in trust. The trustee will forward to these shareholders all communications
received by the trustee, including proxy statements and financial reports. The
Victory Portfolios and the Fund are not required to hold annual meetings of
shareholders and in ordinary circumstances do not intend to hold such meetings.
The Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Declaration of Trust. Under
certain circumstances, the Trustees may be removed by action of the Trustees or
by the shareholders. Shareholders holding 10% or more of the Victory Portfolios'
outstanding shares may call a special meeting of shareholders for the purpose of
voting upon the question of removal of Trustees.

The Victory Portfolio's Board of Trustees may authorize the Victory Portfolios
to offer other funds which may differ in the types of securities in which their
assets may be invested.

Key Advisers, the Sub-Adviser and the Victory Portfolios have adopted a Code of
Ethics (the "Code") which requires investment personnel (a) to pre-clear all
personal securities transactions, (b) to file reports regarding such
transactions, and (c) to refrain from personally engaging in (i) short-term
trading of a security, (ii) transactions involving a security within seven days
of a Fund transaction involving the same security, and (iii) transactions
involving securities being considered for investment by a Victory fund. The Code
also prohibits investment personnel from purchasing securities in an initial
public offering. Personal trading reports are reviewed periodically by Key
Advisers and the Sub-Adviser, and the Board of Trustees reviews annually such
reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.

DELAWARE LAW

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<PAGE>

Portfolios will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Victory Portfolios. Therefore, financial loss
resulting from liability as a shareholder will occur only if the Victory
Portfolios itself cannot meet its obligations to indemnify shareholders and pay
judgments against. them.

MISCELLANEOUS

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<PAGE>

THE VICTORY PORTFOLIOS

PART B

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

THE VICTORY PORTFOLIOS

FINANCIAL RESERVES FUND

MARCH 1, 1996

This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus of The Victory Portfolios - Financial
Reserves 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.

TABLE OF CONTENTS

INVESTMENT OBJECTIVE AND POLICIES.................2 INVESTMENT ADVISER
INVESTMENT LIMITATIONS AND RESTRICTIONS.......... 8 KeyCorp Mutual Fund
DETERMINING NET ASSET VALUE......................11 Advisers, Inc.
VALUATION OF PORTFOLIO SECURITIES................13
PERFORMANCE COMPARISONS..........................13 INVESTMENT SUB-ADVISER
ADDITIONAL PURCHASE, EXCHANGE AND Society Asset Management,
REDEMPTION INFORMATION........................ 14 Inc.
DIVIDENDS AND DISTRIBUTIONS......................15
TAXES............................................15 ADMINISTRATOR
TRUSTEES AND OFFICERS............................16 Concord Holding
ADVISORY AND OTHER CONTRACTS.....................21 Corporation
ADDITIONAL INFORMATION...........................29
APPENDIX.........................................33 DISTRIBUTOR
Victory Broker-Dealer
INDEPENDENT AUDITOR'S REPORT Services, Inc.
FINANCIAL STATEMENTS

TRANSFER AGENT
Primary Funds Service
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"), four of which series are currently
inactive. The outstanding shares represent interests in the twenty-four separate
investment portfolios which are currently active. This Statement of Additional
Information relates to the Victory Financial Reserves 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 OBJECTIVE AND POLICIES

ADDITIONAL INFORMATION REGARDING FUND INVESTMENTS

The Fund's investment objective is to obtain as high a level of current income
as is consistent with preserving capital and providing liquidity through
investment primarily in high-quality, U.S. dollar-denominated money market
instruments.

The following policies supplement the investment policies of the Fund set forth
in the Prospectus. The Fund's investments in the following securities and other
financial instruments are subject to the other investment policies and
limitations described in the Prospectus and this Statement of Additional
Information.

HIGH-QUALITY INVESTMENTS. As noted in the Prospectus for the Fund, the Fund may
invest only in obligations determined by Key Advisers to present minimal credit
risks under guidelines adopted by the Fund's Board of Trustees (the "Board of
Trustees" or the "Trustees").

Investments will be limited to those obligations which, at the time of purchase,
(i) possess one of the two highest short-term ratings from a nationally
recognized statistical rating organization ("NRSRO") or (ii) possess, in the
case of multiple-rated securities, one of the two highest short-term ratings by
at least two NRSROs; or (iii) do not possess a rating (i.e. are unrated) but are
determined by Key Advisers or the Sub- Adviser to be of comparable quality to
the rated instruments eligible for purchase by the Fund under the guidelines
adopted by the Trustees. For purposes of these investment limitations, a
security that has not received a rating will be deemed to possess the rating
assigned to an outstanding class of the issuer's short-term debt obligations if
determined by Key Advisers or the Sub-Adviser to be comparable in priority and
security to the obligation selected for purchase by the Fund. (The above
described securities which may be purchased by the Fund are hereinafter referred
to as "Eligible Securities.")

A security subject to a tender or demand feature will be considered an Eligible
Security only if both the demand feature and the underlying security possess a
high quality rating, or, if such do not possess a rating, are determined by Key
Advisers or the Sub-Adviser to be of comparable quality; provided, however, that
where the demand feature would be readily exercisable in the event of a default
in payment of principal or interest on the underlying security, this obligation
may be acquired based on the rating possessed by the demand feature or, if the
demand feature does not possess a rating, a determination of comparable quality
by Key Advisers or the Sub-Adviser. A security which at the time of issuance had
a maturity exceeding 397 days but, at the time of purchase, has remaining
maturity of 397 days or less, is not considered an Eligible Security if it does
not possess a high quality rating and the long-term rating, if any, is not
within the two highest rating categories.

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<PAGE>

Pursuant to Rule 2a-7 (the "Rule") 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 Board and in accordance with the Rule, Key
Advisers or the Sub-Adviser may be required to dispose promptly of 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 its net asset
value, 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.

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 (the "FDIC") 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.]

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<PAGE>

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
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 an 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.

VARIABLE AND FLOATING RATE NOTES. The Fund may acquire variable and floating
rate notes. 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.

- 4 -

<PAGE>

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.

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.

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 Securities and
Exchange Commission (the "Commission"), the Fund may invest in the money market
funds of the Victory Portfolios. Key Advisers will waive its investment advisory
fee with respect to assets of the Fund invested in any of the money market funds
of the Victory Portfolios, and, to the extent required by the laws of any state
in which the Fund's shares are sold, Key Advisers will waive its investment
advisory fee as to all assets invested in other investment companies.

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 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.

- 5 -

<PAGE>

REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary purposes
by entering into reverse repurchase agreements. 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 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.

"WHEN-ISSUED" SECURITIES. 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 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 the Government National Mortgage
Association ("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 guarantor (i.e., backed by the full faith and credit
of the U.S. Government) 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

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<PAGE>

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 Fund may purchase mortgage-related securities at a premium or at a
discount. Among the U.S. Government securities in which the Fund 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 GNMA are mortgage-backed securities which
evidence an undivided interest in a pool or pools of mortgages. GNMA
Certificates that the funds 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.

- 7 -

<PAGE>

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.

ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities and zero coupon corporate securities ("Zero Coupon
Bonds"). Zero Coupon Bonds are purchased at a discount from the face amount
because the buyer receives only the right to a fixed payment on a certain date
in the future and does not receive any periodic interest payments. The effect of
owning instruments which do not make current interest payments is that a fixed
yield is earned not only on the original investment but also, in effect, on
accretion during the life of the obligations. This implicit reinvestment of
earnings at the same rate eliminates the risk of being unable to reinvest
distributions at a rate as high as the implicit yields on the Zero Coupon Bond,
but at the same time eliminates the holder's ability to reinvest at higher
rates. For this reason, Zero Coupon Bonds are subject to substantially greater
price fluctuations during periods of changing market interest rates than are
comparable securities which pay interest currently, which fluctuation increases
in accordance with the length of the period to maturity.

INVESTMENT LIMITATIONS AND 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. Purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the United States government, its
agencies or instrumentalities) if, as a result thereof: (i) more than 5% of its
total assets would be invested in the securities of such issuer, provided,
however, that in the case of certificates of deposit, time deposits and bankers'
acceptances, up to 25% of the Fund's total assets may be invested without regard
to such 5% limitation, but shall instead be subject to a 10% limitation; (ii)
more than 25% of its total assets would be invested in the securities of one or
more issuers having their principal business activities in the same industry,
provided, however, that it may invest more than 25% of its total assets in the
obligations of domestic banks. Neither finance companies as a group nor utility
companies as a group are considered a single industry for purposes of this
policy (i.e., finance companies will be considered a part of the industry they
finance and utilities will be divided according to the types of services they
provide). (Note: In accordance with Rule 2a-7 under the 1940 Act, the fund may
invest up to 25% of its total assets in securities of a single issuer for a
period of up to three business days.)

2. Borrow money except (i) from a bank for temporary or emergency purposes (not
for leveraging or investment) or (ii) by engaging in reverse repurchase
agreements, provided that (i) and (ii) in combination ("borrowings") do not
exceed an amount equal to one third of the current value of its total assets
(including the amount borrowed) less liabilities (not including the amount
borrowed) at the time the borrowing is made.

3. Make loans to other persons, except (i) by the purchase of debt obligations
in which the Fund is authorized to invest in accordance with its

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<PAGE>

investment objective, and (ii) by engaging in repurchase agreements. In
addition, the Fund may lend its portfolio securities to broker-dealers or other
institutional investors, provided that the borrower delivers cash or cash
equivalents as collateral to the Fund and agrees to maintain such collateral so
that it equals at least 100% of the value of the securities loaned. Any such
securities loan may not be made if, as a result thereof, the aggregate value of
all securities loaned exceeds 33 1/3% of the total assets of the Fund.

4. Act as an underwriter (except as it may be deemed such in a sale of
restricted securities).

5. Buy or sell real estate, commodities, or commodity (futures).

6. Issue any senior security (as defined in the 1940 Act), except that (a) the
Fund may engage in transactions which 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 that may be deemed senior securities to the extent permitted
under applicable regulations or interpretations of the 1940 Act; (c) subject to
certain restrictions, the Fund may borrow money as authorized by the 1940 Act.

Fundamental limitation 2 is construed in conformity with the 1940 Act, and if
any time Fund borrowings exceed an amount equal to one third of the current
value of the Fund's total assets (including the amount borrowed) less
liabilities (other than borrowings) at the time the borrowing is made due to a
decline in net assets, such borrowings will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with the
331/3% limitation.

The following restrictions are not fundamental and may be changed without
shareholder approval:

THE FUND MAY NOT:

1. Purchase the securities of a company if such purchase, at the time thereof,
would cause more than 5% of the Fund's total assets to be invested in securities
of companies, which, including predecessors, have a record of less than three
years' continuous operation.

2. Pledge assets, except that the Fund may pledge not more than one third of its
total assets (taken at current value) to secure borrowings made in accordance
with limitation 2 above.

3. Invest more than 10% of the value of the Fund's net assets in securities that
are illiquid, including repurchase agreements providing for settlement in more
than seven days after notice or more than 15% of its net assets in securities
which are "restricted as to disposition."

4. Purchase or retain the securities of any issuer, any of whose officers,
directors, or security holders is a trustee, director, or officer of the Fund or
of its investment adviser, if or so long as the Board of Trustees, directors,
and officers of the Fund and of its Investment Adviser together own beneficially
more than 5% of any class of securities of such issuer.

5. Purchase securities on margin (but the Fund may obtain such credits as may be
necessary for the clearance of purchases and sales of securities).

6. Write or purchase any put or call option.

7. Make short sales of securities.

8. Invest in companies for the purpose of exercising control or management and
will not purchase the securities of any issuer if, as to 75% of its total

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<PAGE>

assets, it would own more than 10% of the voting securities of any such issuer.

9. Invest in the securities of other investment companies, except that the Fund
may invest in shares of money market funds that are not "affiliated persons" of
the Fund (unless permitted by Commission regulations or exemptive relief) and
that limit their investments to securities appropriate for the Fund, provided
investment by the Fund is limited to: (a) ten percent of the Fund's assets; (b)
five percent of the Fund's total assets in the shares of a single money market
fund; and (c) not more than three percent of the net assets of any one acquired
money market fund. The investment adviser will waive the portion of its fee
attributable to the assets of the Fund invested in such money market funds to
the extent required by the laws of any jurisdiction in which shares of the Fund
are registered for sale .

10. Invest more than 5% of its net assets in warrants, valued at lower of cost
or market. In addition the Fund will not invest more than 2% of its net assets
in warrants not listed on the New York or American Stock Exchange.

11. Invest in oil, gas or other mineral exploration or development programs.

Also, the Fund does not currently intend to:

1. Purchase obligations of savings and loan institutions and savings banks.

2. Purchase commercial paper which is not rated in the single highest category
by Duff & Phelps, Inc., Fitch Investors Service, Inc., Standard & Poor's
Corporation, or Moody's Investors Service, Inc., or if unrated, which is not
deemed to be of equivalent quality pursuant to procedures reviewed by the
Trustees.

3. Purchase securities for investment during periods when the sum of temporary
bank borrowings and reverse repurchase agreements (described in fundamental
limitation 2 entered into to facilitate redemptions exceeds 5% of its total
assets.

4. Lend more than 5% of its portfolio securities. Subject to this restriction,
the Fund may lend its securities if collateral values are continuously
maintained at not less than 100% by "marking-to-market" daily.

5. Invest in oil, gas or other mineral leases or in real estate limited
partnerships.

STATE REGULATIONS.

In addition, the Fund, 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 Fund's
shareholders: (1) the Fund has represented to the Texas State Securities Board,
that it 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 (2) the
Fund has represented to the Texas State Securities Board that it will not invest
more than 5% of its 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.

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<PAGE>

GENERAL.

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 Trustees will
consider what actions, if any, are appropriate to maintain adequate liquidity.

The investment policies of the Fund may be changed without an affirmative vote
of the holders of a majority of the Fund's outstanding voting securities unless
(1) a policy is expressly deemed to be a fundamental policy of the Fund or (2) a
policy is expressly deemed to be changeable only by such majority vote.

DETERMINING NET ASSET VALUE

USE OF THE AMORTIZED COST METHOD.

The Fund's use of the amortized cost method of valuing Fund instruments depends
on its compliance with certain conditions contained in the Rule. Under the Rule,
the Trustees must establish procedures reasonably designed to stabilize the net
asset value per share, as computed for purposes of distribution and redemption,
at $1.00 per share, taking into account current market conditions and the Fund's
investment objective .

The Fund has elected to use the amortized cost method of valuation pursuant to
the Rule. 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 Fund can
be expected to vary inversely with changes in prevailing interest rates.

Pursuant to the Rule, 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. Should the disposition of a
portfolio's security result in a dollar weighted average portfolio maturity of
more than 90 days, the Fund will invest its available cash to reduce the average
maturity to 90 days or less as soon as possible.

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<PAGE>

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.

MONITORING PROCEDURES

The Trustee's procedures include monitoring the relationship between the
amortized cost value per share and the net asset value per share based upon
available indications of market value. The Trustees will decide what, if any,
steps should be taken if there is a difference of more than 0.5% between the two
values. The Trustees will take any steps they consider appropriate (such as
redemption in kind or shortening the average Fund maturity) to minimize any
material dilution or other unfair results arising from differences between the
two methods of determining net asset value.

INVESTMENT RESTRICTIONS

The Rule requires that the Fund limit its investments to instruments that, in
the opinion of the Trustees, present minimal credit risks and have received the
requisite rating from one or more NRSRO. The Fund will limit the percentage
allocation of its investments so as to comply with the Rule, which generally
limits to 5% of total assets the amount which may be invested in the securities
of any one issuer. If the instruments are not rated, the Trustees must determine
that they are of comparable quality.

The Fund may attempt to increase yield by trading portfolio securities to take
advantage of short-term market variations. This policy may, from time to time,
result in high portfolio turnover. Under the amortized cost method of valuation,
neither the amount of daily income nor the net asset value is affected by any
unrealized appreciation or depreciation of the portfolio.

In periods of declining interest rates, the indicated daily yield on shares of
the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates.

In periods of rising interest rates, the indicated daily yield on shares of the
Fund computed the same way may tend to be lower than a similar computation made
by using a method of calculation based upon market prices and estimates.

VALUATION OF PORTFOLIO SECURITIES

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

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<PAGE>

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
Fund can be expected to vary inversely with changed 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 has 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 each of the Funds for
purposes of sales and redemption 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 each 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. Theses steps amy 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.

PERFORMANCE COMPARISONS

The Fund's performance depends upon such variables as:

o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates on money market instruments;
o changes in Fund expenses; and
o the relative amount of Fund cash flow.

From time to time the Fund may advertise its performance compared to similar
funds or portfolios using certain indices, reporting services, and financial
publications. (See "Performance" in the Prospectus).

YIELD

The Fund calculates its yield daily, based upon the seven days ending on the day
of the calculation, called the "base period." This yield is computed by:

o determining the net change in the value of a hypothetical account
with a balance of one share at the beginning of the base period,
with the net change excluding capital changes but including the
value of any additional shares purchased with dividends earned
from the original one share and all dividends declared on the
original and any purchased shares;

o dividing the net change in the account's value by the value of the
account at the beginning of the base period to determine the base
period return; and

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<PAGE>

o multiplying the base period return by (365/7).

To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with the Fund, the yield will
be reduced for those shareholders paying those fees. For the seven-day period
ended October 31, 1995, the Fund's yield was 5.26%.

EFFECTIVE YIELD

The Fund's effective yield is computed by compounding the unannualized base
period return by:

o adding 1 to the base period return;
o raising the sum to the 365/7th power; and
o subtracting 1 from the result.

For the seven-day period ended October 31, 1995, the Fund's effective yield was
5.40%.

TOTAL RETURN CALCULATIONS

Total returns quoted in advertising reflect all aspects of the Fund's return,
including the effect of reinvesting dividends and capital gain distributions (if
any), and any change in each Fund's net asset value per share over the period.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in the Fund over a stated
period, and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative total return of 100% over
ten years would produce an average annual total return of 7.18%, which is the
steady annual rate of return that would equal 100% growth on an annually
compounded basis in ten years. While average annual total returns are a
convenient means of comparing investment alternatives, investors should realize
that a Fund's performance is not constant over time, but changes from year to
year, and that average annual total returns represent averaged figures as
opposed to the actual year-to-year performance of the Fund. When using total
return and yield to compare the Fund with other mutual funds, investors should
take into consideration permitted portfolio composition methods used to value
portfolio securities and computing offering price. The Fund's average annual
total returns for the one, five and ten year periods ended October 31, 1995 and
the period since inception were 5.50%, 4.32%, 5.76% and 6.37%, respectively.

In addition to average annual total returns, the Fund may quote unaveraged or
cumulative total returns reflecting the total income over a stated period.
Average annual and cumulative total returns may be quoted as a percentage or as
a dollar amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period. Total returns may
be broken down into their components of income and capital (including capital
gains and changes in share price) in order to illustrate the relationship of
these factors and their contributions to total return. Total returns, yields,
and other performance information may be quoted numerically or in a table,
graph, or similar illustration. The Fund's cumulative total returns for the five
and ten year periods ended October 31, 1995 and the period since inception were
23.54%, 75.14% and 117.63% respectively.

ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION

The New York Stock Exchange ("NYSE") and Federal Reserve Bank of Cleveland
holiday closing schedule indicated in the Prospectus under "Share Price" are
subject to change.

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<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 net asset value per share at Valuation Time. The
Fund's net asset value per share 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
net asset value per share 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.

PURCHASING SHARES

Shares are sold at their net asset value without a sales charge on a Business
Day that the NYSE and the Federal Reserve Bank of Cleveland are open for
business. The procedure for purchasing shares of the Fund is explained in the
prospectus under "How to Invest, Exchange and Redeem."

EXCHANGING SHARES

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 (1) 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 (2) the 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 or would otherwise potentially be adversely
affected.

The Fund reserves 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.

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 net asset value next calculated after the
Transfer Agent has received the redemption request . Redemption procedures are
explained in the prospectus under "How to Invest, Exchange and Redeem."

[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 Securities and
Exchange 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.]

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<PAGE>

DIVIDENDS AND DISTRIBUTIONS

The Fund ordinarily declares dividends from its net investment income daily and
pays such dividends on or around the second business day of the succeeding
month. 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.

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 assets of the Fund, dividend income, if any, income from securities loans,
if any, and realized capital gains and losses on Fund assets, if any, less all
expenses and liabilities of that 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, 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.

TAXES

It is the policy of the Fund to seek to qualify for the favorable tax
treatment accorded regulated investment companies ("RICs") under Subchapter M of
the IRS 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 Fund 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, the 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 (a) 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 (b) 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 Fund controls and that
are engaged in the same, similar, or related trades or businesses. These
requirements may restrict the degree to which the Fund may engage in short-term
trading and concentrate investments. If the 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.

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<PAGE>

The 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 a (or has 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 Fund.
No attempt has been made to present a complete explanation of the federal tax
treatment of the Fund or its shareholders, and this discussion is not intended
as a substitute for careful tax planning. Accordingly, potential purchasers of
shares of the Fund 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.

TRUSTEES AND OFFICERS

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
Delaware 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 ("Independent Trustees"). The Trustees, in turn,
elect the officers of the Victory Portfolios to actively supervise 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:

Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years

Leigh A. Wilson*, 51 Trustee and From 1989 to present,
Glenleigh International Ltd. President Chairman and Chief
53 Sylvan Road North Executive Officer,
Westport, CT 06880 Glenleigh International
Limited; from 1984 to
1989, Chief Executive
Officer, Paribas North
America and Paribas
Corporation; President
and Trustee, The
Victory Funds and the
Spears, Benzak, Salomon
and Farrell Funds (the
"SBSF Funds, Inc."),
dba Key Mutual Funds.

Robert G. Brown, 72 Trustee Retired; from October
5460 N. Ocean Drive 1983 to November 1990,
President,

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<PAGE>

Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years

Singer Island Cleveland Advanced
Riviera Beach, FL 33404 Manufacturing Program
(non-profit corporation
engaged in regional
economic development).

Edward P. Campbell, 46 Trustee From March 1994 to
Nordson Corporation present, Executive Vice
28601 Clemens Road President and Chief
Westlake, OH 44145 Operating Officer of
Nordson Corporation
(manufacturer of
application equipment);
from May 1988 to March
1994, Vice President of
Nordson Corporation;
from 1987 to December
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
the SBSF Funds, Inc.,
dba Key Mutual Funds.

- ------------

* 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.

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<PAGE>

Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years

Dr. Harry Gazelle, 68 Trustee Retired radiologist,
17822 Lake Road Drs. Hill and Thomas
Lakewood, Ohio 44107 Corp.; Trustee, The
Victory Funds.

Stanley I. Landgraf, 70 Trustee Retired; currently,
41 Traditional Lane Trustee, Rensselaer
Loudonville, NY 12211 Polytechnic Institute;
Director, Elenel
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.

Dr. Thomas F. Morrissey, 62 Trustee 1995 Visiting Scholar,
Weatherhead School of Management Bond University,
Case Western Reserve University Queensland, Australia;
10900 Euclid Avenue Professor, Weatherhead
Cleveland, OH 44106-7235 School of Management,
Case Western Reserve
University ; from 1989
to 1995, Associate Dean
of Weatherhead School
of Management ; from
1987 to December 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.

Dr. H. Patrick Swygert, 52 Trustee President, Howard
Howard University University; formerly
2400 6th Street, N.W. President, State
Suite 320 University of New York
Washington, D.C. 20059 at Albany; formerly,
Executive Vice
President, Temple
University; Trustee,
the Victory Funds.

The Board presently has an Investment Policy Committee and a Business, Legal,
and Audit Committee. The members of the Investment Policy Committee are Messrs.
Landgraf (Chairman), Morrissey and Brown, 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 Trustees
regarding the revision of such policies or, if necessary, the submission 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

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<PAGE>

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 Independent 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 12 months ended
October 31, 1995. The Business, Legal and Audit Committee was constituted on May
24, 1995 (and has met twice 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 12 month period ended October 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 table indicates the compensation received by each Trustee from the
Victory "Fund Complex"(1) for the 12 month period ended October 31, 1995.

<TABLE>
<CAPTION>
Estimated Annual Total Total Compensation
Pension or Retirement Benefits Benefits Compensation from Victory
Accrued as Portfolio Expenses Upon Retirement from Fund "Fund Complex" (1)
<S> <C> <C> <C> <C>
Leigh A. Wilson, Trustee....... -0- -0- $5,729.73 $46,716.97
Robert G. Brown, Trustee....... -0- -0- 4,834.58 39,815.98
John D. Buckingham, Trustee(2). -0- -0- 2,598.87 18,841.89
Edward P. Campbell, Trustee.... -0- -0- 3,549.91 39,799.68
Harry Gazelle, Trustee......... -0- -0- 5,474.20 35,916.98
John W. Kemper, Trustee(2)..... -0- -0- 2,913.01 22,567.31
Stanley I. Landgraf, Trustee... -0- -0- 5,112.02 34,615.98
Thomas F. Morrissey, Trustee... -0- -0- 4,996.26 40,366.98
H. Patrick Swygert, Trustee.... -0- -0- 4,996.26 37,116.98
John R. Young, Trustee(2)...... -0- -0- 2,709.16 21,963.81
</TABLE>

(1) For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Victory Portfolios
as of June 5, 1995), the Key Funds, formerly 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 Victory Balanced Fund and Victory 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."

(2) Resigned

OFFICERS.

The officers of the Victory Portfolios, their ages, addresses and principal
occupations during the past five years, are as follows:

- 20 -

<PAGE>

Position(s) with the Principal Occupation
Name, Age and Address Victory Portfolios During the Past 5 Years
- --------------------- ------------------ -----------------------

Leigh A. Wilson, 51 President and Trustee From 1989 to present,
Glenleigh International Ltd. Chairman and Chief
53 Sylvan Road North Executive Officer,
Westport, CT 06880 Glenleigh International
Limited; from 1984 to
1989, Chief Executive
Officer, Paribas North
America and Paribas
Corporation; President
and Trustee to The
Victory Funds and SBSF
Funds, Inc., dba Key
Mutual Funds.

William B. Blundin, 57 Vice President Senior Vice President
BISYS Fund Services of BISYS Fund Services;
125 West 55th Street officer of other
New York, New York 10019 investment companies
administered by BISYS
Fund Services;President
and Chief Executive
Officer of Vista
Broker-Dealer
Management, Inc. and
BNY Hamilton
Distributors, Inc.,
registered
broker/dealers.

J. David Huber, 49 Vice President Executive Vice
BISYS Fund Services President, BISYS Fund
3435 Stelzer Road Services.
Columbus, OH 43219-3035

Scott A. Englehart, 33 Secretary From October 1990 to
BISYS Fund Services present, employee of
3435 Stelzer Road BISYS Fund Services,
Columbus, OH 43219-3035 Inc.; from 1985 to
October 1990, Manager
of Banking Center,
Fifth Third Bank.

George O. Martinez, 36 Assistant Secretary From March 1995 to
BISYS Fund Services present, Senior Vice
3435 Stelzer Road President and Director
Columbus, OH 43219-3035 of Legal and Compliance
Services, BISYS Fund
Services; from June
1989 to March 1995,
Vice President and
Associate General
Counsel, Alliance
Capital Management.

Martin R. Dean, 32 Treasurer From May 1994 to
BISYS Fund Services present, employee of
3435 Stelzer Road BISYS Fund Services;
Columbus, OH 43219-3035 from January 1987 to
April 1994; Senior
Manager, KPMG Peat
Marwick.

Adrian J. Waters, 33 Assistant Treasurer From May 1993 to
BISYS Fund Services present, employee of
(Ireland) Limited BISYS Fund Services;
Floor 2, Block 2 from 1989 to May 1993,
Harcourt Center, Dublin 2, Ireland Manager, Price
Waterhouse.

- 21 -

<PAGE>

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 (other than Leigh Wilson) receive no
compensation directly from the Victory Portfolios for performing the duties of
their offices. Concord Holding Corporation 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.

ADVISORY AND OTHER CONTRACTS

INVESTMENT ADVISER AND SUB-ADVISER.

Key Advisers was organized as an Ohio corporation on July 27, 1995 and is
registered as an investment adviser under the Investment Advisers Act of 1940.
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 $66
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 September 30, 1995, KeyCorp had an asset
base of $68 billion, with banking offices in 26 states from Maine to Alaska, and
trust and investment offices in 16 states. KeyCorp is the resulting entity of a
merger in 1994 of Society Corporation, the bank holding company of which Society
National Bank was a wholly-owned subsidiary, and KeyCorp, the former bank
holding company. 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 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 (1)

.35 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Prime Obligations Fund (1)
Victory U.S. Government Obligations Fund (1)
Victory Tax-Free Money Market Fund (1)

.50 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Money Market Fund (1)
Victory Limited Term Income Fund (1)
Victory Government Mortgage Fund (1)
Victory Financial Reserves Fund (1)
Victory Fund for Income (2)

.55 OF 1% OF AVERAGE DAILY NET ASSETS
Victory National Municipal Bond Fund (1)
Victory Government Bond Fund (1)
Victory New York Tax-Free Fund (1)

.60 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Bond Fund (1)

- 22 -

<PAGE>

Victory Stock Index Fund (1)

.65 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Diversified Stock Fund (1)

.75 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Intermediate Income Fund (1)
Victory Investment Quality Bond Fund (1)
Victory Ohio Regional Stock Fund (1)

1% OF AVERAGE DAILY NET ASSETS
Victory Balanced Fund (1)
Victory Value Fund (1)
Victory Growth Fund (1)
Victory Special Value Fund (1)
Victory Special Growth Fund (3)

1.10% OF AVERAGE DAILY NET ASSETS
Victory International Growth Fund (1)

- --------------

(1) Society Asset Management, Inc. serves as sub-adviser to each of these
funds. 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 table set forth below, following these footnotes.

(2) First Albany Asset Management Corporation serves as sub- adviser to the
Victory Fund for Income, for which it receives .20% of such fund's
average daily net assets.

(3) T. Rowe Price Associates, Inc. serves as sub-adviser to the Victory
Special Growth Fund, for which it receives .25% of such fund's average
daily net assets up to $100 million and .20% of average daily net assets
in excess of $100 million.

The Investment Sub-advisory fees payable by Key Advisers to the
SubAdviser are as follows:

For the Victory Balanced Fund, For the Victory International Growth
Diversified Stock Fund, Growth Fund, Fund, Ohio Regional Stock Fund and
Stock Index Fund and Value Fund: Special Value Fund:

Rate of Rate of
Net Assets Sub-Advisory Fee(1) Net Assets Sub-Advisory Fee(1)

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%

- 23 -

<PAGE>

For the Victory Intermediate Income For the Victory Prime Obligations Fund,
Fund, Investment Quality Bond Fund, Tax-Free Money Market Fund, U.S.
Limited Term Income Fund, Ohio Government Obligations Fund,
Municipal Bond Fund, Government Bond Financial Reserves Fund,
Fund, Government Mortgage Fund, Institutional Money
National Municipal Bond Fund and New Market Fund and Ohio Municipal Money
York Tax-Free Fund: Market Fund:

Rate of Rate of
Net Assets Sub-Advisory Fee(1) Net Assets Sub-Advisory Fee(1)

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%

- --------------------

(1) 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 will be in writing.

THE INVESTMENT ADVISORY AND INVESTMENT SUB-ADVISORY AGREEMENTS.

Unless sooner terminated, the Investment Advisory Agreement between Key Advisers
and the Victory Portfolios on behalf of the Fund (the "Investment Advisory
Agreement") provides that it will continue in effect as to the 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 the Fund (as
defined under "Additional Information - Miscellaneous"), 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 the Fund at any time on 60
days' written notice without penalty by the Trustees, by vote of a majority of
the outstanding shares of the 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 Fund
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 its duties
and obligations thereunder.

Prior to January, 1993, Society National Bank served as investment adviser to
the Fund. From January 1, 1993 until December 31, 1995, Society Asset
Management, Inc. served as investment adviser to the Fund. For the fiscal years
ended October 31, 1994 and 1995 the Adviser earned investment advisory fees of

- 24 -

<PAGE>

$2,132,744, and 3,125,072, respectively,] after fee reductions of $584,417 and
$420,213, respectively.

Under the Investment Advisory Agreement, Key Advisers may delegate a portion of
its responsibilities to a sub-adviser. 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 the Fund. The SubAdviser
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 SubAdviser. The sub-advisory arrangement does not result in the payment
of additional fees by the Fund.

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.

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 SubAdviser
including, but not limited to, (1) descriptions of the operations of Key Trust
Company of Ohio, N.A., Key Advisers and the Sub-Adviser; (2) descriptions of
certain personnel and their functions; and (3) statistics and rankings related
to the operations of Key Trust Company of Ohio, N.A., Key Advisers and the
Sub-Adviser.

- 25 -

<PAGE>

PORTFOLIO TRANSACTIONS.

Pursuant to the Investment Advisory Agreement and the Investment Sub-Advisory
Agreement, Key Advisers and the Sub-Adviser determine, 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 the 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 to dealers is determined by Key Advisers or the
SubAdviser in their 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
investment advisory fees payable to Key Advisers by the Fund. Such information
may be useful to Key Advisers or the Sub-Adviser in serving both the Victory
Portfolios and other clients and, conversely, such supplemental research
information obtained by the placement of orders on behalf of 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. The Fund purchases
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 their affiliates, or 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.

- 26 -

<PAGE>

to be sold or purchased for the Fund with those to be sold or purchased for the
other funds of the Victory Portfolios or for other investment companies or
accounts in order to obtain best execution. 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 the 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, 1994 and October 31, 1995, the Fund did
not pay any brokerage commissions.

ADMINISTRATOR.

Currently, Concord Holding Corporation ("CHC") serves as administrator (the
"Administrator") to the Fund. The Administrator assists in supervising all
operations of the Fund (other than those performed by Key Advisers or the
SubAdviser under the Investment Advisory Agreement and Sub-Investment Advisory
Agreement). Prior to June 5, 1995, the Winsbury Company ("Winsbury"), now known
as BISYS Fund Services, served as the Fund's administrator.

While CHC and Winsbury are distinct legal entities from BISYS Fund Services, CHC
and Winsbury are considered to be affiliated persons of BISYS Fund Services
under the 1940 Act due to, among other things, the fact that CHC and Winsbury
are owned by substantially the same persons that directly or indirectly own
BISYS Fund Services.

CHC receives a fee from the 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
the Fund's average daily net assets. CHC may periodically waive all or a portion
of its fee with respect to the Fund.

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
Trustees or by vote of a majority of the outstanding shares of the 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.

- 27 -

<PAGE>

In the fiscal years ended October 31, 1994 and October 31, 1995, the
Administrator earned aggregate administration fees of $278,025, and $1,063,114,
after fee reductions of $0 and $471, respectively.

DISTRIBUTOR.

Victory Broker-Dealer Services, Inc. serves as distributor (the "Distributor")
for the continuous offering of the shares of the Fund pursuant to a Distribution
Agreement between the Distributor and the Victory Portfolios. Prior to May 31,
1995, Winsbury served as distributor of the Fund. Unless otherwise terminated,
the Distribution Agreement will remain in effect with respect to the Fund for
two years, and thereafter for consecutive one-year terms, provided that it is
approved at least annually (1) by the Trustees or by the vote of a majority of
the outstanding shares of the Fund, and (2) 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
will terminate in the event of its assignment, as defined under the 1940 Act.
For the Victory Portfolios' fiscal years ended October 31, 1994 and October 31,
1995, the Distributor received no underwriting commission for underwriting the
Fund's shares.

TRANSFER AGENT.

Primary Funds Service Corporation ("PFSC") serves as transfer agent and dividend
disbursing agent for the Fund, pursuant to a Transfer Agency Agreement. Under
its agreement with the Victory Portfolios, PFSC has agreed (1) to issue and
redeem shares of the Victory Portfolios; (2) 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; (3) to respond to correspondence or inquiries by
shareholders and others relating to its duties; (4) to maintain shareholder
accounts and certain sub-accounts; and (5) to make periodic reports to the
Trustees concerning the Victory Portfolios' operations. For the services
provided under the Transfer Agency and Shareholder Servicing Agreement, PFSC
receives a maximum monthly fee of $1,250 from the Fund and a maximum of $3.50
per account of the Fund.

DISTRIBUTION AND SERVICE PLAN.

The Victory Portfolios on behalf of the Fund has adopted a Distribution [and
Service] Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act (the
"Rule"). The Rule provides in substance that a mutual fund may not engage
directly or indirectly in financing any activity that is primarily intended to
result in the sale of shares of such mutual fund except pursuant to a plan
adopted by the Fund under the Rule. The Board of Trustees has adopted the Plan
to allow Key Advisers, the Sub-Adviser and the Distributor to incur certain
expenses that might be considered to constitute indirect payment by the Fund of
distribution expenses. Under the Plan, if a payment to Key Advisers or the
Sub-Adviser of management fees or to the Distributor of administrative fees
should be deemed to be indirect financing by the Victory Portfolios of the
distribution of their shares, such payment is authorized by the Plan.

The Plan specifically recognizes that 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 Board of Trustees. As required by the Rule,
the Trustees carefully considered all pertinent factors relating to the

- 28 -

<PAGE>

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. In particular, the Trustees noted that the Plan does not authorize
payments by the Fund other than the advisory and administrative fees authorized
under the investment advisory and administration agreements. 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.]

FUND ACCOUNTANT.

BISYS Fund Services Ohio, Inc. serves as fund accountant for the 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 Fund's 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 the Fund. Under
the Fund Accounting Agreement, BISYS Fund Services Ohio, Inc. is entitled to
receive annual fees of .03% of the first $100 million of the Fund's daily
average net assets, .02% of the next $100 million of the Fund's daily average
net assets, and .01% of the Fund's remaining daily average net assets. Money
Market Funds will have no incremental asset charge when net assets exceed $500
million. These annual fees are subject to a minimum monthly assets charge of
$2,500 per taxable fund, and does 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, 1993, October 31, 1994 and
October 31, 1995, the Fund accountant earned fund accounting fees of $306,082,
$276,849 and $41,020, respectively.

CUSTODIAN.

Cash and securities owned by the Fund are held by Key Trust Company of Ohio,
N.A. as custodian. Key Trust Company of Ohio, N.A. serves as custodian to the
Fund pursuant to a Custodian Agreement dated May 24, 1995. Under this Agreement,
Key Trust Company of Ohio, N.A. (1) maintains a separate account or accounts in
the name of the Fund; (2) makes receipts and disbursements of money on behalf of
the Fund; (3) collects and receives all income and other payments and
distributions on account of portfolio securities; (4) responds to correspondence
from security brokers and others relating to its duties; and (5) makes periodic
reports to the Trustees concerning the Victory Portfolios' operations. Key Trust
Company of Ohio, N.A. may, with the approval of the Victory Portfolios and at
the custodian's own expense, open and maintain a sub-custody account or accounts
on behalf of the Fund, provided that Key Trust Company of Ohio, N.A. shall
remain liable for the performance of all of its duties under the Custodian
Agreement.

INDEPENDENT ACCOUNTANTS.

The financial highlights appearing in the Prospectus has been derived from
financial statements of the Fund incorporated by reference in this Statement of
Additional Information which, for the fiscal year ended October 31, 1995, have
been audited by Coopers & Lybrand L.L.P. as set forth in their report
incorporated by reference herein, and are included in reliance upon such report
and on the authority of such firm as experts in auditing and accounting. Coopers
& Lybrand L.L.P. serves as the Victory Portfolios' auditors. 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 is the counsel to the Victory Portfolios .

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EXPENSES.

The Fund bears the following expenses relating to its operations: taxes,
interest, brokerage fees and commissions, fees of the Trustees , 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 the Fund in any fiscal year exceeds expense
limitations imposed by applicable state securities regulations, Key Advisers or
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 Fund limits its 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 its
average net assets, 2.0% of the next $70 million of its average net assets, and
1.5% of its remaining average net assets. Any expenses to be borne by Key
Advisers or the Administrator will be estimated daily and reconciled and paid on
a monthly basis. Fees imposed upon customer accounts by Key Advisers, the
SubAdviser, 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.

ADDITIONAL INFORMATION

DESCRIPTION OF SHARES.

The Victory Portfolios (sometimes referred to as the "Trust") is a business
trust organized under the laws of Delaware. 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. On February 29, 1996, the Victory
Portfolios reorganized as a Delaware business trust. The currently effective
Delaware Trust Instrument authorizes the Trustees to issue an unlimited number
of shares, which are units of beneficial interest, without par value. 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

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<PAGE>

the Victory Portfolios into one or more additional series by setting or changing
in any one or more aspects 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 their 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 of February 2, 1996, the Fund believes that SNBOC and Company was shareholder
of record of 92.64% of the outstanding shares of the Fund, but did not hold such
shares beneficially.

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 (1)
when required by the 1940 Act, shares shall be voted by individual series, and
(2) 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
purpose 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 vote of the
holders of at least two-thirds of the outstanding shares of the Victory
Portfolios. A meeting shall be held for such purpose upon the written request of
the holders of not less than 10% of the outstanding shares. Upon written request
by ten or more shareholders meeting the qualifications of Section 16(c) of the
1940 Act, (i.e., persons who have been shareholders for at least six months, and
who hold shares having a net asset value per share of at least $25,000 or
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.

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<PAGE>

SHAREHOLDER AND TRUSTEE LIABILITY.

The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of personal liability
extended to shareholders of Delaware corporations, and the Delaware Trust
Instrument provides that shareholders of the Victory Portfolios shall not be
liable for the obligations of the Victory Portfolios. The Delaware Trust
Instrument also 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 Delaware Trust Instrument 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 considered to be extremely
remote.

The Delaware Trust Instrument 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.

MISCELLANEOUS.

As used in the Prospectus and in this Statement of Additional Information,
"assets belonging to a fund" (or "assets belonging to the Fund") means the
consideration received by the Victory Portfolios upon the issuance or sale of
shares of a fund (or the 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 (or the Fund) that are allocated to
that fund (or the Fund) by the 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 each 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 , which
are allocated to each fund in accordance with its proportionate share of the net
asset values 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 and
will be in accordance with generally accepted accounting principles.
Determinations by the Trustees 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 Fund means the affirmative
vote of the lesser of (a) 67% or more of the shares of the Fund present at a
meeting at which the holders of more than 50% of the outstanding shares of the
Fund are represented in person or by proxy, or (b) more than 50% of the
outstanding shares of the Fund.

The Victory Portfolios is registered with the Commission as an open-end
management investment company. Such registration does not involve supervision by
the Commission of the management or policies of the Victory Portfolios.

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<PAGE>

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.

APPENDIX

DESCRIPTION OF SECURITY RATINGS.

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.

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<PAGE>

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.

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<PAGE>

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):

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<PAGE>

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:

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<PAGE>

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.

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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.

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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

THE VICTORY PORTFOLIOS

FUND FOR INCOME

MARCH 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 Fund for Income 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.

TABLE OF CONTENTS

INVESTMENT OBJECTIVES AND POLICIES....... __ INVESTMENT ADVISER
INVESTMENT LIMITATIONS AND RESTRICTIONS.. __ KeyCorp Mutual Fund Advisers,
VALUATION OF PORTFOLIO SECURITIES........ __ Inc.
ADDITIONAL PURCHASE, EXCHANGE AND
REDEMPTION INFORMATION............... __ INVESTMENT SUB-ADVISER
TAXES First Albany Asset Management
TRUSTEES AND OFFICERS.................... __ Corporation
ADVISORY AND OTHER CONTRACTS............. __
ADDITIONAL INFORMATION................... __ ADMINISTRATOR
APPENDIX................................. __ Concord Holding Corporation

INDEPENDENT AUDITOR'S REPORT DISTRIBUTOR
FINANCIAL STATEMENTS Victory Broker-Dealer Services,
Inc.

TRANSFER AGENT
Primary Funds Service
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"), four of which series are
currently inactive. The outstanding shares represent interests in the
twenty-four separate investment portfolios which are currently active. This
Statement of Additional Information relates to the Victory Fund for Income (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 OBJECTIVE AND POLICIES

ADDITIONAL INFORMATION REGARDING FUND INVESTMENTS.

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 Fund may purchase mortgage-related securities at a premium or at a
discount. Among the U.S. Government securities in which the Fund 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 funds 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

- 2 -

<PAGE>

fees paid to the "issuer" and GNMA, regardless of whether or not the mortgagor
actually makes the payment.

INVESTMENT LIMITATIONS AND 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. Purchase the securities of any issuer (except the United States government,
its agencies and instrumentalities), with regard to 50% of total assets, if as a
result more than 5% of its total assets would be invested in the securities of
such issuer.

- 3 -

<PAGE>

In determining the issuer of a tax-exempt security, each state and each
political subdivision, agency, and instrumentality of each state and each
multi-state agency of which such state is a member is a separate issuer. Where
securities are backed only by assets and revenues of a particular
instrumentality, facility or subdivision, such entity is considered the issuer.

2. Invest more than 25% of its total assets in securities whose interest
payments are derived from revenue from similar projects .

3. Borrow money, except for temporary or emergency purposes and not for
investment purposes, and then only in an amount not exceeding 5% of the value of
its total assets at the time of the borrowing.

4. Pledge, mortgage or hypothecate its assets, except that, to secure borrowings
permitted by subparagraph (3) above, it may pledge securities having a market
value at the time of pledge not exceeding 10% of the value of its total assets.

5. Issue any senior security (as defined in the 1940 Act), except that (a) the
Fund may engage in transactions which may result in the issuance of senior
securities to the extent permissible under the applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) the Fund may acquire
other securities that may be deemed senior securities to the extent permitted
under applicable regulations or interpretations of the 1940 Act; (c) subject to
the restrictions set forth above, the Fund may borrow money as authorized by the
1940 Act.

6. Underwrite any issue of securities.

7. Purchase or sell commodities or commodity contracts, or oil, gas or other
mineral exploration or development programs.

8. Make loans to other persons except through the use of repurchase agreements
or the purchase of commercial paper. For these purposes, the purchase of a
portion of an issue of debt securities which is part of an issue to the public
shall not be considered the making of a loan.

The following restrictions are not fundamental and may be changed
without shareholder approval:

1. The Fund will not make short sales of securities or purchase any securities
on margin, except for such short-term credits as are necessary for the clearance
of transactions; or

2. The Fund will not participate on a joint, or a joint and several, basis in
any trading account in securities except pursuant to an exemptive order or
otherwise permitted by the 1940 Act; the "bunching" of orders for the sale or
purchase of portfolio securities with other funds advised by the Adviser or its
affiliates to reduce brokerage commissions or otherwise to achieve best overall
execution is not considered participation in a trading account in securities;

With respect to non-municipal bond investments, in addition to the foregoing
limitations, the Fund will not purchase securities (other than securities of the
United States government, its agencies or instrumentalities), if as a result of
such purchase 25% or more of the total Fund's assets would be invested in any
one industry, or enter into a repurchase agreement if, as a result thereof, more
than 10% of its total assets would be subject to repurchase agreements maturing
in more than seven days.

- 4 -

<PAGE>

In the event the Fund acquires liquid assets as a result of the exercise of a
security interest relating to municipal bonds, the Fund's trustees will dispose
of such assets as promptly as possible.

STATE REGULATIONS.

GENERAL.

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 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

- 5 -

<PAGE>

not having readily available market quotations will be priced at fair value
using a methodology approved in good faith by the Trustees.

PERFORMANCE

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
Fund's 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 shares of the Fund are affected by portfolio quality,
portfolio maturity, the type of investments the Fund holds and operating
expenses.

STANDARDIZED YIELD.

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)^6 - 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 shares for the 30-day period ended October 31,
1995 was 6.76% .

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<PAGE>

DIVIDEND YIELD AND DISTRIBUTION RETURNS.

From time to time the Fund may quote a "dividend yield" or a "distribution
return" for each class. Dividend yield is based on the 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) 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:

<TABLE>

<S> <C> <C> <C> <C>
Dividend Yield of the Class = Dividends + Number of days (accrual period) x 365
-------------------
Max. Offering Price (last day of period)
</TABLE>

The maximum offering price includes the maximum front-end sales charge.

From time to time similar yield or distribution return calculations may also be
made using the net asset value (instead of its respective maximum offering
price) at the end of the period. The dividend yields at maximum offering price
and net asset value for the 30-day period ended October 31, 1995 were 5.93% and
6.05%, respectively. The distribution returns at maximum offering price and net
asset value as of October 31, 1995 were 5.93% and 6.05%, 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 )^1n - 1 = Average Annual Total Return
-----
( P )

ERV - P = Total Return
-------
P

In calculating total returns the current maximum sales charge of 2.00% (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). 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 shares for the period December 10,
1993 (commencement of operations) to October 31, 1995 (life of fund) at maximum
offering price were 8.41% and 98.52%, respectively. For the one and five year
periods ended October 31, 1995 the average annual total return was 10.52% and
43.06%, respectively.

- 7 -

<PAGE>

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 shares for the period
December 10, 1993 (commencement of operations) to October 31, 1995 (life of
fund), at net asset value, was 8.66% and 102.48%, respectively. For the one and
five year periods ended October 31, 1995, the average annual total return at net
asset value was 12.75% and 45.93%, respectively.

OTHER PERFORMANCE COMPARISONS.

From time to time the Fund may publish the ranking of the performance of its
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 (1) all other funds, excluding money market funds,
and (2) 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
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.

The total return on an investment made in 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 mortgage-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 applicable to indices.

From time to time, the yields and the total returns of shares of the Fund may be
quoted in and compared to other mutual funds with similar investment objectives
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 are 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

- 8 -

<PAGE>

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 the 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 the 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, and Treasury bills, as compared to an investment in shares of the 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 the 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, the
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, the performance
of 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 and in the following publications: IBC's Money
Fund Reports, Value Line Mutual Fund Survey, Morningstar, CDA/Wiesenberger,
Money Magazine, Forbes, Barron's, The Wall Street Journal, The New York Times,
Business Week, American Banker, Fortune, Institutional Investor, and 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, and its
investment philosophy.

When comparing yield, total return and investment risk of an investment in
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

- 9 -

<PAGE>

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 maintain a fixed price per
share.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The New York Stock Exchange ("NYSE") and Federal Reserve Bank of Cleveland
holiday closing schedule indicated in the Prospectus under "Share Price" are
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 net asset value at Valuation Time. A Fund's net asset
value 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
Fund's net asset value. 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 (1) 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 (2) the 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.

The Fund reserves 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 "How to
Invest, Exchange and Redeem."

CONVERSION TO FEDERAL FUNDS.

- 10 -

<PAGE>

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 "How to Redeem."

REDEMPTION IN KIND.

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 OF PORTFOLIO SECURITIES" above.)

DIVIDENDS AND DISTRIBUTIONS

The Fund ordinarily declares and pays dividends from its net investment income
monthly. 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.

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's
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.

TAXES

It is the policy of the Fund to seek to qualify for the favorable tax treatment
accorded regulated investment companies ("RICs") under Subchapter M of the IRS
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 Fund expects to eliminate or

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<PAGE>

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, the 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 (a) at least 50% 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 (b) 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 Fund controls and that are
engaged in the same, similar, or related trades or businesses. These
requirements may restrict the degree to which the Fund may engage in short-term
trading and concentrate investments. If the 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.

Certain investment and hedging activities of the 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 Fund and its shareholders.

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<PAGE>

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.

TRUSTEES AND OFFICERS

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 ("Independent
Trustees"). The Trustees, in turn, elect the officers of the Victory Portfolios
to actively supervise 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:

Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years

- ------------
* 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.

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<PAGE>

Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years

Robert G. Brown, 72 Trustee Retired; from October
5460 N. Ocean Drive 1983 to November 1990,
Singer Island Cleveland Advanced
Riviera Beach, FL 33404 Manufacturing Program
(non-profit corporation
engaged in regional
economic development).

Dr. Harry Gazelle, 68 Trustee Retired radiologist,
17822 Lake Road Drs. Hill and Thomas
Lakewood, Ohio 44107 Corp.; Trustee, The
Victory Funds.

- 14 -

<PAGE>

Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years

- 15 -

<PAGE>

REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS.

The following table indicates the compensation received by each Trustee from the
Victory "Fund Complex"(1) for the 12 month period ended October 31, 1995.

Estimated Annual Total Total Compensation
Pension or Retirement Benefits Benefits Compensation from Victory
Accrued as Portfolio Expenses Upon Retirement from Fund "Fund Complex" (1)
<S> <C> <C> <C> <C>
Leigh A. Wilson, Trustee...... -0- -0- $248.70 $46,716.97
Robert G. Brown, Trustee -0- -0- 217.14 39,815.98
John D. Buckingham, Trustee(2). -0- -0- 82.92 18,841.89
Edward P. Campbell, Trustee... -0- -0- 114.18 39,799.68
Harry Gazelle, Trustee........ -0- -0- 189.79 35,916.98
John W. Kemper, Trustee(2).... -0- -0- 161.55 22,567.31
Stanley I. Landgraf, Trustee.. -0- -0- 157.16 34,615.98
Thomas F. Morrissey, Trustee.. -0- -0- 228.46 40,366.98
H. Patrick Swygert, Trustee... -0- -0- 228 .46 37,116.98
John R. Young, Trustee(2)..... -0- -0- 140.67 21,963.81
</TABLE>

(1) For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Victory Portfolios
as of June 5, 1995), the Key Funds, formerly 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 Victory Balanced Fund and Victory 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 abovenamed Trustees serve on
the boards of each fund in the "Fund Complex."

(2) Resigned

OFFICERS.

The officers of the Victory Portfolios, their ages, addresses and principal
occupations during the past five years, are as follows:

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<PAGE>

Position(s) with the Principal Occupation
Name, Age and Address Victory Portfolios During Past 5 Years
- --------------------- ------------------ -----------------------

J. David Huber, 49 Vice President Executive Vice
BISYS Fund Services President, BISYS Fund
3435 Stelzer Road Services.
Columbus, OH 43219-3035

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<PAGE>

Position(s) with the Principal Occupation
Name, Age and Address Victory Portfolios During Past 5 Years
- --------------------- ------------------ -----------------------

The mailing address of each of the officers of the Victory Portfolios is 3435
Stelzer Road, Columbus, Ohio 43219-3035.

ADVISORY AND OTHER CONTRACTS

INVESTMENT ADVISER AND SUB-ADVISER.

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 (1)

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<PAGE>

.35 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Prime Obligations Fund (1)
Victory U.S. Government Obligations Fund (1)
Victory Tax-Free Money Market Fund (1)

.55 OF 1% OF AVERAGE DAILY NET ASSETS
Victory National Municipal Bond Fund (1)
Victory Government Bond Fund (1)
Victory New York Tax-Free Fund (1)

.60 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Bond Fund (1)
Victory Stock Index Fund (1)

.65 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Diversified Stock Fund (1)

.75 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Intermediate Income Fund (1)
Victory Investment Quality Bond Fund (1)
Victory Ohio Regional Stock Fund (1)

1.00% OF AVERAGE DAILY NET ASSETS
Victory Balanced Fund (1)
Victory Value Fund (1)
Victory Growth Fund (1)
Victory Special Value Fund (1)
Victory Special Growth Fund (3)

1.10% OF AVERAGE DAILY NET ASSETS
Victory International Growth Fund (1)

- --------------

(1) Society Asset Management, Inc. serves as sub-adviser to each of these
funds. 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 table set forth below, following these footnotes.

(2) First Albany Asset Management Corporation serves as sub- adviser to the
Victory Fund for Income, for which it receives .20% of such fund's
average daily net assets.

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<PAGE>

The Investment Sub-advisory fees payable by Key Advisers to the
SubAdviser are as follows:

For the Victory Balanced Fund, For the Victory International Growth
Diversified Stock Fund, Growth Fund, Fund, Ohio Regional Stock Fund and
Stock Index Fund and Value Fund: Special Value Fund:

Rate of Rate of
Net Assets Sub-Advisory Fee(1) Net Assets Sub-Advisory Fee(1)

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%

Rate of Rate of
Net Assets Sub-Advisory Fee(1) Net Assets Sub-Advisory Fee(1)

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%

- --------------------

THE INVESTMENT ADVISORY AND INVESTMENT SUB-ADVISORY AGREEMENTS.

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<PAGE>

Investment Advisory Agreement, by votes cast in person at a meeting called for
such purpose.

Prior to January 1, 1995 Society Asset Management, Inc. Served as investment
adviser to the Fund. From May 1, 1994 to June 5, 1995, Society's affiliate, Key
Trust Company, served as the investment adviser to the Fund and its Predecessor
Fund. Prior to May 1, 1994, First Albany served as the investment adviser to the
Investors Preference Fund for Income, the Predecessor to the Predecessor Fund.
For the fiscal years ended October 31, 1995 and the fiscal period ended October
31, 1994, the adviser earned investment advisory fees of $87,483 and $84,270,
respectively, after fee reductions of $36,865 and $2,027, respectively.

Key Advisers has entered into an investment sub-advisory agreement with First
Albany on behalf of the Fund. 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. The sub-advisory arrangement does not
result in the payment of additional fees by the Fund.

GLASS-STEAGALL ACT.

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<PAGE>

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.

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, (1) descriptions of the operations of
Key Trust Company of Ohio, N.A., Key Advisers and the Sub-Adviser; (2)
descriptions of certain personnel and their functions; and (3) 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 Agreement and Sub-Advisory Agreement, Key
Advisers and the Sub-Adviser determine, 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 the 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 to dealers is determined by Key Advisers or the
Sub-Adviser in their 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
investment advisory fees payable to Key Advisers by the Fund. Such information
may be useful to Key Advisers or the Sub-Adviser in serving both the Victory
Portfolios and other clients and, conversely, such supplemental research
information obtained by the placement of orders on behalf of 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.

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<PAGE>

Key Trust Company of Ohio, N.A. or their affiliates, or 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 the Fund are made independently from those made for the
other funds of the Victory Portfolios or any other investment company or account
managed by Key Advisers or the Sub-Adviser. Such other funds, investment
companies or accounts may also invest in the securities in which the Fund
invests. When a purchase or sale of the same security is made at substantially
the same time on behalf of the 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 the Fund and such other fund, investment company or
account. In some instances, this investment procedure may affect the price paid
or received by the Fund or the size of the position obtained by the Fund in an
adverse manner relative to the result that would have been obtained if only the
Fund had participated in or been allocated such trades. To the extent permitted
by law, Key Advisers or the Sub-Adviser may aggregate the securities to be sold
or purchased for the Fund with those to be sold or purchased for the other funds
of the Victory Portfolios or for other investment companies or accounts in order
to obtain best execution. 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
the 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, 1994 and 1995, the Fund paid $176,716 and
$0, respectively, in brokerage commissions.

PORTFOLIO TURNOVER. The turnover rate stated in the Prospectus 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
period from February 1, 1994 to October 31, 1994 and the fiscal year ended
October 31, 1995, the Fund's portfolio turnover rates were 18.00% and 35.20%,
respectively.

ADMINISTRATOR.

While CHC and Winsbury are distinct legal entities from BISYS Fund Services, CHC
and Winsbury are considered to be affiliated persons of BISYS Fund Services
under the Investment Company Act of 1940 due to, among other things, the fact
that CHC and Winsbury are owned by substantially the same persons that directly
or indirectly own BISYS Fund Services.

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<PAGE>

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.

In the fiscal periods ended October 31, 1994 and October 31, 1995, the
Adminis-trator earned aggregate administration fees of $224,695 and $27,624,
respectively, after fee reductions of $8,592 and $9,681, respectively.

DISTRIBUTOR.

Victory Broker-Dealer Services, Inc. serves as distributor (the "Distributor")
for the continuous offering of the shares of the Fund pursuant to a Distribution
Agreement between the Distributor and the Victory Portfolios. Prior to May 31,
1995, Winsbury served as distributor of the Fund. Unless otherwise terminated,
the Distribution Agreement will remain in effect with respect to the Fund for
two years, and thereafter for consecutive one-year terms, provided that it is
approved at least annually (1) by the Trustees or by the vote of a majority of
the outstanding shares of the Fund, and (2) 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
will terminate in the event of its assignment, as defined under the 1940 Act.
[For the Victory Portfolios' fiscal year ended October 31, 1994 Winsbury earned
$212,021, in underwriting commissions, and retained $15; for the fiscal year
ended October 31, 1995, the Distributor earned $11,637 in underwriting
commissions, and retained $0.]

TRANSFER AGENT.

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<PAGE>

receives a maximum monthly fee of $1,250 from the Fund and a maximum of $3.50
per account of the Fund.

SHAREHOLDER SERVICING PLAN.

Payments made under the Shareholder Servicing Plan to Shareholder Servicing
Agents (which may include affiliates of the Adviser and Sub-Adviser)are for
administrative support services to customers who may from time to time
beneficially own shares, which services may include: (1) 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; (2) providing customers with a service that invests the assets
of their accounts in shares pursuant to specific or pre-authorized instructions;
(3) processing dividend and distribution payments on behalf of customers; (4)
providing information periodically to customers showing their positions in
shares; (5) arranging for bank wires; (6) responding to customer inquiries; (7)
providing subaccounting with respect to shares beneficially owned by customers
or providing the information to the Fund as necessary for subaccounting; (8) 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; (9) forwarding to customers proxy
statements and proxies containing any proposals regarding this Plan; and (10)
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.

FUND ACCOUNTANT.

BISYS Fund Services Ohio, Inc. serves as fund accountant for the 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 Fund's 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 the Fund. Under
the Fund Accounting Agreement, BISYS Fund Services Ohio, Inc. is entitled to
receive annual fees of .03% of the first $100 million of the Fund's daily
average net assets, .02% of the next $100 million of the Fund's daily average
net assets, and .01% of the Fund's remaining daily average net assets. These
annual fees are subject to a minimum monthly assets charge of $2,500 per taxable
fund, and does 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 periods ended January 31, 1994, October 31, 1994 and October 31, 1995 the
Fund accountant earned fund accounting fees of $_______, $_______ and $32,288,
respectively.]

CUSTODIAN.

INDEPENDENT ACCOUNTANTS.

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<PAGE>

The financial highlights appearing in the Prospectus have been derived from
financial statements of the Fund incorporated by reference in this Statement of
Additional Information which, for the fiscal year ended October 31, 1995, have
been audited by Coopers & Lybrand L.L.P. as set forth in their report
incorporated by reference herein, and are included in reliance upon such report
and on the authority of such firm as experts in auditing and accounting. Coopers
& Lybrand L.L.P. serves as the Victory Portfolios' auditors. 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 is the counsel to the Victory Portfolios.

EXPENSES.

The Fund bears the following expenses relating to its operations: taxes,
interest, brokerage fees and commissions, fees of the Trustees, 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.

ADDITIONAL INFORMATION

DESCRIPTION OF SHARES.

The Victory Portfolios (sometimes referred to as the "Trust") is a Delaware
business Trust. Its Delaware Trust Instrument was adopted on December 6, 1995
and a certificate of Trust for the Trust was filed in Delaware on December 21,
1995. On February 29, 1996, the Victory Portfolios converted from a
Massachusetts business trust to a Delaware business trust.

The previously effective Massachusetts 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.

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<PAGE>

The currently effective Delaware Trust Instrument authorizes the Trustees to
issue an unlimited number of shares, which are units of beneficial interest,
without par value. 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' Delaware Trust Instrument 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 aspects 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 their 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 the Victory Portfolios, of
any general assets not belonging to any particular fund which are available for
distribution.

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 (1)
when required by the 1940 Act, shares shall be voted by individual series, and
(2) 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
purpose 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 vote of the
holders of at least two-thirds of the outstanding shares of the Victory
Portfolios. A meeting shall be held for such purpose upon the written request of
the holders of not less than 10% of the outstanding shares. Upon written request
by ten or more shareholders meeting the qualifications of Section 16(c) of the
1940 Act, (i.e., persons who have been shareholders for at least six months, and
who hold shares having a net asset value of at least $25,000 or 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.

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<PAGE>

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 all of the Victory
Portfolios voting without regard to series.

SHAREHOLDER AND TRUSTEE LIABILITY.

The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of personal liability
extended to shareholders of Delaware corporations and the Delaware Trust
Instrument provides that shareholders of the Victory Portfolios shall not be
liable for the obligations of the Victory Portfolios. The Delaware Trust
Instrument also 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 Delaware Trust Instrument 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 considered to be extremely
remote.

The Delaware Trust Instrument 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.

MISCELLANEOUS.

As used in the Prospectus and in this Statement of Additional Information,
"assets belonging to a fund" (or "assets belonging to the Fund") means the
consideration received by the Victory Portfolios upon the issuance or sale of
shares of a fund (or the 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 (or the Fund) that are allocated to
that fund (or the 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, which are allocated to each fund in accordance
with its proportionate share of the net asset values 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 and will be in accordance with generally
accepted accounting principles. Determinations by the Trustees 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 Fund means the

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<PAGE>

affirmative vote of the lesser of (a) 67% or more of the shares of the Fund
present at a meeting at which the holders of more than 50% of the outstanding
shares of the Fund are represented in person or by proxy, or (b) more than 50%
of the outstanding shares of the Fund.

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<PAGE>

APPENDIX

DESCRIPTION OF SECURITY RATINGS.

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 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.

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<PAGE>

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):

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 "[-]+."

IBCA's description of its three highest long-term debt ratings:

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<PAGE>

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:

- 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.