VICTORY PORTFOLIOS, 497, 1996-03-06

VICTORY PORTFOLIOS
497, 1996-03-06

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MANAGED BY KEYCORP Rule 497(c)
Registration No. 33-8982

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
"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 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.

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 19

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<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
nonbank 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.

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<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), whose reports thereon, together with the financial
statements of the Fund, are incorporated by reference into the Statement of
Additional Information, and 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 for each period indicated.

THE VICTORY FINANCIAL RESERVES FUND

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
1995(C) 1994(B) 1993(A)(B) 1992(A)(B) 1991(A)(B) 1990(B)(E) 1989(B)(E)
------- ------- ---------- ---------- ---------- ---------- ----------

<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------- --------
Income from Investment Activities
Net investment income 0.054 0.035 0.030 0.040 0.060 0.080 0.090
Distributions
Net investment income (0.054) (0.035) (0.030) (0.040) (0.060) (0.080) (0.090)
-------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ======== ========
Total Return 5.50% 3.57% 2.81% 3.76% 6.28% 8.12% 9.14%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $762,693 $433,266 $457,872 $523,889 $412,542 $432,905 $369,582
Ratio of expenses to average net assets 0.60% 0.57% 0.55% 0.55% 0.55% 0.55% 0.56%
Ratio of net investment income to
average net assets 5.40% 3.48% 2.78% 3.67% 6.12% 7.84% 8.77%
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%

</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 subsidiary 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.

(e) This information is not included in the financial statements audited by
Coopers & Lybrand L.L.P.

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
1988(B)(E) 1987(B)(E) 1986(B)(E)
---------- ---------- ----------

<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING PERIOD $ 1.000 $ 1.000 $ 1.000
-------- -------- --------
Income from Investment Activities
Net investment income 0.070 0.060 0.070
Distributions
Net investment income (0.070) (0.060) (0.070)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000
======== ======== ========
Total Return 7.13% 6.19% 6.87%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $409,440 $388,938 $231,823
Ratio of expenses to average net assets 0.54% 0.56% 0.57%
Ratio of net investment income to
average net assets 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>

(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.

(e) 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 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 will only purchase obligations that (a) are rated high quality by two
of the following four nationally recognized statistical rating organizations
("NRSROs"): 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; (b) are rated high
quality if rated by only one rating service; or (c) if unrated, are determined
to be of equivalent quality pursuant to procedures reviewed by the Board of
Trustees of the Victory Portfolios (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 and other short-term debt. 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. As required by
Rule 2a-7 under the Investment Company Act of 1940, as amended ("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 the highest category by an NRSRO 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, ie, those initially issued as longer-term debt,
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.

- 4 -

<PAGE>

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, the Trustees will monitor the quality of the
Fund's investments.

A $1.00 share price cannot be guaranteed, but the above practices help to
minimize any price fluctuations that might result from rising or declining
interest rates. 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.

O EURODOLLARS AND FOREIGN ISSUERS. 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 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.

- 5 -

<PAGE>

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. 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 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.

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<PAGE>

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.

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.

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,

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<PAGE>

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 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 generally credits such
investment on a monthly basis with guaranteed payment of interest. 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 net 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 of 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.

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.

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.

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1. 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.

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.

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,
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.)

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, except that the Fund may invest
more than 25% of its total assets in the securities of banks.

4. 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=% 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 limitations pertaining to illiquid securities and
compliance with Rule 2a-7. 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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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 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

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 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

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<PAGE>

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 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 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 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 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
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>

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 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.

(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").

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:

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<PAGE>

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.

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.

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.

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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 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.

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

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<PAGE>

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 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 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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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 Internal Revenue Service (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.

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.

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 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.

- 16 -

<PAGE>

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 IRS) by January 31 showing the amounts and
tax status of distributions made (or deemed made) during the preceding calendar
year.

O EXCHANGES OR REDEMPTIONS. 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.

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.

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.

- 17 -

<PAGE>

PERFORMANCE

From time to time, the Fund's "yield" and "effective yield" and "average annual
total return" 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. "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
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.

- 18 -

<PAGE>

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.

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 one-hundredths of one percent (.50%) 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 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 .44% 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 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.

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.

- 19 -

<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.

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.

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.

O DISTRIBUTION PLAN. The Victory Portfolio has adopted a Distribution and
Service Plan ("Plan") for the Fund under Rule 12b-1. No separate payments are
authorized to be made by the Fund under the Plan. Rather, the Plan recognizes
that the Adviser or the Distributor may use their fee revenues, or other
resources to pay expenses associated with activities primarily intended to
result in the sale of the shares of the Fund. The Plan also provides that the
Adviser or the Distributor may make payments from these sources to third
parties, including affiliates, such as banks or broker-dealers, that engage in
the sale of the shares of a Fund.

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, excluding certain voluntary
fee reductions or reimbursements.

- 20 -

<PAGE>

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 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 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

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.

MISCELLANEOUS

- 21 -

<PAGE>

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.

- 22 -

<PAGE>

BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
Permit 469

MANAGED BY KEYCORP

PR/FRP-305 3/96

- 23 -

<PAGE>

Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY FUND FOR INCOME

MARCH 1, 1996

<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"). As of the date of this prospectus, First Albany Asset Management
Corporation is the investment sub-adviser to the Fund (the "Sub-Adviser" or
"First Albany"). Effective May 1, 1996, First Albany will no longer serve as
Sub-Adviser and Key Advisers will assume all of the duties of 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 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 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.

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 8
Dividends, Distributions and Taxes 16
Performance 18
Fund Organization and Fees 18
Additional Information 21

- 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(2)(4)(5) 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 to the
extent necessary to maintain the total fund operating expense ratio of
the Fund at no more than 1.20% until at least May 2, 1996. Absent the
voluntary reduction of investment advisory fees, "Management Fees" as a
percentage of 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 3 YEARS 5 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 by Coopers & Lybrand
L.L.P., independent accountants for the Victory Portfolios (for fiscal year
ended October 31, 1995), and 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 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 information set
forth below is for a share outstanding for each period indicated.

THE VICTORY FUND FOR INCOME

PERIOD FROM
YEAR FEB. 1,
ENDED 1994 TO
OCT. 31, OCT. 31, YEAR ENDED JANUARY 31,
1995(D) 1994(C) 1994(C) 1993(C) 1992(C) 1991(C) 1990(C) 1989(C) 1988(C)(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) 0.39 0.86 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%)(a) 3.75% 8.45% 12.34% 12.75% 11.77% 7.58% --
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
(000) $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 assets(e) 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.

(d) Effective June 5, 1995, the Victory Fund for Income Portfolio was
reorganized as 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 OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its objective by investing primarily in selected
mortgage-related securities. The Fund generally invests at least 65% of its
total assets in mortgage-related securities that are rated AA or higher by a
nationally recognized statistical rating organization ("NRSRO") or in unrated
mortgages and mortgage-related securities which, in the opinion of Key Advisers
or 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 may be derived.

The mortgage-related securities in which the Fund may invest consist of
pass-throughs (such as 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, Key Advisers or the
Sub-Adviser may, at certain times, decrease the percentage of the Fund's assets
invested in these instruments.

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. 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.

Key Advisers or 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 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 or 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.

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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 semi-annual 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 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 semi-annually. 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

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<PAGE>

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. 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.

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<PAGE>

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.

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 delayed delivery transactions at prices inferior to then-current market
values. No when-issued or delayed delivery 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.

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 35.20% compared to 18.00% in the period from
February 1, 1994 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 Victory Portfolios'
Board of Trustees (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.

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<PAGE>

INVESTMENT LIMITATIONS

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 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.

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.

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

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<PAGE>

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.

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

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") which is normally 4:00 pm 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

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:

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

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 reserves the right to reallow the entire Commission. If that
occurs, the dealer may be considered an "underwriter" under Federal securities
law.

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.

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<PAGE>

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.

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 RIGHTS 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;

(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

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<PAGE>

(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 sections 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.

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<PAGE>

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 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").

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"). 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

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 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 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

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<PAGE>

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 which is 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 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

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<PAGE>

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 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.

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<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.

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

- 18 -

<PAGE>

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 IRS) by January 31 showing the amounts and tax
status of distributions made (or deemed made) during the preceding calendar
year.

O EXCHANGES OR REDEMPTIONS. 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.

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 and
yield may be presented in advertisements, sales literature and in reports to
shareholders. Such performance figures are based on historical earnings and are
not intended to indicate future performance. Average annual total return will be
calculated over a stated period 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.

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<PAGE>

Additional information regarding the performance of each of the Victory
Portfolios is included in the Victory Portfolios' annual and semiannual 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
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.

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 one-hundredths of one percent (.50%) 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 1, 1996, Society Asset 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 .35% of the average daily net assets of the Fund.

- 20 -

<PAGE>

investment sub-advisory agreement with First Albany Asset Management
Corporation. First Albany Asset Management Corporation, 41 State Street, Albany,
New York 12207, was incorporated on July 3, 1991, as a newly formed subsidiary
of First Albany Companies, Inc. It utilizes the expertise of an experienced
staff of research personnel employed by its affiliate, First Albany Corporation.

For its services under the investment sub-advisory agreement, Key Advisers pays
the Sub-Adviser a sub-advisory 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. At that time Key Advisers will assume all of the duties
of the Sub-Adviser described in this prospectus.

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

PORTFOLIO MANAGING
MANAGER FUND SINCE PREVIOUS EXPERIENCE

Robert T. Hennes, Jr. Since Inception, Executive Vice President, First
through April 30, Albany Asset Management Corporation
1996 since 1991; formerly Executive Vice
President and Director, Dollar Dry
Dock Bank.

Robert H. Fernald Effective Vice President and Portfolio
May 1, 1996 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, Fairfield
Research Corporation.

EFFECT OF BANKING LAWS

- 21 -

<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.

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.

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.

O DISTRIBUTION PLAN. The Victory Portfolios have adopted a Distribution and
Service Plan ("Plan") for the Fund under Rule 12b-1. No separate payments are
authorized to be made by the Fund under the Plan. Rather, the Plan recognizes
that the Adviser or the Distributor may use their fee revenues, or other
resources to pay expenses associated with activities primarily intended to
result in the sale of the shares of the Fund. The Plan also provides that the
Adviser or the Distributor may make payments from these sources to third
parties, including affiliates, such as banks or broker-dealers, that engage in
the sale of the shares of a Fund.

- 22 -

<PAGE>

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 Codes.
Violations of the Codes 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 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 have the power to incorporate the Victory Portfolios, to
merge or consolidate it with another entity,

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<PAGE>

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.

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<PAGE>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY GOVERNMENT BOND FUND

MARCH 1, 1996

<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 (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 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 will not exceed ten years.

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.

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 7
Dividends, Distributions and Taxes 17
Performance 19
Fund Organization and Fees 19
Additional Information 22

- 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) 0.28% 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%

(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 .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.")

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

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 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 accountants for the Victory Portfolios,
whose reports thereon, together with the financial statements of the Fund and
the Victory Government Bond Portfolio (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 of the Fund outstanding
for each period indicated.

THE VICTORY GOVERNMENT BOND FUND

CLASS B CLASS A
SIX MONTHS SEPTEMBER 26, SIX MONTHS
ENDED 1994 TO ENDED YEAR ENDED MAY 3, 1993
OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, TO APRIL 30,
1995(e) 1995(a)(d) 1995(e) 1995(d) 1994(a)(d)
------- ---------- ------- ------- ----------

NET ASSET VALUE, BEGINNING
<S> <C> <C> <C> <C> <C>
OF PERIOD $ 9.43 $ 9.25 $ 9.44 $ 9.45 $ 10.00
Investment Activities
Net investment income 0.25 0.31 0.33 0.55 0.45
Net realized and unrealized
gains (losses) from
investments 0.45 0.17 0.40 (0.02) (0.54)
Total from Investment
Activities 0.70 0.48 0.73 0.53 (0.09)
------ ------ ------- ------- --------
Distributions
Net investment income (0.22) (0.30) (0.29) (0.54) (0.45)
In excess of net investment
income (0.06) -- (0.01) -- --
Net realized gains -- -- -- -- (0.01)
Total Distributions (0.28) (0.30) (0.30) (0.54) (0.46)
NET ASSET VALUE, END OF PERIOD $ 9.85 $ 9.43 $ 9.87 $ 9.44 $ 9.45
Total Return (excludes sales
charges) 7.47%(b) 5.26%(b) 7.86%(b) 5.87% (1.06%)
------ ------ ------- ------- --------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 909 $ 155 $27,856 $84,567 $120,636
====== ====== ======= ======= ========
Ratio of expenses to average
net assets 1.82%(c) 1.43%(c) 0.92%(c) 0.63% 0.38%(c)
Ratio of net investment income
to average net assets 4.98%(c) 5.03%(c) 6.04%(c) 5.97% 4.61%(c)
Ratio of expenses to average
net assets(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.

(d) Audited by other auditors.

(e) Effective June 5, 1995, the Victory Government Bond Portfolio was
reorganized as the Victory 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.

- 4 -

<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
investment objective of the Fund is fundamental and therefore 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 investing in a portfolio of U.S. government
securities. As a fundamental policy, the Fund normally invests 100% of its total
assets in U.S. government securities such as U.S. Treasury bonds, notes and
bills and mortgage-backed securities issued by the Government National Mortgage
Association ("GNMA"), and in repurchase agreements secured by those securities
in such a manner that the Fund's dollar-weighted average maturity does not
exceed ten years. However, the Fund normally holds some U.S. government
securities with remaining maturities of 18 months or less. 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,
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.

- 5 -

<PAGE>

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 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.

- 6 -

<PAGE>

may be subject to greater fluctuations in value due to changes in interest rates
than interest-paying U.S. Treasury obligations.

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.

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.

O INVESTMENT COMPANY SECURITIES. The Fund may invest up to 5% of its total
assets in the securities of any one investment company that follows the Fund's
investment policy, 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 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.

- 7 -

<PAGE>

INVESTMENT LIMITATIONS

1. The Fund may not 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).

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 33=% 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 extent necessary to comply with the 33=% 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.

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.

- 8 -

<PAGE>

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 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 INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. 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 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.

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

- 9 -

<PAGE>

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

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.

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") which is 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 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 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:

- 10 -

<PAGE>

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.

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.

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.

- 11 -

<PAGE>

O RIGHTS 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).

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 Portfolio 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;

(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 sections 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

- 12 -

<PAGE>

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)

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.

- 13 -

<PAGE>

commission paid 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 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, 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>

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.

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 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.

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<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.

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:

BY MAIL. Send a written request to:

The Victory Government 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
instruction with a signature guarantee to the Transfer Agent, Primary Funds
Service Corporation, P.O. Box 9741, Providence, RI 02940-9741.

- 16 -

<PAGE>

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

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, which is 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 based primarily upon
information concerning market transactions and dealers quotations for comparable
securities.

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.

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<PAGE>

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 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.

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.

- 18 -

<PAGE>

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 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.

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>

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.

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.

- 20 -

<PAGE>

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.

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.

Additional information regarding the performance of each fund 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

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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 fifty-five one hundredths of one percent (.55%) 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 .42% 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:
.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 FUND
PORTFOLIO MANAGER SINCE PREVIOUS 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.

- 22 -
<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.

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,

- 23 -

<PAGE>

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

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, 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 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.

- 24 -

<PAGE>

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 have the flexibility to respond to future business contingencies. For
example, the Trustees 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.

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.

- 25 -
<PAGE>

- 26 -

<PAGE>

MANAGED BY KEYCORP

PR/GBF-165 3/96

- 27 -

<PAGE>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY GOVERNMENT MORTGAGE FUND

MARCH 1, 1996

<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.

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 8
Dividends, Distributions and Taxes 15
Performance 17
Fund Organization and Fees 18
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) 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%
====

(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.

- 2 -

<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 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 share of the Fund outstanding for each period indicated.

THE VICTORY GOVERNMENT MORTGAGE FUND

MAY 18,
1990 TO
YEAR ENDED OCTOBER 31, OCT. 31,
1995 1994 1993 1992 1991 1990(a)(e)

NET ASSET VALUE, BEGINNING
<S> <C> <C> <C> <C> <C> <C>
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) 0.98 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 (Excludes Sales Charge) 13.55% (3.01%) 9.05% 10.34% 13.77% 5.37%(c)
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%(b)
Ratio of net investment income to
average net assets 6.81% 6.38% 5.92% 6.82% 7.68% 7.98%(b)
Ratio of expenses to average net
assets(d) 0.79% 0.96% 0.76%
Ratio of net investment income to
average net assets(d) 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.

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

(e) This information is not included in the financial statements audited by
Coopers & Lybrand L.L.P.

- 3 -

<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 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 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

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

- 4 -

<PAGE>

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 guarantors (i.e., not backed by the full faith and credit of
the U.S. Government) 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 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 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.

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

- 5 -

<PAGE>

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 FUTURES CONTRACTS. The Fund may enter into contracts for the future delivery
of securities and futures contracts based on a specific security, class of
securities 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.

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.

- 6 -

<PAGE>

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, 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 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.

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 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.

- 7 -

<PAGE>

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

- 8 -

<PAGE>

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

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") which is normally 4:00 p.m. Eastern time (the "Valuation Time") on each
Business Day (as defined in "Shareholder Account Rules and Polices -- 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 Tranfer
Agent in a timely fashion in order for you to receive that day's share price.

INVESTMENT REQUIREMENTS

- 9 -

<PAGE>

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

- 10 -

<PAGE>

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).

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;

(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

- 11 -

<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.

- 12 -

<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 two 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 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.

- 13 -

<PAGE>

HOW TO REDEEM

You may redeem shares in several ways:

O BY MAIL. Send a written request to: The Victory Government Mortgage 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 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.

- 14 -

<PAGE>

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
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 which is 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 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.

- 15 -

<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 also 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. Reinvested dividend distributions receive the same tax
treatment as dividend distributions 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.

- 16 -

<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.

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

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.

- 17 -

<PAGE>

EXCHANGES OR REDEMPTIONS. 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.

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 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

- 18 -

<PAGE>

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.

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 one hundredths of one percent (.50%) 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 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 subadvisory 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.

- 19 -

<PAGE>

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

PORTFOLIO MANAGING
MANAGER FUND SINCE PREVIOUS 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.

TRANSFER AGENT

- 20 -
KL2:130846.1

<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.

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

- 21 -

<PAGE>

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

MISCELLANEOUS

- 22 -

<PAGE>

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.

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.

- 23 -

<PAGE>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY GROWTH FUND

MARCH 1, 1996

<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.

TABLE OF CONTENTS PAGE

- 1 -

<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 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.

- 2 -

<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 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 share of the Fund outstanding for each period indicated.

THE VICTORY GROWTH FUND
<TABLE>
<CAPTION>

FISCAL DECEMBER 3,
YEAR ENDED 1993 TO
OCTOBER 31, OCTOBER 31,
1995(D) 1994(A)
------- -------
<S> <C> <C>
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 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)
--------
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%
</TABLE>

(a) Period from commencement of operations.

(b) Not 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.

- 3 -

<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 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.

The Fund may also 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. However, the Fund
will limit such investments to 20% of its respective total assets.

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 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
SubAdviser 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 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

- 4 -

<PAGE>

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 SubAdviser 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.

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 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

- 5 -

<PAGE>

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 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% 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."

- 6 -

<PAGE>

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.

- 7 -

<PAGE>

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 107.13% compared to 28.09% 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 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.

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<PAGE>

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

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<PAGE>

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") which is 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

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<PAGE>

DEALER
CLASS A SALES CHARGE REALLOWANCE
AS A % OF AS A % OF AS A %
OFFERING NET AMOUNT OF OFFERING
AMOUNT OF PURCHASE PRICE INVESTED 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%
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. 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 RIGHTS 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).

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;

SPECIAL INVESTOR SERVICES

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<PAGE>

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.

HOW TO EXCHANGE

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<PAGE>

(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. 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. 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.

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".)

There are certain exchange policies you should be aware of:

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.

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<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. 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.

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>

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>

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

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:

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.

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 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 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.

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<PAGE>

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 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.

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

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 fund of the Victory
Portfolios is included in the Victory Portfolios' annual and semiannual reports,
which are available free of charge by calling 800-539-3863.

FUND ORGANIZATION AND FEES

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 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 subadvisory 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.

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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
MANAGER FUND SINCE PREVIOUS 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.

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.

TRANSFER AGENT

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<PAGE>

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.

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: .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.

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

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<PAGE>

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 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

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.

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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
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.

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<PAGE>
MANAGED BY KEYCORP Rule 497(c)
Registration No. 33-8982

THE VICTORY INSTITUTIONAL MONEY MARKET FUND

MARCH 1, 1996

<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.

- 2 -

<PAGE>

TABLE OF CONTENTS PAGE

- 3 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

INVESTOR SELECT
SHARES SHARES

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

INVESTOR SELECT
SHARES* SHARES**

Management Fees(2) .10% .10%
Administration Fee(2) .06% .06%
Other Expenses .11% .36%(3)
----- -----
Total Fund Operating Expenses(4) .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 average 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 Operating 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

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

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<PAGE>

REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.

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. for the fiscal period ended October 31, 1995 and by KPMG Peat Marwick LLP
independent accountants, 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 Investor Shares only. The information
set forth below is for a share of the Fund outstanding throughout each period
indicated.

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THE VICTORY INSTITUTIONAL MONEY MARKET FUND

SELECT INVESTOR
SHARES SHARES
JUNE 5, 1995 SIX MONTHS
TO 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(D)
---------- ------- ------- ------- ------- ------- ------- -------
<S> <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
------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Activities
Net nvestment income 0.012 0.290 0.500 0.028 0.032 0.051 0.076 0.087
Distributions
Net investment income (0.012) (0.290) (0.500) (0.028) (0.032) (0.051) (0.076) (0.087)
------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END
OF PERIOD $ 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%
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
Ratio of expenses to
average net assets 0.51%(c) 0.26%(c) 0.27% 0.55% 0.43% 0.30% 0.30% .30%
Ratio of net investment
income to average
net assets 5.33%(c) 5.69%(c) 4.91% 2.78% 3.19% 5.06% 7.46% 8.63%
Ratio of expenses to
average net assets(g) 1.00%(c) 0.49%(c) 0.51% 0.55% 0.48% 0.42% 0.44% 0.43%
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%

</TABLE>

NET ASSET VALUE, BEGINNING 1989(D) 1988(D) 1987(D) 1986(D)
OF PERIOD ------- ------- ------- -------

Income from Investment
Activities $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net nvestment income ------- ------- ------- -------
Distributions
Net investment income
0.082 0.068 0.061 0.075
NET ASSET VALUE, END
OF PERIOD (0.082) (0.068)(f) (0.061)(f) (0.075)
------- ------- ------- -------
Total Return
RATIOS/SUPPLEMENTAL DATA: $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Assets, End of ======= ======= ======= =======
Period (000) 8.46% 6.98% 6.21% 7.72%
Ratio of expenses to
average net assets
Ratio of net investment $133,492 $172,151 $106,961 $56,260
income to average
net assets .29% .25% .24% .39%
Ratio of expenses to
average net assets(g)
Ratio of net investment 8.21% 6.94%(f) 6.02%(f) 7.58%(f)
income to average
net assets(g) 0.36% 0.25% 0.24% 0.39%

(a) Period from commencement of operations.

(b) Not 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 investment income, net realized gain/(loss) on investments and
unrealized appreciation (depreciation) of investments. Subsequently,
distributions have been declared solely from net investment 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.

- 6 -
<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 U.S. dollar-denominated money-market instruments. 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 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 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 (a) are
rated high quality by at least two nationally recognized statistical rating
organizations ("NRSRO"); (b) are rated high quality if rated by only one rating
service; or (c) if unrated, are determined to be of equivalent quality pursuant
to procedures reviewed by the Board of Trustees of the Victory Portfolios (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 and other short-term debt. The two highest
rating categories for such instruments 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. As required by Rule 2a-7 under the Investment Company Act of 1940,
as amended ("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 the highest category
by an NRSRO if two other NRSROs 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.

For other corporate obligations, i.e., those initially issued as longer-term
debt, 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.

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

- 7 -

<PAGE>

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. The
Trustees will monitor the quality of the Fund's investments.

A stable $1.00 share price cannot be guaranteed, but the above practices help to
minimize any price fluctuations that might result from rising or declining
interest rates. 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

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.

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 EURODOLLARS. 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.

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.

- 8 -

<PAGE>

- 9 -

<PAGE>

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 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.

- 10 -

<PAGE>

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 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 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=% 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. 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

- 11 -

<PAGE>

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.

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 under the 1940 Act, 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, 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.)

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.

O 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") 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

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<PAGE>

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.

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
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 SubAdviser 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 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") 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.

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<PAGE>

INVESTMENT REQUIREMENTS

O DISTRIBUTION PLAN. The Victory Portfolio has adopted a Distribution and
Service Plan ("Plan") for the Fund under Rule 12b-1 under the 1940 Act. No
separate payments are authorized to be made by the Fund under the Plan. Rather,
the Plan recognizes that the Adviser or the Distributor may use their fee
revenues, or other resources to pay expenses associated with activities
primarily intended to result in the sale of the shares of the Fund. The Plan
also provides that the Adviser or the Distributor may make payments from these
sources to third parties, including affiliates, such as banks or broker-dealers,
that engage in the sale of the shares of a Fund.

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 $1,000,000, 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 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.

- 14 -

<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 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:

- 15 -

<PAGE>

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.

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

- 16 -

<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 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 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 for each class of its shares, there can be no
assurance that it will be able to do so.

- 17 -

<PAGE>

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 $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:

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.

- 18 -

<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

- 19 -

<PAGE>

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 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.

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.

- 20 -

<PAGE>

PERFORMANCE

From time to time, the Fund's "yield," "effective yield" and "average annual
total return" 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. 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

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.

- 21 -

<PAGE>

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 twenty-five one-hundredths of one percent (.25%) of the Fund's
average daily net assets. 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 .12% of the Fund's average daily net assets.

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

- 22 -

<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.

TRANSFER AGENT

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.

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.

- 23 -

<PAGE>

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 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.

DELAWARE LAW

- 24 -

<PAGE>

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.

- 25 -

<PAGE>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY INTERMEDIATE INCOME FUND

MARCH 1, 1996

<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
"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 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.

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 10
Dividends, Distributions and Taxes 18
Performance 20
Fund Organization and Fees 20
Additional Information 23

- 1 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSE(1)

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%
====

(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 Fund
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
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.

- 2 -

<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 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 share of the Fund outstanding for each period indicated.

THE VICTORY INTERMEDIATE INCOME FUND

<TABLE>
<CAPTION>
DECEMBER 10,
YEAR ENDED 1993 TO
OCTOBER 31, OCTOBER 31,
1995 1994(A)
---- -------
<S> <C> <C>
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
RATIOS/SUPPLEMENTAL DATA:
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%
</TABLE>

(a) Period from commencement of operations.

(b) Not 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.

- 3 -

<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 pursues its objective by investing primarily in debt securities issued
by corporations and the U.S. Government and its agencies and 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 may 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 Sub-Adviser,
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

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.

- 4 -

<PAGE>

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.

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 create 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 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 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.

- 5 -

<PAGE>

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 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 collateralized mortgage
obligations ("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" 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 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 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.

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<PAGE>

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 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.

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 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

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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
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 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.

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<PAGE>

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 Commerical 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 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

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<PAGE>

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.

The investment limitations set forth above in this subsection are fundamental,
except that the 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 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

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<PAGE>

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

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") which is 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

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

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 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;

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<PAGE>

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 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 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
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>

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.

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 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

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<PAGE>

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 shares in several ways:

O BY MAIL. Send a written request to: The Victory Intermediate 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 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>

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, which is 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 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>

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 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.

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.

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 Internal Revenue Service ("IRS").
At least twice a year, you will receive the Fund's financial reports.

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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 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.

Distributions by the Fund of its net investment income and the excess, if any,
of its net short-term capital gain over its 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.

- 20 -

<PAGE>

Because a shareholders'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

Yield will be computed by dividing the Fund's net investment 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

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

- 21 -

<PAGE>

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 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 1, 1996, Society Asset 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 .51% 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:

PORTFOLIO MANAGING
MANAGER FUND SINCE PREVIOUS EXPERIENCE

David M. Baccile March 1996 Portfolio Manager, Society Asset Management,
Inc., beginning in 1994; Credit Analyst and
Fixed Income Trader for KeyCorp since 1990.

EFFECT OF BANKING LAWS

- 22 -

<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.

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.

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.

- 23 -

<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, 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 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

- 24 -

<PAGE>

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.

MISCELLANEOUS

- 25 -

<PAGE>
MANAGED BY KEYCORP Rule 497(c)
Registration No. 33-8982

THE VICTORY INVESTMENT QUALITY BOND FUND

MARCH 1, 1996

<PAGE>

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.

TABLE OF CONTENTS PAGE

- 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%
====

(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.

- 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 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 share of the Fund outstanding for each period indicated.

THE VICTORY INVESTMENT QUALITY BOND FUND

<TABLE>
<CAPTION>
DECEMBER 10,
YEAR ENDED 1993 TO
OCTOBER 31, OCTOBER 31,
1995 1994(A)
---- -------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.10 $ 10.00
-------- -------
Income from 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 0.88% 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%

</TABLE>

(a) Period from commencement of operations.

(b) Not 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.

- 4 -

<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 the outstanding voting securities (as defined in the Statement of
Additional Information). There can be no assurance 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 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 may 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 an 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.

- 5 -

<PAGE>

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, 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 are
instruments of U.S. 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 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
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.

- 6 -

<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, 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.

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

- 7 -

<PAGE>

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.

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 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.

- 8 -

<PAGE>

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 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 33 1/3% 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

- 9 -

<PAGE>

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 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 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.

Certain investment management techniques which the Fund may use may expose the
Fund to special risks. The products utilized in this technique 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.

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INVESTMENT LIMITATIONS

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

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<PAGE>

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.

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

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

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") which is 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

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<PAGE>

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

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

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
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):

(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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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, 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>

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 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. 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. 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 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

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<PAGE>

"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 -- 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.

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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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 which is 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 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>

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 National Association of Securities Dealers, Inc. None
of the aforementioned compensation is paid for by the Fund or its shareholders.

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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.

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>

tax year and also will be filed with the Internal Revenue Service (the "IRS").
At least twice a year, you will receive the Fund's financial reports.

O EXCHANGES OR REDEMPTIONS. 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

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.

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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

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.

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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 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 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 .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 fees 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
MANAGER FUND SINCE PREVIOUS 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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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

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.

- 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 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.

- 25 -

<PAGE>

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

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

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.

- 26 -

<PAGE>

- 27 -

<PAGE>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY LIMITED TERM INCOME FUND

MARCH 1, 1996

<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
"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 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.

TABLE OF CONTENTS PAGE

- 2 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSE(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%
====

(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 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 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 share of the Fund outstanding for each period indicated.

THE VICTORY LIMITED TERM INCOME FUND

<TABLE>
<CAPTION>
OCTOBER 20,
1989 TO
YEARS ENDED OCTOBER 31, OCTOBER 31,
1995(D) 1994 1993 1992 1991 1990 1989(A)
------- ---- ---- ---- ---- ---- -------

<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING 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)
In excess of 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%(c)
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(e) 0.79% 0.97% 0.78%
Ratio of net investment income to
average net assets(e) 5.76% 5.10% 5.48%
Portfolio turnover 97.25% 41.26% 50.27% 14.97% 9.79%

</TABLE>
(a) Period from commencement of operations.

(b) Annualized.

(d) 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.

(e) During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.

- 4 -

<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 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 will invest in high grade, fixed income securities with a
dollar-weighted average maturity of one to five years, based upon remaining
maturities.

Under normal market conditions, the Fund will 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 high-grade debt securities; i.e., those 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

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

- 5 -

<PAGE>

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 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.

- 6 -

<PAGE>

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.

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 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.

- 7 -

<PAGE>

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 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 net assets will be invested in illiquid securities.

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

- 8 -

<PAGE>

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. "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 Sub-Adviser
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."

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 REPURCHASE AGREEMENTS. Under the terms of a repurchase agreement, the Fund
acquires securities from financial institutions or registered broker-dealers,
subject to the

- 9 -

<PAGE>

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 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.

Certain investment management techniques which the Fund may use may expose the
Fund to special risks. The products utilized in these techniques 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

- 10 -

<PAGE>

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.

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

- 11 -

<PAGE>

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 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
redemptions should also be coordinated through your bank trust department.
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.

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

- 12 -

<PAGE>

"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

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

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% 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.

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

- 13 -

<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;

- 14 -

<PAGE>

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, 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.

- 15 -

<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 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.

- 16 -

<PAGE>

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"). 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 institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.

- 17 -

<PAGE>

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.

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 which is 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 Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for

- 18 -

<PAGE>

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 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 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.

- 19 -

<PAGE>

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.

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.

- 20 -

<PAGE>

tax year and also will be filed with the Internal Revenue Service (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.

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 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.

- 21 -

<PAGE>

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

FUND ORGANIZATION AND FEES

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

- 22 -

<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 fifty one-hundredths of one-percent (.50%) 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 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 SubAdviser,
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
MANAGER FUND SINCE PREVIOUS EXPERIENCE

Robert H. Fernald January, 1995 Vice President and Portfolio Manager for
Society Asset Management, Inc., beginning
in 1993; Portfolio Manager, Society
National Bank since 1992; Portfolio Manager
for Ameritrust Company National Association
from 1991-1992; formerly Vice President,
Fairfield Research Corporation.
EFFECT OF BANKING LAWS

- 23 -

<PAGE>

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.

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.

- 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.

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.

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

- 25 -

<PAGE>

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 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>

- 27 -

Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY NATIONAL MUNICIPAL BOND FUND

MARCH 1, 1996

<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.

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 8
Dividends, Distributions and Taxes 17
Performance 19
Fund Organization and Fees 20
Additional Information 23

- 1 -

<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).
<TABLE>
<CAPTION>

CLASS A CLASS B
<S> <C> <C>
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
</TABLE>

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(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:

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.

- 2 -

<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 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 information set forth below is for a share of the Fund outstanding for each
period indicated.

THE VICTORY NATIONAL MUNICIPAL BOND FUND
<TABLE>
<CAPTION>

CLASS B CLASS A
SIX MONTHS SEPT. 26, SIX MONTHS FEB. 3,
ENDED 1994 TO ENDED YEAR ENDED 1994 TO
OCT. 31, APRIL 30, OCT. 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
------ ------ ------- ------ ------
Income From 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.

(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.

- 3 -

<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
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

- 4 -

<PAGE>

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
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

- 5 -

<PAGE>

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.

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 periodically.
The amount of price fluctuation tends to increase as maturity of the securities
increases.

- 6 -

<PAGE>

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.

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

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=% 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.

- 7 -

<PAGE>

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 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

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 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:

- 8 -

<PAGE>

O INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. 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 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
redemptions should also be coordinated through your bank trust department.
Contact your bank trust department for instructions.

INVESTING DIRECTLY

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.

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 National Municipal Bond Fund

- 9 -

<PAGE>

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"), which is 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

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

- 10 -

<PAGE>

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 RIGHTS 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):

(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

- 11 -

<PAGE>

(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;

(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."

DISTRIBUTION PLAN FOR CLASS A SHARES. The Victory Portfolios, on behalf of the
Class A shares of the Fund, has adopted a Distribution and Service Plan ("Plan")
for the Fund under Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). No separate payments are authorized to be made by the Fund under
the Plan. Rather, the Plan recognizes that the Adviser or the Distributor may
use their fee revenues, or other resources to pay expenses associated with
activities primarily intended to result in the sale of the shares of the Fund.
The Plan also provides that the Adviser or the Distributor may make payments
from these sources to third parties, including affiliates, such as banks or
broker-dealers, that engage in the sale of the shares of a Fund.

- 12 -

<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, 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 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

- 13 -

<PAGE>

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 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.

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.

- 14 -

<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.

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 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.

- 15 -

<PAGE>

HOW TO REDEEM

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 the 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.

- 16 -

<PAGE>

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.

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.

- 17 -

<PAGE>

securities from the Fund. Please refer to the Statement of Additional
Information for more details.

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 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 the record date, and have your income dividends
paid in cash.

- 18 -

<PAGE>

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 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.

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.

- 19 -

<PAGE>

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.

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.

O 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.

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.

- 20 -

<PAGE>

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.

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

- 21 -

<PAGE>

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 1, 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.

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 SubAdviser,
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
MANAGER FUND SINCE PREVIOUS 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 Merritt, 1990-1991

EFFECT OF BANKING LAWS

- 22 -

<PAGE>

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.

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.

- 23 -

<PAGE>

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 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 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.

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<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 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.

- 25 -

<PAGE>

- 26 -

<PAGE>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY NEW YORK TAX-FREE 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. Under normal market conditions, the Fund will invest
at least 80% of its portfolio in securities, the interest on which is exempt
from federal income tax, and at least 65% of its 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.

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.

- 2 -
<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 19
Performance 21
Fund Organization and Fees 22
Additional Information 25

- 3 -

<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 (2)(4) .95% 1.75%
==== ====

(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").

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.

- 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"), and has been audited by Coopers &
Lybrand, L.L.P. only for the fiscal year 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 incorporated 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 SEPT. 25, YEAR JAN. 1, YEAR YEAR FEB. 11,
ENDED 1994 TO ENDED 1994 TO ENDED ENDED 1991 TO
OCT. 31, OCT. 31, OCT. 31, OCT. 31, DEC. 31, DEC. 31, DEC. 31,
1995(E) 1994(D) 1995(E) 1994(D) 1993(D) 1992(D) 1991(A)(D)
------- ------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.39 $ 12.62 $ 12.39 $ 13.54 $ 12.76 $ 12.50 $ 12.00
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(g) 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(g) 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.

(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.

(g) During the period, certain fees were voluntarily reduced. If such 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 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 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

Under normal market conditions, the Fund will invest at least 80% (and generally
all) of its portfolio in securities, the interest on which is exempt from
federal income tax, 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 municipal
securities and insured municipal securities. The Fund expects that these
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 may not invest more than 20% of its
assets in securities, the interest on which constitutes a tax preference item,
and consequently, may be subject to the federal alternative minimum tax on
individuals. However, during normal market conditions and during periods when
there is an adequate supply of other types of municipal securities in which the
Fund may invest, the Fund intends to invest substantially all of its assets in
securities, the interest on which does not constitute a tax preference item.

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.

Insured Municipal 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 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

- 6 -

<PAGE>

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 "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"

- 7 -

<PAGE>

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 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.

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

- 8 -

<PAGE>

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.

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 ZERO COUPON BONDS. The Fund is permitted to purchase both zero coupon U.S.
government securities, municipal bond 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

- 9 -

<PAGE>

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 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

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.
Since more than 5% of its assets may be invested in the securities of a single
issuer, and since 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.

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 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

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<PAGE>

$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 BBBi 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. 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=% 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.

Each of the investment limitations indicated above in this subsection is
non-fundamental, except for the limitation pertaining to borrowing money.
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

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<PAGE>

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

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 INVESTING THROUGH YOUR INVESTMENT PROFESSIONAL. 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 through your Investment Professional. Subsequent investments by
telephone may

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<PAGE>

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
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.

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

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") which is 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.

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<PAGE>

INVESTMENT REQUIREMENTS

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

"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:

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<PAGE>

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).

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>

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-, 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

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<PAGE>

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.

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. 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 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.

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<PAGE>

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.

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>

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 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.

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 New York Tax-Free Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

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<PAGE>

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.

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 which is
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 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 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. 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 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

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<PAGE>

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 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 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>

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 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

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.

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 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.

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<PAGE>

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. Exempt-interest 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

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.

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 taxable-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

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<PAGE>

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.

FUND ORGANIZATION AND FEES

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 (0.55%) 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 1, 1996, Society Asset 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 0.28% 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

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<PAGE>

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:
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
MANAGER FUND SINCE PREVIOUS EXPERIENCE

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>

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.

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, excluding certain voluntary fee reductions or
reimbursements.

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<PAGE>

ADDITIONAL INFORMATION

The 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

MISCELLANEOUS

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<PAGE>

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>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY OHIO MUNICIPAL BOND FUND

MARCH 1, 1996

<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 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 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.

TABLE OF CONTENTS PAGE

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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) .46%
Administration Fees .15%
Other Expenses (3) .29%
----
Total Fund Operating Expenses (2) (3) .90%
====

(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.

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<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 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 share of the Fund outstanding for each period indicated.

THE VICTORY OHIO MUNICIPAL BOND FUND

<TABLE>
<CAPTION>
MAY 18,
1990 TO
YEARS ENDED OCTOBER 31, OCTOBER 31,
-----------------------
1995 1994 1993 1992 1991 1990(A)(E)
---- ---- ---- ---- ---- ----------

<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 10.33 $ 11.52 $ 10.52 $ 10.37 $ 10.06 $10.00
------- ------- ------- ------- ------- ------
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%(c)
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(d) 0.94% 1.09% 0.86% 0.84% 1.17%(b)
Ratio of net investment
income to average net
assets(d) 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.

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

(e) This information is not included in the financial statements audited by
Coopers & Lybrand L.L.P.

- 3 -

<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 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 tax 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 a 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
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.

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

- 4 -

<PAGE>

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 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 below 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.

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.

- 5 -

<PAGE>

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.

- 6 -

<PAGE>

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.

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.

- 7 -

<PAGE>

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. "Investment grade" obligations 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. 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."

- 8 -

<PAGE>

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 124.79% compared to 52.59% in the prior fiscal year.

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 Sub-Adviser
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

- 9 -

<PAGE>

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.

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=% 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. 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.

- 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 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
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 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
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.

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.

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

- 11 -

<PAGE>

(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 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") which is 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

DEALER
CLASS A SALES CHARGE REALLOWANCE
AS A % OF AS A % OF AS A %
OFFERING NET AMOUNT OF OFFERING
AMOUNT OF PURCHASE PRICE INVESTED 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
ongoing sales support

- 12 -

<PAGE>

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 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):

- 13 -

<PAGE>

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

(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.

- 14 -

<PAGE>

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.

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.

- 15 -

<PAGE>

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.

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 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 shares in several ways:

O BY MAIL. Send a written request to: The Victory Ohio Municipal Bond Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

- 16 -

<PAGE>

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.

SHAREHOLDER ACCOUNT RULES AND POLICIES

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 Trustees believe
accurately reflects fair value. Fair value of these portfolio securities is
determined by an

- 17 -

<PAGE>

independent pricing service 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.

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.

- 18 -

<PAGE>

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.

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.

- 19 -

<PAGE>

tax year and also will be filed with the Internal Revenue Service (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.

FEDERAL TAXES

O EXCHANGES OR REDEMPTIONS. 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

- 20 -

<PAGE>

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 any state or local
taxing authority. However, if at all times at least fifty percent of the value
of the total assets of the Fund consists of obligations issued by or on behalf
of the State of Ohio, its political subdivisions thereof or agencies or
instrumentalities of the State or its political subdivisions ("Ohio
Obligations"), or similar obligations of other states or their subdivisions, (a)
dividends paid by the Fund that are properly attributable to interest on Ohio
Obligations or on obligations issued by the governments of Puerto Rico, the
Virgin Islands or Guam will be exempt from Ohio personal income tax, and
municipal and school district income taxes in Ohio, and will be excluded from
net income for purposes of the Ohio corporation franchise tax, and (b)
distributions of "capital gain dividends," as defined in the IRS Code, that are
properly attributable to the Fund's sale or other disposition of Ohio
Obligations will be exempt from Ohio personal income tax, and municipal and
school district income taxes in Ohio, and will be excluded from net income for
purposes of the Ohio corporation franchise tax. However, other distributions
from the Fund will generally not be exempt from Ohio personal income tax,
municipal tax (where applicable to intangible income) or school district income
taxes in Ohio, and shares of the Fund will not be excluded from net worth for
purposes of the Ohio corporation franchise tax. Income from the Fund is not
necessarily exempt from regular state income taxes in states other than Ohio or
from personal property taxes. 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. 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 determine their tax.

PERFORMANCE

From time to time, performance information for the Fund showing total return
and/or yield may be presented in advertisements, sales literature and in reports
to shareholders. Such performance figures are based on historical earnings and
are not intended to indicate future performance. Average annual total return
will be calculated over a stated period 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.

The Fund may also quote taxable-equivalent yields, which show the taxable yields
an investor would have to earn, before taxes, to equal to tax-free yields for a
class of shares of the Fund. A taxable-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

- 21 -

<PAGE>

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.

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
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 1, 1996,
Society Asset Management, Inc. served as investment adviser to the Fund. During
the Fund's fiscal

- 22 -

<PAGE>

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
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:

PORTFOLIO MANAGING
MANAGER FUND SINCE PREVIOUS 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 Merritt, 1990-1991.

EFFECT OF BANKING LAWS

- 23 -

<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.

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.

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.

- 24 -

<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 .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 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
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.

DELAWARE LAW

- 25 -

<PAGE>

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.

- 26 -

<PAGE>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

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:

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.

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 8
Dividends, Distributions and Taxes 14
Performance 16
Fund Organization and Fees 16
Additional Information 19

- 1 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

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

Management Fees .35%
Administration Fees .15%
Other Expenses(2) .40%
---
Total Fund Operating Expenses(2) .90%
===

(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.

- 2 -

<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 by Coopers & Lybrand
L.L.P., independent 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
<TABLE>
<CAPTION>

YEAR ENDED OCTOBER 31,
1995 1994 1993 1992 1991 1990(B) 1989(B)
---- ---- ---- ---- ---- ------- -------

<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from 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 0.032 0.030 0.037 0.061 0.078 0.087
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.

(b) This information is not included in the financial statements audited by
Coopers & Lybrand L.L.P.

- 3 -

<PAGE>

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 the 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 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
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.

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.

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<PAGE>

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.

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>

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
fluctuation tends to increase as maturity of the security increases.

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<PAGE>

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 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 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

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<PAGE>

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.

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 under the 1940 Act, 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, 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.

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

INVESTING DIRECTLY

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

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<PAGE>

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 Prime Obligations 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 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 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

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<PAGE>

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.

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 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.

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

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<PAGE>

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").

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 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
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

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<PAGE>

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
("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. 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 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.

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<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 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

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<PAGE>

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:

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.

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>

O 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. 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.

REDEMPTIONS OR EXCHANGES

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

From time to time, the Fund's "yield", "effective yield", and "average annual
total return" 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. 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.

Additional information regarding the performance of each fund 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

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>

large corporate and public retirement plans, Taft-Hartley plans, foundations and
endowments, high net worth individuals and mutual funds.

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 thirty-five one-hundredths of one percent (.35%) 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 1, 1996, Society Asset 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 .35% 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 subadvisory 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:
.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.

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 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.

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.

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>

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'
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

Delaware law authorizes electronic or telephone communications between
shareholders and the Victory Portfolios. Under Delaware law, the Victory
Portfolios will have the

- 20 -

<PAGE>

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 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.

- 21 -

<PAGE>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

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.

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 17
Performance 19
Fund Organization and Fees 19
Additional Information 22

- 1 -

<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) .38%
----
Total Fund Operating Expenses(2) 1.53%
====

(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.

- 2 -

<PAGE>

FINANCIAL HIGHLIGHTS

The table below sets forth certain financial information with respect to the
financial highlights for the Fund and for the Victory Aggressive Growth
Portfolio which merged into the Fund on June 5, 1995 and was deemed to be 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 reports thereon, together with the financial statements of the
Fund and 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
<TABLE>
<CAPTION>

JAN. 11,
SIX MONTHS 1994 TO
ENDED YEAR ENDED APRIL 30,
OCTOBER 31, APRIL 30, 1994
1995 1995(D)(E) (A)(D)(E)
---- ---------- ---------

<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.54 $ 9.82 $ 10.00
-------- -------- --------
Income from Investment Activities
Net investment income (loss) 0.02 (0.01)
Net realized and unrealized gains
(losses) on investments 1.27 0.72 (0.17)
-------- -------- --------
Total from Investment Activities 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 Period (000) $ 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%)(c)
Portfolio turnover 54.37% 102.00% 61.00%
</TABLE>

(a) Period from commencement of operations.

(b) Not 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.

- 3 -

<PAGE>

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.

INVESTMENT POLICIES AND RISK FACTORS

SUMMARY OF PRINCIPAL INVESTMENT POLICIES

The Fund pursues its 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 determines that adverse market conditions exist,
including any period during which it is believed 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 investment grade debt securities, i.e., those that are
rated at the time of purchase within the four highest rating categories assigned
by a nationally recognized statistical ratings organization ("NRSRO") 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.

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 investment when you redeem your shares.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

- 4 -

<PAGE>

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 that 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, or "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 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 "Repurchase Agreements". "Investment
grade" obligations are those rated at the time of purchase within the four
highest rating categories assigned by an 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.

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 and the SubAdviser will take such factors into consideration in
managing the Fund's investments.

O OPTIONS. The Fund may invest in certain types of derivative securities, which
are securities whose values are based on other securities. For example, 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

- 5 -

<PAGE>

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.

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

- 6 -

<PAGE>

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 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 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 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>

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."

- 8 -

<PAGE>

("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 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 six-month 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.

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

- 9 -

<PAGE>

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

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

INVESTING DIRECTLY

- 10 -

<PAGE>

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") 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

- 11 -

<PAGE>

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

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

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<PAGE>

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;

(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

- 13 -

<PAGE>

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.

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.

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<PAGE>

(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. 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. 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.

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.

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<PAGE>

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.

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>

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 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.

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.

- 17 -

<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 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

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.

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

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<PAGE>

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.

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 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.

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<PAGE>

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 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.

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. 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.

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<PAGE>

FUND ORGANIZATION AND FEES

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

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<PAGE>

PORTFOLIO MANAGING
MANAGER FUND SINCE PREVIOUS EXPERIENCE

Jonathan M. Green Commencement Vice President, T. Rowe Price Associates, Inc.
of Operations since 1979.

EFFECT OF BANKING LAWS

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 and its 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, 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.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

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<PAGE>

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 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

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 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 Victory Portfolios Delaware Trust Instrument
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.

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<PAGE>

DELAWARE LAW

MISCELLANEOUS

THE V I C T O R Y STOCK INDEX FUND

MARCH 1, 1996

<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.

TABLE OF CONTENTS PAGE

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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 (3) .11%
---
Total Fund Operating Expenses(3) .56%
===

(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 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 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 share of the Fund outstanding for each period indicated.

THE VICTORY STOCK INDEX FUND

DECEMBER 3,
YEAR ENDED 1993 TO
OCTOBER 31, OCTOBER 31,
1995 1994(A)
---- -------

NET ASSET VALUE, BEGINNING OF PERIOD $ 10.18 $ 10.00
-------- -------
Income from Investment Activities
Net investment income 0.27 0.20
Net realized and unrealized gains 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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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 errors 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.

ADDITIONAL INFORMATION REGARDING THE FUND'S INVESTMENTS

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<PAGE>

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 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 be
limited to "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.

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 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.

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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=% 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."

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<PAGE>

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 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 is generally sold to institutional investors, such as the Fund,
that agree 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 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.

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<PAGE>

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=% 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

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<PAGE>

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

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.

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

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<PAGE>

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") which is
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 DEALER
CHARGE CHARGE REALLOWANCE
AS A % OF AS A % OF AS A %
OFFERING NET AMOUNT OF OFFERING
AMOUNT OF PURCHASE PRICE INVESTED 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):

(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>

(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.

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<PAGE>

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.

(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 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.

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<PAGE>

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 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.

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<PAGE>

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

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<PAGE>

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 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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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.

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 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.

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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 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.

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.

- 18 -

<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

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.

- 19 -

<PAGE>

large corporate and public retirement plans, Taft-Hartley plans, foundations and
endowments, high net worth individuals and mutual funds.

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 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 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.

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

PORTFOLIO MANAGING
MANAGER FUND SINCE PREVIOUS EXPERIENCE

Denise Coyne Since Inception Vice President and Portfolio
Manager for Society Asset
Management, Inc. since 1995; Vice
President, Equity Research for
Society National Bank since 1992;
Research Analyst with Ameritrust
Company National Association since
1985.

EFFECT OF BANKING LAWS

- 20 -

<PAGE>

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.

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.

- 21 -

<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, 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.

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

- 22 -

<PAGE>

MISCELLANEOUS

- 23 -

<PAGE>

MANAGED BY KEYCORP

PR/VSI-350 3/96

- 24 -

<PAGE>
MANAGED BY KEYCORP Rule 497(c)
Registration No. 33-8982

THE VICTORY TAX-FREE MONEY MARKET FUND

MARCH 1, 1996

<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 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 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.

TABLE OF CONTENTS PAGE

- 2 -

<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.

- 3 -

<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 share of the Fund outstanding for each period indicated.

THE VICTORY TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>

YEARS ENDED OCTOBER 31,
1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------- -------
Income from Investment Activities
Net investment income 0.034 0.021 0.020 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 have been
as indicated.

- 4 -

<PAGE>

INVESTMENT 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 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 in short-term, high-quality
municipal securities 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.

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.

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

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

- 5 -

<PAGE>

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 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 a nationally
recognized statistical ratings organization ("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 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."

- 6 -

<PAGE>

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 of the U.S., 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.

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.

- 7 -

<PAGE>

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).

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 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.

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.

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

- 8 -

<PAGE>

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=% 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.

3. 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,
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; 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.

Each of the investment limitations indicated above in this subsection are
fundamental, except for the limitations 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 time exceeds the percentage limitation applicable at the time of acquisition
due to subsequent fluctuations

- 9 -

<PAGE>

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.

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 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
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.

- 10 -

<PAGE>

Boston Safe Deposit & Trust Co
ABA #011001234
Credit PFSC DDA #16-918-8
The Victory Tax-Free Money Market Fund

INVESTMENT REQUIREMENTS

SPECIAL INVESTOR SERVICES

- 11 -

<PAGE>

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.

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 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.

RETIREMENT PLANS. 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 IRAs and Keogh plans.

HOW TO EXCHANGE

Shares of the Fund may be exchanged for shares of certain funds of the Victory
Group at NAV 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.

- 12 -

<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.

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").

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 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 Tax-Free Money Market Fund
Primary Funds Service Corporation
P.O. Box 9741
Providence, RI 02940-9741

- 13 -

<PAGE>

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,

- 14 -

<PAGE>

Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving and Christmas.

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 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.

- 15 -

<PAGE>

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:

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.

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

- 16 -

<PAGE>

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

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 dividends" and are 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.

O EXCHANGES OR REDEMPTIONS. 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 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.

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<PAGE>

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. 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" 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.

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.

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 taxable-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.

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

- 18 -

<PAGE>

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 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.

FUND ORGANIZATION AND FEES

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.

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 thirty-five one hundredths of one percent (.35%) 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 1, 1996, Society Asset 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
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.

- 19 -

<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.

TRANSFER AGENT

SHAREHOLDER SERVICING PLAN

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<PAGE>

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

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

- 21 -

<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 Codes 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 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.

- 22 -

<PAGE>

- 23 -

<PAGE>

BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
Permit 469

MANAGED BY KEYCORP
PR/TMM-185 3/96

- 24 -

<PAGE>
Rule 497(c)
Registration No. 33-8982

MANAGED BY KEYCORP

THE VICTORY VALUE FUND

MARCH 1, 1996

<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.

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 16
Performance 18
Fund Organization and Fees 19
Additional Information 22

- 1 -

<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES(1)

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.

- 2 -

<PAGE>

FINANCIAL HIGHLIGHTS

THE VICTORY VALUE FUND
<TABLE>
<CAPTION>

DECEMBER 3,
YEAR ENDED 1993 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.

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<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.

O INVESTMENT GRADE AND HIGH QUALITY 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

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<PAGE>

"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 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.

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 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

- 5 -

<PAGE>

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.

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% of total assets.

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<PAGE>

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."

- 7 -

<PAGE>

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 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.

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% 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 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

- 8 -

<PAGE>

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

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

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<PAGE>

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 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

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") which is 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

- 10 -

<PAGE>

within 90 days without incurring an additional sales charge. The current sales
charge rates and commissions paid to Investment Professionals are as follows:

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

Letter of Intent) will reflect the applicable reduced sales charge of the Letter
of Intent.

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).

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;

SPECIAL INVESTOR SERVICES

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<PAGE>

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.

- 13 -

<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 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 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.

- 14 -

<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. 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
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.

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<PAGE>

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
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 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.

- 16 -

<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 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.

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 Internal Revenue Service ("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.

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 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

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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 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.

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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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

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 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 1, 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 .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 SubAdviser,
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

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$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 her previous experience is as follows:

PORTFOLIO MANAGING
MANAGER FUND SINCE PREVIOUS EXPERIENCE

Judith A. Jones Commencement
of Operations Portfolio Manager with Society Asset
Management Inc. 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.

TRANSFER AGENT

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<PAGE>

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.

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 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.

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, excluding certain voluntary fee
reductions or reimbursements.

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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 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

MISCELLANEOUS

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MANAGED BY KEYCORP

PR/VVF-3603/96

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