ANNUAL REPORT
OCTOBER 31,
1997
LOGO
Victory Funds(R)
TABLE OF CONTENTS
Shareholder Letter 2
Investment Review and Outlook 3
Fund Review and Commentary
Introduction to Victory Money
Market Funds 5
Introduction to Victory Taxable
Fixed Income Funds 8
Introduction to Victory Municipal
Fixed Income Funds 14
Introduction to Equity Funds 17
How to Read Your Statement 29
Key Asset
Management Inc.
(KAM) a subsidiary of
KeyCorp, is the investment
adviser to The Victory Funds.
The Victory Funds are sponsored
and distributed by BISYS Fund Services,
which is not affiliated with KeyCorp or
its subsidiaries. KAM receives a fee for
its services from the Victory Funds.
This report is not authorized for
distribution to prospective investors
unless preceded or accompanied
by a current prospectus for
the Victory Funds.
Shares of the Victory Funds are not
insured by the FDIC and are not deposits
or other obligations of, or guaranteed by,
any KeyCorp bank, Key Asset Management
Inc., or their affiliates, and are subject to
investment risks, including possible loss of
the principal amount invested.
Financial Statements
Schedules of Investments 31
Statements of Assets and Liabilities 112
Statements of Operations 119
Statements of Changes in Net Assets 126
Notes to Financial Statements 135
Financial Highlights 143
Report of Independent Accountants 166
12/19/97
Letter to our Shareholders
We are happy to present this annual report for the fiscal year 1997.
During this period the financial markets posted substantial gains.
Despite the steep drop in the Dow Jones Industrial Average on October
27, 1997, the Dow had gained more than 1000 points, a 23% increase
between October 31, 1996 and October 31, 1997. Investors stood out
this skirmish with mature fortitude, and we are pleased that Victory
continued to experience net investment inflows to the funds during
the volatile and uncertain days that followed.
Victory fund assets have increased by nearly $2 billion during this
fiscal year ended October 31, 1997, a gain of approximately 20%. In
addition to strong asset growth two new investment products, Victory
Lakefront Fund and the Real Estate Investment Fund were launched in
March and April of 1997, respectively.* These funds have enhanced
the scope of diversification and investment choices available from
Victory.
A significant enhancement to the services offered to Victory fund
investors is the development of our national distribution network.
The Victory Funds are now available through many no-transaction fee
platforms, where investors, working with their investment advisers,
have access to the funds without a transaction fee. Victory funds
are also available for purchase through over 100 national and regional
brokerage firms. The growth of this national distribution network
is evidence of investor demand and the level of confidence placed
in Victory. It also provides our current and prospective shareholders
with convenient and easy access to our investment products.
As always, we welcome your feedback to this annual report.
Yours sincerely,
/s/ Leigh A. Wilson
Leigh A. Wilson, President
The Victory Funds
*For more information about the Victory Funds, including charges and
expenses, request a prospectus by calling 1-800-KEY-FUND (1-800-539-3863).
Please read the prospectus carefully before investing or sending money.
Investment Review and Outlook
As I write this review at the close of the fiscal year, it is tempting
to draw parallels between the stock market and Halloween. The stock
market has undergone some dramatic costume changes in the past few
weeks. October began with investors dressed up like bulls, led by
various Wall Street luminaries masquerading as Goldilocks. Economic
activity appeared to be OK, the inflation news was encouraging, and
it looked like corporate profits would be pretty good in the third
quarter. There were treats aplenty, and everyone seemed happy.
Then a few uninvited guests showed up at the party, with a trick or
two to upset the scene. The dollar came as a muscle-bound weightlifter,
and unmasked a few of the mighty blue chips as mere mortals when third
quarter earnings were reported. Fed Chairman Alan Greenspan went to
Capital Hill dressed as a devils advocate, and made a number of inflammatory
remarks about the "New Era" approach to economic and market analysis.
To briefly recapitulate the arguments of the New Era proponents: superior
methods of information dissemination and inventory management have
led to the business cycle being tamed; we could all enjoy an endless
array of treats!
The Fed Chairman pointed out that, as far as he knew, the laws of
supply and demand had not been suspended, and that the tight labor
market needed to be watched very carefully. He also suggested that
equity returns were unsustainably high, and the bulls were counting
on ever-improving conditions to justify the prices being paid for
stocks. To top it all off, the dragons of speculation and excess leverage
came along and spooked the Asian Tigers, and a handful of Ninja warriors
kicked the tar out of those nations' currencies and stock markets.
Their panic awoke a bear or two from hibernation, and the US markets
headed south as well. Stocks that had looked like handsome princes
and beautiful princesses all of a sudden looked more like vampires
and witches in the eyes of investors.
So what will we see when the make-up comes off and the pumpkins are
all turned into pies? Will there still be skeletons in the closet,
and ghosts of past market corrections haunting the halls of the New
York stock exchange? Or will investors be whistling past one more
graveyard, convinced of the long-term invincibility of stocks by yet
another speedy rebound from a hair-raising plunge?
Before tackling those questions, let's review a few basics. First,
there is no value in trying to predict a market top or bottom. I have
no clue as to whether or not the intraday low of less than 7,000 reached
briefly in the recent past will be tested again in the weeks or months
ahead. On the other hand, there is something to be said for analyzing
and estimating the market's fair value, and then assessing the odds
of achieving above-average returns in the year or two ahead based
on where stock prices are relative to that estimated value. This leads
me to my second point: based on interest rates and consensus earnings
estimates for 1998, stocks are still roughly 5%-10% overvalued, in
my opinion, even after the setback they've suffered in recent sessions.
Third, those earnings forecasts are at risk, given the events of the
past few weeks in Asia.
Though relatively few US companies derive a substantial portion of
their earnings from the Pacific Rim, many more compete with companies
based there. Those Asian competitors are likely to drop prices in
the wake of their currency devaluations, making it tougher for US
firms to raise prices enough to cover rising labor and commodity costs.
I think margins may get squeezed a bit in 1998, at least among the
big blue chip companies that have enjoyed six years of virtually uninterrupted
margin expansion. Finally, demand for stocks is likely to remain intact
from individuals investing through their 401(k) plans and from companies
using excess cash to buy back shares. However, foreign investors may
be absent for awhile, and retirement demand may be offset by households
selling to preserve gains, especially now that the capital gains tax
rate has been reduced.
With all that in mind, I think that equity investors are in for a
bumpy ride in the next year, and that stock market returns are likely
to be well below the high teens average of the past fifteen years.
This does not mean that the trading range from low to high will be
only 10% or so; indeed, I would not be surprised if the Dow were to
register a new high at some point in the next twelve months, which
would imply a point-to-point gain of over 15% from the close on October
30. However, I'm not nimble or prescient enough to load up at the
precise bottom of the range, nor to dump everything at the top. So,
instead of trying to time the market, why not try to find a few good
stock ideas?
If I had to identify one theme that I think will have a high degree
of success in the next year or two, it would be margin expansion.
In an environment where most companies will have a tough time passing
through higher costs, those that can find a way to improve profitability
will become scarce, and that scarcity will attract investors. As for
industries, I am attracted to some cyclicals (including some consumer
cyclicals like autos, homebuilder's and retailers), financials (especially
insurance) and energy (with an emphasis on domestic natural gas).
Communications stocks, REITs and biotechnology also appeal to me.
Value looks better than growth, and small looks better than big (despite
the tendency of investors to flock to the "safety'' of the big blue
chips in times of market turmoil).
Regardless of the market's near-term direction, volatility is likely
to remain high. These are times that favor the disciplined investor
who maintains strict buy and sell limits on stocks. Fundamental research
can provide an edge, limiting the risk of negative surprises. Stick
with things you know, and avoid the temptation to jump into unfamiliar
stocks just because they've sold off sharply.
If all of this sounds pretty basic, that's because it is. Adherence
to the basics in times of market turbulence can make the difference
between finding treats or tricks in one's portfolio, and between looking
like a Buffet or a buffoon.
/s/ Charles G. Crane
Charlie Crane, Chief Market Strategist
Key Asset Management Inc.
October 31, 1997
Introduction to Money Market Funds
THE INVESTMENT PROCESS
As with longer-term fixed income portfolios, each portfolio manager
seeks to enhance portfolio yields by identifying opportunities in
the financial markets for incremental returns and by seeking relative
value. Portfolio managers for the Victory Funds follow the shape and
movement of the yield curve closely. This process helps the portfolios
to take advantage of anticipated movements in short-term interest
rates.
CREDIT REVIEW
INTEREST RATE ENVIRONMENT
SECTOR SCREEN
TAXABLE FUND PERFORMANCE
The Victory U.S. Government Obligations Fund
The Victory Financial Reserves Fund
The Victory Prime Obligations Fund
TAX-FREE FUND PERFORMANCE
The Victory Ohio Municipal Money Market Fund
The Victory Tax-Free Money Market Fund
The past year has been dominated by speculation about when the Federal
Reserve will tighten monetary policy by increasing the Federal Funds
Rate. One tightening did occur in the first quarter of 1997 but the
subsequent period was one of temporary calm before continued US economic
performance re-ignited concerns that the Fed would have to tighten
again. However, this has not been the case as each additional piece
of economic news or data which shows that the economy is not overheating
pushes a potential tightening further into the future. Most recently,
the equity sell-off in October has most likely delayed a Fed tightening
until late in the first quarter of 1998 at the earliest.
VICTORY
MONEY MARKET
FUNDS
The Victory U.S. Government Obligations Fund
The Victory Prime Obligations Fund
The Victory Financial Reserves Fund
The Victory Financial Reserves, Prime Obligations and US Government
Obligations Funds all operate under the same philosophy, which is
the preservation of capital, high levels of liquidity to the client
and competitive market yields. The primary difference is in the client
base of each fund. Changes in the level of interest rates is the primary
risk of these funds and we reduce the effects of credit risk by investing
in high quality Tier 1 securities which have gone through a credit
pre-approval process.
The strong corporate performance we have seen in the last year has
reduced the demand for money overall and focused the remaining demand
on Tier 1 commercial paper. Moreover, there has been a significant
reduction in quality spreads associated with these short-term investments.
The result is a market that focuses on differences in yields to a
much greater extent than in the past when a security's credit quality
played a larger role in issue selection. This has reduced the dispersion
of investment performance between managers for the time being.
Going forward, given the recent round of interest rate increases by
European banks, the Funds have taken a more "defensive" posture, which
essentially means a higher percentage of short-maturity investments.
We are mindful of the fact that the Federal Reserve Board Chairman,
Alan Greenspan, continues to issue warnings indicating that a tightening
of monetary policy may be forthcoming.
<TABLE>
As of October 31, 1997
<CAPTION>
PRIME FINANCIAL US GOVT OBLIGATIONS
OBLIGATIONS RESERVES SELECT INVESTOR
<S> <C> <C> <C> <C>
Seven-Day Yield 4.90% 5.03% 4.85% 5.11%
Seven-Day Effective Yield 5.02% 5.16% 4.97% 5.24%
One Year Total Return 4.89% 5.04% 4.75% --
</TABLE>
<TABLE>
Maturity Schedule<F1>
As of 10/31/97
<CAPTION>
Days to PRIME FINANCIAL US GOVT
Maturity OBLIGATIONS RESERVES OBLIGATIONS
<S> <C> <C> <C>
Less than 30 Days 64.0% 59.8% 78.5%
31 to 60 Days 12.5% 11.9% 0%
61 to 90 Days 6.3% 6.5% 1.5%
Greater than 90 Days 17.2% 21.8% 20.0%
<FN>
<F1> The funds' Maturity Schedules presented may not be representative
of current or future investment strategies. Fund strategies may change
at any time.
</TABLE>
The performance data quoted represent past performance and are not
indicative of future results. Yields will fluctuate with market conditions.
The Victory Financial Reserves Fund yield reflects
the waiver of a portion of fees for various periods. Without such
waiver of fees, the current 7-day yield would have been 5.00%, and
the 7-day effective yield would have been 5.13%, respectively.
There can be no assurance that any of the Victory Money Market Funds
will be able to maintain a stable net asset value of $1.00 per share.
An investment in a Victory Money Market Fund is neither insured nor
guaranteed by the U.S. Government.
VICTORY
MONEY MARKET
FUNDS
The Victory Tax-Free Money Market Fund
The Victory Ohio Municipal Money Market Fund
As for the tax-free money market funds, they benefited from the relatively
stable rate environment with a positively sloping yield curve (indicating
an interest rate structure where short term interest rates are lower
than longer term rates). The Funds have timed purchases of longer
fixed rate notes to coincide with periods when relatively large supply
supported higher yields.
The Ohio Municipal Money Market Fund has had to push however, to maintain
relatively longer maturity and competitive yield. This is due to the
Fund being one of the largest exclusively Ohio paper money market
funds with over $600 million in assets. The supply of Ohio debt is
limited, and availability of longer term, higher yield investments
are more difficult to find. Going forward, we will continue to monitor
the supply and demand in the short-term municipal market to take advantage
of the times when seasonal factors produce imbalances and yield opportunities.
<TABLE>
Maturity Schedule<F1>
As of 10/31/97
<CAPTION>
Days to Maturity TAX-FREE OHIO MMMKT
<S> <C> <C>
Less than 30 Days 72.3% 63.3%
31 to 60 Days 11.3% 13.4%
61 to 90 Days 4.1% 1.0%
Greater than 90 Days 12.3% 22.3%
<FN>
<F1> The Maturity Schedules presented may not be representative of current
or future investment strategies. Fund strategies may change at any
time.
</TABLE>
<TABLE>
As of October 31, 1997
<CAPTION>
TAX-FREE OHIO MMMKT
<S> <C> <C>
Seven-Day Yield 3.12% 3.03%
Tax Equivalent Yield1 4.88% 5.31%
Seven-Day Effective Yield 3.17% 3.08%
Seven-Day Tax Equivalent
Effective Yield<F1> 4.95% 5.39%
One Year Total Return 3.07% 3.01%
<FN>
<F1> The tax equivalent yield is for illustrative purposes only. The
tax rate used to calculate the tax equivalent yield was based on the
36% Federal regular income rate, and the rate used for the Ohio MMMKT
is the combined 36% federal and 6.9% Ohio state income tax rate and
are for illustrative purposes only. The tax bracket does not reflect
the effects of the Federal AMT.
</TABLE>
The performance data quoted is past performance and are not indicative
of future results. Yields will fluctuate with market conditions. The
Victory Ohio MMMKT yields reflect the waiver of a portion of certain
fees for various periods. In such instances and without such waivers,
the current 7-day yield and Tax-Equivalent Yield would have been 2.82%
and 4.94%, and the 7-day effective yield and 7-day effective tax equivalent
yield would have been 2.87% and 5.02% respectively. There can be no
assurance that any of the Victory Money Market Funds will be able
to maintain a stable net asset value of $1.00 per share. An investment
in a Victory Money Market Fund is neither insured nor guaranteed by
the U.S. Government. Certain investors may be subject to the Federal
Alternative Minimum Tax and to certain state and local taxes.
Introduction to Taxable Fixed Income Funds
THE INVESTMENT PROCESS
Selecting fixed income securities involves on-going analysis not only
of the bonds available in the marketplace, but of interest rates,
yield curves, relative values and sector weightings. To conduct their
security selection, the experienced fixed income management team follows
a disciplined and tested process.
The investment advisor assigns a relative value to each economic sector
by utilizing its in-house analytical capabilities as well as a wide
range of outside research. It considers the broad economic environment
in making duration decisions for each of the Victory Funds. The portfolio
managers have developed a proprietary process to identify those securities
that have strong potential for income and total return. They are active
managers, continually monitoring portfolio holdings for shifts in
value that will affect buy and sell decisions.
FIXED INCOME SECURITIES UNIVERSE
CREDIT SCREENING PROCESS
DURATION AND MATURITY SCREEN
SHORT-TERM POOL
Yield Curve Shape and Movement Analysis
SHORT-TERM FUND
The Victory Limited Term Income Fund
INTERMEDIATE-TERM POOL
RELATIVE VALUE ANALYSIS
Supply and Demand Scarcity; Regulatory Changes;
New Products or Securities; New Issues; Technical Innovation;
Sector Analysis; Investor Sentiment
INTERMEDIATE-TERM FUNDS
The Victory Intermediate Income Fund
The Victory Fund for Income
The Victory Government Mortgage Fund
LONG-TERM POOL
RELATIVE VALUE ANALYSIS
Supply and Demand Scarcity; Regulatory Changes;
New Products or Securities; New Issues; Technical Innovation;
Sector Analysis; Investor Sentiment
LONG-TERM FUNDS
The Victory Investment Quality Bond Fund
1. Superior Research.
Before any fixed income security can be considered for purchase by
a portfolio manager, it must pass a stringent internal credit review
process. As part of this process, credit analysts review the structure
and credit ratings of the individual securities as well as the financial
statements of the organizations that issue them.
2. No large duration bets are taken.
To keep the interest rate sensitivity of the Victory Funds' fixed
income portfolios consistent with the market, a security benchmark
is chosen that is appropriate for a given portfolio. The portfolio
is then managed to keep its duration as close as possible to that
of the given benchmark. By not taking large "duration bets," interest
rate risk of the portfolio is dramatically reduced relative to the
benchmark.
3. Relative Value.
The portfolio managers for the Victory Funds combine both technical
research and market experience to identify inefficiencies and anomalies
in the marketplace. Inefficiencies give the portfolio manager the
opportunity to purchase securities for the portfolio that may provide
higher yields or total returns. Differences in relative value are
a function of securities' yield differentials (e.g. between corporate,
government and mortgage/asset backed securities), caused by regulatory
changes, forces of supply and demand, and investor sentiments.
VICTORY
TAXABLE FIXED
INCOME
FUNDS
The Victory Limited Term Income Fund
The Fund had a good year performing in line with its Index, as was
the expectation given its duration neutral position for most of the
year. During the course of the year we progressively reduced the percentage
of the Fund's investments in Treasuries and increased allocations
to corporate, government agency and mortgage-backed debt securities
in order to increase the Fund's yield. Our overweighting in the corporate
sector will continue to be a part of the ongoing strategy for the
Fund. Price volatility of this sector should be moderate due to the
relatively short remaining maturity and high credit quality of these
investment selections.
Near term we expect a continued rally in the short and intermediate
sectors. Longer term however, the underlying strength of the economy
is still a concern even with the Federal Reserve on "hold." Minutes
from the previous Federal Open Market Committee meeting point towards
a bias for tightening if inflation picks up.
Looking forward, we expect to maintain the Fund's duration neutral
position. However, should the economy show a resurgence of activity
the Fund's duration will be shortened in anticipation of Federal Reserve
action. We will continue to monitor the corporate sector for specific
value in the short high grade area and seek opportunities to add yield
as a cushion against adverse market conditions.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 5.57% 3.51%
Three Years 6.42% 5.71%
Five Years 4.96% 4.54%
Since Inception Annualized
10/20/89 6.39% 6.13%
</TABLE>
<TABLE>
Victory Limited Term Income Fund
vs. Merrill Lynch 1-3 Yr Treas
(Dollars in thousands)
<CAPTION>
Limited Term Income Limited Term @ NAV Merrill Lynch 1-3 Yr Treas
<S> <C> <C> <C>
10/31/89 9,805 10,000 10,000
11/30/89 9,886 10,083 10,089
12/31/89 9,922 10,119 10,130
1/31/90 9,919 10,116 10,138
2/28/90 9,958 10,157 10,185
3/31/90 9,974 10,172 10,220
4/30/90 9,980 10,179 10,240
5/31/90 10,140 10,342 10,396
6/30/90 10,245 10,449 10,506
7/31/90 10,376 10,583 10,636
8/31/90 10,389 10,596 10,668
9/30/90 10,450 10,659 10,756
10/31/90 10,565 10,775 10,874
11/30/90 10,691 10,904 10,981
12/31/90 10,790 11,005 11,114
1/31/91 10,892 11,109 11,216
2/28/91 10,964 11,182 11,282
3/31/91 11,024 11,243 11,358
4/30/91 11,116 11,337 11,466
5/31/91 11,194 11,417 11,535
6/30/91 11,212 11,435 11,582
7/31/91 11,308 11,533 11,683
8/31/91 11,462 11,690 11,843
9/30/91 11,591 11,822 11,971
10/31/91 11,707 11,940 12,100
11/30/91 11,835 12,070 12,226
12/31/91 12,030 12,270 12,412
1/31/92 11,977 12,215 12,393
2/29/92 12,000 12,239 12,436
3/31/92 11,965 12,203 12,431
4/30/92 12,063 12,304 12,545
5/31/92 12,194 12,437 12,659
6/30/92 12,319 12,564 12,789
7/31/92 12,488 12,736 12,932
8/31/92 12,581 12,831 13,046
9/30/92 12,715 12,968 13,170
10/31/92 12,617 12,869 13,091
11/30/92 12,564 12,814 13,070
12/31/92 12,675 12,928 13,194
1/31/93 12,825 13,080 13,331
2/28/93 12,966 13,224 13,445
3/31/93 12,970 13,229 13,485
4/30/93 13,088 13,348 13,569
5/31/93 13,068 13,328 13,531
6/30/93 13,181 13,443 13,631
7/31/93 13,200 13,463 13,662
8/31/93 13,348 13,614 13,781
9/30/93 13,405 13,672 13,826
10/31/93 13,424 13,691 13,853
11/30/93 13,389 13,656 13,857
12/31/93 13,451 13,719 13,908
1/31/94 13,554 13,824 13,997
2/28/94 13,420 13,688 13,908
3/31/94 13,291 13,556 13,838
4/30/94 13,214 13,477 13,789
5/31/94 13,220 13,484 13,809
6/30/94 13,244 13,507 13,850
7/31/94 13,380 13,646 13,969
8/31/94 13,404 13,671 14,018
9/30/94 13,327 13,592 13,986
10/31/94 13,335 13,601 14,018
11/30/94 13,253 13,517 13,955
12/31/94 13,282 13,547 13,987
1/31/95 13,446 13,714 14,182
2/28/95 13,653 13,925 14,376
3/31/95 13,726 13,999 14,457
4/30/95 13,841 14,117 14,585
5/31/95 14,131 14,413 14,840
6/30/95 14,201 14,484 14,920
7/31/95 14,239 14,523 14,982
8/31/95 14,323 14,609 15,071
9/30/95 14,393 14,680 15,144
10/31/95 14,505 14,794 15,272
11/30/95 14,644 14,936 15,407
12/31/95 14,741 15,034 15,525
1/31/96 14,869 15,165 15,657
2/29/96 14,792 15,087 15,591
3/31/96 14,741 15,035 15,577
4/30/96 14,740 15,034 15,590
5/31/96 14,762 15,056 15,622
6/30/96 14,863 15,159 15,734
7/31/96 14,904 15,201 15,796
8/31/96 14,939 15,237 15,851
9/30/96 15,074 15,374 15,994
10/31/96 15,222 15,525 16,174
11/30/96 15,329 15,635 16,298
12/31/96 15,334 15,639 16,298
1/31/97 15,386 15,693 16,375
2/28/97 15,427 15,734 16,412
3/31/97 15,408 15,714 16,406
4/30/97 15,519 15,828 16,540
5/31/97 15,601 15,912 16,653
6/30/97 15,705 16,018 16,768
7/31/97 15,856 16,172 16,952
8/31/97 15,859 16,175 16,968
9/30/97 15,973 16,291 17,096
10/31/97 16,070 16,390 17,223
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Merrill Lynch 1-3 Year Treasury Index (Merrill Lynch 1-3 Yr Treas)
is a broad-based unmanaged index that represents the general performance
of short-term (1-3 year) U.S. Treasury securities.
The performance data quoted represent past performance and therefore,
are not indicative of future results. Total returns are historical
and include the change in share price and reinvestment of dividends
and capital gains distributions, and unless indicated, show the effect
of the maximum 2.00% sales charge. Investment returns and principal
values will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return
figures set forth above may reflect the waiver of a portion of certain
fees for various periods since the Fund's inception date. In such
instances and without such waiver of fees, the total returns would
have been lower.
Fee waivers are voluntary and may be modified or terminated at any
time.
VICTORY
TAXABLE FIXED
INCOME
FUNDS
The Victory Intermediate Income Fund
The investment objective of the Victory Intermediate Income Fund is
to provide a high level of income by investing in debt securities
issued by corporations and the US Government and its agencies or
instrumentalities.
Year to date the Fund performed near its benchmark, the Lehman Brothers
Intermediate Government/Corporate Bond Index. The Fund has benefited
from a modestly overweighted position in mortgage-backed securities,
but the potential increased volatility of this sector was offset by
a shorter and more defensively structured corporate bond position
which reduced the Fund's yield.
Going forward, we expect to seek opportunities to add higher yielding
investments while adding only modest additional credit risk.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 6.62% 0.53%
Three Years 7.57% 5.48%
Since Inception Annualized
12/10/93 5.10% 3.51%
</TABLE>
<TABLE>
Victory Intermediate Income Fund
vs. Lehman Int Gov't/Corp
(Dollars in thousands)
<CAPTION>
Intermediate Income Intermediate Income @ NAV Lehman Int Govt/Corp
<S> <C> <C> <C>
12/31/93 9,422 10,000 10,000
1/31/94 9,517 10,101 10,111
2/28/94 9,379 9,953 9,961
3/31/94 9,251 9,819 9,797
4/30/94 9,179 9,742 9,730
5/31/94 9,179 9,742 9,737
6/30/94 9,183 9,745 9,738
7/31/94 9,288 9,858 9,878
8/31/94 9,301 9,871 9,909
9/30/94 9,209 9,773 9,818
10/31/94 9,207 9,771 9,817
11/30/94 9,160 9,722 9,773
12/31/94 9,197 9,761 9,807
1/31/95 9,349 9,922 9,972
2/28/95 9,507 10,090 10,178
3/31/95 9,565 10,151 10,236
4/30/95 9,673 10,266 10,363
5/31/95 9,961 10,572 10,676
6/30/95 10,016 10,630 10,747
7/31/95 10,012 10,626 10,749
8/31/95 10,104 10,724 10,846
9/30/95 10,166 10,789 10,924
10/31/95 10,279 10,909 11,046
11/30/95 10,402 11,040 11,190
12/31/95 10,489 11,132 11,308
1/31/96 10,582 11,231 11,405
2/29/96 10,446 11,087 11,272
3/31/96 10,385 11,022 11,214
4/30/96 10,333 10,967 11,175
5/31/96 10,309 10,941 11,166
6/30/96 10,413 11,052 11,284
7/31/96 10,433 11,072 11,318
8/31/96 10,431 11,070 11,327
9/30/96 10,567 11,214 11,485
10/31/96 10,747 11,406 11,688
11/30/96 10,852 11,517 11,842
12/31/96 10,809 11,472 11,767
1/31/97 10,846 11,511 11,812
2/28/97 10,860 11,526 11,835
3/31/97 10,777 11,437 11,753
4/30/97 10,899 11,567 11,892
5/31/97 10,969 11,642 11,991
6/30/97 11,065 11,743 12,100
7/31/97 11,291 11,983 12,345
8/31/97 11,221 11,909 12,284
9/30/97 11,352 12,048 12,426
10/31/97 11,459 12,162 12,564
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Lehman Brothers Intermediate Government/Corporate Bond Index (Lehman
Int Gov't/Corp) is an unmanaged index comprised of investment-grade
corporate debt securities and U.S. Treasury and U.S. Government Agency
debt securities that mature in one to ten years.
The performance data quoted represent past performance and therefore,
are not indicative of future results. Total returns are historical
and include the change in share price and reinvestment of dividends
and capital gains distributions, and unless indicated, show the effect
of the maximum 5.75% sales charge. Investment returns and principal
values will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return
figures set forth above may reflect the waiver of a portion of certain
fees for various periods since the Fund's inception date. In such
instances and without such waiver of fees, the total returns would
have been lower.
Fee waivers are voluntary and may be modified or terminated at any
time.
VICTORY
TAXABLE FIXED
INCOME
FUNDS
The Victory Fund for Income
The year 1997 began with a preemptive tightening of interest rates
by the Federal Reserve Board, which allayed the inflationary fears
of the bond market and set the stage for a bond market rally. As the
market rallied, the strong price performance of certain discount mortgage
securities held by the Fund largely offset the lower performance of
the income-oriented premium priced securities in the Fund. The Victory
Fund for Income typically holds more income-oriented securities than
the Lehman Mortgage-Backed Index, and therefore, tends to lag in a
bond market rally, as was evidenced in the past year. But the benefits
of this relatively defensive strategy are most notable in bear markets
such as the one in 1996, when the Fund's relative performance was
stronger.
While the economy remains on a very solid footing, there continue
to be risks to the outlook for a Goldilocks' ending (the Goldilocks
economy is a recent term coined to describe current US economic conditions--
low inflation and low unemployment, the best of both worlds). The tight
labor market and high capacity utilization that typify a booming economy
have traditionally led to a burst of inflation, rising interests rates
and finally recession. Currently, strong productivity growth has allowed
businesses to meet growing demand without the usual impact on inflation.
Demand may continue to grow, but the outlook for productivity is unclear.
Should productivity falter, the Federal Reserve stands ready to head
off any increase in inflation by raising interest rates. On the other
hand, the recent disturbances in global equity markets suggest the
possibility of a decrease in confidence and a possible decline in
global demand leading to lower growth rates.
In the short run, rates may rise slightly as global markets stabilize
and US economic fundamentals reassert themselves. Longer term, this
general level of interest rates should hold and be quite supportive
for mortgages. The Fund will continue to seek opportunities to invest
in high quality and relatively higher yielding securities.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 7.58% 5.42%
Three Years 8.86% 8.14%
Five Years 6.08% 5.64%
Ten Years 8.67% 8.39%
Since Inception Annualized
5/8/87 8.34% 8.13%
</TABLE>
<TABLE>
Victory Fund for Income
vs. Lehman Mortgage
(Dollars in thousands)
<CAPTION>
Victory Fund for Income Victory Fund for Income @ NAV Lehman Mortgage
<S> <C> <C> <C>
5/31/87 9,801 10,000 10,000
6/30/87 9,960 10,161 10,180
7/31/87 10,006 10,208 10,219
8/31/87 10,044 10,248 10,173
9/30/87 9,789 9,987 9,968
10/31/87 9,955 10,157 10,269
11/30/87 10,152 10,357 10,394
12/31/87 10,230 10,437 10,531
1/31/88 10,547 10,760 10,925
2/29/88 10,687 10,903 11,064
3/31/88 10,741 10,959 10,981
4/30/88 10,683 10,900 10,933
5/31/88 10,611 10,826 10,855
6/30/88 10,853 11,073 11,164
7/31/88 10,851 11,071 11,119
8/31/88 10,849 11,069 11,144
9/30/88 11,083 11,307 11,421
10/31/88 11,317 11,546 11,671
11/30/88 11,222 11,450 11,502
12/31/88 11,198 11,425 11,442
1/31/89 11,346 11,576 11,640
2/28/89 11,262 11,490 11,567
3/31/89 11,283 11,512 11,584
4/30/89 11,494 11,727 11,818
5/31/89 11,815 12,054 12,184
6/30/89 12,151 12,397 12,484
7/31/89 12,367 12,617 12,766
8/31/89 12,242 12,490 12,600
9/30/89 12,326 12,575 12,690
10/31/89 12,595 12,850 12,979
11/30/89 12,741 12,999 13,119
12/31/89 12,812 13,072 13,197
1/31/90 12,681 12,938 13,104
2/28/90 12,806 13,066 13,182
3/31/90 12,840 13,100 13,215
4/30/90 12,694 12,951 13,096
5/31/90 13,083 13,348 13,502
6/30/90 13,290 13,559 13,715
7/31/90 13,484 13,757 13,954
8/31/90 13,371 13,641 13,806
9/30/90 13,514 13,788 13,919
10/31/90 13,701 13,978 14,076
11/30/90 13,955 14,237 14,372
12/31/90 14,169 14,456 14,613
1/31/91 14,298 14,588 14,835
2/28/91 14,399 14,691 14,960
3/31/91 14,473 14,766 15,062
4/30/91 14,591 14,886 15,200
5/31/91 14,707 15,005 15,334
6/30/91 14,767 15,066 15,348
7/31/91 14,972 15,275 15,607
8/31/91 15,280 15,589 15,891
9/30/91 15,547 15,862 16,188
10/31/91 15,677 15,994 16,457
11/30/91 15,884 16,205 16,576
12/31/91 16,335 16,666 16,909
1/31/92 16,062 16,388 16,713
2/29/92 16,138 16,465 16,871
3/31/92 16,080 16,406 16,764
4/30/92 16,124 16,450 16,928
5/31/92 16,429 16,762 17,232
6/30/92 16,691 17,029 17,436
7/31/92 16,998 17,342 17,589
8/31/92 17,118 17,464 17,818
9/30/92 17,287 17,637 17,957
10/31/92 17,029 17,374 17,799
11/30/92 17,037 17,383 17,854
12/31/92 17,217 17,565 18,084
1/31/93 17,419 17,772 18,321
2/28/93 17,551 17,906 18,506
3/31/93 17,576 17,932 18,619
4/30/93 17,534 17,889 18,716
5/31/93 17,558 17,914 18,823
6/30/93 17,829 18,190 18,966
7/31/93 17,775 18,135 19,042
8/31/93 17,913 18,276 19,131
9/30/93 17,918 18,281 19,148
10/31/93 17,930 18,294 19,204
11/30/93 17,890 18,253 19,165
12/31/93 17,927 18,290 19,321
1/31/94 18,072 18,438 19,512
2/28/94 17,950 18,314 19,375
3/31/94 17,883 18,245 18,872
4/30/94 17,748 18,108 18,732
5/31/94 17,783 18,143 18,807
6/30/94 17,763 18,123 18,766
7/31/94 17,903 18,266 19,141
8/31/94 17,933 18,296 19,202
9/30/94 17,795 18,156 18,929
10/31/94 17,732 18,091 18,918
11/30/94 17,630 17,988 18,859
12/31/94 17,716 18,075 19,010
1/31/95 17,981 18,345 19,417
2/28/95 18,336 18,707 19,912
3/31/95 18,550 18,926 20,006
4/30/95 18,743 19,122 20,290
5/31/95 19,422 19,815 20,929
6/30/95 19,520 19,915 21,048
7/31/95 19,512 19,907 21,084
8/31/95 19,584 19,981 21,303
9/30/95 19,780 20,181 21,491
10/31/95 19,992 20,397 21,682
11/30/95 20,206 20,615 21,929
12/31/95 20,392 20,805 22,203
1/31/96 20,577 20,994 22,370
2/29/96 20,389 20,802 22,184
3/31/96 20,388 20,801 22,104
4/30/96 20,382 20,795 22,043
5/31/96 20,372 20,784 21,979
6/30/96 20,505 20,921 22,282
7/31/96 20,614 21,031 22,364
8/31/96 20,678 21,097 22,364
9/30/96 20,901 21,324 22,738
10/31/96 21,262 21,693 23,184
11/30/96 21,495 21,931 23,515
12/31/96 21,431 21,865 23,393
1/31/97 21,559 21,996 23,566
2/28/97 21,646 22,085 23,644
3/31/97 21,544 21,981 23,421
4/30/97 21,802 22,244 23,794
5/31/97 21,954 22,399 24,027
6/30/97 22,131 22,580 24,308
7/31/97 22,477 22,933 24,765
8/31/97 22,429 22,884 24,706
9/30/97 22,677 23,137 25,019
10/31/97 22,873 23,336 25,297
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Lehman Brothers Mortgage-Backed Securities Index (Lehman Mortgage)
is a broad-based unmanaged index that represents the general performance
of fixed rate mortgage bonds.
The performance data quoted represent past performance and therefore,
are not indicative of future results. Total returns are historical
and include the change in share price and reinvestment of dividends
and capital gains distributions, and unless indicated, show the effect
of the maximum 2.00% sales charge. Investment returns and principal
values will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return
figures set forth above may reflect the waiver of a portion of certain
fees for various periods since the Fund's inception date. In such
instances and without such waiver of fees, the total returns would
have been lower.
Fee waivers are voluntary and may be modified or terminated at any
time.
VICTORY
TAXABLE FIXED
INCOME
FUNDS
The Victory Government Mortgage Fund
The 8.22% one year return of the Victory Government Mortgage Fund
lagged the Lehman Mortgage-Backed Index (9.12%), but was very much
in line with the mortgage fund universe (8.30%*) for the period ended
October 31, 1997.** For much of the year, the Fund featured seasoned
mortgages with either discount or premium prices while de-emphasizing
newer, par-priced pools. As the market rallied, the strong price performance
of the more liquid discount mortgages largely offset that of the income-oriented
premium securities.
While the economy remains on a very solid footing, there continue
to be risks to the outlook for a Goldilocks' ending (the Goldilocks
economy is a recent term coined to describe current US economic conditions--
low inflation and low unemployment, the best of both worlds). The tight
labor market and high capacity utilization that typify a booming economy
have traditionally led to a burst of inflation, rising interests rates
and finally recession. Currently, strong productivity growth has allowed
businesses to meet growing demand without the usual impact on inflation.
Demand may continue to grow, but the outlook for productivity is unclear.
Should productivity falter, the Federal Reserve stands ready to head
off any increase in inflation by raising interest rates. On the other
hand, the recent disturbances in global equity markets suggest the
possibility of a decrease in confidence and a possible decline in
global demand, leading to lower growth rates.
In the short run, rates may rise slightly as global markets stabilize
and US economic fundamentals reassert themselves. Longer term, this
general level of interest rates should hold and be quite supportive
for mortgages.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 8.22% 1.97%
Three Years 9.05% 6.92%
Five Years 6.53% 5.27%
Since Inception Annualized
5/18/90 8.31% 7.45%
</TABLE>
<TABLE>
Victory Government Mortgage
vs. Lehman Mortgage
(Dollars in thousands)
<CAPTION>
Government Mortgage Government Mortgage @ NAV Lehman Mortgage
<S> <C> <C> <C>
5/31/90 9,421 10,000 10,000
6/30/90 9,537 10,123 10,158
7/31/90 9,681 10,276 10,335
8/31/90 9,632 10,224 10,225
9/30/90 9,710 10,306 10,309
10/31/90 9,839 10,443 10,426
11/30/90 10,027 10,643 10,644
12/31/90 10,154 10,778 10,823
1/31/91 10,251 10,881 10,988
2/28/91 10,322 10,956 11,080
3/31/91 10,361 10,998 11,155
4/30/91 10,460 11,103 11,258
5/31/91 10,527 11,174 11,357
6/30/91 10,509 11,155 11,367
7/31/91 10,623 11,276 11,559
8/31/91 10,871 11,539 11,770
9/30/91 11,069 11,749 11,990
10/31/91 11,194 11,882 12,189
11/30/91 11,357 12,055 12,277
12/31/91 11,682 12,400 12,524
1/31/92 11,505 12,212 12,378
2/29/92 11,512 12,220 12,496
3/31/92 11,436 12,139 12,416
4/30/92 11,544 12,253 12,538
5/31/92 11,747 12,469 12,763
6/30/92 11,939 12,672 12,914
7/31/92 12,203 12,953 13,027
8/31/92 12,342 13,100 13,197
9/30/92 12,564 13,336 13,300
10/31/92 12,351 13,110 13,183
11/30/92 12,243 12,995 13,224
12/31/92 12,412 13,175 13,394
1/31/93 12,682 13,461 13,570
2/28/93 12,910 13,703 13,707
3/31/93 12,946 13,741 13,790
4/30/93 13,063 13,866 13,862
5/31/93 13,016 13,816 13,941
6/30/93 13,186 13,996 14,047
7/31/93 13,200 14,011 14,103
8/31/93 13,394 14,217 14,169
9/30/93 13,444 14,271 14,182
10/31/93 13,469 14,296 14,223
11/30/93 13,398 14,221 14,195
12/31/93 13,427 14,252 14,310
1/31/94 13,531 14,362 14,452
2/28/94 13,414 14,238 14,350
3/31/94 13,108 13,914 13,977
4/30/94 12,997 13,795 13,874
5/31/94 13,057 13,859 13,929
6/30/94 13,023 13,823 13,899
7/31/94 13,255 14,069 14,177
8/31/94 13,271 14,086 14,222
9/30/94 13,091 13,895 14,020
10/31/94 13,063 13,866 14,012
11/30/94 13,044 13,846 13,968
12/31/94 13,151 13,959 14,080
1/31/95 13,397 14,220 14,381
2/28/95 13,713 14,556 14,748
3/31/95 13,752 14,597 14,817
4/30/95 13,931 14,787 15,028
5/31/95 14,343 15,224 15,501
6/30/95 14,431 15,317 15,589
7/31/95 14,442 15,330 15,616
8/31/95 14,576 15,472 15,778
9/30/95 14,698 15,601 15,917
10/31/95 14,833 15,745 16,059
11/30/95 14,980 15,900 16,242
12/31/95 15,153 16,084 16,445
1/31/96 15,247 16,184 16,568
2/29/96 15,089 16,016 16,431
3/31/96 15,029 15,952 16,372
4/30/96 14,980 15,900 16,326
5/31/96 14,956 15,875 16,278
6/30/96 15,088 16,015 16,503
7/31/96 15,150 16,080 16,564
8/31/96 15,149 16,080 16,564
9/30/96 15,373 16,318 16,841
10/31/96 15,655 16,617 17,171
11/30/96 15,870 16,845 17,416
12/31/96 15,787 16,757 17,326
1/31/97 15,897 16,874 17,454
2/28/97 15,914 16,892 17,512
3/31/97 15,776 16,746 17,347
4/30/97 16,015 16,999 17,623
5/31/97 16,153 17,145 17,796
6/30/97 16,340 17,344 18,004
7/31/97 16,652 17,675 18,342
8/31/97 16,594 17,614 18,298
9/30/97 16,782 17,814 18,531
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Lehman Brothers Mortgage-Backed Securities Index (Lehman Mortgage)
is a broad-based unmanaged index that represents the general performance
of fixed rate mortgage bonds.
The performance data quoted represent past performance and therefore,
are not indicative of future results. Total returns are historical
and include the change in share price and reinvestment of dividends
and capital gains distributions, and unless indicated, show the effect
of the maximum 5.75% sales charge. Investment returns and principal
values will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return
figures set forth above may reflect the waiver of a portion of certain
fees for various periods since the Fund's inception date. In such
instances and without such waiver of fees, the total returns would
have been lower.
Fee waivers are voluntary and may be modified or terminated at any
time.
*Lipper US Mortgage Funds Index, which is a non-weighted index of
the 30 largest funds within the Lipper US Mortgage Funds category.
**Reflects the total return without showing the effect of the 5.75%
maximum sales charge.
VICTORY
TAXABLE FIXED
INCOME
FUNDS
The Victory Investment Quality Bond Fund
Year over year the Fund's performance was in line with its benchmark,
the Lehman Aggregate Bond Fund Index. The Fund benefited from an overweighted
position in mortgage-backed securities and corporate bonds. In the
mortgage-backed sector, our issue selection added incrementally to
the Fund's return. In the corporate sector, the Fund emphasized industrial
and financial industry debt.
The fiscal year ended on a strong economic note both domestically
and in Europe. The European central banks' response of increasing
interest rates added competitive pressure in the bond market. The
sudden bout of "Asian Flu" provided an offset to the strong domestic
economic releases. A flight to the safety of the US Treasury market
ensued as market participants began to assess the level of risk in
their portfolios (both stock and bond).
Given our expectation that economic growth will remain healthy, our
current strategy in the bond portfolio has been two-pronged. The first
strategy has been to add to premium coupon mortgage-backed debt securities
as a substitute for short treasuries, as they seem underpriced. Our
second strategy has been to purchase long industrial bonds that cheapened
during the recent stock market sell off.
While long term Treasury yields have remained in a narrow range of
between 6% and 7%, the sudden shifts and mood swings of the market
have added difficulty to the management of the Fund. Shareholders
can be assured that our stated investment style will remain intact.
Risk will be managed through a combination of portfolio diversification,
high average credit quality and a relatively stable duration.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 7.67% 1.45%
Three Years 8.90% 6.76%
Since Inception Annualized
12/10/93 5.70% 4.10%
</TABLE>
<TABLE>
Victory Investment Quality Bond Fund
vs. Lehman Aggregate
(Dollars in thousands)
<CAPTION>
Invest Quality Bond Invest Quality Bond @ NAV Lehman Aggregate
<S> <C> <C> <C>
12/31/93 9,421 10,000 10,000
1/31/94 9,528 10,114 10,135
2/28/94 9,390 9,967 9,959
3/31/94 9,184 9,749 9,713
4/30/94 9,111 9,671 9,635
5/31/94 9,101 9,660 9,634
6/30/94 9,076 9,633 9,613
7/31/94 9,234 9,801 9,804
8/31/94 9,229 9,796 9,816
9/30/94 9,108 9,668 9,672
10/31/94 9,088 9,646 9,663
11/30/94 9,093 9,652 9,642
12/31/94 9,175 9,739 9,708
1/31/95 9,327 9,900 9,900
2/28/95 9,528 10,113 10,136
3/31/95 9,568 10,156 10,198
4/30/95 9,700 10,295 10,341
5/31/95 10,075 10,693 10,741
6/30/95 10,128 10,750 10,819
7/31/95 10,087 10,706 10,795
8/31/95 10,203 10,830 10,926
9/30/95 10,290 10,922 11,032
10/31/95 10,417 11,057 11,175
11/30/95 10,565 11,214 11,343
12/31/95 10,705 11,362 11,502
1/31/96 10,748 11,408 11,578
2/29/96 10,573 11,222 11,376
3/31/96 10,492 11,137 11,297
4/30/96 10,421 11,062 11,233
5/31/96 10,379 11,016 11,211
6/30/96 10,493 11,137 11,361
7/31/96 10,515 11,161 11,392
8/31/96 10,479 11,123 11,372
9/30/96 10,662 11,317 11,570
10/31/96 10,901 11,571 11,827
11/30/96 11,091 11,773 12,029
12/31/96 10,968 11,642 11,918
1/31/97 11,007 11,683 11,955
2/28/97 11,019 11,695 11,984
3/31/97 10,886 11,555 11,851
4/30/97 11,033 11,711 12,029
5/31/97 11,125 11,808 12,143
6/30/97 11,251 11,942 12,288
7/31/97 11,557 12,267 12,620
8/31/97 11,440 12,142 12,512
9/30/97 11,595 12,307 12,698
10/31/97 11,737 12,458 12,882
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Lehman Brothers Aggregate Bond Index (Lehman Aggregate) is a broad-based
unmanaged index that represents the general performance of longer-term
(greater than 1 year), investment-grade fixed-income securities.
The performance data quoted represent past performance and therefore,
are not indicative of future results. Total returns are historical
and include the change in share price and reinvestment of dividends
and capital gains distributions, and unless indicated, show the effect
of the maximum 5.75% sales charge. Investment returns and principal
values will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return
figures set forth above may reflect the waiver of a portion of certain
fees for various periods since the Fund's inception date. In such
instances and without such waiver of fees, the total returns would
have been lower.
Fee waivers are voluntary and may be modified or terminated at any
time.
Introduction to Municipal Fixed Income Funds
THE INVESTMENT PROCESS
The Victory Funds offer a series of Municipal investment strategies
that can help you manage your investments. The investment advisor's
fixed income specialists maintain a close watch on the credit ratings
of the issuers of holdings in the Victory Funds. In addition, our
portfolio management team continuously assesses new municipal issues
from across the nation for special values and incremental returns.
TAX-EXEMPT SECURITIES UNIVERSE
2000+ issues reviewed per year;
500 new issues reviewed per year
ISSUE AND ISSUER CREDIT QUALITY
DURATION AND MATURITY SCREEN
INTERMEDIATE-TERM POOL
RELATIVE VALUE
Scarcity/Liquidity; Geographic/Economic Trends;
Positive Curve Convexity; New Issues; Sector Analysis
CAPITAL GAINS
INTERMEDIATE-TERM FUNDS
The Victory Ohio Municipal Bond Fund
The Victory New York Tax-Free Fund
LONG-TERM POOL
RELATIVE VALUE
Scarcity/Liquidity; Geographic/Economic Trends;
Positive Curve Convexity; New Issues; Sector Analysis
CAPITAL GAINS
LONG-TERM FUND
The Victory National Municipal Bond Fund
The portfolio
managers of the Victory Funds
utilize a three-dimensional
approach to managing
municipal portfolios.
1. Superior Research.
Credit analysis of municipal securities and issuers is an on-going
process. Portfolio managers and credit analysts review over 2,000
existing issues annually in addition to up to 500 new issues each
year. Analysts review important factors such as the structure of the
offering and the financial status of the issuing entity, as well as
any underlying credit enhancements, including insurance and letters
of credit.
2. No large "Duration Bets" are taken.
Portfolios are carefully managed to keep their duration consistent
with their appropriate benchmark.
3. Relative Value.
The portfolio manager seeks to identify inefficiencies in the marketplace
that may result in an increase in the relative value of the securities
both in the portfolio and available in the market place. Differences
in relative value of municipal securities are created by factors such
as geographic and economic trends, regulatory changes, forces of supply
and demand and investor sentiment.
The portfolio management team for the Victory Municipal Funds seeks
to keep the municipal portfolios fully invested while focusing on
maintaining superior credit quality and adequate liquidity.
VICTORY
MUNICIPAL
FIXED INCOME
FUNDS
The Victory Ohio Municipal Bond Fund
The Victory New York Tax-Free Fund
The Victory National Municipal Bond Fund
The Federal Reserve Board's preemptive tightening of interest rates
in the first quarter of 1997 allayed the inflationary concerns of
the bond market and set the stage for a bond market rally which has
continued throughout the year. Inflation has continued to remain subdued
and the market remains confident in the Fed's ability to practice
effective monetary policy.
In managing the municipal funds, we keep fairly close to the characteristics
of our benchmarks, which define the levels of interest rate risk and
duration for our funds. Therefore, we focus on undervalued securities,
issue selection and coupon structure in our goal to earn a competitive
return. This relative value style is implemented through the selective
purchase of high quality municipal bonds. The Funds do not undertake
or expose their investments to the potential negative effects of interest
rate, duration and quality bets relative to their benchmarks.
The Victory National Municipal Bond Fund has produced a total return
for the year ending 10/31/97 of 8.10% compared to the Lehman 7-year
Municipal Bond Index of 7.43% for the same period.* Although the National
Muni Bond Fund has up to this time been compared to the Lehman 10-year
Muni Bond Fund Index, the maturity characteristics of the Fund are
more in line with the Lehman 7-year Muni Bond Fund Index. The Lehman
Brothers 7-year Muni Bond Fund Index is an unmanaged index comprised
of investment grade muni bonds with maturities of 6-8 years, weighted
according to the total market value of each bond in the Index.
Going forward, we will continue to employ the relative value strategy
which has served us well in recent years.
The Victory Ohio Municipal Bond Fund
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 7.37% 1.17%
Three Years 9.35% 7.21%
Five Years 7.55% 6.29%
Since Inception Annualized
5/18/90 7.81% 6.96%
</TABLE>
<TABLE>
Victory Ohio Municipal Bond Fund
vs. Lehman 10-Yr Muni
(Dollars in thousands)
<CAPTION>
Ohio Muni Ohio Muni @ NAV Lehman 10-Yr Muni
<S> <C> <C> <C>
5/31/90 9,427 10,000 10,000
6/30/90 9,506 10,085 10,094
7/31/90 9,604 10,188 10,234
8/31/90 9,532 10,112 10,087
9/30/90 9,542 10,122 10,089
10/31/90 9,706 10,296 10,311
11/30/90 9,851 10,450 10,521
12/31/90 9,880 10,481 10,547
1/31/91 10,023 10,633 10,721
2/28/91 10,121 10,737 10,813
3/31/91 10,092 10,706 10,807
4/30/91 10,219 10,840 10,956
5/31/91 10,293 10,919 11,039
6/30/91 10,272 10,897 11,025
7/31/91 10,361 10,991 11,141
8/31/91 10,481 11,119 11,292
9/30/91 10,603 11,248 11,465
10/31/91 10,663 11,312 11,558
11/30/91 10,691 11,341 11,577
12/31/91 10,943 11,608 11,823
1/31/92 10,981 11,648 11,848
2/29/92 10,976 11,644 11,830
3/31/92 10,953 11,619 11,813
4/30/92 11,035 11,706 11,925
5/31/92 11,157 11,836 12,064
6/30/92 11,299 11,986 12,273
7/31/92 11,629 12,336 12,676
8/31/92 11,492 12,191 12,526
9/30/92 11,555 12,258 12,630
10/31/92 11,447 12,143 12,501
11/30/92 11,664 12,373 12,730
12/31/92 11,792 12,510 12,878
1/31/93 11,936 12,662 13,095
2/28/93 12,365 13,117 13,575
3/31/93 12,173 12,913 13,376
4/30/93 12,343 13,094 13,504
5/31/93 12,411 13,166 13,551
6/30/93 12,651 13,420 13,818
7/31/93 12,631 13,400 13,852
8/31/93 12,893 13,677 14,139
9/30/93 13,121 13,919 14,313
10/31/93 13,135 13,933 14,336
11/30/93 12,985 13,774 14,218
12/31/93 13,282 14,090 14,521
1/31/94 13,464 14,283 14,700
2/28/94 13,071 13,866 14,297
3/31/94 12,609 13,376 13,751
4/30/94 12,677 13,448 13,902
5/31/94 12,845 13,626 14,013
6/30/94 12,754 13,530 13,953
7/31/94 12,948 13,735 14,187
8/31/94 12,989 13,779 14,243
9/30/94 12,792 13,570 14,051
10/31/94 12,597 13,363 13,845
11/30/94 12,409 13,164 13,584
12/31/94 12,691 13,463 13,828
1/31/95 13,059 13,854 14,186
2/28/95 13,440 14,257 14,588
3/31/95 13,540 14,363 14,785
4/30/95 13,562 14,387 14,803
5/31/95 14,004 14,856 15,272
6/30/95 13,874 14,718 15,177
7/31/95 13,980 14,830 15,400
8/31/95 14,175 15,037 15,610
9/30/95 14,257 15,124 15,710
10/31/95 14,490 15,371 15,890
11/30/95 14,712 15,607 16,103
12/31/95 14,942 15,851 16,201
1/31/96 15,018 15,932 16,365
2/29/96 14,945 15,854 16,298
3/31/96 14,700 15,594 16,096
4/30/96 14,663 15,555 16,039
5/31/96 14,670 15,563 15,995
6/30/96 14,803 15,704 16,146
7/31/96 14,973 15,883 16,301
8/31/96 14,977 15,888 16,301
9/30/96 15,179 16,102 16,469
10/31/96 15,340 16,273 16,677
11/30/96 15,610 16,559 17,014
12/31/96 15,588 16,536 16,937
1/31/97 15,540 16,485 17,003
2/28/97 15,671 16,624 17,163
3/31/97 15,443 16,383 16,933
4/30/97 15,551 16,497 17,058
5/31/97 15,776 16,735 17,301
6/30/97 15,923 16,891 17,491
7/31/97 16,363 17,358 17,982
8/31/97 16,167 17,150 17,808
9/30/97 16,375 17,370 18,034
10/31/97 16,470 17,472 18,130
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Lehman Brothers 10-Year Municipal Bond (Lehman 10-Yr Muni) Index
is a broad-based unmanaged index that represents the general performance
of investment-grade municipal bonds with maturities of 8 to 12 years.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and reinvestment of dividends and capital
gain distributions, and unless indicated show the effect of the maximum
5.75% sales charge. Investment returns and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or
less than their original cost. The total return figures set forth
above may reflect the waiver of a portion of certain fees for various
periods since the Fund's inception date. In such cases and without
such waiver of fees, the total returns would have been lower.
Certain investors may be subject to Federal AMT.
Fee waivers are voluntary and may be modified or terminated at anytime.
*Reflects total return for Class A shares at Net Asset Value, without
showing the effect of the 5.75% maximum sales charge.
VICTORY
MUNICIPAL
FIXED INCOME
FUNDS
The Victory New York Tax-Free Fund
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
NY TAX-FREE Class A NY TAX-FREE Class B
Maximum Contingent
Net Asset Offering Net Asset Deferred
Value Price Value Charges
<S> <C> <C> <C> <C>
One Year 5.77% -0.34% 4.88% 0.89%
Three Years 7.01% 4.90% 6.22% 5.33%
Five Years 6.39% 5.14% 5.85% 5.69%
Since Inception Annualized
2/11/91 6.90% 5.96% 6.50% 6.50%
</TABLE>
<TABLE>
Victory New York Tax-Free Fund
vs. Lehman 10-Yr Muni
(Dollars in thousands)
<CAPTION>
NY Tax Free Class A NY Tax Free Class A @ NAV Lehman 10-Yr Muni
<S> <C> <C> <C>
2/28/91 9,526 10,000 10,000
3/31/91 9,608 10,086 9,995
4/30/91 9,763 10,248 10,133
5/31/91 9,876 10,367 10,209
6/30/91 9,796 10,283 10,197
7/31/91 9,957 10,452 10,304
8/31/91 10,100 10,602 10,443
9/30/91 10,235 10,744 10,604
10/31/91 10,315 10,827 10,690
11/30/91 10,275 10,786 10,707
12/31/91 10,564 11,089 10,935
1/31/92 10,491 11,012 10,958
2/29/92 10,557 11,081 10,941
3/31/92 10,586 11,112 10,925
4/30/92 10,699 11,231 11,029
5/31/92 10,805 11,342 11,158
6/30/92 10,945 11,489 11,351
7/31/92 11,418 11,985 11,723
8/31/92 11,210 11,767 11,585
9/30/92 11,202 11,759 11,681
10/31/92 11,054 11,603 11,562
11/30/92 11,320 11,883 11,773
12/31/92 11,437 12,005 11,910
1/31/93 11,555 12,129 12,111
2/28/93 11,957 12,551 12,554
3/31/93 11,858 12,448 12,371
4/30/93 11,975 12,570 12,489
5/31/93 12,075 12,675 12,532
6/30/93 12,219 12,827 12,779
7/31/93 12,292 12,903 12,811
8/31/93 12,532 13,154 13,076
9/30/93 12,659 13,288 13,237
10/31/93 12,732 13,365 13,258
11/30/93 12,608 13,234 13,150
12/31/93 12,848 13,487 13,430
1/31/94 12,980 13,625 13,595
2/28/94 12,745 13,378 13,222
3/31/94 12,380 12,996 12,717
4/30/94 12,355 12,969 12,857
5/31/94 12,431 13,049 12,960
6/30/94 12,397 13,014 12,904
7/31/94 12,550 13,174 13,121
8/31/94 12,559 13,183 13,172
9/30/94 12,436 13,054 12,994
10/31/94 12,295 12,906 12,805
11/30/94 12,072 12,672 12,563
12/31/94 12,259 12,869 12,789
1/31/95 12,512 13,133 13,120
2/28/95 12,788 13,423 13,491
3/31/95 12,896 13,537 13,674
4/30/95 12,930 13,572 13,690
5/31/95 13,202 13,859 14,124
6/30/95 13,216 13,873 14,036
7/31/95 13,304 13,965 14,243
8/31/95 13,380 14,045 14,436
9/30/95 13,473 14,143 14,529
10/31/95 13,625 14,302 14,696
11/30/95 13,778 14,463 14,893
12/31/95 13,892 14,582 14,984
1/31/96 13,963 14,657 15,135
2/29/96 13,937 14,630 15,073
3/31/96 13,749 14,433 14,886
4/30/96 13,732 14,414 14,834
5/31/96 13,744 14,427 14,792
6/30/96 13,832 14,520 14,933
7/31/96 13,973 14,668 15,076
8/31/96 14,027 14,724 15,076
9/30/96 14,140 14,843 15,231
10/31/96 14,242 14,950 15,423
11/30/96 14,400 15,115 15,735
12/31/96 14,379 15,093 15,664
1/31/97 14,386 15,101 15,725
2/28/97 14,494 15,215 15,873
3/31/97 14,368 15,082 15,660
4/30/97 14,462 15,181 15,776
5/31/97 14,591 15,317 16,000
6/30/97 14,704 15,435 16,176
7/31/97 14,985 15,730 16,631
8/31/97 14,890 15,630 16,470
9/30/97 15,005 15,751 16,679
10/31/97 15,065 15,813 16,767
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Lehman Brothers 10-year Municipal Bond Index (Lehman 10 Yr Muni)
is a broad-based unmanaged index that represents the general performance
of investment-grade municipal bonds with maturities of 8-12 years.
The Victory National Municipal Bond Fund
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
NATIONAL MUNI Class A NATIONAL MUNI Class B
Maximum Contingent
Net Asset Offering Net Asset Deferred
Value Price Value Charges
<S> <C> <C> <C> <C>
One Year 8.10% 1.88% 6.74% 2.74%
Three Years 9.26% 7.11% 8.25% 7.39%
Since Inception Annualized
2/3/94 6.01% 4.34% 5.16% 4.46%
</TABLE>
<TABLE>
Victory National Municipal Bond Fund
vs. Lehman 7-Yr & 10-Yr Muni
(Dollars in thousands)
<CAPTION>
National Muni Class A National Muni Class A @ NAV Lehman 7-Yr Muni Lehman 10-Yr Muni
<S> <C> <C> <C> <C>
2/28/94 9,425 10,000 10,000 10,000
3/31/94 9,222 9,785 9,733 9,618
4/30/94 9,299 9,866 9,805.02 9,724
5/31/94 9,352 9,923 9,854.05 9,802
6/30/94 9,324 9,893 9,836.31 9,759
7/31/94 9,449 10,026 9,975 9,923
8/31/94 9,494 10,073 10,026.87 9,962
9/30/94 9,301 9,869 9,931.61 9,828
10/31/94 9,127 9,684 9,831.3 9,684
11/30/94 8,926 9,471 9,687.76 9,501
12/31/94 9,090 9,644 9,835.01 9,672
1/31/95 9,362 9,933 10,018.92 9,923
2/28/95 9,562 10,146 10,244.35 10,203
3/31/95 9,677 10,268 10,350.89 10,341
4/30/95 9,690 10,281 10,377.8 10,354
5/31/95 9,954 10,562 10,653.85 10,682
6/30/95 9,942 10,549 10,644.26 10,616
7/31/95 10,083 10,698 10,779.44 10,772
8/31/95 10,207 10,830 10,906.64 10,918
9/30/95 10,261 10,887 10,948.09 10,988
10/31/95 10,406 11,041 11,043.34 11,114
11/30/95 10,531 11,173 11,164.82 11,263
12/31/95 10,697 11,350 11,223.99 11,332
1/31/96 10,797 11,456 11,332.86 11,446
2/29/96 10,816 11,476 11,294.33 11,400
3/31/96 10,655 11,306 11,184.77 11,258
4/30/96 10,632 11,281 11,164.64 11,219
5/31/96 10,643 11,293 11,147.89 11,187
6/30/96 10,704 11,357 11,233.73 11,294
7/31/96 10,816 11,476 11,326.97 11,402
8/31/96 10,803 11,463 11,332.63 11,402
9/30/96 10,892 11,557 11,434.62 11,520
10/31/96 11,013 11,685 11,558.11 11,665
11/30/96 11,198 11,882 11,751.13 11,900
12/31/96 11,174 11,856 11,715.88 11,847
1/31/97 11,180 11,863 11,758.06 11,893
2/28/97 11,281 11,969 11,854.48 12,005
3/31/97 11,149 11,829 11,701.56 11,844
4/30/97 11,229 11,914 11,762.41 11,932
5/31/97 11,394 12,089 11,910.62 12,101
6/30/97 11,517 12,220 12,024.96 12,234
7/31/97 11,833 12,555 12,303.94 12,578
8/31/97 11,706 12,420 12,216.58 12,456
9/30/97 11,846 12,569 12,346.08 12,614
10/31/97 11,905 12,631 12,418.92 12,681
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Lehman Brothers 7-year Muni Bond Fund Index is an unmanaged index
comprised of investment grade muni bonds with maturities of 6-8 years,
weighted according to the total market value of each bond in the Index.
The Lehman Brothers 10-year Municipal Bond Index (Lehman 10 Yr Muni)
is a broad-based unmanaged index that represents the general performance
of investment-grade municipal bonds with maturities of 8-12 years.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and reinvestment of dividends and capital
gain distributions. Performance of the different classes of shares
will vary based on the differences in sales charges and class specific
expenses paid by the shareholders. Class A performance with a sales
charge shows the effect of the maximum 5.75% sales charge applied
at the beginning of the reported period.
The performance figures provided for Class B shares includes the performance
of Class A shares of the Fund prior to the date that the Class B shares
commenced operations. Class B share performance is adjusted to reflect
the applicable contingent deferred sales charge payable by shareholders
that redeem Class B shares at the end of the time periods shown. In
addition, Class B shares are subject to an annual Rule 12b-1 fee of
0.75% of the average daily net assets of Class B shares, and other
class-specific expenses. These Class B expenses are reflected in the
performance data, but only for the period since the Class B shares
commenced operations. (Prior performance of Class A shares has not
been adjusted to reflect these expenses.)
Investment returns and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver
of a portion of certain fees for various periods since the Fund's
inception. In such instances and without such fee waivers, the total
returns would have been lower.
Certain investors may be subject to Federal AMT.
Fee waivers are voluntary and may be modified or terminated at anytime.
Introduction to Equity Funds
Diversified Funds
EQUITY RESEARCH UNIVERSE
DIVERSIFIED MANAGEMENT
Value
Growth
Market Condition Assessment
buy/sell decisions
DIVERSIFIED FUNDS
The Victory Balanced Fund
The Victory Diversified Stock Fund
The Victory Stock Index Fund
The Victory Real Estate Investment Fund
Value Funds
EQUITY RESEARCH UNIVERSE
VALUE MANAGEMENT
Valuation
Statistical Cheapness
Earnings Revisions
buy/sell decisions
VALUE FUNDS
The Victory Value Fund
The Victory Special Value Fund
The Victory Ohio Regional Stock Fund
The Victory Lakefront Fund
Growth Funds
EQUITY RESEARCH UNIVERSE
GROWTH MANAGEMENT
Return Prospects
Statistical Valuation
Risk Assessment
buy/sell decisions
GROWTH FUNDS
The Victory Growth Fund
The Victory Special Growth Fund
The Victory International Growth Fund
THE INVESTMENT PROCESS
The Victory Equity Funds that are managed according to the diversified
style attempt to remain flexible in order to adjust to changing market
conditions.
The Victory Funds that are managed according to a "Value Style" seek
to outperform an appropriate market benchmark while maintaining broad
market sector exposure. The approach to managing these funds is to
target stocks that are statistically inexpensive (low P/Es, low price-to-book,
high-yield stocks) and find those issues where investor sentiment
is improving as evidenced by upward earnings revisions and positive
earning events.
The Victory Equity Funds that are managed according to the growth
style subscribe to the philosophy of "Growth At a Reasonable Price"
(GARP). They seek to identify stocks believed to have future return
prospects greater than the overall market.
VICTORY
EQUITY FUNDS
The Victory Balanced Fund
The Victory Balanced Fund's performance was negatively impacted by
its lower equity exposure compared to the S&P 500 Index, and the Fund's
value style of investing. Consistent with our value style we were
under-weighted in technology, which was one of the best performing
sectors last year, and over-weighted in utilities. The latter was
not among the stellar performing economic sectors last year. In addition,
international equities which comprise 3.8% of the Fund, lagged domestic
equities considerably. Slight changes to asset allocation at the beginning
of the year had modestly reduced domestic equities to 53% from 58%
in the previous year and increased international stocks.
The fixed income portion benefited from an increase in mortgage-backed
securities and corporate bond investments.
Economic conditions of moderate growth and low inflation have been
ideal for stocks. While 30 Year Treasury yields have remained range-bound,
between 6% and 7%, abrupt movements in the market had added pressures
to managing the Fund's fixed income exposure. Once again stocks outperformed
bonds and cash last year. Corporate profits have been quite strong
but there are signs of a slowdown. Concern over Asian economies' weakness
and a related slowdown in domestic profit growth for those companies
with Asian exposure contributed to market volatility late in the year.
Our valuation work indicates that bonds are more attractively priced
than stocks and we have positioned the portfolio accordingly. The
current strategy is two-fold: substituting premium coupon mortgages
for short term Treasury securities and purchasing long industrial
bonds that have cheapened as a result of the stock market sell off.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
BALANCED FUND Class A BALANCED FUND Class B
Maximum Contingent
Net Asset Offering Net Asset Deferred
Value Price Value Charges
<S> <C> <C> <C> <C>
One Year 19.02% 12.20% 17.43% 13.43%
Three Years 18.17% 15.85% 17.46% 16.73%
Since Inception Annualized
12/10/93 13.55% 11.84% 13.03% 12.48%
</TABLE>
<TABLE>
Victory Balanced Fund
vs. S&P 500 & Lipper Balanced
(Dollars in thousands)
<CAPTION>
Balanced Class A Balanced Class A @ NAV S&P 500 Lipper Balanced
<S> <C> <C> <C> <C>
12/31/93 9,426 10,000 10,000 10,000
1/31/94 9,589 10,173 10,340 10,262
2/28/94 9,319 9,886 10,059 10,052
3/31/94 9,040 9,591 9,621 9,678
4/30/94 9,062 9,614 9,744 9,704
5/31/94 9,176 9,735 9,904 9,773
6/30/94 9,064 9,616 9,661 9,599
7/31/94 9,261 9,825 9,978 9,821
8/31/94 9,473 10,050 10,387 10,063
9/30/94 9,235 9,797 10,133 9,872
10/31/94 9,338 9,907 10,361 9,907
11/30/94 9,158 9,716 9,984 9,670
12/31/94 9,264 9,828 10,132 9,751
1/31/95 9,450 10,026 10,394 9,870
2/28/95 9,766 10,361 10,799 10,157
3/31/95 9,932 10,536 11,118 10,334
4/30/95 10,157 10,776 11,445 10,524
5/31/95 10,519 11,159 11,903 10,864
6/30/95 10,582 11,227 12,179 11,059
7/31/95 10,768 11,424 12,583 11,294
8/31/95 10,824 11,483 12,615 11,382
9/30/95 11,118 11,795 13,147 11,710
10/31/95 11,135 11,813 13,100 11,681
11/30/95 11,471 12,169 13,675 12,044
12/31/95 11,684 12,396 13,939 12,233
1/31/96 11,926 12,652 14,413 12,454
2/29/96 11,853 12,575 14,547 12,460
3/31/96 12,015 12,747 14,687 12,507
4/30/96 12,069 12,803 14,904 12,590
5/31/96 12,171 12,912 15,288 12,718
6/30/96 12,261 13,007 15,346 12,760
7/31/96 12,007 12,738 14,668 12,432
8/31/96 12,162 12,902 14,977 12,628
9/30/96 12,619 13,387 15,820 13,095
10/31/96 12,947 13,735 16,257 13,373
11/30/96 13,645 14,475 17,486 13,996
12/31/96 13,383 14,197 17,139 13,825
1/31/97 13,801 14,641 18,210 14,248
2/28/97 13,843 14,686 18,353 14,300
3/31/97 13,513 14,335 17,599 13,885
4/30/97 13,886 14,731 18,650 14,302
5/31/97 14,422 15,300 19,785 14,888
6/30/97 14,823 15,725 20,671 15,372
7/31/97 15,599 16,549 22,316 16,247
8/31/97 15,016 15,931 21,066 15,731
9/30/97 15,597 16,546 22,220 16,359
10/31/97 15,409 16,347 21,478 16,061
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded
common stocks of mid- to large-size companies.
The Lipper Balanced Fund Index is a non-weighted index of the 30 largest
funds within the Lipper Balanced Fund investment category.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and reinvestment of dividends and capital
gain distributions. Performance of the different classes of shares
will vary based on the differences in sales charges and class specific
expenses paid by shareholders. Class A performance with sales charge
shows the effect of the maximum 5.75% sales charge applied at the
beginning of the period.
The performance figures provided for Class B shares includes the performance
of Class A shares of the Fund prior to the date that the Class B shares
commenced operations. Class B share performance is adjusted to reflect
the applicable contingent deferred sales charge payable by shareholders
that redeem Class B shares at the end of the time periods shown. In
addition, Class B shares are subject to an annual Rule 12b-1 fee of
0.75% of the average daily net assets of Class B shares, and other
class-specific expenses. These Class B expenses are reflected in the
performance data, but only for the period since the Class B shares
commenced operations. (Prior performance of Class A shares has not
been adjusted to reflect these expenses.)
Investment returns and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver
of a portion of certain fees for various periods since inception.
In such instances and without such waiver of fees, the total returns
would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
VICTORY
EQUITY FUNDS
The Victory Diversified Stock Fund
The overall stock market, as represented by the S&P 500, surprised
many observers by continuing to power forward for the last eleven
consecutive quarters tying an all-time record set between 1962 and
1965. Many of the traditional valuation techniques such as price to
book value or dividend yield have had to be discarded one by one as
the market's advance seemingly has made them obsolete.
Yet professional investors grounded in the fundamentals of economics
and finance know that one cannot totally ignore the past. So we move
forward cognizant of history while also mindful of the new forces
that are operative in the late 1990's. The two most pertinent of these
forces are the seemingly endless stream of cash looking for a home
in equities and the stunning focus and improving profitability of
the American corporation. While the market has continued to have the
wind at its back, it appears to us that the investments risks are
increasing as well.
Our task then is to continue to earn a competitive rate of return
commensurate with a level of risk that is appropriate for our shareholder
constituency. While we are fully invested with cash reserves at a
paltry 2%, our emphasis is on the "value" economic sectors of basic
industry, consumer cyclicals, financials, and utility companies. The
portfolio is also slightly overweighted in technology, but trading
activity in this sector has been very sensitive to valuation levels,
and we have scaled back positions on the recent excessive strength.
The portfolio continues to de-emphasize consumer staples just as it
has for most of the year. This sector includes many multinational
companies which now have new concerns about the health and stability
of various foreign economies.
We are also consciously bringing down the average market capitalization
of the Fund. Our recent inclusion of several mid sized companies is
an action predicated on the market broadening out to include more
than the "Nifty 50" in its advance.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
DIVERSIFIED FUND Class A DIVERSIFIED FUND Class B
Maximum Contingent
Net Asset Offering Net Asset Deferred
Value Price Value Charges
<S> <C> <C> <C> <C>
One Year 27.96% 20.61% 26.48% 22.48%
Three Years 26.21% 23.75% 25.54% 24.90%
Five Year 19.73% 18.32% 19.35% 19.25%
Since Inception Annualized
10/20/89 16.08% 15.23% 15.85% 15.85%
</TABLE>
<TABLE>
Victory Diversified Stock Fund
vs. S&P 500
(Dollars in thousands)
<CAPTION>
Diversified Stock Class A Diversified Stock Class A @ NAV S&P 500
<S> <C> <C> <C>
10/31/89 9,429 10,000 10,000
11/30/89 9,562 10,141 10,204
12/31/89 9,887 10,486 10,449
1/31/90 9,332 9,897 9,747
2/28/90 9,447 10,019 9,874
3/31/90 9,700 10,288 10,136
4/30/90 9,508 10,084 9,883
5/31/90 10,413 11,044 10,846
6/30/90 10,371 10,999 10,773
7/31/90 10,332 10,958 10,738
8/31/90 9,538 10,116 9,768
9/30/90 9,082 9,633 9,292
10/31/90 9,024 9,571 9,253
11/30/90 9,609 10,191 9,851
12/31/90 9,944 10,546 10,125
1/31/91 10,549 11,188 10,567
2/28/91 11,243 11,924 11,322
3/31/91 11,291 11,976 11,596
4/30/91 11,252 11,934 11,624
5/31/91 11,820 12,536 12,125
6/30/91 11,077 11,748 11,570
7/31/91 11,568 12,269 12,109
8/31/91 11,858 12,577 12,396
9/30/91 11,515 12,213 12,189
10/31/91 11,505 12,202 12,353
11/30/91 11,012 11,679 11,855
12/31/91 12,328 13,076 13,211
1/31/92 12,255 12,998 12,965
2/29/92 12,412 13,164 13,133
3/31/92 12,107 12,841 12,877
4/30/92 12,359 13,108 13,255
5/31/92 12,285 13,030 13,320
6/30/92 12,136 12,871 13,122
7/31/92 12,609 13,373 13,658
8/31/92 12,336 13,083 13,378
9/30/92 12,655 13,421 13,536
10/31/92 12,834 13,612 13,582
11/30/92 13,341 14,149 14,045
12/31/92 13,491 14,309 14,217
1/31/93 13,502 14,321 14,336
2/28/93 13,578 14,401 14,531
3/31/93 13,772 14,607 14,838
4/30/93 13,588 14,411 14,479
5/31/93 13,956 14,802 14,867
6/30/93 13,909 14,752 14,910
7/31/93 13,996 14,844 14,850
8/31/93 14,551 15,433 15,414
9/30/93 14,449 15,325 15,295
10/31/93 14,635 15,522 15,612
11/30/93 14,449 15,325 15,463
12/31/93 14,837 15,736 15,650
1/31/94 15,350 16,280 16,182
2/28/94 14,837 15,736 15,743
3/31/94 14,331 15,199 15,057
4/30/94 14,539 15,420 15,250
5/31/94 14,981 15,889 15,500
6/30/94 14,629 15,515 15,120
7/31/94 14,998 15,907 15,616
8/31/94 15,602 16,548 16,256
9/30/94 15,350 16,280 15,859
10/31/94 15,709 16,661 16,215
11/30/94 15,213 16,135 15,625
12/31/94 15,424 16,359 15,856
1/31/95 15,817 16,776 16,267
2/28/95 16,477 17,475 16,901
3/31/95 16,945 17,972 17,400
4/30/95 17,410 18,465 17,913
5/31/95 18,158 19,258 18,628
6/30/95 18,396 19,511 19,061
7/31/95 18,977 20,127 19,693
8/31/95 19,119 20,278 19,743
9/30/95 19,734 20,930 20,576
10/31/95 19,407 20,583 20,502
11/30/95 20,405 21,642 21,402
12/31/95 20,881 22,146 21,815
1/31/96 21,471 22,772 22,557
2/29/96 22,014 23,348 22,766
3/31/96 22,317 23,669 22,986
4/30/96 22,862 24,247 23,324
5/31/96 23,313 24,726 23,926
6/30/96 23,111 24,511 24,017
7/31/96 22,096 23,435 22,956
8/31/96 22,611 23,981 23,440
9/30/96 23,769 25,209 24,759
10/31/96 24,677 26,173 25,442
11/30/96 26,721 28,341 27,365
12/31/96 26,042 27,620 26,824
1/31/97 27,489 29,155 28,500
2/28/97 27,436 29,099 28,723
3/31/97 26,596 28,207 27,543
4/30/97 27,393 29,053 29,187
5/31/97 29,216 30,987 30,964
6/30/97 30,167 31,996 32,351
7/31/97 32,653 34,632 34,925
8/31/97 31,322 33,220 32,969
9/30/97 33,133 35,141 34,774
10/31/97 31,535 33,446 33,613
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded
common stocks of mid- to large-size companies.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and reinvestment of dividends and capital
gain distributions. Performance of the different classes of shares
will vary based on the differences in sales charges and class specific
expenses paid by shareholders. Class A performance with sales charge
shows the effect of the maximum 5.75% sales charge applied at the
beginning of the period.
The performance figures provided for Class B shares includes the performance
of Class A shares of the Fund prior to the date that the Class B shares
commenced operations. Class B share performance is adjusted to reflect
the applicable contingent deferred sales charge payable by shareholders
that redeem Class B shares at the end of the time periods shown. In
addition, Class B shares are subject to an annual Rule 12b-1 fee of
0.75% of the average daily net assets of Class B shares, and other
class-specific expenses. These Class B expenses are reflected in the
performance data, but only for the period since the Class B shares
commenced operations. (Prior performance of Class A shares has not
been adjusted to reflect these expenses.)
Investment returns and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver
of a portion of certain fees for various periods since inception.
In such instances and without such waiver of fees, the total returns
would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
VICTORY
EQUITY FUNDS
The Victory Stock Index Fund
The objective of the Victory Stock Index Fundis to replicate the performance
of the S&P 500 Index. The Victory Stock Index Fund invests in all
stocks in the S&P 500 Index, in proportion to their weighting in the
Index. This method of management is referred to as passive investing.
Since we strive to replicate the performance of the S&P 500 Index,
we invest in every one of the stocks that comprise the Index; our
sector weights are also closely aligned to that of the Index. We follow
a full-replication strategy, not one of sampling. In addition, we
invest in S&P futures contracts to hedge cash flows, provide liquidity
and reduce tracking error. We do not use futures for speculative or
leveraging purposes.
The S&P 500 Index has continued its rally through the fiscal year
1997. The Victory Stock Index Fund's performance almost matched that
of the S&P 500 with a year to date return of 24.68% versus 25.31%
for the Index. For the fiscal year 1997, the Fund returned 31.16%,
compared to the S&P 500's return of 32.12% for the same period.*
Consistent with its investment objective, the Fund strives to continue
matching the performance of the S&P 500.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 31.16% 23.59%
Three Years 26.71% 24.25%
Since Inception Annualized
12/3/93 21.00% 19.18%
</TABLE>
<TABLE>
Victory Stock Index Fund
vs. S&P 500
(Dollars in thousands)
<CAPTION>
Stock Index Stock Index @ NAV S&P 500
<S> <C> <C> <C>
12/31/93 9,526 10,000 10,000
1/31/94 9,839 10,329 10,340
2/28/94 9,564 10,040 10,059
3/31/94 9,149 9,605 9,621
4/30/94 9,263 9,725 9,744
5/31/94 9,406 9,875 9,904
6/30/94 9,180 9,637 9,661
7/31/94 9,477 9,949 9,978
8/31/94 9,851 10,342 10,387
9/30/94 9,611 10,090 10,133
10/31/94 9,823 10,313 10,361
11/30/94 9,476 9,948 9,984
12/31/94 9,613 10,092 10,132
1/31/95 9,856 10,347 10,394
2/28/95 10,226 10,735 10,799
3/31/95 10,521 11,044 11,118
4/30/95 10,833 11,373 11,445
5/31/95 11,253 11,814 11,903
6/30/95 11,493 12,065 12,179
7/31/95 11,876 12,468 12,583
8/31/95 11,906 12,498 12,615
9/30/95 12,389 13,006 13,147
10/31/95 12,350 12,965 13,100
11/30/95 12,883 13,525 13,675
12/31/95 13,119 13,773 13,939
1/31/96 13,564 14,240 14,413
2/29/96 13,676 14,357 14,547
3/31/96 13,821 14,509 14,687
4/30/96 14,014 14,711 14,904
5/31/96 14,349 15,063 15,288
6/30/96 14,419 15,137 15,346
7/31/96 13,776 14,462 14,668
8/31/96 14,051 14,751 14,977
9/30/96 14,827 15,566 15,820
10/31/96 15,238 15,997 16,257
11/30/96 16,346 17,160 17,486
12/31/96 16,030 16,828 17,139
1/31/97 17,010 17,857 18,210
2/28/97 17,136 17,989 18,353
3/31/97 16,416 17,233 17,599
4/30/97 17,389 18,255 18,650
5/31/97 18,447 19,365 19,785
6/30/97 19,254 20,212 20,671
7/31/97 20,762 21,796 22,316
8/31/97 19,604 20,580 21,066
9/30/97 20,669 21,698 22,220
10/31/97 19,987 20,982 21,478
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded
common stocks of mid- to large-size companies.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and the reinvestment of dividends and capital
gain distributions, and unless indicated show the effect of the maximum
5.75% sales charge. Investment returns and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total return figures set forth above
may reflect the waiver of a portion of certain fees for various periods
since the Fund's inception date. In such cases and without such waiver
of fees, the total returns would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
*Reflects the Fund's total return without showing the effect of the
5.75% maximum sales charge.
VICTORY
EQUITY FUNDS
The Victory Real Estate Investment Fund
The Victory Real Estate Investment Fund returned 22.42% since its
inception on April 30, 1997, versus the return of 17.83% of the Morgan
Stanley REIT Index for the same period.* Our decision to overweight
in the office sector (47% versus 24% for the Index) was mainly instrumental
in achieving this result. This decision was based on our knowledge
of the fundamental strength of this sector. We believe that this sector
will continue to lead growth in the real estate sector over the next
twelve months.
By contrast, we have little confidence in the retail sector as a whole
although some exceptions do exist. Our weighting for this sector is
only 8%, compared to 25% in the Index. The retail sector of malls,
strip shopping centers and outlet centers continues to be overbuilt
and this combined with the changing spending patterns of the consuming
public gives little evidence that this sector can recover in the future.
The Fund invests for the long term with low turnover. However, constant
monitoring of the companies, their management teams, the economics
of the underlying real estate, and the respective markets will alert
us to moving out of a particular stock, property sector or geographical
region.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
Since Inception
4/30/97 22.42% 15.38%
</TABLE>
<TABLE>
Victory Real Estate Investment Fund
vs. MSREIT Index
(Dollars in thousands)
<CAPTION>
Real Estate Investment Fund Real Estate Investment Fund @ NAV MSREIT Index
<S> <C> <C> <C>
4/30/97 9,425.07 10,000 10,000
5/31/97 9,660.7 10,250 10,300.45
6/30/97 10,169.65 10,790 10,844.9
7/31/97 10,744.58 11,400 11,139.3
8/31/97 10,763.43 11,420 11,064.02
9/30/97 11,844.07 12,566.55 12,109.89
10/31/97 11,538.17 12,241.99 11,782.55
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Morgan Stanley REIT Index is a capitalization weighted index with
dividends reinvested of the most actively traded real estate investment
trusts and is designed to be a measure of real estate equity performance.
The index was developed with a base value of 200 as of December 31,
1994.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and the reinvestment of dividends and capital
gain distributions, and unless indicated show the effect of the maximum
5.75% sales charge. Investment returns and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total return figures set forth above
may reflect the waiver of a portion of certain fees for various periods
since the Fund's inception date. In such cases and without such waiver
of fees, the total returns would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
*Reflects total return on Fund performance without showing the effect
of the 5.75% maximum sales charge.
Investments in this Fund are subject to the risks related to direct
investment in real estate, such as real estate risk, regulatory risks,
concentration risk and diversification risk. By itself, the Fund does
not constitute a complete investment plan and should be considered
a long-term investment for investors who can afford to weather changes
in the value of their investment.
VICTORY
EQUITY FUNDS
The Victory Value Fund
The stock market over the twelve months ended October 1997 has surged,
with growth investors having had the upper hand for most of the period.
The Fund saw some variations from the benchmark due to the impact
of sector diversification. For instance, The Victory Value Fund was
underweighted in the technology sector which was the strongest performing
area overall. The electric utilities and the basic industry sectors
significantly lagged the market, which hampered the Fund due to its
exposure to these areas. Another factor affecting performance has
been the dramatic shift during the year from major outperformance
by large capitalization stocks early in the year to small company
stocks towards the end. This is certainly not a surprising development
for the late phase of a long bull run for the large cap issues.
The biggest disappointment for the Fund was its holding of Columbia
HCA, which comprises 0.8% of the Fund, and which is the target of
the largest health care fraud investigation in history. The decision
to remain overweighted in the financial sector was a major plus for
this years' performance. Despite stellar returns in fiscal year 1996,
we feel that industry fundamentals will continue to improve going
forward, and stock valuations continue to show upside potential.
Long term, the basic fundamentals are very strong. The inflation rate
is well contained, interest rates are stable, and therefore a very
conducive environment for financial assets continues. We are cautiously
optimistic that the expansion will continue. Despite recent setbacks,
the political and economic factors contributing to the longevity of
the expansion phase of the current cycle remain intact. As a result
of the current high valuations, we expect equity returns over the
next year to be slightly below the historically high returns of the
past fifteen years. This does not necessarily mean that stock prices
will decline, only that it allows less leeway for mistakes.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 27.24% 19.89%
Three Years 24.71% 22.28%
Since Inception Annualized
12/3/93 19.41% 17.62%
</TABLE>
<TABLE>
Victory Value Fund
vs. S&P 500
(Dollars in thousands)
<CAPTION>
Value Fund Value Fund @ NAV S&P 500
<S> <C> <C> <C>
12/31/93 9,422 10,000 10,000
1/31/94 9,729 10,327 10,340
2/28/94 9,347 9,921 10,059
3/31/94 8,978 9,529 9,621
4/30/94 9,109 9,669 9,744
5/31/94 9,325 9,898 9,904
6/30/94 9,145 9,706 9,661
7/31/94 9,400 9,977 9,978
8/31/94 9,740 10,338 10,387
9/30/94 9,461 10,041 10,133
10/31/94 9,622 10,213 10,361
11/30/94 9,337 9,910 9,984
12/31/94 9,446 10,026 10,132
1/31/95 9,680 10,274 10,394
2/28/95 10,069 10,687 10,799
3/31/95 10,324 10,958 11,118
4/30/95 10,530 11,176 11,445
5/31/95 10,941 11,613 11,903
6/30/95 11,057 11,736 12,179
7/31/95 11,373 12,071 12,583
8/31/95 11,481 12,186 12,615
9/30/95 11,875 12,604 13,147
10/31/95 11,766 12,488 13,100
11/30/95 12,361 13,120 13,675
12/31/95 12,633 13,408 13,939
1/31/96 13,032 13,832 14,413
2/29/96 13,093 13,897 14,547
3/31/96 13,448 14,273 14,687
4/30/96 13,581 14,415 14,904
5/31/96 13,797 14,644 15,288
6/30/96 13,874 14,726 15,346
7/31/96 13,297 14,113 14,668
8/31/96 13,616 14,452 14,977
9/30/96 14,264 15,140 15,820
10/31/96 14,667 15,568 16,257
11/30/96 15,723 16,688 17,486
12/31/96 15,463 16,412 17,139
1/31/97 16,147 17,138 18,210
2/28/97 16,266 17,265 18,353
3/31/97 15,633 16,593 17,599
4/30/97 16,243 17,240 18,650
5/31/97 17,266 18,326 19,785
6/30/97 17,916 19,016 20,671
7/31/97 19,335 20,522 22,316
8/31/97 18,342 19,468 21,066
9/30/97 19,297 20,482 22,220
10/31/97 18,663 19,809 21,478
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded
common stocks of mid- to large-size companies.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and the reinvestment of dividends and capital
gain distributions, and unless indicated show the effect of the maximum
5.75% sales charge. Investment returns and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total return figures set forth above
may reflect the waiver of a portion of certain fees for various periods
since the Fund's inception date. In such cases and without such waiver
of fees, the total returns would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
VICTORY
EQUITY FUNDS
The Victory Special Value Fund
The Victory Special Value Fund's investments during the year were
in line with the Fund's naturally "defensive" orientation and value
style, which often leads to investments in stocks that can be considered
to be in special situations. Today, that orientation has the Fund
overweighted in many industries that are considered economically sensitive,
including paper, transportation, machinery, aerospace, and retail.
Valuation concerns have kept us from having full representation in
the technology sector, and the recent currency devaluations coming
out of Southeast Asia and the decline in economic growth have only
reinforced this position in our view. While we don't expect much of
an impact on the domestic economy, exports will likely be impacted.
Exports have been a large factor powering the growth rates of many
technology companies. Among financials, we prefer insurance stocks
over the banks, although we retain positions in banks with attractive
franchises that we believe will be attractive to acquirers as the
consolidation process in the banking industry evolves.
The Fund is guided by an investment philosophy that states that superior
long-term performance is the result of identifying stocks which are
intrinsically undervalued, statistically inexpensive, and for which
investor sentiment is improving. While the portfolio is built from
the "bottom-up" on this basis, strict risk controls are employed which
serve to enhance the return/risk relationship over time. Examples
of risk controls include a preference for "low expectation" stocks
that fit the above mentioned criteria, and a limit of two times the
benchmark weight for positions in any one sector.
As a value fund with a generally defensive orientation (i.e. low beta),
we are not surprised that the Fund would lag the benchmark during
a period of unusually high returns. History shows that although past
performance does not guarantee future results, the Fund has often
outperformed during periods when returns were more normal or declining.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
SPECIAL VALUE Class A SPECIAL VALUE Class B
Maximum Contingent
Net Asset Offering Net Asset Deferred
Value Price Value Charge
<S> <C> <C> <C> <C>
One Year 27.05% 19.77% 25.41% 21.41%
Three Years 21.83% 19.45% 21.03% 20.35%
Since Inception Annualized
12/3/93 18.06% 16.28% 17.48% 17.00%
</TABLE>
<TABLE>
Victory Special Value Fund
vs. S&P 400 Mid Cap
(Dollars in thousands)
<CAPTION>
Special Value Class A Special Value Class A @ NAV S&P 400 Mid Cap
<S> <C> <C> <C>
12/31/93 9,423 10,000 10,000
1/31/94 9,652 10,243 10,233
2/28/94 9,643 10,233 10,087
3/31/94 9,319 9,889 9,620
4/30/94 9,273 9,841 9,692
5/31/94 9,365 9,938 9,600
6/30/94 9,179 9,741 9,269
7/31/94 9,455 10,034 9,583
8/31/94 9,777 10,376 10,085
9/30/94 9,610 10,198 9,897
10/31/94 9,693 10,287 10,005
11/30/94 9,240 9,806 9,553
12/31/94 9,543 10,127 9,641
1/31/95 9,580 10,167 9,741
2/28/95 10,065 10,681 10,252
3/31/95 10,317 10,948 10,430
4/30/95 10,532 11,176 10,639
5/31/95 10,737 11,395 10,896
6/30/95 10,924 11,592 11,340
7/31/95 11,374 12,070 11,931
8/31/95 11,590 12,299 12,152
9/30/95 11,683 12,399 12,446
10/31/95 11,439 12,139 12,126
11/30/95 11,900 12,628 12,656
12/31/95 12,099 12,840 12,624
1/31/96 12,254 13,005 12,807
2/29/96 12,497 13,262 13,243
3/31/96 12,633 13,406 13,401
4/30/96 13,002 13,798 13,811
5/31/96 13,051 13,850 13,997
6/30/96 13,131 13,935 13,787
7/31/96 12,538 13,305 12,855
8/31/96 13,092 13,894 13,596
9/30/96 13,571 14,402 14,189
10/31/96 13,795 14,640 14,230
11/30/96 14,536 15,426 15,032
12/31/96 14,423 15,306 15,048
1/31/97 14,736 15,638 15,613
2/28/97 14,851 15,760 15,485
3/31/97 14,501 15,389 14,825
4/30/97 14,753 15,656 15,209
5/31/97 15,989 16,968 16,539
6/30/97 16,464 17,472 17,004
7/31/97 17,534 18,608 18,687
8/31/97 17,492 18,563 18,664
9/30/97 18,252 19,370 19,737
10/31/97 17,527 18,600 18,878
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Standard & Poor's 400 Mid-Cap Index (S&P 400 Mid Cap) is a broad-based
unmanaged index that represents the general performance of domestically
traded common stocks of mid-sized companies.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and reinvestment of dividends and capital
gain distributions. Performance of the different classes of shares
will vary based on the differences in sales charges and class specific
expenses paid by shareholders. Class A performance with sales charge
shows the effect of the maximum 5.75% sales charge applied at the
beginning of the period.
The performance figures provided for Class B shares includes the performance
of Class A shares of the Fund prior to the date that the Class B shares
commenced operations. Class B share performance is adjusted to reflect
the applicable contingent deferred sales charge payable by shareholders
that redeem Class B shares at the end of the time periods shown. In
addition, Class B shares are subject to an annual Rule 12b-1 fee of
0.75% of the average daily net assets of Class B shares, and other
class-specific expenses. These Class B expenses are reflected in the
performance data, but only for the period since the Class B shares
commenced operations. (Prior performance of Class A shares has not
been adjusted to reflect these expenses.)
Investment returns and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The total return figure set forth above may reflect the waiver
of a portion of certain fees for various periods since the Fund's
inception. In such instances and without such waiver of fees, the
total returns would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
VICTORY
EQUITY FUNDS
The Victory Ohio Regional Stock Fund
The Fund's objective is to seek capital appreciation by investing
in a diversified group of common stocks and securities convertible
into common stocks issued by companies whose headquarters are located
in the state of Ohio. The Ohio Regional Stock Fund has an investment
style that can be characterized as having a mid capitalization, value
orientation. This means that we look out for stocks of mainly mediums-sized
companies which are selling below what we judge to be their fair market
values.
As of October 31, 1997, the Fund's one year performance of 34.61%
exceeds that of the S&P 500 for the same period.* The Fund's performance
was aided by a large exposure to capital goods, technology and financials.
There also were a couple of buyouts of companies we held, which is
always a pleasant surprise. Belden and Blake and Haverfield Companies
were acquired, boosting the Fund's performance. The Fund was hurt
by exposure to basic industry.
The current market's price level impels caution, especially in the
light of the surprising volatility in stock prices in the absence
of earnings disappointments. For this reason, we have taken the Fund
to a market weight in utilities for the first time. Going forward,
we would expect a lower exposure to banks and an increase in exposure
to insurance companies. We expect small to mid capitalization stocks
to outperform large caps, and value stocks to outperform high multiple
growth stocks.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
OHIO REGIONAL Class A OHIO REGIONAL Class B
Maximum Maximum
Net Asset Offering Net Asset Offering
Value Price Value Price
<S> <C> <C> <C> <C>
One Year 34.61% 26.84% 32.71% 28.71%
Three Years 22.85% 20.44% 21.97% 21.30%
Five Years 18.87% 17.47% 18.37% 18.26%
Since Inception Annualized
10/20/89 15.10% 14.25% 14.80% 14.80%
</TABLE>
<TABLE>
Victory Ohio Regional Stock Fund
vs. S&P 500
(Dollars in thousands)
<CAPTION>
Ohio Regional Class A Ohio Regional Class A @ NAV S&P 500
<S> <C> <C> <C>
10/31/89 9,529 10,000 10,000
11/30/89 9,539 10,010 10,204
12/31/89 9,592 10,065 10,449
1/31/90 8,863 9,301 9,747
2/28/90 9,060 9,507 9,874
3/31/90 9,196 9,651 10,136
4/30/90 8,939 9,380 9,883
5/31/90 9,514 9,983 10,846
6/30/90 9,571 10,044 10,773
7/31/90 9,193 9,647 10,738
8/31/90 7,948 8,340 9,768
9/30/90 7,134 7,486 9,292
10/31/90 6,801 7,137 9,253
11/30/90 7,507 7,877 9,851
12/31/90 7,818 8,204 10,125
1/31/91 8,669 9,098 10,567
2/28/91 9,379 9,842 11,322
3/31/91 9,866 10,353 11,596
4/30/91 10,029 10,524 11,624
5/31/91 10,681 11,209 12,125
6/30/91 10,140 10,641 11,570
7/31/91 10,642 11,168 12,109
8/31/91 10,909 11,447 12,396
9/30/91 11,143 11,694 12,189
10/31/91 11,473 12,039 12,353
11/30/91 11,411 11,974 11,855
12/31/91 12,403 13,015 13,211
1/31/92 12,851 13,485 12,965
2/29/92 13,372 14,032 13,133
3/31/92 13,233 13,887 12,877
4/30/92 12,992 13,634 13,255
5/31/92 12,930 13,568 13,320
6/30/92 12,391 13,003 13,122
7/31/92 12,843 13,477 13,658
8/31/92 12,475 13,091 13,378
9/30/92 12,517 13,135 13,536
10/31/92 12,791 13,423 13,582
11/30/92 13,467 14,132 14,045
12/31/92 13,753 14,432 14,217
1/31/93 14,083 14,778 14,336
2/28/93 14,104 14,800 14,531
3/31/93 14,474 15,189 14,838
4/30/93 14,154 14,853 14,479
5/31/93 14,602 15,323 14,867
6/30/93 14,608 15,330 14,910
7/31/93 14,897 15,633 14,850
8/31/93 15,250 16,003 15,414
9/30/93 15,465 16,228 15,295
10/31/93 15,754 16,532 15,612
11/30/93 15,422 16,183 15,463
12/31/93 16,032 16,823 15,650
1/31/94 16,567 17,385 16,182
2/28/94 16,545 17,362 15,743
3/31/94 15,738 16,516 15,057
4/30/94 16,051 16,844 15,250
5/31/94 15,828 16,609 15,500
6/30/94 15,687 16,462 15,120
7/31/94 16,012 16,803 15,616
8/31/94 16,663 17,485 16,256
9/30/94 16,433 17,244 15,859
10/31/94 16,376 17,185 16,215
11/30/94 15,713 16,489 15,625
12/31/94 16,037 16,829 15,856
1/31/95 16,168 16,967 16,267
2/28/95 16,585 17,404 16,901
3/31/95 16,922 17,758 17,400
4/30/95 17,532 18,398 17,913
5/31/95 18,249 19,150 18,628
6/30/95 18,755 19,681 19,061
7/31/95 19,618 20,586 19,693
8/31/95 19,762 20,737 19,743
9/30/95 20,002 20,990 20,576
10/31/95 19,149 20,095 20,502
11/30/95 19,978 20,965 21,402
12/31/95 20,274 21,276 21,815
1/31/96 20,212 21,210 22,557
2/29/96 20,537 21,551 22,766
3/31/96 21,553 22,617 22,986
4/30/96 21,966 23,051 23,324
5/31/96 22,429 23,537 23,926
6/30/96 22,275 23,375 24,017
7/31/96 21,234 22,283 22,956
8/31/96 21,798 22,875 23,440
9/30/96 22,694 23,815 24,759
10/31/96 22,556 23,670 25,442
11/30/96 24,114 25,305 27,365
12/31/96 24,502 25,712 26,824
1/31/97 24,976 26,210 28,500
2/28/97 25,387 26,640 28,723
3/31/97 24,592 25,806 27,543
4/30/97 24,707 25,928 29,187
5/31/97 26,853 28,179 30,964
6/30/97 28,088 29,475 32,351
7/31/97 29,657 31,122 34,925
8/31/97 29,310 30,757 32,969
9/30/97 31,302 32,847 34,774
10/31/97 30,361 31,860 33,613
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded
common stocks of mid- to large-size companies.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and reinvestment of dividends and capital
gain distributions. Performance of the different classes of shares
will vary based on the differences in sales charges and class specific
expenses paid by shareholders. Class A performance with sales charge
shows the effect of the maximum 5.75% sales charge applied at the
beginning of the period.
The performance figures provided for Class B shares includes the performance
of Class A shares of the Fund prior to the date that the Class B shares
commenced operations. Class B share performance is adjusted to reflect
the applicable contingent deferred sales charge payable by shareholders
that redeem Class B shares at the end of the time periods shown. In
addition, Class B shares are subject to an annual Rule 12b-1 fee of
0.75% of the average daily net assets of Class B shares, and other
class-specific expenses. These Class B expenses are reflected in the
performance data, but only for the period since the Class B shares
commenced operations. (Prior performance of Class A shares has not
been adjusted to reflect these expenses.)
Investment returns and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver
of a portion of certain fees for various periods since inception.
In such instances and without such waiver of fees, the total returns
would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
*Reflects the total return on Class A shares without showing the effect
of the 5.75% maximum sales charge.
Regional Investing may involve additional risks since the companies
are located in one geographic region.
VICTORY
EQUITY FUNDS
The Victory Lakefront Fund
In managing the Victory Lakefront Fund we emphasize a bottom up style
of stock selection and an unwavering adherence to value investing.
Our sector positioning--specifically overweighted positions in top
performing sectors such as capital goods, financials, and technology,
have helped the Fund's performance to date. In general, the Fund invests
in the stocks of companies which we believe are undervalued relative
to their peer group, the overall market, or the current fair value.
Looking ahead, we remain bullish on equities. The market scenario
is characterized by low inflation and high employment, low interest
rates, solid corporate earnings growth, increases in retirement savings
plans, greater overseas trade, a shrinking equity supply, and increased
productivity. Although we would not be surprised by some mild corrections,
or short periods of market stagnation due to negative earnings surprises
or inflation spikes, these are likely to be temporary and would signal
buying opportunities.
The slowdown in large cap performance in the last quarter of fiscal
1997 had much to do with the overreaction, in our view, to the impact
of the "Asian Currency Crisis" and the potentially adverse effect
on the earnings of US companies with international exposure. Firstly,
the earnings implications of recent events are likely to be shortlived
and secondly, US companies are extremely diversified geographically
and are therefore able to weather periodic currency problems. In any
event, these challenges are the price of admission to compete in the
global marketplace.
The Fund, given its value orientation, possesses somewhat of a natural
hedge against market corrections in that most holdings are already
considered relatively inexpensive and would therefore have the potential
to hold up better during market corrections or long periods of stagnation.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
Since Inception
3/3/97 13.87% 7.32%
</TABLE>
<TABLE>
Victory Lakefront Fund
vs. S&P 500
(Dollars in thousands)
<CAPTION>
Lakefront Fund Lakefront Fund @ NAV S&P 500
<S> <C> <C> <C>
3/1/97 10,000 10,000 10,000
3/31/97 8,963.24 9,519.685 9,589
4/30/97 9,433.97 10,010.18 10,162
5/31/97 10,009.44 10,620.81 10,780
6/30/97 10,273.59 10,944.32 11,263
7/31/97 11,270.14 11,959.35 12,159
8/31/97 10,711.37 11,366.41 11,478
9/30/97 11,184.91 11,911.45 12,107
10/31/97 10,729.96 11,386.98 11,702
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded
common stocks of mid- to large-size companies.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and the reinvestment of dividends and capital
gain distributions, and unless indicated show the effect of the maximum
5.75% sales charge. Investment returns and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total return figures set forth above
may reflect the waiver of a portion of certain fees for various periods
since the Fund's inception date. In such cases and without such waiver
of fees, the total returns would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
VICTORY
EQUITY FUNDS
The Victory Growth Fund
Problems in Southeast Asia clearly have added some uncertainty to
the US Equity Markets. The US economy however continues to remain
strong with low inflation, good profit growth, and low interest rates.
We are optimistic that the equity market can make further modest gains
following the October 1997 sell-off.
The Victory Growth Fund emphasizes high-quality, large capitalization
companies with above-average earnings prospects. These companies typically
have strong balance sheets, high returns on capital and sound management.
In addition, most of the companies in the Fund have more consistent
and less volatile earnings profiles than the average S&P 500 company.
In periods of uncertainty, such as the stock market sell-off in Asia,
investors seek quality, safety and liquidity and the Victory Fund
is well positioned to serve this need.
The Victory Growth Fund was up 29.1% versus the S&P 500 being up 32.1%
for the one year period ended 10/31/97.* Although the Victory Fund
underperformed the S&P 500, the Fund's performance was very good when
compared to equity mutual funds in general and equity growth mutual
funds in particular. For instance, the Lipper Growth Fund Index returned
28.4% for the fiscal year.** The Fund benefited from emphasis on large
capitalization growth companies in the consumer goods, capital goods,
and technology areas. The Fund was underweighted in the financial
sector, one of the best performing stock market sectors, and this
was a drag on Fund performance.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 29.08% 21.65%
Three Years 25.04% 22.62%
Since Inception Annualized
12/3/93 19.64% 17.85%
</TABLE>
<TABLE>
Victory Growth Fund
vs. S&P 500
(Dollars in thousands)
<CAPTION>
Growth Fund Growth Fund @ NAV S&P 500
<S> <C> <C> <C>
12/31/93 9,427 10,000 10,000
1/31/94 9,756 10,349 10,340
2/28/94 9,530 10,110 10,059
3/31/94 9,094 9,647 9,621
4/30/94 9,217 9,777 9,744
5/31/94 9,434 10,007 9,904
6/30/94 9,102 9,655 9,661
7/31/94 9,357 9,926 9,978
8/31/94 9,707 10,297 10,387
9/30/94 9,411 9,983 10,133
10/31/94 9,695 10,285 10,361
11/30/94 9,439 10,013 9,984
12/31/94 9,380 9,950 10,132
1/31/95 9,571 10,153 10,394
2/28/95 9,886 10,487 10,799
3/31/95 10,097 10,711 11,118
4/30/95 10,365 10,995 11,445
5/31/95 10,700 11,351 11,903
6/30/95 10,934 11,599 12,179
7/31/95 11,251 11,935 12,583
8/31/95 11,164 11,843 12,615
9/30/95 11,715 12,428 13,147
10/31/95 11,686 12,397 13,100
11/30/95 12,157 12,897 13,675
12/31/95 12,332 13,082 13,939
1/31/96 12,703 13,476 14,413
2/29/96 12,834 13,614 14,547
3/31/96 12,954 13,741 14,687
4/30/96 13,155 13,955 14,904
5/31/96 13,607 14,435 15,288
6/30/96 13,772 14,609 15,346
7/31/96 13,278 14,086 14,668
8/31/96 13,540 14,364 14,977
9/30/96 14,403 15,279 15,820
10/31/96 14,685 15,578 16,257
11/30/96 15,834 16,797 17,486
12/31/96 15,408 16,345 17,139
1/31/97 16,312 17,304 18,210
2/28/97 16,459 17,460 18,353
3/31/97 15,677 16,630 17,599
4/30/97 16,698 17,713 18,650
5/31/97 17,781 18,863 19,785
6/30/97 18,512 19,638 20,671
7/31/97 19,817 21,022 22,316
8/31/97 18,459 19,582 21,066
9/30/97 19,440 20,622 22,220
10/31/97 18,956 20,108 21,478
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded
common stocks of mid- to large-size companies.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and the reinvestment of dividends and capital
gains distributions, and unless indicated show the effect of the maximum
5.75% sales charge. Investment returns and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total return figures set forth above
may reflect the waiver of a portion of certain fees for various periods
since the Fund's inception date. In such cases and without such waiver
of fees, the total returns would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
*Reflects the total return of the Fund without showing the effect
of of the 5.75% maximum sales charge
**The Lipper Growth Fund Index is a non-weighted index of the 30 largest
funds within the Lipper growth fund category.
VICTORY
EQUITY FUNDS
The Victory Special Growth Fund
The long overdue rally in small company stocks, which began towards
the end of April 1997, occurred after such stocks had reached their
lowest valuations relative to large companies in over five years.
The rebound in small company stock prices picked up momentum over
the summer supported by strong earnings reports. The Victory Special
Growth Fund has no predetermined industry weightings, but investment
themes do emerge as we find prosperous companies clustered in strong
economic sectors. This forces us to look beyond businesses that are
classically defined as growth areas, and examine undiscovered opportunities
in stocks which meet our 25% earnings growth rate hurdle. For instance,
our initial investment in the oil drillers, just as this group was
emerging from a painful period, is a prime example of this kind of
creative research.
Going forward, we believe that this trend towards small cap outperformance
can be sustained and will draw increasing investor attention, especially
since it is occurring at the same time as a slowdown in the S&P 500.
It is likely that the profit growth of larger companies will continue
to be hampered by the negative impact of a strong dollar and a diminished
ability to affect further cost-cutting. We also expect money to be
flowing into small caps due to the lowering of the capital gains tax
rate and the devaluation in Asian currency which has soured risk-oriented
investors in those markets and may lead them to domestic emerging
growth companies instead.
Looking ahead to 1998 it is our opinion that better earnings potential
should propel small stock prices higher from current valuations, which
are still very close to their historical lows. Based on 1998 earnings
growth estimates of +51% and a P/E ratio of 25, the stocks in the
portfolio are selling at one-half their growth rates. Domestic emerging
growth stocks offer investors the opportunity to share in the wealth
creation of ongoing entrepreneurial activity which is the hallmark
of our capitalist system. Somewhere within our universe of companies
is the next Microsoft.
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
Maximum
Net Asset Offering
Value Price
<S> <C> <C>
One Year 20.62% 13.70%
Three Years 20.39% 18.03%
Since Inception Annualized
1/11/94 15.10% 13.32%
</TABLE>
<TABLE>
Victory Special Growth Fund
vs. Russell 2000
(Dollars in thousands)
<CAPTION>
Special Growth Special Growth @ NAV Russell 2000
<S> <C> <C> <C>
1/31/94 9,425 10,000 10,000
2/28/94 9,576 10,160 9,964
3/31/94 8,944 9,490 9,438
4/30/94 9,255 9,820 9,494
5/31/94 8,916 9,460 9,387
6/30/94 8,426 8,940 9,068
7/31/94 8,615 9,140 9,217
8/31/94 9,076 9,630 9,731
9/30/94 9,095 9,650 9,699
10/31/94 9,227 9,790 9,660
11/30/94 8,869 9,410 9,270
12/31/94 9,148 9,706 9,519
1/31/95 8,968 9,515 9,399
2/28/95 9,252 9,816 9,790
3/31/95 9,629 10,217 9,959
4/30/95 9,950 10,557 10,180
5/31/95 10,045 10,657 10,355
6/30/95 10,498 11,138 10,892
7/31/95 11,168 11,849 11,520
8/31/95 11,253 11,939 11,758
9/30/95 11,517 12,220 11,968
10/31/95 11,149 11,829 11,433
11/30/95 11,621 12,330 11,913
12/31/95 11,970 12,701 12,227
1/31/96 11,895 12,621 12,214
2/29/96 12,471 13,232 12,595
3/31/96 12,660 13,432 12,851
4/30/96 13,566 14,393 13,539
5/31/96 14,085 14,944 14,072
6/30/96 13,254 14,063 13,494
7/31/96 11,942 12,671 12,316
8/31/96 13,066 13,863 13,031
9/30/96 13,830 14,674 13,540
10/31/96 13,349 14,163 13,331
11/30/96 13,717 14,554 13,880
12/31/96 14,134 14,997 14,244
1/31/97 14,421 15,301 14,529
2/28/97 12,988 13,780 14,177
3/31/97 11,950 12,679 13,508
4/30/97 11,574 12,280 13,545
5/31/97 13,324 14,137 15,052
6/30/97 13,937 14,787 15,697
7/31/97 15,024 15,940 16,428
8/31/97 15,854 16,821 16,804
9/30/97 17,337 18,394 18,033
10/31/97 16,101 17,083 17,241
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
The Russell 2000 Index (Russell 2000) is a broad-based unmanaged index
that represents the general performance of domestically traded common
stocks of small- to mid-sized companies.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and the reinvestment of dividends and capital
gains distributions, and unless indicated show the effect of the maximum
5.75% sales charge. Investment returns and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total return figures set forth above
may reflect the waiver of a portion of certain fees for various periods
since the Fund's inception date. In such cases and without such waiver
of fees, the total returns would have been lower. Small capitalization
funds typically carry additional risks since smaller companies generally
have a higher risk of failure and, by definition, are not as well
established as "blue-chip" companies. Historically, smaller companies'
stocks have experienced a greater degree of market volatility than
average.
Fee waivers are voluntary and may be modified or terminated at anytime.
VICTORY
EQUITY FUNDS
The Victory International Growth Fund
Towards the end of fiscal 1997, global markets experienced extremely
volatile conditions. In emerging markets, particularly in southeast
Asia and subsequently Latin America, currency turmoil, both actual
and perceived, was the catalyst. Given the economic interrelationships
among the Asian countries, soon other parts of the region, like Malaysia,
Hong Kong and Japan, also saw significant declines in their stock
markets. Because of the nature of global markets, it was inevitable
that developed economies within Europe also were affected.
The Fund's outperformance for the fiscal year relative to its index
can partly be attributed to our decision to underweight certain southeast
Asian countries while maintaining an above average exposure to countries
such as the Netherlands, Finland, Norway and Australia.
Southeast Asian economies are likely to continue to experience the
impacts of weak currencies, restrictive financial policies and slower
economic growth, while capital inflows will remain unpredictable.
Domestic-led recoveries will be essential in countries such as Japan
and Malaysia, with financial reform being at the forefront. In Europe,
we will closely monitor the development of the European Monetary Union
("EMU"), and its new currency, the "Euro." Growth in emerging economies
is expected to continue as large foreign companies focus their attention
away from mature markets. Typically dependent on a strong US dollar,
capital flows into these countries will continue but growth levels
are unlikely to reach levels recently experienced.
The Fund has either removed or reduced the weightings of those stocks
whose fundamentals may be adversely affected by a slowdown in southeast
Asia. We will continue to maintain our disciplined approach, but will
look for "bargains."
<TABLE>
Total Return
As of 10/31/97
<CAPTION>
INTERNATIONAL GROWTH INTERNATIONAL GROWTH
Class A Class B
Maximum Contingent
Net Asset Offering Net Asset Deferred
Value Price Value Charges
<S> <C> <C> <C> <C>
One Year 6.04% -0.03% 4.68% 0.68%
Three Years 2.98% 0.98% 2.30% 1.35%
Five Years 10.25% 8.97% 9.81% 9.67%
Since Inception Annualized
5/18/90 6.21% 5.37% 5.93% 5.93%
</TABLE>
<TABLE>
Victory International Growth Fund
vs. MSCI EAFE
(Dollars in thousands)
<CAPTION>
International Growth Class A International Growth Class A @ NAV MSCII EAFE
<S> <C> <C> <C>
5/31/90 9,429 10,000 10,000
6/30/90 9,620 10,203 9,912
7/31/90 9,883 10,482 10,051
8/31/90 8,840 9,376 9,075
9/30/90 8,267 8,768 7,811
10/31/90 8,938 9,479 9,028
11/30/90 8,900 9,439 8,495
12/31/90 8,749 9,279 8,633
1/31/91 8,983 9,527 8,912
2/28/91 9,547 10,125 9,867
3/31/91 9,234 9,794 9,275
4/30/91 9,412 9,983 9,366
5/31/91 9,274 9,836 9,464
6/30/91 8,843 9,378 8,769
7/31/91 9,092 9,643 9,199
8/31/91 9,142 9,696 9,012
9/30/91 9,360 9,927 9,520
10/31/91 9,200 9,757 9,655
11/30/91 8,970 9,513 9,204
12/31/91 9,604 10,186 9,680
1/31/92 9,543 10,121 9,473
2/29/92 9,392 9,961 9,134
3/31/92 9,069 9,619 8,531
4/30/92 9,221 9,779 8,571
5/31/92 9,634 10,218 9,145
6/30/92 9,675 10,261 8,712
7/31/92 9,291 9,854 8,489
8/31/92 9,533 10,111 9,021
9/30/92 9,493 10,068 8,843
10/31/92 9,009 9,554 8,379
11/30/92 8,958 9,501 8,458
12/31/92 8,989 9,533 8,502
1/31/93 8,968 9,512 8,501
2/28/93 9,150 9,704 8,757
3/31/93 9,715 10,303 9,521
4/30/93 10,653 11,298 10,424
5/31/93 10,794 11,448 10,644
6/30/93 10,532 11,170 10,478
7/31/93 10,875 11,534 10,845
8/31/93 11,702 12,411 11,431
9/30/93 11,813 12,529 11,173
10/31/93 12,035 12,764 11,518
11/30/93 11,279 11,962 10,511
12/31/93 12,217 12,957 11,270
1/31/94 12,913 13,695 12,223
2/28/94 12,903 13,684 12,189
3/31/94 12,419 13,171 11,664
4/30/94 12,701 13,470 12,159
5/31/94 12,509 13,267 12,089
6/30/94 12,610 13,374 12,260
7/31/94 12,822 13,599 12,378
8/31/94 13,155 13,952 12,671
9/30/94 12,983 13,770 12,272
10/31/94 13,437 14,251 12,680
11/30/94 12,509 13,267 12,071
12/31/94 12,549 13,309 12,146
1/31/95 11,656 12,362 11,680
2/28/95 11,571 12,272 11,646
3/31/95 12,315 13,061 12,373
4/30/95 12,655 13,422 12,838
5/31/95 12,634 13,399 12,685
6/30/95 12,931 13,715 12,462
7/31/95 13,378 14,188 13,238
8/31/95 13,165 13,963 12,733
9/30/95 13,388 14,199 12,982
10/31/95 13,101 13,895 12,633
11/30/95 13,176 13,974 12,985
12/31/95 13,517 14,336 13,508
1/31/96 13,591 14,415 13,563
2/29/96 13,591 14,415 13,609
3/31/96 13,772 14,606 13,898
4/30/96 14,176 15,034 14,302
5/31/96 13,942 14,786 14,039
6/30/96 14,059 14,910 14,118
7/31/96 13,676 14,505 13,705
8/31/96 13,666 14,493 13,735
9/30/96 14,032 14,883 14,100
10/31/96 13,841 14,679 13,956
11/30/96 14,426 15,300 14,511
12/31/96 14,368 15,238 14,325
1/31/97 14,114 14,969 13,823
2/28/97 14,169 15,027 14,049
3/31/97 14,213 15,074 14,100
4/30/97 14,323 15,191 14,175
5/31/97 14,963 15,869 15,097
6/30/97 15,558 16,501 15,930
7/31/97 15,735 16,688 16,188
8/31/97 14,820 15,717 14,979
9/30/97 15,713 16,665 15,818
10/31/97 14,676 15,565 14,602
</TABLE>
Graph reflects investment growth from end of month of fund commencement.
*MSCI EAFE Index--Morgan Stanley Capital International Europe, Australia,
and Far East Index (MSCI EAFE) is a broad based capitalization weighted
unmanaged index that represents the general performance of over 1,000
companies of the European, Australian and Far Eastern equity markets.
The performance data quoted represent past performance and are not
indicative of future results. Total returns are historical and include
the change in share price and reinvestment of dividends and capital
gain distributions. Performance of the different classes of shares
will vary based on the differences in sales charges and class specific
expenses paid by shareholders. Class A performance with sales charge
shows the effect of the maximum 5.75% sales charge applied at the
beginning of the period.
The performance figures provided for Class B shares includes the performance
of Class A shares of the Fund prior to the date that the Class B shares
commenced operations. Class B share performance is adjusted to reflect
the applicable contingent deferred sales charge payable by shareholders
that redeem Class B shares at the end of the time periods shown. In
addition, Class B shares are subject to an annual Rule 12b-1 fee of
0.75% of the average daily net assets of Class B shares, and other
class-specific expenses. These Class B expenses are reflected in the
performance data, but only for the period since the Class B shares
commenced operations. (Prior performance of Class A shares has not
been adjusted to reflect these expenses.)
Investment returns and principle value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver
of a portion of certain fees for various periods since the Fund's
inception. In such instances and without such waiver of fees, the
total returns would have been lower.
Fee waivers are voluntary and may be modified or terminated at anytime.
International investing is subject to certain factors such as currency
exchange rate volatility, possible political, social and economic
instability, foreign taxation and differences in auditing and other
financial standards.
HOW TO READ YOUR FINANCIAL STATEMENT
This guide will assist you in extracting information from the report
which is most important to you.
THE STATEMENT OF ASSETS AND LIABILITIES
Presents all of the assets and liabilities of eachmutual Fund. This
is each individual Fund's "balance sheet" as of the date of the
statement.
The Financial Statements summarize and describe the Fund's financial
transactions. They are broken down into four different statements.
1. Summary of the mutual fund's assets stated at market value including
investments owned, dividends, interest and other amounts owed to each
Fund by outside parties, and other assets owned by each fund.
2. Summary of all amounts owed by each Fund including distributions
declared but not yet paid to shareholders and other amounts due to
outside parties.
3. Summary of the amounts that comprise each Fund's net assets including
capital, undistributed net investment income, unrealized gains from
investments owned and realized gains from investments sold.
4. The number of shares owned by shareholders of each Fund.
5. The market worth of each mutual fund's total net assets divided
by the number of outstanding shares.
6. The net asset value per share plus sales charges.
THE STATEMENT OF OPERATIONS
Presents the results of operating activities during the period.
1. Investment income
includes dividend and
interest income earned
from holding investments.
2. Summary of expenses incurred by each Fund
from its operations.
3. Summary of realized gains
or losses from selling each Fund's investments and the change during
the period
in unrealized gains or
losses from holding each Fund's investments.
4. Net change due to mutual fund operations.
HOW TO READ YOUR FINANCIAL STATEMENT
THE STATEMENT OF CHANGES IN NET ASSETS
Presents the activity that affects the value of total net assets of
each Fund during the two most recent reporting periods.
The Notes to Financial Statements provide explanatory information
to the financial statements. These include information on accounting
methods used by the mutual Fund, contractual arrangements between
the Fund and its service providers, certain transactions affecting
the Fund, and other general information about the Fund.
1. See Statement of Operations.
2. Distributions declared to shareholders from net investment income
or from net realized gains during
the periods. Each Fund declares distributions based on investment
income and taxable realized gains, which may differ from the Fund's
operations for financial statement purposes. Thus, distributions may
exceed net investment income or realized gains.
3. Dollar amount of mutual fund shares issued, reinvested and redeemed
during the periods. Detail of this activity pertaining to Funds with
two share classes is presented in the footnotes.
4. Compares total net assets as of the end of the current and prior
periods.
5. Number of mutual fund shares issued, reinvested and redeemed during
the periods. Detail of this activity pertaining to Funds with two
share classes is presented in the footnotes.
THE FINANCIAL HIGHLIGHTS
Present changes in net asset value per share as well as certain ratios
and supplementary data for the five most recent reporting periods.
1. The table presents changes in the net asset value per share caused
by the Fund's investment activities and distributions.
2. Total return presents the historical return on an investment in the
Fund throughout the period including changes in net asset value per
share and reinvestment of dividends. The total return presented excludes
sales charges.
3. Actual ratios of expenses and net investment income to average net
assets during the period.
4. Hypothetical ratios of expenses and net investment income to average
net assets during the period assuming no fee waivers or expense
reimbursements
had occurred.
5. Portfolio turnover presents the rate of investment activity. Higher
turnover indicates more active investment purchases and sales.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
U.S. Government Obligations Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Amortized
Security Description Amount Cost
<S> <C> <C>
Repurchase Agreements (78.5%)
Aubrey G. Lanston & Co., Inc.,
5.65%, 11/3/97, (Collateralized
by $69,052 U.S. Treasury Notes,
5.88%, 8/31/99, market
value--$70,997) 70,000 $ 70,000
Barclays de Zoete Wedd
Securities, Inc., 5.70%,
11/3/97, (Collateralized by
$71,193 various U.S. Treasury
Securities 0.00%-9.88%,
3/26/98-2/15/23, market
value--$81,601) 80,000 80,000
Chase Securities, Inc., 5.62%,
11/3/97, (Collateralized by
$71,625 various U.S. Treasury
Securities, 0.00%-3.63%,
1/2/98-7/15/02, market
value--$71,404) 70,000 70,000
Dean Witter Discover, Inc.,
5.70%, 11/3/97, (Collateralized
by $79,519 various U.S. Treasury
Securities, 5.88%-7.25%,
1/31/99-8/15/22, market
value--$81,601) 80,000 80,000
Deutsche Morgan Grenfell,
5.70%, 11/3/97, (Collateralized
by $76,718 various U.S. Treasury
Securities, 5.13%-6.50%,
12/31/98-11/15/26, market
value--$81,600) 80,000 80,000
Donaldson-Lufkin Jenrette
Securities Corp., 5.70%,
11/3/97, (Collateralized by
$80,338 various U.S. Treasury
Securities, 0.00%-7.88%,
9/17/98-11/15/04, market
value--$81,601) 80,000 80,000
Goldman Sachs Group L.P.,
5.70%, 11/3/97, (Collateralized
by $79,971 U.S. Treasury Notes,
6.00%, 8/15/00, market
value--$81,600) 80,000 80,000
Harris-Nesbitt Burns Securities,
5.70%, 11/3/97, (Collateralized
by $139,388 U.S. Treasury Strips,
0.00%, 5/15/05-5/15/09, market
value--$81,600) 80,000 80,000
Lehman Brothers, Inc., 5.67%,
11/3/97, (Collateralized by
$189,342 U.S. Treasury Notes
0.00%, 11/15/08-05/15/15,
market value--$74,404) 72,945 72,945
Morgan Stanley Securities, Inc.,
5.62%, 11/3/97, (Collateralized
by $72,170 various U.S. Treasury
Securities, 0.00%-6.38%,
1/15/98-1/15/00, market
value--$71,401) 70,000 70,000
NationsBanc Capital Markets, Inc.,
5.70%, 11/3/97, (Collateralized
by $463,270 various U.S.
Government Securities
0.00%-9.25%, 11/15/97-8/15/02,
market value--$423,304) 415,000 415,000
Nomura Securities International, Inc.,
5.70%, 11/3/97, (Collateralized by
$296,186 U.S. Treasury Strips,
0.00%, 8/15/17-2/15/20, market
value--$81,600) 80,000 80,000
Smith Barney Securities, Inc.,
5.65%, 11/3/97, (Collateralized
by $72,447 various U.S. Treasury
Securities, 0.00%-5.63%,
3/5/98-10/31/99, market
value--$71,401) 70,000 70,000
Total Repurchase Agreements
(Cost $1,327,945) 1,327,945
U.S. Treasury Notes (21.6%)
5.25%, 12/31/97 25,000 24,978
5.13%, 3/31/98 25,000 24,957
6.13%, 3/31/98 25,000 25,010
5.88%, 4/30/98 75,000 75,055
6.13%, 5/15/98 105,000 105,252
6.25%, 6/30/98 25,000 25,057
6.25%, 7/31/98 30,000 30,118
6.25%, 7/31/98 30,000 30,138
6.13%, 8/31/98 25,000 25,087
Total U.S. Treasury Notes
(Amortized Cost $365,652) 365,652
Total Investments
(Amortized Cost $1,693,597) <F1>--100.1% 1,693,597
Liabilities in excess of other assets (0.1)% (1,989)
TOTAL NET ASSETS--100.0% $1,691,608
<FN>
<F1> Cost and value for federal income tax and financial reporting purposes are the same.
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Prime Obligations Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Amortized
Security Description Amount Cost
<S> <C> <C>
Certificates of Deposit (10.5%)
Bankers Trust New York,
5.64%<F2>, 11/3/97<F3> 4,000 $ 4,000
Bankers Trust New York,
5.50%<F2>, 11/4/97<F3> 10,000 9,997
Bankers Trust New York,
6.24%, 4/2/98 2,000 2,001
Canadian Imperial,
5.58%, 12/30/97 15,000 15,000
Deutschbank,
5.96%, 8/17/98 3,500 3,500
Fifth Third Bank,
5.20%, 11/19/97 2,600 2,599
Harris Bank and Trust,
5.55%, 11/14/97 10,000 10,000
Morgan Guaranty Trust,
5.58%, 12/22/97 10,000 10,000
Morgan Guaranty Trust,
5.71%, 1/6/98 1,500 1,500
Morgan Guaranty Trust,
5.87%, 8/6/98 5,000 5,000
Rabobank,
5.69%, 3/30/98 10,000 10,001
Societe Generale,
5.63%<F2>, 11/3/97<F3> 4,000 3,998
Total Certificates of Deposit
(Amortized Cost $77,596) 77,596
Commercial Paper (45.7%)
Ameritech Capital Funding Corp.,
5.49%, 12/31/97 10,000 9,909
Ameritech Corp.,
5.50%, 1/12/98 10,000 9,890
Arizona Educational
Loan Marketing Corp.,
5.54%, 11/5/97,
LOC Mellon Bank NA 3,715 3,713
Arizona Educational
Loan Marketing Corp.,
5.57%, 12/1/97,
LOC Mellon Bank 4,050 4,031
Arizona Educational
Loan Marketing Corp.,
5.52%, 12/1/97,
LOC Mellon Bank NA 6,200 6,171
Asset Securitization Corp.,
5.51%, 11/17/97 15,000 14,963
Associates Corp.,
5.75%, 11/3/97 30,000 29,989
AVCO Financial Services,
5.50%, 11/4/97 2,500 2,499
AVCO Financial Services,
5.50%, 12/1/97 9,000 8,959
California Higher Education
Loan Authority,
5.56%, 11/6/97,
LOC State Street 7,000 6,995
Chevron Oil Finance,
5.53%, 11/17/97,
LOC Credit Suisse Bank 10,000 9,976
Eiger Capital Corp.,
5.55%, 11/21/97 5,000 4,985
Ford Motor Credit Corp.,
5.52%, 12/2/97 5,000 4,976
General Electric Capital Corp.,
5.79%, 11/3/97 15,000 14,995
General Electric Capital Corp.,
5.64%, 2/2/98 10,000 9,854
General Electric Capital Corp.,
5.59%, 3/30/98 5,000 4,884
General Motors Acceptance Corp.,
5.62%, 4/23/98 7,000 6,811
McGraw Hill,
5.52%, 12/22/97 11,800 11,708
Nebraska Higher Education
Loan Program,
5.59%, 11/25/97, SLMA 15,000 14,944
Rabobank,
5.49%, 11/3/97 15,000 14,995
Rank Xerox,
5.75%, 11/3/97 22,000 21,993
Reed Elseuier,
5.52%, 11/18/97 5,000 4,987
Retailer Funding,
5.54%, 11/13/97 10,000 9,982
Retailer Funding,
5.52%, 11/18/97 12,063 12,032
Retailer Funding,
5.55%, 12/5/97 5,000 4,974
Sanwa Business Credit Corp.,
5.62%, 11/6/97 5,000 4,996
Sheffield Corp.,
5.75%, 11/3/97 8,950 8,947
Sheffield Corp.,
5.55%, 11/14/97 5,000 4,990
Smith Barney, Inc.,
5.52%, 11/14/97 10,000 9,980
Sony Capital Corp.,
5.52%, 11/7/97 10,000 9,991
Sony Capital Corp.,
5.50%, 11/10/97 6,100 6,092
Southern California Gas,
5.53%, 12/9/97 2,744 2,728
Southwest Student Service,
5.53%, 11/3/97,
LOC Dresdner Bank AG 8,300 8,297
Toshiba America, Inc.,
5.57%, 12/12/97 5,000 4,968
Toshiba America, Inc.,
5.52%, 12/23/97 5,000 4,960
Toshiba America, Inc.,
5.55%, 2/23/98 5,500 5,403
Transamerica Finance,
5.50%, 11/13/97 5,902 5,891
Vehicle Services,
5.63%, 1/14/98,
LOC NationsBank, Texas 10,000 9,884
Total Commercial Paper
(Amortized Cost $336,342) 336,342
Corporate Bonds (16.6%)
Associates Corp.,
7.25%, 5/15/98 3,000 3,017
Astro Aluminum,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 2,660 2,660
AVCO Financial Services,
5.50%, 5/1/98 2,000 1,993
Bankers Trust New York,
5.70%<F2>, 11/3/97<F3> 5,000 5,000
Baylis Group Partnership,
5.75%<F2>, 11/6/97<F3>,
LOC Societe Generale 3,180 3,180
Carelife, Inc.,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 2,350 2,350
Carelife, Inc.,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 175 175
Chevron Finance,
5.60%, 4/1/98 10,000 9,993
Cleveland Steel Container,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 1,395 1,395
Comerica Bank,
5.64%<F2>, 11/4/97<F3> 10,000 9,996
Dietz Road Ltd Partnership,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 775 775
Dome Corp,
5.67%<F2>, 11/5/97<F3>,
LOC Societe Generale 2,820 2,820
F.C. Bellevue Inc.,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 2,500 2,500
General American Life Insurance,
5.85%<F2>, 11/3/97<F3> 15,000 15,000
GMH Enterprises,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 1,675 1,675
Highland Road Partners,
5.70%, 10/1/04,
LOC National City Bank 815 815
Highland Road Partners,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 235 235
McKinley Air Transport,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 850 850
MCMC Pob LII,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 810 810
Mount Carmel East,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 725 725
Nestle Holding,
5.88%, 6/19/98 1,170 1,169
Olympic Steel Corp.,
5.68%<F2>, 11/6/97<F3>,
LOC Fifth Third Bank 3,040 3,040
Pharmed, Inc Project,
5.68%<F2>, 11/6/97<F3>,
LOC Fifth Third Bank 640 640
Philip Morris Cos., Inc.,
9.25%, 12/1/97 2,700 2,707
Presrite Corp.,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 1,040 1,040
Reichert Limited Partnership,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 3,140 3,140
Republic New York
Securities Master Note,
5.79%<F2>, 11/4/97<F3> 12,000 12,000
Rivnut Engineered Products,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 501 501
RKS LLC Health Care,
5.70%<F2>, 11/5/97<F3>,
LOC AmSouth Bank 9,700 9,700
S&S Ltd. Partnership Project,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 695 695
Schipper Enterprises,
5.70%<F2>, 11/6/97<F3>,
LOC Bank One 2,963 2,963
Schipper Enterprises,
5.70%<F2>, 11/6/97<F3>,
LOC Bank One 132 132
SeaRiver Maritime, Inc.,
5.62%<F2>, 11/3/97,
Guaranteed by Exxon 14,300 14,300
Sofa Express Project,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 750 750
Tell-Schipper Properties, Inc.,
5.70%<F2>, 11/6/97<F3>,
LOC Bank One 1,500 1,500
Zanetos Partnership Project,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 1,820 1,820
Total Corporate Bonds
(Amortized Cost $122,061) 122,061
Medium Term Notes (12.7%)
CIT Group Holdings,
6.35%, 7/31/98 3,100 3,112
Exxon Funding,
8.00%, 10/2/98 1,379 1,403
Ford Motor Credit Corp.,
8.00%, 12/1/97 2,050 2,053
Ford Motor Credit Corp.,
9.38%, 12/15/97 5,000 5,020
Ford Motor Credit Corp.,
6.55%, 2/3/98 1,300 1,302
General Electric Capital Corp.,
7.95%, 2/2/98 1,200 1,205
General Electric Capital Corp.,
8.63%, 3/12/98 1,823 1,838
General Electric Capital Corp. Note,
7.08%, 3/30/98 2,500 2,512
General Motors Acceptance Corp.,
5.74%<F2>, 11/3/97<F3> 5,000 5,001
General Motors Acceptance Corp.,
7.50%, 3/16/98 1,000 1,004
General Motors Acceptance Corp.,
7.13%, 5/11/98 1,000 1,004
General Motors Acceptance Corp.,
7.85%, 11/17/97 12,122 12,135
General Motors Acceptance Corp.,
6.38%, 7/2/98 2,000 2,006
General Motors Acceptance Corp.,
6.25%, 9/8/98 3,000 3,006
Goldman Sachs Notes,
9.37%, 7/20/98 3,000 3,072
John Deere Capital Corp.,
5.85%, 10/28/98 10,000 9,995
Merrill Lynch,
5.77%, 6/10/98 5,000 5,000
Miami Valley,
5.60%<F2>, 11/6/97<F3> 2,000 2,000
Morgan Guaranty Trust Co.,
5.63%<F2>, 11/14/97<F3> 4,000 4,000
Morgan Stanley Group,
5.82%<F2>, 12/15/97<F3> 8,000 8,000
Nationsbank,
5.83%<F2>, 11/27/97<F3> 4,000 4,001
PepsiCo, Inc.,
8.00%, 12/28/97 1,185 1,188
PepsiCo, Inc.,
5.80%, 8/31/98 5,000 4,991
Philip Morris,
9.00%, 5/15/98, . 1,500 1,524
Philip Morris,
8.70%, 6/1/98, . 2,000 2,031
Student Loan Marketing Assoc.,
5.75%, 1/23/98 3,000 3,000
Walt Disney Co.,
8.00%, 12/19/97 2,000 2,005
Total Medium Term Notes
(Amortized Cost $93,408) 93,408
Municipal Bonds (2.5%)
Ohio (1.0%):
Cuyahoga County Taxable EDR,
Gateway Arena Project,
Series B, 5.67%<F2>, 11/5/97<F3>,
LOC Canadian Imperial Bank
Of Commerce 7,500 7,500
Virginia (1.5%):
Industrial Development
Authority of Bedford,
5.73%<F2>, 12/23/97<F3>, LOC
Societe Generale 5,000 5,000
State Housing Authority
Commonwealth Mortgage,
5.80%, 12/30/97 6,000 6,000
11,000
Total Municipal Bonds
(Amortized Cost $18,500) 18,500
U.S. Government Agencies (1.0%)
Federal Home Loan Bank (0.4%):
5.78%, 1/28/98,
Callable 07/28/97 @ 100 3,000 3,000
Student Loan Marketing Assoc.
(0.6%):
5.54%, 2/25/98 4,000 3,999
Total U.S. Government Agencies
(Amortized Cost $6,999) 6,999
U.S. Treasury Notes (1.2%)
5.25%, 12/31/97 4,000 3,998
7.88%, 1/15/98 5,000 5,022
Total U.S. Treasury Notes
(Amortized Cost $9,020) 9,020
Total Investments (Amortized Cost $663,926) 663,926
Repurchase Agreements (9.8%)
Goldman Sachs Group L.P.,
5.70%, 11/3/97, (Collateralized
by $36,717 U.S. Treasury
Securities, 0.00%-5.88%,
9/17/98-8/31/99,
market value--$37,013) 36,287 36,287
Paine Webber Securities Corp.,
5.70%, 11/3/97 (Collateralized
by $36,280 U.S. Treasury
Notes, 6.13%, 8/31/98,
market value--$36,825) 36,100 36,100
Total Repurchase Agreements
(Cost $72,387) 72,387
Total Investments and Repurchase Agreements
(Amortized Cost $736,313) <F1>--100.0% 736,313
Other assets in excess of liabilities 0.0% 136
TOTAL NET ASSETS--100.0% $736,449
<FN>
<F1> Cost and value for federal income tax and financial reporting purposes are the same.
<F2> Variable rate securities having liquidity sources through bank letters of credit or other credit and/or liquidity
agreements. The interest rate, which will change periodically, is based upon bank prime rates or an index of market
interest rates. The rate reflected on the Schedule of Portfolio Investments is the rate in effect at October 31, 1997.
The date reflects the next rate change date.
<F3> Put and demand features exist allowing the Fund to require the repurchase of the investment within variable time periods
less than one year.
EDR--Economic Development Revenue
LOC--Letter of Credit
SLMA--Student Loan Marketing Assoc.
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Financial Reserves Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Amortized
Security Description Amount Cost
<S> <C> <C>
Bankers Acceptances (1.2%)
Bank of America,
5.51%, 4/15/98 10,000 $ 9,748
Total Bankers Acceptances
(Amortized Cost $9,748) 9,748
Certificates of Deposit (8.9%)
Bankers Trust New York,
5.64%<F2>, 11/3/97<F3> 6,000 6,000
Bankers Trust New York,
5.50%<F2>, 11/4/97<F3> 10,000 9,999
Bankers Trust New York,
6.24%, 4/2/98 4,000 4,001
Bankers Trust New York,
5.91%, 8/7/98 4,000 3,996
Canadian Imperial,
5.58%, 12/30/97 15,000 15,000
Deutschbank,
5.96%, 8/17/98 4,000 4,000
Harris Bank and Trust,
5.55%, 11/14/97 5,000 5,000
Morgan Guaranty Trust,
5.58%, 12/22/97 10,000 10,000
Societe Generale,
5.63%<F2>, 11/3/97<F3> 7,000 6,997
Societe Generale,
5.64%<F2>, 11/3/97<F3> 6,000 5,998
Total Certificates of Deposit
(Amortized Cost $70,986) 70,991
Commercial Paper (38.5%)
Ameritech Capital Funding Corp.,
5.49%, 12/31/97 10,000 9,909
Ameritech Corp.,
5.50%, 1/12/98 10,000 9,890
Associates Corp.,
5.75%, 11/3/97 30,000 29,991
BellSouth Telecommunications,
5.50%, 12/12/97 8,100 8,049
Beta Finance,
5.60%, 4/23/98 10,000 9,731
Chevron Oil Finance,
5.53%, 11/17/97,
LOC Credit Suisse Bank 5,000 4,988
Fleet Funding Corp.,
5.52%, 11/17/97 25,000 24,939
General Electric Capital Corp.,
5.79%, 11/3/97 10,000 9,997
General Electric Capital Corp.,
5.64%, 2/2/98 10,000 9,854
General Electric Capital Corp.,
5.59%, 3/30/98 10,000 9,769
General Motors Acceptance Corp.,
5.62%, 4/23/98 8,000 7,784
Nalco Chemical,
5.51%, 11/3/97 15,975 15,969
Nebraska Higher Education
Loan Program,
5.00%, 11/26/97, SLMA 20,000 19,928
Pitney Bowes Credit Corp.,
5.52%, 1/15/98 5,000 4,943
Retailer Funding,
5.54%, 11/13/97 5,000 4,991
Retailer Funding,
5.55%, 12/5/97 10,138 10,085
Sanwa Business Credit Corp.,
5.62%, 11/6/97 10,000 9,992
Sheffield Corp.,
5.55%, 11/14/97 10,950 10,928
Sheffield Receivables,
5.54%, 11/17/97 5,500 5,486
Smith Barney, Inc.,
5.52%, 11/14/97 10,000 9,980
Sony Capital Corp.,
5.50%, 11/5/97 15,000 14,990
Sony Capital Corp.,
5.52%, 11/7/97 15,000 14,986
Southwest Student Services,
5.57%, 11/24/97,
LOC Dresdner Bank, AG 6,000 5,979
Toshiba America, Inc.,
5.57%, 12/12/97 10,000 9,937
Toshiba International,
5.53%, 12/29/97 7,700 7,631
Toshiba International,
5.60%, 1/26/98 2,300 2,269
Vehicle Services,
5.63%, 1/14/98,
LOC NationsBank, Texas 10,000 9,884
Weyerhauser Real Estate,
5.52%, 11/5/97 15,000 14,991
Total Commercial Paper
(Amortized Cost $307,870) 307,870
Corporate Bonds (23.4%)
Associates Corp.,
7.25%, 5/15/98 4,000 $ 4,023
Austin Printing Co.,
5.70%<F2>, 11/6/97<F3>,
LOC Bank One 1,980 1,980
Automated Packaging System,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 3,030 3,030
Bankers Trust New York,
5.70%<F2>, 11/3/97<F3> 9,000 9,000
Bear Stearns,
5.81%<F2>, 11/3/97<F3> 5,000 5,005
Bee Holdings, Inc.,
5.70%<F2>, 11/6/97<F3> 1,950 1,950
Bee Holdings, Inc.,
5.70%<F2>, 11/6/97<F3> 845 845
BellSouth Telecommunications,
5.25%, 6/8/98 4,050 4,035
Buckeye Corrugated,
5.70%<F2>, 11/6/97<F3> 3,525 3,525
Chevron Finance,
5.60%, 4/1/98 10,000 9,993
CIT Group Holdings,
5.63%, 4/1/98 3,000 2,997
CIT Group Holdings,
6.75%, 4/30/98 4,000 4,013
Comerica Bank,
5.64%<F2>, 11/4/97<F3> 10,000 9,996
F.C. Bellevue Inc.,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 5,000 5,000
Ford Motor Credit Corp.,
9.25%, 6/15/98 3,889 3,967
General American Life Insurance,
5.85%<F2>, 11/3/97<F3> 25,000 25,000
Hancor, Inc.,
5.70%<F2>, 11/6/97<F3> 1,200 1,200
Ivex of Delaware (Kama Project),
5.70%<F2>, 11/6/97<F3>,
LOC Societe Generale 6,500 6,500
Morgan Guaranty Trust Co.,
5.97%, 6/22/98, 5,500 5,503
OFC Corp.,
5.70%<F2>, 11/5/97<F3>,
LOC LaSalle Bank 11,600 11,600
Parkway Business Plaza,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 600 600
Philip Morris Cos., Inc.,
9.25%, 12/1/97 1,470 1,474
Republic New York
Securities Master Note,
5.79%<F2>, 11/4/97<F3> 23,000 22,999
Sea River Maritime, Inc.,
5.62%<F2>, 11/3/97<F3>,
Guaranteed by Exxon Corp. 23,800 23,800
SGS Tool Co.,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 1,420 1,420
SGS Tool Co.,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 925 925
Shelbourne Realty,
5.71%<F2>, 11/6/97<F3>,
LOC Star Bank 7,170 7,170
TPC Properties, Inc.,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 605 605
U.S. West,
5.63%, 7/8/98 2,150 2,146
Venturecor, Inc.,
5.70%<F2>, 11/5/97<F3>,
LOC FNB-Chicago 5,000 5,000
Zanetos Partnership Project,
5.70%<F2>, 11/6/97<F3>,
LOC National City Bank 2,280 2,280
Total Corporate Bonds
(Amortized Cost $187,581) 187,581
Medium Term Notes (12.5%)
Bank Of America,
5.58%<F2>, 11/3/97<F3> 10,000 9,993
CIT Group Holdings,
6.35%, 7/31/98 5,000 5,020
Ford Motor Credit Corp,
6.25%, 2/26/98 3,500 3,501
General Electric Capital Corp.,
7.95%, 2/2/98 3,800 3,818
General Motors Acceptance Corp.,
7.50%, 1/29/98 5,000 5,020
General Motors Acceptance Corp.,
7.88%, 2/23/98 3,000 3,019
General Motors Acceptance Corp.,
7.50%, 3/16/98 2,000 2,009
General Motors Acceptance Corp.,
5.74%<F2>, 11/3/97<F3> 10,000 10,000
General Motors Acceptance Corp.,
5.75%<F2>, 1/17/98<F3> 1,890 1,890
General Motors Acceptance Corp.,
7.13%, 5/11/98 2,000 2,008
General Motors Acceptance Corp.,
6.30%, 6/11/98 1,500 1,503
John Deere Capital Corp.,
5.85%, 10/28/98 10,000 9,995
Merrill Lynch,
6.60%, 6/24/98 2,600 2,610
Morgan Guaranty Trust Co.,
5.63%<F2>, 11/14/97<F3> 6,000 6,000
Morgan Stanley Group,
6.05%<F2>, 12/17/97<F3> 5,000 5,009
Morgan Stanley Group,
5.82%<F2>, 12/15/97<F3> 15,000 15,000
PepsiCo, Inc.,
5.80%, 8/31/98 10,000 9,984
Philip Morris Cos. Inc,
8.75%, 6/1/98 4,000 4,064
Total Medium Term Notes
(Amortized Cost $100,443) 100,443
Municipal Bonds (3.0%)
Pennsylvania (1.2%):
Armstrong County Hospital,
5.70%<F2>, 11/5/97<F3>,
LOC FNB--Chicago 10,000 10,000
Virginia (1.8%):
Industrial Development
Authority of Bedford,
5.73%<F2>, 12/23/97<F3>,
LOC Societe Generale 7,000 7,000
State Housing Authority
Commonwealth Mortgage,
5.80%, 12/30/97 7,000 6,999
13,999
Total Municipal Bonds
(Amortized Cost $24,004) 23,999
U.S. Government Agencies (8.1%)
Federal Home Loan Bank (0.4%):
5.81%, 1/30/98 3,000 3,000
Federal National Mortgage Assoc.
(5.0%):
5.28%<F2>, 11/4/97<F3> 15,000 15,000
5.29%<F2>, 11/4/97<F3> 20,000 20,000
5.53% 12/16/97 5,000 4,999
39,999
Student Loan Marketing Assoc.
(2.7%):
5.29%<F2>, 11/4/97<F3> 10,000 9,999
5.31%<F2>, 11/4/97<F3> 4,500 4,501
5.54%, 2/25/98 7,000 6,998
21,498
Total U.S. Government Agencies
(Amortized Cost $64,497) 64,497
U.S. Treasury Notes (1.8%)
5.25%, 12/31/97 7,000 6,997
7.88%, 1/15/98 7,000 7,030
Total U.S. Treasury Notes
(Amortized Cost $14,027) 14,027
Total Investments (Amortized Cost $779,156) 779,156
Repurchase Agreements (5.7%)
Goldman Sachs Group L.P.,
5.70%, 11/3/97, (Collateralized
by $23,036 U.S. Treasury
Notes, 5.88%, 7/31/99,
market value--$23,461) 23,000 23,000
Paine Webber Securities Corp.,
5.70%, 11/3/97, (Collateralized
by $175,522 various U.S.
Government Securities,
6.13%-7.50%, 8/31/98-11/15/24,
market value--$39,946 22,988 22,988
Total Repurchase Agreements
(Cost $45,988) 45,988
Total Investments and Repurchase Agreements
(Amortized Cost $825,144) <F1>--103.1% 825,144
Liabilities in excess of other assets (3.1)% (24,502)
TOTAL NET ASSETS--100.0% $800,642
<FN>
<F1> Cost and value for federal income tax and financial reporting purposes are the same.
<F2> Variable rate securities having liquidity sources through bank letters of credit or
other credit and/or liquidity agreements. The interest rate, which will change periodically,
is based upon bank prime rates or an index of market interest rates. The rate reflected on
the Schedule of Portfolio Investments is the rate in effect at October 31, 1997. The date
reflects the next rate change date.
<F3> Put and demand features exist allowing the Fund to require the repurchase of the investment
within variable time periods less than one year.
LOC--Letter of Credit
SLMA--Student Loan Marketing Assoc.
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Tax-Free Money Market Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Amortized
Security Description Amount Cost
<S> <C> <C>
Municipal Bonds (99.8%)
Arizona (0.4%):
Pima County Industrial
Development Authority, IDR,
3.70%<F2>, 11/6/97,
LOC National City Bank 1,500 $ 1,500
California (2.2%):
Housing Finance Authority,
Revenue Bond,
Series J, 3.95%, 8/3/98,
LOC FGIC AMT 9,000 9,000
Colorado (1.0%):
Arvada IDR, Sundstrand Corp. Project,
3.75%<F2>, 11/6/97,
LOC Union Bank of Switzerland 1,000 1,000
Pitkin County,
4.10%<F2>, 11/3/97,
LOC First National Bank of Chicago 1,100 1,100
Pitkin County,
4.10%<F2>, 11/3/97,
LOC First National Bank of Chicago 1,900 1,900
4,000
District of Columbia (3.4%):
District Of Columbia,
3.95%<F2>, 11/3/97,
LOC Bank of America 6,900 6,900
District Of Columbia,
3.95%<F2>, 11/3/97,
LOC Deutschebank 2,000 2,000
District of Columbia Housing
Finance Agency, Mortgage
Revenue, Single Family,
Series B, 3.75%, 12/1/97<F3>,
GNMA/FNMA AMT 5,000 5,000
13,900
Florida (1.9%):
Dade County Housing Finance
Authority, Multifamily
Mortgage Revenue,
Nob Hill Project,
Series 1, 3.70%<F2>, 11/5/97,
LOC John Hancock Mutual Life 500 500
Hillsborough County, Ringhaven,
3.90%<F2>, 11/6/97,
LOC Mellon Bank 2,500 2,500
Palm Beach County,
3.85%<F2>, 11/6/97,
LOC Bank of New York 5,000 5,000
8,000
Georgia (0.2%):
State Municipal Electric Authority,
GO of Participants,
3.80%, 12/11/97,
LOC CS First Boston/
Morgan Guaranty 1,000 1,000
Illinois (5.9%):
Development Financial Authority,
Catherine Cook School Project,
3.80%<F2>, 11/5/97,
LOC Harris Bank & Trust 1,325 1,325
Development Financial Authority,
Kindlon Partnership Project,
3.90%<F2>, 11/5/97,
LOC Lasalle National Bank 1,400 1,400
Development Financial Authority,
Pollution Control Revenue,
Consolidated Edison Project,
Series B, 3.60%<F2>, 11/5/97,
LOC Bank of New York, AMBAC 8,000 8,000
Hanover Park IDR,
Spectra-Tech, Inc. Project,
3.90%<F2>, 11/6/97,
LOC Harris Bank & Trust 1,775 1,775
Kankakee County IDR,
Ivex Corp. Project,
3.80%<F2>, 11/6/97,
LOC Societe Generale, AMT 3,500 3,500
Mundelein,
3.60%<F2>, 11/5/97,
LOC Harris Bank & Trust 1,800 1,800
State Development Financial
Authority, Economic
Development Revenue,
CPL/Downers Grove Partnership,
3.90%<F2>, 11/5/97,
LOC LaSalle National Bank 4,400 4,400
Tinley Park Multi-Family Revenue,
3.90%<F2>, 11/6/97,
LOC LaSalle National Bank 1,975 1,975
24,175
Indiana (17.2%):
Bartholomew Consolidated
School Corp., Tax
Anticipation Warrants,
4.00%, 12/31/97 7,390 7,394
Carmel Clay Schools,
Tax Anticipation Warrants,
4.25%, 12/31/97 3,400 3,403
Concord Community Schools,
Tax Anticipation Warrants,
4.25%, 12/31/97 4,740 4,743
Financing Authority Health
Facility Revenue, Baptist
Homes of Indiana,
3.70%<F2>, 11/6/97,
LOC Bank One 6,960 6,960
Franklin County Economic
Development Revenue, J&J Project,
3.85%<F2>, 11/6/97,
LOC Fifth Third Bank 3,820 3,820
Franklin Economic Development Revenue,
Davidson Industries, Inc. Project,
Series A, 3.80%<F2>, 11/6/97,
LOC Bank One 1,600 1,600
Greenwood Economic Development,
Endress & Hauser Inc.,
Series B, 3.70%<F2>, 11/6/97,
LOC Deutsche Bank AG 1,100 1,100
Greenwood IDR, Jacks
Investments LLC Project,
3.80%<F2>, 11/6/97,
LOC Bank One AMT 2,300 2,300
Griffith Public School District,
4.00%, 12/31/97 1,550 1,550
Hammond Industrial,
Local Public Improvement
Bond Bank, Advance
Funding Program Notes,
Series A-2, 4.20%, 1/8/98 7,000 7,006
Indiana Educational Facility
Authority Revenue, Bethel College,
Series A, 3.60%<F2>, 11/5/97,
LOC NBD Bank 4,100 4,100
Indianapolis Economic Development
Revenue, White Arts, Inc. Project,
3.80%<F2>, 11/6/97,
LOC Fifth Third Bank 5,000 5,000
Michigan City Area Schools,
Tax Anticipation Warrants,
4.00%, 12/31/97 4,100 4,101
Scottsburg Economic
Development Revenue,
Multi Color Project,
3.90%<F2>, 11/6/97,
LOC PNC Bank 2,540 2,540
Seymour, EDR,
Pedcor Investors Project,
Series A, 3.80%<F2>, 11/6/97,
LOC Federal Home
Loan Bank AMT 4,100 4,100
Seymour, EDR,
Pedcor Investors Project,
Series B, 3.80%<F2>, 11/6/97,
LOC Federal Home Loan Bank 500 500
State Development Financial
Authority, Economic
Development Revenue,
Dura-Crete Project,
3.80%<F2>, 11/6/97,
LOC Bank One AMT 3,910 3,910
State Educational Facilities,
St. Mary Project, Revenue Bond,
3.60%<F2>, 11/5/97,
LOC NBD Bank 3,000 3,000
Valparaiso Community Schools,
Tax Anticipation Warrants,
4.00%, 12/31/97 3,075 3,076
Wakarusa Economic Development,
MMM-Invest Inc. Project,
3.70%<F2>, 11/6/97,
LOC Bank One 920 920
71,123
Iowa (1.5%):
City of Urbandale,
4.10%<F2>, 11/3/97,
Guaranteed by Principle
Mutual Life Insurance Co. 4,325 4,325
Iowa Financial Authority,
3.75%<F2>, 11/6/97,
LOC Lasalle National Bank 900 900
State Finance Authority,
Housing Health Care,
Wesley Retirement Services, Inc.,
3.75%<F2>, 11/6/97,
LOC Norwest 955 955
6,180
Kansas (3.3%):
Burlington Pollution Control,
Kansas City Power & Light,
3.70%, 10/8/97,
LOC Societe General 2,000 2,000
Fairway IDR, J.C. Nichols Co., Inc.,
4.10%<F2>, 11/3/97,
Guaranteed by Principle
Mutual Life Insurance Co. 2,300 2,300
Lenexa Health Care Facility,
Lakeview Village,
Series A, 3.70%<F2>, 11/6/97,
LOC Lasalle National Bank 9,160 9,160
13,460
Kentucky (11.2%):
Bath County Industrial Building Revenue,
Cintas Sales Corp. Project,
3.85%<F2>, 11/6/97,
LOC Fifth Third Bank 1,210 1,210
Boone County Industrial Building Revenue,
Maruga, Inc. Project,
3.85%<F2>, 11/6/97,
LOC Star Bank N.A. 2,915 2,915
Boone County Industrial Building Revenue,
Multi-Color Corp. Project,
3.85%<F2>, 11/6/97,
LOC PNC Bank 2,475 2,475
Carroll County IDR,
Kentucky Ladder Co. Project,
3.90%<F2>, 11/5/97,
LOC National City Bank AMT 5,000 5,000
Covington Industrial Building Revenue,
Atkins & Pierce Inc. Project,
4.10%, 12/1/98,
LOC Fifth Third Bank 230 230
Dayton Industrial Building Revenue,
Woodcraft Manufacturing Co., Inc.
Project,
3.90%<F2>, 11/6/97,
LOC Fifth Third Bank 650 650
Elsmere Industrial Building Revenue,
Mazak Corp. Project, Revenue Bond,
3.80%<F2>, 11/6/97,
LOC Fifth Third Bank 3,500 3,500
Jefferson County Industrial
Building Revenue,
Hamilton Printing, Inc. Project,
3.80%<F2>, 11/6/97,
LOC Fifth Third Bank AMT 4,500 4,500
Kentucky Asset Liability,
4.50%, 6/25/98 2,000 2,008
Lewis County, Industrial Building
Revenue, Stolle Vanceburg, Inc.,
3.85%<F2>, 11/6/97,
LOC Fifth Third Bank AMT 1,400 1,400
Louisville IDR, Zeochem Project,
3.75%<F2>, 11/5/97,
LOC National City Bank, Kentucky 2,400 2,400
Mayfield Multi-City Lease Revenue,
3.80%<F2>, 11/5/97,
LOC PNC Bank 10,600 10,600
Pendelton County, Self Insured
Funding, Kentucky Association
of Counties Fund,
3.95%, 07/01/01<F3>,
LOC PNC Bank 5,100 5,100
Somerset Industrial Building Revenue,
Glen Oak Lumber & Mining,
3.80%<F2>, 11/6/97,
LOC Bank One AMT 2,835 2,835
State Rural Economic Development
Authority, PB&S Chemical Co.
Project, Revenue Bond,
3.70%<F2>, 11/6/97,
LOC Westdeutsche
Landesbank AMT 1,300 1,300
46,123
Louisiana (1.7%):
Caddo Parish Industrial
Development Board Exempt
Facilities Revenue, Atlas Project,
Series B, 3.70%<F2>, 11/5/97,
LOC ABN-Amro Bank N.V. 2,550 2,550
St. Tammany Public Finance
Authority, Christwood Project,
Series B, 3.85%<F2>, 11/6/97,
LOC Banque Paribas 4,265 4,265
6,815
Maine (1.5%):
Biddeford, Bond Anticipation Notes,
4.25%, 6/1/98 1,000 1,001
State Public Utility Financing Bank,
Public Utility Revenue,
Maine Public Service Co. Project,
3.80%<F2>, 11/5/97,
LOC Bank of New York AMT 5,000 5,000
6,001
Michigan (2.2%):
Farmington Hills Economic
Development Corp., Limited
Obligation Revenue,
Brookfield Building Association,
3.75%<F2>, 11/5/97,
LOC Comerica Bank N.A. 3,220 3,220
Higher Education Facilities Authority,
Davenport College Project,
Revenue Bond,
3.70%<F2>, 11/6/97,
LOC Old Kent Bank 1,000 1,000
Iron Mountain City School District,
3.90%, 5/1/98,
AMBAC 485 485
State Strategic Consumer,
Consumer Power Co. Project,
4.00%<F2>, 11/3/97,
LOC Canadian Imperial Bank 1,100 1,100
State Strategic Fund Limited,
4.00%<F2>, 11/3/97,
LOC Barclays Bank PLC 1,200 1,200
State Strategic Fund,
Environmental Quality,
3.80%<F2>, 11/5/97,
LOC Comerica Bank N.A. AMT 1,000 1,000
State Strategic Fund, IDR,
Rospatch Corp.,
3.90%<F2>, 11/5/97,
LOC Harris Bank & Trust AMT 1,200 1,200
9,205
Minnesota (0.7%):
St.Cloud Housing & Redevelopment
Authority, Webway Inc. Project,
3.80%<F2>, 11/6/97,
LOC National City Bank 3,000 3,000
Missouri (3.1%):
Cuba Industrial Development
Authority, Imre & Carolyn Project,
3.80%<F2>, 11/6/97,
LOC Bank One 1,025 1,025
Independence Water Utility,
3.85%, 11/13/97,
LOC Westdeutchebank 1,050 1,050
Kansas City Industrial
Development Authority,
Multifamily Housing Revenue,
J.C. Nichols Co. Project,
4.10%<F2>, 11/3/97,
LOC Principle Mutual
Life Insurance Co. 3,600 3,600
Missouri State Health &
Educational Facilities,
4.10%<F2>, 11/3/97,
LOC Morgan Guaranty 2,500 2,500
St. Louis County Industrial
Development Authority,
Friendship Village,
Series B, 3.70%<F2>, 11/15/97,
LOC LaSalle National Bank 4,725 4,725
12,900
Nebraska (2.0%):
Nebraska,
3.90%, 9/1/29<F3>,
GIC AIG 3,700 3,700
State Investment Finance
Authority, Single Family
Mortgage Revenue,
Series B, 3.80%,1/15/98,
GNMA/FGIC 4,630 4,630
8,330
Nevada (1.2%):
Clark County IDR,
Nevada Power Co. Project,
Series A, 3.80%<F2>, 11/5/97,
LOC Barclays Bank PLC AMT 5,000 5,000
New York (3.4%):
New York City Municipal
Assistance, Corp.,
Series D, 3.75%<F2>, 11/6/97,
AMBAC 13,965 13,965
Ohio (5.5%):
Ashtabula County Medical
Center Project, Revenue Bond,
3.70%<F2>, 11/6/97,
LOC Bank One 600 600
Bedford County Industrial
Development Authority, IDR,
3.80%<F2>, 11/5/97,
LOC Canadian Imperial
Bank of Commerce 3,500 3,500
Eastlake Bond Anticipation Notes,
4.38%, 7/16/98 1,120 1,123
State Air Quality,
3.95%<F2>, 11/3/97,
LOC JP Morgan & Co. 8,100 8,100
State Water Development Authority,
Pollution Control Facilities,
Cleveland Illuminating,
Series B, 3.60%<F2>, 11/5/97,
LOC FNB Chicago 9,400 9,400
22,723
Oklahoma (2.4%):
Development Financial Authority,
Seaboard Farms Project,
Revenue Bond,
3.80%<F2>, 11/5/97,
LOC Bank of New York 5,000 5,000
Oklahoma County Finance Authority,
IDR, Hutto-Carbon Office Project,
3.65%<F2>, 11/17/97,
FGIC 1,650 1,650
Oklahoma County Finance Authority,
IDR, Perrine Office Project,
3.65%<F2>, 11/17/97,
FGIC 3,170 3,170
9,820
Pennsylvania (2.5%):
Delaware County Industrial
Development Authority,
Pollution Control Revenue,
Philadelphia Electric,
Series A, 3.80%, 12/10/97,
FGIC 4,000 4,000
Erie County Hospital Authority
Revenue, Senior Living
Services, Inc. Project,
3.65%<F2>, 11/6/97,
LOC PNC Bank 830 830
Lawrence County Industrial
Development Authority, IDR,
L&N Metallurgical Products,
3.90%<F2>, 11/6/97,
LOC Banque Paribas 3,600 3,600
Monroe County Hospital Authority,
Pocono Medical Center,
Series C, 3.65%<F2>, 11/6/97,
LOC PNC Bank 2,000 2,000
10,430
South Carolina (0.2%):
Charleston GO, Tax Anticipation Notes,
4.00%, 3/13/98 1,025 1,025
Tennessee (2.6%):
McKenzie Industrial Development
Board, IDR, Noma Outdoor
Products, Inc., Project,
3.80%<F2>, 11/6/97,
LOC Wachovia Bank & Trust, AMT 5,900 5,900
Memphis Shelby County,
3.80%<F2>, 11/6/97,
LOC PNC Bank 5,000 5,000
10,900
Texas (4.0%):
Austin Texas,
3.85%, 11/19/97,
LOC Morgan Guaranty 1,500 1,500
Grapevine Industrial Development Corp.,
Trencor-Jetco, Inc.,
3.70%<F2>, 11/5/97,
LOC FNB-Chicago 6,000 6,000
Harris County Industrial
Development Corp., IDR,
Precision General, Inc. Project,
3.80%, 11/6/97,
LOC Morgan Guaranty AMT 4,140 4,140
North Harris Montgomery,
3.89%, 1/15/98,
FGIC 5,000 5,001
16,641
Utah (0.7%):
Utah County Limited GO,
Tax & Revenue Anticipation Notes,
4.50%, 12/31/97 2,750 2,753
Vermont (0.6%):
Student Assistance Corp.,
Student Loan Revenue,
3.85%<F2>, 11/3/97,
LOC National Westminster Bank 2,350 2,350
Virginia (0.6%):
Bedford County Industrial
Development Authority, IDR,
3.80%<F2>, 11/5/97,
LOC Canadian Imperial
Bank of Commerce 1,500 1,500
Virginia Beach, GO,
5.13%, 2/1/98 1,000 1,003
2,503
Wisconsin (12.9%):
Angelina & Neches Authority,
4.00%<F2>, 11/3/97,
LOC Credit Suisse 1,000 1,000
Appleton IDR, Pensar Corp. Project,
3.80%, 11/6/97,
LOC Bank One AMT 690 690
Beloit School District,
4.11%, 10/30/98, 1,700 1,701
Brown Deer School District,
Tax and Revenue Anticipation
Promissory Notes,
4.00%, 10/29/98 4,500 4,504
De Pere Unified School District,
Bond Anticipation Notes,
4.25%, 12/1/97
ETM 2,400 2,401
Fredonia IDR,
3.80%<F2>, 11/6/97,
LOC Bank One Milwaukee 3,270 3,270
Germantown Industrial Revenue,
Jeanne Tanner Project,
Revenue Bond,
3.80%<F2>, 11/6/97,
LOC Bank One Milwaukee 1,090 1,090
Howard Suamico Wisconsin
School District, Tax & Revenue
Anticipation Promissory Notes,
4.07%, 8/21/98 2,800 2,800
Janesville IDR,
The Lamson & Sessions Co.,
3.80%<F2>, 11/6/97,
LOC General Electric
Credit Corp., AMT 2,800 2,800
Kenosha IDR,
Metalmen Building LLC Project,
3.80%<F2>, 11/6/97,
LOC Bank One
Milwaukee N.A., AMT 3,595 3,595
Kenosha Wisconsin School District,
4.15%, 09/28/98, 2,500 2,503
Kenosha Wisconsin School District,
4.20%, 09/28/98, 5,000 5,005
Kenosha Wisconsin School District,
4.28%, 09/28/98, 3,800 3,803
Maple Dale-Indian Hills School District,
Tax & Revenue Anticipation
Promissory Notes,
4.10%, 8/20/98 2,300 2,302
New Berlin IDR, Wenninger Project,
3.80%<F2>, 11/6/97,
LOC Bank One AMT 1,350 1,350
Oak Creek, IDR,
McAdams Graphics, Inc. Project,
3.80%<F2>, 11/6/97,
LOC Bank One AMT 1,435 1,435
Oconomowoc Area School District,
Tax & Revenue Anticipation
Promissory Notes,
4.00%, 9/21/98 4,600 4,601
Oshkosh IDR,
Oshkosh Architectural Project,
3.80%<F2>, 11/6/97,
LOC Norwest Bank AMT 1,000 1,000
Oshkosh, Schloesser/OEC Graphics,
3.80%<F2>, 11/6/97,
LOC Bank One AMT 1,000 1,000
Plymouth IDR,
Great Lakes Cheese, Inc. Project,
3.80%<F2>, 11/6/97,
LOC Rabobank AMT 3,500 3,500
Pulaski Community School District,
4.26%, 10/1/98 1,000 1,001
Waukesha IDR,
Alloy Products Corp. Project,
3.80%<F2>, 11/6/97,
LOC Bank One AMT 1,700 1,700
53,051
Wyoming (3.8%):
Converse County Pollution
Control Revenue,
PacificCorp Project,
3.60%, 12/9/97,
LOC Deutschebank 4,800 4,800
Gillette,
3.60%, 12/9/97,
LOC Deutschebank 2,200 2,200
Gillette,
3.60%, 12/9/97,
LOC Deutschebank 5,200 5,200
Sweetwater County,
4.00%<F2>, 11/3/97,
LOC Deustchebank 3,300 3,300
15,500
Total Municipal Bonds
(Amortized Cost $411,373) 411,373
Investment Companies (0.2%)
Federated Tax-Free
Money Market Fund 710,935 711
Fidelity Tax Free Fund 628 1
Total Investment Companies (Cost $712) 712
Total Investments
(Amortized Cost $412,085) <F1>--100.0% 412,085
Other assets in excess of liabilities 0.0% 139
TOTAL NET ASSETS--100.0% $412,224
<FN>
<F1> Cost and value for federal income tax and financial reporting purposes are the same.
<F2> Variable rate securities having liquidity sources through bank letters of credit or other
credit and/or liquidity agreements. The interest rate, which will change periodically, is
based upon bank prime rates or an index of market interest rates. The rate reflected on the
Schedule of Portfolio Investments is the rate in effect at October 31, 1997. The date reflects
the next rate change date.
<F3> Put and demand features exist allowing the Fund to require the repurchase of the investment within
variable time periods less than one year.
AIG--American International Group
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
EDR--Economic Development Revenue
ETM--Escrowed to Maturity
FGIC--Insured by Financial Guaranty Insurance Corp.
FNMA--Federal National Mortgage Assoc.
FSA--Insured by Financial Security Assurance
GIC--Guaranteed Insurance Contract
GNMA--Insured by Government National Mortgage Assoc.
GO--General Obligation
IDR--Industrial Development Revenue
LOC--Letter of Credit
PLC--Public Liability Company
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Ohio Municipal Money Market Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Amortized
Security Description Amount Cost
<S> <C> <C>
Municipal Bonds
Ohio (100.6%):
Akron Bath Copley Township Hospital,
3.07%<F2>, 11/06/97,
LOC National City Bank 590 $ 590
Akron Special Assessment,
4.15%, 12/19/97 3,820 3,822
Archbold Village GO,
4.55%, 3/26/98 2,000 2,005
Ashtabula County Medical
Center Project, Revenue Bond,
3.70%<F2>, 11/06/97,
LOC Bank One 2,800 2,800
Auglaize County,
3.80%<F2>, 11/6/97,
LOC Bank One AMT 2,670 2,670
Avon GO,
4.1%, 12/17/97 1,000 1,000
Avon, GO,
4.1%, 7/2/98 1,300 1,302
Barberton GO,
4.45%, 4/23/98 1,940 1,942
Barberton GO,
4.34%, 6/1/98 2,000 2,004
Barberton GO,
4.35%, 5/15/98 995 996
Beavercreek,
4.30%, 6/5/98 175 175
Beavercreek GO,
3.85%, 3/15/98 8,800 8,802
Beavercreek GO,
4.25%, 5/8/98 540 540
Bedford Heights IDR,
3.85%<F2>, 11/5/97,
LOC National City Bank 1,550 1,550
Belmont County GO,
4.12%, 11/25/97 2,089 2,089
Belmont County GO,
4.16%, 12/1/97 1,800 1,801
Berea,
4.00%, 10/15/98 2,300 2,303
Bowling Green,
3.75%<F2>, 11/06/97,
LOC General Electric Capital Corp. 2,400 2,400
Bowling Green GO,
3.98%, 6/18/98 3,325 3,326
Bowling Green IDR,
3.87%<F2>, 11/06/97,
LOC Mid American National Bank 1,430 1,430
Brecksville GO,
4.15%, 7/29/98 585 586
Brooklyn,
3.68%, 12/4/97 3,100 3,100
Brooklyn Heights IDR,
4.80%, 5/1/97,
LOC Bank One 450 450
Bryan GO,
4.14%, 10/14/98 2,000 2,004
Butler County,
6.75%<F2>, 11/6/97,
FNMA Collateral Agreement AMT 5,600 5,600
Butler County Hospital
Facilities Revenue,
3.7%, 11/6/97,
LOC Fifth Third Bank 1,000 1,000
Butler County Middletown
Regional Hospital,
Series A, 3.65%<F2>, 11/6/97,
LOC Star Bank 900 900
Centerville Health Care Revenue,
Bethany Lutheran,
3.65%<F2>, 11/5/97,
LOC PNC Bank 4,650 4,650
Chillicothe EDR,
3.75%<F2>, 11/6/97,
LOC Huntington National Bank 2,210 2,210
Cincinnati & Hamilton County
Port Authority IDR,
Bethesda One Ltd.,
4.00%<F2>, 8/1/98<F3>,
LOC Bank One 290 290
Cincinnati & Hamilton County
Port Authority IDR,
Multi-Color Corp. Project,
3.65%<F2>, 11/5/97,
LOC PNC Bank 200 200
Cincinnati & Hamilton IDR,
3.70%<F2>, 11/3/97,
LOC PNC Bank 7,055 7,055
Clark County GO,
4.35%, 5/14/98 965 966
Clermont County EDR,
3.90%<F2>, 11/6/97,
LOC Star Bank 1,145 1,145
Clermont County GO,
4.14%, 12/19/97 1,700 1,701
Clinton County Airport
Facilities Revenue,
3.65%<F2>, 11/6/97,
LOC Wachovia Bank
of North Carolina 6,700 6,700
Columbus GO,
3.55%<F2>, 11/6/97,
LOC West Deutsche 1,600 1,600
Crawford County,
4.21%, 2/13/98 4,900 4,901
Cuyahoga County EDR,
Crestmont-Cleveland
Partnership Project,
3.85%<F2>, 4/15/98<F3>,
LOC Bank One 490 490
Cuyahoga County IDR,
3.90%<F2>, 11/5/97,
LOC National City Bank 350 350
Cuyahoga County IDR,
3.80%<F2>, 11/6/97,
LOC Bank One 3,480 3,480
Cuyahoga County IDR,
Allen Group Project,
3.70%<F2>, 11/5/97,
LOC Union Bank of Switzerland 2,700 2,700
Cuyahoga County IDR,
Decorp Project,
3.70%<F2>, 11/6/97,
LOC Bank One 2,140 2,140
Cuyahoga County IDR,
Interstate Diesel,
4.15%<F2>, 11/7/97,
LOC Huntington National Bank 355 355
Cuyahoga County IDR,
Playhouse Square
Foundation Project,
3.80%<F2>, 11/5/97,
LOC National City Bank 4,710 4,710
Cuyahoga Falls Hospital Facilities
Revenue, Portage Trail
Care Center Project,
3.85%<F2>, 11/6/97,
LOC Provident Bank 3,200 3,200
Cuyahoga Falls Hospital Facilities
Revenue, Portage Trail
Care Center Project,
3.85%<F2>, 11/6/97,
LOC Fifth Third Bank 2,300 2,300
Dayton GO,
3.80%, 12/16/97 5,000 5,001
Deerfield Township GO,
3.95%, 8/13/98 1,000 1,000
Defiance County IDR,
Dietrich Industries, Inc. Project,
3.80%, 11/6/97,
LOC PNC Bank 660 660
Delaware GO,
4.04%, 6/4/98 1,400 1,400
East Palestine City School District GO,
4.00%, 1/29/98 1,400 1,400
Elyria,
3.97%, 11/5/97 920 920
Elyria,
4.05%, 8/19/98 1,280 1,281
Elyria GO,
4.00%, 12/4/97 2,000 2,000
Erie County,
4.15%, 7/10/98 1,600 1,602
Fairborn GO,
3.97%, 8/21/98 1,220 1,221
Fairfield,
4.1%, 7/1/98 1,250 1,252
Fairfield County,
Sewer System Improvements,
4.30%, 9/1/98 631 633
Franklin County EDR,
Dominican Sisters,
3.70%<F2>, 11/6/97,
LOC Fifth Third Bank 2,600 2,600
Franklin County Health Care
Facilities Revenues,
Lifeline Organ Procurement,
3.70%, 11/6/97,
LOC Fifth Third Bank 1,770 1,770
Franklin County Health System
Revenue, Health Care
Facilities--Wesley Glen,
3.79%<F2>, 11/6/97,
LOC Fifth Third Bank 2,960 2,960
Franklin County Health System
Revenue, Health Care
Facilities--Wesley Glen,
3.70%<F2>, 11/6/97,
LOC Fifth Third Bank 1,030 1,030
Franklin County Hospital Revenue,
Children's Hospital Project,
Series B, 3.80%<F2>, 11/6/97,
LOC Bank One 3,700 3,700
Franklin County Hospital Revenue,
National Church Residences Project,
3.85<F2>%, 11/6/97,
LOC Fifth Third Bank 1,490 1,490
Franklin County Hospital Revenue,
U.S. Health Corp.,
Series A, 3.65%<F2>, 11/6/97,
LOC Morgan Guaranty 7,800 7,800
Franklin County IDR,
4.10%, 3/1/98<F3>,
LOC Key Bank 1,925 1,925
Franklin County IDR,
Capitol South Community
Redevelopment,
3.90%<F2>, 11/3/97,
LOC Huntington National Bank 3,560 3,560
Franklin County IDR,
Jacobson Stores,
3.90%<F2>, 11/3/97,
LOC Bank One 7,100 7,100
Franklin County Multifamily Revenue,
3.90%<F2>, 11/6/97,
LOC Huntington Bank AMT 700 700
Franklin County Multifamily Revenue,
3.90%<F2>, 11/6/97,
LOC Star Bank 13,150 13,150
Geauga County,
3.90%, 12/18/97 1,800 1,800
Geneva,
4.38%<F2>, 4/30/98 510 510
Georgetown School District,
4.00%, 12/19/97 1,300 1,300
Gorham Fayette Local School District GO,
4.19%, 3/5/98 1,315 1,316
Graham Local School District GO,
Series A, 4.29%, 5/28/98 2,000 2,004
Granville GO,
4.41%, 5/19/98 550 551
Greene County Apple Valley,
Apple Valley Project,
3.90%<F2>, 11/3/97,
LOC PNC Bank 3,000 3,000
Greene County GO,
4.50%, 5/7/98 9,250 9,270
Grove City EDR,
Cross Country Inns, Inc.,
3.70%<F2>, 11/6/97,
LOC Bank One 1,670 1,670
Grove City GO,
4.08%, 6/26/98 780 780
Hamilton County EDR,
Berman Printing Co. Project,
3.85%<F2>, 11/6/97,
LOC Fifth Third Bank 5,650 5,650
Hamilton County EDR,
Cincinnati Performing Arts,
3.70%<F2>, 11/6/97,
LOC Fifth Third Bank 1,900 1,900
Hamilton County EDR,
TBM, Inc. Project,
3.90%<F2>, 11/6/97,
LOC Fifth Third Bank 3,340 3,340
Hamilton County Hospital
Facilities Revenue,
Beechwood Home Project,
3.75%<F2>, 11/6/97,
LOC Star Bank 4,100 4,100
Hamilton County Hospital Revenue,
Health Alliance,
Series B, 3.55%<F2>, 11/5/97,
MBIA 3,000 3,000
Hamilton County Multifamily Revenue,
Forest Ridge Apartment Project,
3.75%<F2>, 11/6/97,
LOC PNC Bank 8,000 8,000
Hancock County EDR,
Cross Country Inns Project,
3.85%<F2>, 12/1/97<F3>,
LOC Bank One 1,460 1,460
Hancock County GO,
4.83%, 11/21/97 3,000 3,001
Highland Heights,
4.15%, 12/18/97 2,880 2,881
Highland Heights,
4.10%, 12/18/97 1,500 1,501
Highland Heights,
3.97%, 12/18/97 2,500 2,501
Hillard EDR,
3.95%, 04/1/98<F3>,
LOC Bank One 630 630
Hilliard IDR,
Baesman Printing Corp. Project,
3.85%<F2>, 11/06/97,
LOC Fifth Third Bank 835 835
Holmes County IDR,
Poultry Processing Project,
3.80%<F2>, 11/5/97,
LOC Rabobank 500 500
Housing Finance Agency,
4.20%, 9/1/30,
LOC Trinity Funding 5,000 5,004
Housing Finance Agency,
3.85%<F2>, 11/5/97,
LOC Bank Of New York 3,300 3,300
Housing Finance Agency,
Mortgage Revenue,
3.65%, 3/2/98<F3>,
AIG AMT 8,000 8,000
Housing Finance Agency,
Multifamily Housing Revenue,
Hunters Glen Project,
3.75%<F2>, 11/5/97,
LOC PNC Bank 7,400 7,400
Housing Finance Agency,
Series 25, 3.75%<F2>, 11/5/97 2,080 2,080
Housing Finance Agency,
Single Family Mortgage Revenue,
3.85%<F2>, 11/5/97,
GNMA/Bank of New York 5,400 5,400
Huron County IDR,
American Baler Co. Project,
3.80%<F2>, 11/6/97,
LOC Bank One 2,075 2,075
Jefferson School District,
4.44%, 6/19/98 600 601
Jefferson Village,
3.93%, 12/19/97 700 700
Kings Local School District GO,
4.45%, 7/10/98 645 647
Liberty School District GO,
4.35%, 2/17/98 3,700 3,706
Licking County IDR,
Sunfield, Inc. Project,
3.80%<F2>, 11/6/97,
LOC Bank One 1,670 1,670
Lima Hospital Revenue,
Lima Memorial Hospital,
3.75%<F2>, 11/6/97,
LOC Bank One 6,700 6,700
Lorain,
5.25%, 3/27/98 841 845
Lorain County,
4.23%, 8/28/98 1,074 1,076
Lorain County EDR,
Crestmont-Cleveland
Partnership Project,
3.85%<F2>, 4/15/98<F3>,
LOC Bank One 1,180 1,180
Lorain County IDR,
French Creek Partners,
3.80%<F2>, 11/6/97,
LOC Bank One 950 950
Lucas County EDR,
Cross Country Inns-Maumee Project,
4.40%<F2>, 12/1/97<F3>,
LOC Bank One 1,235 1,235
Lucas County GO,
4.11%, 10/21/98 1,585 1,588
Lucas County Hospital Revenue,
Flower Memorial Hospital,
Series B, 6.10%, 12/1/97,
MBIA 500 501
Lucas County Hospital Revenue,
Sunshine Children's Home Project,
3.70%<F2>, 11/6/97,
LOC National City Bank 510 510
Lucas County Hospital Revenue,
Sunshine Children's Home Project,
3.70%<F2>, 11/6/97,
LOC National City Bank 400 400
Mahoning County Healthcare
Facilities Revenue,
3.65%<F2>, 11/5/97,
LOC PNC Bank 4,500 4,500
Mahoning County IDR,
3.65%<F2>, 11/6/97,
LOC Bank One 290 290
Maple Heights GO,
4.15%, 7/9/98 833 834
Marion County Hospital
Improvement Revenue,
Pooled Leasing Program,
3.70%<F2>, 11/6/97,
LOC Bank One 1,660 1,660
Marion County Hospital
Improvement Revenue,
Pooled Leasing Program,
3.75%<F2>, 11/6/97,
LOC Bank One 480 480
Marion County Hospital
Improvement Revenue,
Pooled Leasing Program,
3.70%<F2>, 11/6/97,
LOC Bank One 2,045 2,045
Marion County Hospital
Improvement Revenue,
Pooled Leasing Program,
3.70%<F2>, 11/6/97,
LOC Bank One 2,496 2,496
Marion County Hospital
Improvement Revenue,
Pooled Leasing Program,
3.70%<F2>, 11/6/97,
LOC Bank One 230 230
Mason,
4.22%, 3/31/98 600 601
Mason,
4.10%, 12/18/97 1,400 1,401
Mason Local School District,
Series B, 4.45%, 3/20/98 2,250 2,256
Maumee,
4.15%, 7/16/98 1,800 1,802
Medina County IDR, Nationwide One
1989 Project, AMT,
3.95%<F2>, 11/1/97,
LOC Bank One 325 325
Medina County IDR,
Partnership in Plastic Project,
3.85%<F2>, 11/6/97,
LOC Bank One AMT 995 995
Montgomery County Healthcare
Facilities Revenue, Greater Dayton
Area-MRI Project,
3.70%<F2>, 11/5/97,
LOC Key Bank 630 630
Montgomery County IDR,
Citywide Development Corp. Project,
3.80%<F2>, 11/6/97,
LOC Banc One 2,420 2,420
Montgomery County IDR,
Town Centers Ltd. Partner Project,
4.00%<F2>, 11/15/97,
LOC National City Bank 385 385
Montgomery County Multifamily
Housing Revenue, Pedcor
Investments--Lyons Gate,
3.80%<F2>, 11/6/97,
LOC Federal Home Loan Bank 5,000 5,000
Montgomery IDR,
Bethesda Two Ltd.,
4.20%<F2>, 11/6/97,
LOC Huntington National Bank 2,800 2,800
Muskingum County,
4.15%<F2>, 11/6/97,
LOC Huntington National Bank 1,445 1,445
Napoleon GO,
3.89%, 7/1/98 4,360 4,361
North Baltimore Local
School District GO,
4.60%, 4/16/98 300 301
Northwood GO,
4.70%, 7/30/98 1,180 1,186
Orange Village,
3.85%, 1/29/98 2,887 2,887
Oregon County GO,
4.07%, 5/6/98 3,800 3,801
Orrville Hospital Facilities Revenue,
3.70%<F2>, 11/5/97,
LOC National City Bank 1,555 1,555
Orrville IDR,
3.90%<F2>, 11/5/97,
LOC National City Bank 150 150
Orrville IDR, Contours Inc. Project,
3.90%<F2>, 11/5/97,
LOC National City Bank 100 100
Paulding County IDR,
Countrymark Co-op, Inc. Project,
3.70%<F2>, 11/6/97,
LOC Fifth Third Bank 800 800
Perrysburg,
4.60%, 11/19/98 3,300 3,319
Perrysburg,
4.60%, 11/20/97 2,800 2,801
Perrysburg GO,
4.60%, 8/20/98 2,200 2,210
Pickerington GO,
4.00%, 11/25/97 1,500 1,500
Pike County Hospital Facilities,
Bristol Village Project,
3.85%<F2>, 11/6/97,
LOC Fifth Third Bank 1,355 1,355
Pike County Hospital Facilities,
Bristol Village Project,
3.85%<F2>, 11/6/97,
LOC Fifth Third Bank 3,300 3,300
Portsmouth EDR,
3.85%<F2>, 11/6/97,
LOC National City Bank 2,800 2,800
Portsmouth IDR, KSA Ltd.
Partnership Project,
3.80%<F2>, 11/6/97,
LOC Bank One 1,340 1,340
Revere Local School District,
4.33%, 12/11/97 990 991
Richland County GO,
4.15%, 12/4/97 320 320
Richland County GO,
4.12%, 12/4/97 945 945
Richland County IDR,
Mansfield Motel Partnership,
3.80%<F2>, 11/6/97,
LOC Huntington National Bank 3,250 3,250
Rickenbacker Port Authority,
3.70%<F2>, 11/6/97,
LOC Bank One 3,200 3,200
Rossford,
4.75%, 12/18/97 500 500
Salem Hospital Revenue,
Salem Community Hospital Project,
3.65%<F2>, 11/5/97,
LOC Marine Bank 4,000 4,000
Sandusky GO,
4.25%, 7/9/98 300 301
School District Cash Flow,
4.47%, 12/31/97 2,602 2,605
School District Cash Flow,
4.47%, 6/30/98 10,031 10,069
Seneca County Hospital
Facilities Revenue,
St. Francis Home, Inc. Project,
3.65%<F2>, 11/6/97,
LOC National City Bank 2,200 2,200
Sharonville IDR, XTEK, Inc. Project,
3.70%<F2>, 11/6/97,
LOC Fifth Third Bank 600 600
Shelby,
4.25%, 8/19/98 810 812
St. Marys GO,
4.27%, 3/12/98 2,000 2,002
Stark County Health Care Facilities,
St. Joseph Hospice Project,
Revenue Bond,
3.70%<F2>, 11/7/97,
LOC Bank One 2,270 2,270
State Air Quality Development
Authority Revenue,
3.60%, 12/9/97,
FGIC 1,000 1,000
State Air Quality Development
Authority Revenue,
3.75%, 12/2/97,
LOC Societe Generale 4,655 4,655
State Air Quality Development
Authority Revenue,
JMG Funding Ltd. Partnership,
3.70%<F2>, 11/5/97,
LOC Societe Generale 1,000 1,000
State Air Quality Development
Authority Revenue,
Pollution Control,
Cleveland Electric,
3.70%, 11/14/97,
FGIC 5,000 5,000
State Air Quality Development
Authority Revenue,
Pollution Control,
Columbus Southern Power Co.,
3.75%, 11/19/97,
FGIC 1,000 1,000
State Environmental Improvement
Revenue, Newark Group
Industries Inc. Project,
3.80%<F2>, 11/6/97,
LOC Chase Manhattan Bank 13,000 13,000
State Environmental Improvement
Revenue, Newark Group
Industry, Inc. Project,
3.90%<F2>, 11/3/97,
LOC Chase Manhattan Bank 1,000 1,000
State Higher Education Facilities
Commission Revenue, Higher
Education--Mount Vernon Nazarene,
3.70%<F2>, 11/6/97,
LOC National City Bank 900 900
State Higher Education Facilities
Commission Revenue,
Kenyon College Project,
3.65%<F2>, 11/5/97 5,600 5,600
State Higher Education Facilities
Commission Revenue,
Wilmington College Project,
3.70%<F2>, 11/6/97,
LOC Fifth Third Bank 2,895 2,895
State IDR,
3.80%<F2>, 11/5/97,
LOC National City Bank 790 790
State IDR,
3.80%<F2>, 11/5/97,
LOC Bank One 800 800
State IDR,
3.80%<F2>, 11/5/97,
LOC Bank One 150 150
State IDR, Atlas Technicast Ltd. Project,
3.80%<F2>, 11/6/97,
LOC Bank One AMT 2,265 2,265
State IDR, Best Atlas Ltd. Project,
3.80%<F2>, 11/6/97,
LOC Bank One 2,265 2,265
State IDR, Cincinnati Riverfront,
3.80%<F2>, 11/6/97,
LOC PNC Bank AMT 440 440
State IDR, Hydro Tube Corp.,
Series IA, 3.80%<F2>, 11/5/97,
LOC National City Bank 650 650
State IDR, Kaufman's Bakery,
3.80%<F2>, 11/5/97,
LOC Bank One 1,805 1,805
State IDR, Middletown Compositing,
3.80%<F2>, 11/5/97,
LOC National City Bank 855 855
State IDR, Ware Industries, Inc.,
3.80%<F2>, 11/5/97,
LOC Bank One 335 335
State Public Facilities Commission,
Higher Education Capital Facilities,
Series II-A, 5.30%, 12/1/97,
FSA 500 501
State Public Facilities Commission,
Higher Education Capital Facilities,
Series II-A, 4.50%, 5/1/98 5,000 5,012
State Public Facilities Commission,
Higher Education Capital Facilities,
Series II-B, 4.50%, 11/1/97 1,500 1,500
State Solid Waste IDR,
USG Corp Project,
3.65%<F2>, 11/5/97,
LOC Chase Manhattan Bank 10,000 10,000
State Special Obligation,
Elementary & Secondary
Education Capital Facilities,
3.90%, 12/1/97 2,000 2,000
State Water Development Authority,
3.60%, 12/9/97,
FGIC 7,200 7,200
State Water Development Authority,
3.65%, 11/13/97 1,000 1,000
State Water Development Authority,
Cleveland Electric,
Series B, 3.60%<F2>, 11/5/97,
LOC First National Bank of Chicago 18,900 18,900
State Water Development Authority,
PA Power Co. Project,
3.65%<F2>, 11/5/97,
LOC First National Bank of Chicago 5,800 5,800
State Water Development Authority,
Philip Morris Co. Inc. Project,
3.65%<F2>, 11/5/97 10,000 10,000
State Water Development Authority,
Pollution Control Facilities Revenue,
4.45%, 12/1/97,
MBIA 500 500
State Water Development Authority,
Pollution Control Facilities Revenue,
Cleveland Electric Illumating Co.,
3.70%, 12/5/97,
FGIC 2,035 2,035
State Water Development Authority,
Pollution Control Facilities Revenue,
Duquesne Light Co. Project,
3.65%<F2>, 11/07/97,
LOC Toronto Dominion Bank AMT 3,000 3,000
State Water Development Authority,
Pollution Control Revenue,
3.75%, 12/2/97,
LOC Societe Generale 19,000 19,004
State Water Development Authority,
The Timken Co. Project,
3.70%<F2>, 11/5/97,
LOC Wachovia 3,300 3,300
Streetsboro,
4.15%, 10/9/98 1,580 1,582
Student Loan Funding Corp.,
Cincinnati Student Loan Revenue,
3.70%<F2>, 11/5/97,
LOC National Westminster Bank 3,400 3,400
Student Loan Funding Corp.,
Cincinnati Student Loan Revenue,
3.70%<F2>, 11/5/97,
LOC National Westminster Bank 5,100 5,100
Student Loan Funding Corp.,
Cincinnati Student Loan Revenue,
3.70%<F2>, 11/5/97,
LOC National Westminster Bank 9,700 9,700
Student Loan Funding Corp.,
Cincinnati Student Loan Revenue,
3.65%<F2>, 11/5/97,
LOC Bank of America 11,135 11,135
Summit County EDR,
4.26%, 9/1/12<F3>,
LOC Bank One 455 455
Summit County Hospital
Facilities Revenue,
Cuyahoga Falls
General Hospital,
3.70%<F2>, 11/6/97,
LOC Bank One 1,500 1,500
Summit County IDR,
Fiocca, Inc. Project,
3.75%<F2>, 11/6/97,
LOC Fifth Third Bank 2,375 2,375
Summit County IDR,
Forest Manufacturing Co. Project,
3.80%<F2>, 11/6/97,
LOC Bank One 715 715
Summit County IDR,
Forest Manufacturing Co. Project,
3.75%<F2>, 11/6/97,
LOC Fifth Third Bank 300 300
Summit County IDR, GO-JO Industries,
3.70%<F2>, 11/6/97,
LOC Bank One 2,270 2,270
Summit County IDR,
L & W Manufacturing Project,
4.00%<F2>, 4/1/98<F3>,
LOC Bank One 220 220
Summit County IDR,
Raymond W King Jr. Project,
3.80%<F2>, 11/6/97,
LOC Bank One 970 970
Summit County IDR,
SSP Fittings Corp. Project,
3.70%<F2>, 11/6/97,
LOC Bank One 1,660 1,660
Summit County IDR,
Texler, Inc. Project,
3.85%<F2>, 11/1/97<F3>,
LOC Bank One 620 620
Summit County IDR,
Triscari Project,
3.95%<F2>, 3/1/98<F3>,
LOC Bank One 360 360
Sunbury GO,
4.36%, 4/30/98 525 525
Tallmadge GO,
4.22%, 7/15/98 2,465 2,469
Tiffin GO,
4.20%, 11/6/97 1,545 1,545
Tiffin GO,
4.30%, 7/9/98 675 676
Tiffin GO,
4.05%, 7/9/98 2,625 2,629
Toledo City School District,
3.80%, 1/30/98 2,274 2,274
Toledo City Services Special Assessment,
3.65%<F2>, 11/6/97,
LOC Canadian Imperial Bank 4,500 4,500
Toledo City Services Special Assessment,
3.65%<F2>, 11/6/97,
LOC Canadian Imperial Bank 1,000 1,000
Toledo, Lucas County,
3.60%, 12/05/97<F3>,
LOC Bank of Nova Scotia 4,300 4,300
Toledo, Lucas County,
3.65%, 12/10/97,
LOC Bank of Nova Scotia 6,700 6,700
Toledo, Lucas County,
3.90%<F2>, 11/6/97,
LOC PNC Bank 2,800 2,800
Toledo, Lucas County Port Authority,
Frostbite Brands, Inc. Project,
3.85%<F2>, 11/6/97,
LOC Old Kent Bank & Trust 1,605 1,605
Tri County GO,
4.41%, 7/22/98 1,115 1,119
Troy EDR, L & CP Corp. Project,
4.00%<F2>, 12/1/97<F3>,
LOC Societe Generale 1,685 1,685
Trumbull County GO,
4.15%, 2/11/98 2,185 2,186
Trumbull County GO,
Sewer System Improvements,
4.10%, 2/11/98 1,050 1,051
Trumbull County IDR,
Eliwood Engineered Casting,
3.70%<F2>, 11/6/97,
LOC Mellon Bank 7,000 7,000
Trumbull County IDR,
McDonald Steel Corp Project,
3.80%<F2>, 11/6/97,
LOC PNC Bank 300 300
Twinsburg IDR,
Weatherchem Corp. Project,
3.90%<F2>, 11/5/97,
LOC National City Bank 250 250
Union County GO,
4.17%, 6/25/98 1,500 1,503
Vermilion IDR, Landover Properties Ltd.,
3.65%<F2>, 11/6/97,
LOC Bank One 1,490 1,490
Washington County GO,
3.95%, 11/14/97 1,800 1,801
Wauseon,
4.90%, 5/21/98 430 431
Wayne County Health Care
Facilities Revenue,
West View Manor Project,
3.79%<F2>, 11/6/97,
LOC Fifth Third Bank 4,940 4,940
Wayne County IDR,
Steiner Turf Equipment Inc.,
3.80%<F2>, 11/6/97,
LOC Bank One 1,370 1,370
West Clermont Local
School District GO,
4.50%, 4/15/98 1,500 1,503
Westerville EDR,
American Ceramic Society,
4.00%<F2>, 11/13/97,
LOC National City Bank 2,190 2,190
Westlake EDR,
Cross Country Inns, Inc. Project,
3.75%<F2>, 5/1/98<F3>,
LOC Huntington Bank AMT 235 235
Westlake IDR,
Logan Westlake Project,
3.75%<F2>, 11/6/97,
LOC Fifth Third Bank 1,700 1,700
Westlake IDR,
Nordson Corp. Project,
3.65%<F2>, 11/6/97,
LOC Bayerische Vereinsbank 2,050 2,050
Williams County,
4.85%, 5/14/98 335 336
Williams County IDR,
Letts Industries, Inc. Project,
3.75%, 11/6/97,
LOC NBD Bank 5,750 5,750
Willowick GO,
4.20%, 7/23/98 700 701
Wilmington GO,
4.11%, 12/22/97 1,000 1,000
Wood County EDR,
Cast Master, Inc. Acquisition,
3.87%<F2>, 11/6/97,
LOC Mid American
National Bank & Trust 2,650 2,650
Wood County EDR,
Precision Aggregate II,
3.87%<F2>, 11/6/97,
LOC Mid American
National Bank & Trust 2,500 2,500
Wooster,
3.88%, 10/15/98 3,000 3,001
Wooster IDR, Allen Group, Inc.,
3.85%<F2>, 11/5/97,
LOC Dresdner Bank AG 700 700
Worthington City School District GO,
3.92%, 1/15/98 700 700
Wyoming GO,
4.21%, 7/17/98 735 736
Wyoming GO,
4.25%, 3/27/98 2,603 2,608
655,007
Total Municipal Bonds
(Amortized Cost $655,007) 655,007
Investment Companies (0.1%)
Federated Ohio Municipal Cash Trust 482,526 483
Total Investment Companies
(Cost $483) 483
Total Investments
(Amortized Cost $655,490) <F1>--100.7% 655,490
Liabilities in excess of other assets (0.7)% (4,512)
TOTAL NET ASSETS--100.0% $650,978
<FN>
<F1> Cost and value for federal income tax and financial reporting purposes are the same.
<F2> Variable rate securities having liquidity sources through bank letters of credit or other
credit and/or liquidity agreements. The interest rate, which will change periodically, is
based upon bank prime rates or an index of market interest rates. The rate reflected on the
Schedule of Portfolio Investments is the rate in effect at October 31, 1997. The date reflects
the next rate change date.
<F3> Put and demand features exist allowing the Fund to require the repurchase of the investment within
variable time periods less than one year.
AMBAC--AMBAC Indemnity Corp.
AMT--Alternate Minimum Tax
FGIC--Insured by Financial Guaranty Insurance Corp.
FNMA--Federal National Mortgage Assoc.
FSA--Insured by Financial Security Assurance
GNMA--Insured by Government National Mortgage Assoc.
EDR--Economic Development Revenue
IDR--Industrial Development Revenue
LOC--Letter of Credit
MBIA--Insured by Municipal Bond Insurance Assoc.
GO--General Obligation
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Limited Term Income Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Asset Backed Securities (10.0%)
Caterpillar Financial Asset Trust,
Series 1997A, Class A3,
6.45%, 5/25/03 3,000 $ 3,037
Chase Manhattan Marine
Owner Trust 1997-A,
6.14%, 5/31/00 3,000 3,000
Fleetwood Credit Corp.,
Class A,
6.64%, 9/15/12 2,132 2,167
General Motors Acceptance Corp.
1993 A Grantor Trust, Class A,
4.15%, 3/16/98 3 3
Total Asset Backed Securities (Cost $8,150) 8,207
Collateralized Mortgage Obligations (3.3%)
Lehman Large Loan,
Series 1997-LLI, Class A1,
6.79%, 6/12/04 2,650 2,706
Total Collateralized Mortgage Obligations
(Cost $2,687) 2,706
Commercial Paper (2.1%)
Financial Services (2.1%):
General Electric Capital Corp.,
5.79%, 11/3/97 1,733 1,733
Total Commercial Paper (Cost $1,733) 1,733
Corporate Bonds (41.6%)
Brokerage Services (4.3%):
Lehman Brothers Holdings,
Senior Subordinated Note,
5.75%, 11/15/98 2,000 1,997
Merrill Lynch & Co., Inc.,
6.50%, 4/1/01 1,500 1,519
3,516
Chemicals--General (3.7%):
E.I. Dupont de Nemour,
6.50%, 9/1/02 3,000 3,049
Financial Services (11.2%):
Associates Corp. N.A.,
6.38%, 6/15/00 3,000 3,023
CIT Group Holdings,
6.38%, 8/1/02 3,000 3,008
Ford Motor Credit Corp.,
6.85%, 8/15/00 3,000 3,055
General Motors Acceptance
Corp.--Global Bond,
6.75%, 2/7/02 100 102
9,188
Industrial Goods & Services (15.0%):
Bass America, Inc.,
6.75%, 8/1/99,
Guaranteed by Bass PLC 2,875 2,911
Burlington Resources, Inc.,
7.15%, 5/1/99 2,000 2,033
International Business Machines Corp.,
6.38%, 11/1/97 2,175 2,175
McKesson Corp.,
6.60%, 3/1/00 5,000 5,056
12,175
Insurance (2.5%):
International Lease Finance Corp.,
8.35%, 10/1/98 2,000 2,048
Telecommunications (3.7%):
Ameritech Capital Funding,
6.13% 10/15/01 3,000 3,004
Utilities--Electric & Gas (1.2%):
Northern States Power Co.,
5.50%, 2/1/99 1,000 995
Total Corporate Bonds (Cost $33,886) 33,975
U.S. Government Mortgage Backed (17.6%)
Federal Home Loan Mortgage
Corp. (3.5%):
9.50%, 12/1/01, Pool #501384 2,766 2,900
Federal National Mortgage
Assoc. (10.4%):
9.00%, 3/1/25, Pool #297103 1,943 2,060
9.00%, 5/1/25, Pool #303389 6,097 6,466
8,526
Government National Mortgage
Assoc. (3.7%):
8.00%, 7/15/17, Pool #780428 1,461 1,519
8.00%, 8/15/27, Pool #446820 94 98
7.50%, 11/19/27 1,400 1,404
3,021
Total U.S. Government Mortgage Backed
(Cost $14,297) 14,447
U.S. Treasury Obligations (8.6%)
U.S. Treasury Bonds (8.6%):
4.75%, 9/30/98 6,602 6,556
6.88%, 7/31/99 500 510
Total U.S. Treasury Obligations (Cost $7,044) 7,066
U.S. Treasury Bills (12.1%)
0.00%, 1/22/98 10,000 9,885
Total U.S.TREASURY BILLS (Cost $9,877) 9,885
Yankee Bonds (3.8%)
Canada (3.8%):
Quebec Province, 9.38%, 4/1/99 3,000 3,139
Total Yankee Bonds (Cost $3,147) 3,139
Total Investments (Cost $80,821) <F1>--99.1% 81,158
Other assets in excess of liabilities 0.9% 755
TOTAL NET ASSETS--100.0% $81,913
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized appreciation of
securities as follows (amounts in thousands):
Unrealized appreciation $ 473
Unrealized depreciation (136)
Net unrealized appreciation $ 337
See notes to financial statements.
</TABLE>
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Intermediate Income Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Asset Backed Securities (7.4%)
Chase Manhattan Auto Owner Trust,
5.95%, 11/15/00 3,450 $ 3,484
Chase Manhattan Auto Owner Trust,
6.25%, 11/15/00 3,450 3,456
Equicredit Home Equity Loan Trust,
Series 1997-3, Class A8,
6.41%, 12/15/04 1,610 1,618
Premier Auto Trust,
Series 1997-1, Class A4,
6.35%, 4/6/02 3,300 3,334
Railcar Trust,
Series 92-1, 7.75%, 6/1/04 3,234 3,411
Toyota Auto Receivables Guarantor Trust,
Series 1997-A, Class A,
6.45%, 4/15/02 3,133 3,179
Total Asset Backed Securities (Cost $18,252) 18,482
Collateralized Mortgage Obligations (2.9%)
Federal Home Loan Mortgage Assoc.,
5.80%, 4/15/14 36 35
Federal Home Loan Mortgage Corp.,
7.50%, 9/15/20 722 729
Federal National Mortgage Assoc.,
7.50%, 7/25/18 498 507
Lehman Large Loan,
Series 1997-LLI, Class A1,
6.79%, 6/12/04 4,000 4,086
Merrill Lynch Mortgage Investors, Inc.,
Series 1997-C1, Class A3,
7.12%, 6/18/29 1,900 1,971
Total Collateralized Mortgage Obligations
(Cost $7,212) 7,328
Commercial Paper (4.1%)
Financial Services (4.1%):
General Electric Capital Corp.,
5.79%, 11/3/97 10,288 10,288
Total Commercial Paper (Cost $10,288) 10,288
Corporate Bonds (38.1%)
Automobiles (2.6%):
Daimler-Benz North America,
7.38%, 9/15/06 5,000 5,319
Ford Motor Co.,
9.00%, 9/15/01 1,000 1,089
6,408
Banks (2.3%):
Bank of New York, 7.88%, 11/15/02 3,000 3,195
Citicorp,
Series C, 7.00%, 7/1/07 2,425 2,486
5,681
Broadcasting/Cable (1.6%):
Time Warner Inc.,
8.11%, 8/15/06, 3,800 4,104
Brokerage Services (4.0%):
First Union-Lehman Brothers
Commercial Mortgage,
Series 1997-C1, Class A3,
7.38%, 4/18/07 2,350 2,465
Lehman Brothers Holdings,
Senior Subordinated Note,
5.75%, 11/15/98 5,000 4,993
Merrill Lynch,
8.25%, 11/15/99 2,500 2,603
10,061
Electronic & Electrical--
General (0.8%):
Phillips Electronics,
7.20%, 6/1/26 2,000 2,088
Financial Services (6.2%):
Bankers Trust, 6.70%, 10/1/07 2,350 2,347
Copelco, 6.47%, 4/20/05, 3,550 3,576
Grand Metro Financial,
6.50%, 9/15/99 5,000 5,037
The Money Store Home Equity Trust,
7.50%, 1/15/26 3,964 4,148
15,108
Industrial Goods & Services (5.7%):
Eaton Corp., 9.38%, 4/1/99 7,000 7,034
Lockheed Martin, 7.20%, 5/1/36 1,600 1,698
USX Corp., 7.20%, 2/15/04 5,000 5,144
13,876
Insurance (2.0%):
Liberty Mutual, 8.20%, 5/4/07 <F2> 2,300 2,533
Prudential Insurance, 7.65%, 7/1/07 2,300 2,447
4,980
Investment Company (1.1%):
D.R. Investments, 7.10%, 5/15/02 2,750 2,829
Leasing (1.0%):
Hertz Corp., 6.30%, 11/15/06 2,500 2,509
Oil & Gas Exploration,
Production & Services (1.7%):
Standard Oil, 9.00%, 6/1/19 4,000 4,135
Retail (4.1%):
Dayton Hudson Co., 6.80%, 10/1/01 5,000 5,081
Sears Roebuck & Co.,
6.86%, 8/6/01 5,000 5,106
10,187
Telecommunications (3.9%):
Telecommunications, Inc.,
8.25%, 1/15/03 6,300 6,647
U.S. West Capital Funding,
6.31%, 11/1/05 3,000 3,015
9,662
Utilities--Electric (1.1%):
Western Resources, Inc.,
6.88%, 8/1/04 2,800 2,856
Total Corporate Bonds (Cost $92,831) 94,484
U.S. Government Agencies (14.6%)
Federal Home Loan Mortgage
Corp. (1.8%):
6.24%, 10/6/04 3,480 3,534
6.00%, 2/1/11, Pool #G10454 1,022 1,006
4,540
Federal National Mortgage
Assoc. (6.9%):
5.90%, 10/10/02 5,410 5,409
7.92%, 3/30/05 2,500 2,593
6.00%, 3/1/09, Pool#190688 869 856
6.00%, 11/1/09, Pool #334108 654 648
6.00%, 6/1/11, Pool #313121 3,941 3,874
8.50%, 11/1/18, Pool #313280 2,247 2,349
7.50%, 5/1/24, Pool #328093 1,348 1,375
17,104
Government National Mortgage
Assoc. (5.9%):
9.00%, 12/15/09, Pool #780009 2,002 2,110
8.50%, 7/15/10, Pool #780516 1,980 2,082
7.00%, 6/15/24 1,112 1,123
8.00%, 8/15/26, Pool #423986 558 578
8.00%, 8/15/26, Pool #432932 1,116 1,158
8.00%, 9/15/26, Pool #421774 558 578
8.00%, 9/15/26, Pool #412663 558 579
8.00%, 9/15/26, Pool #432949 558 579
8.00%, 11/15/26, Pool #439445 745 773
8.00%, 11/15/26, Pool #431510 546 567
8.00%, 6/15/27, Pool #447649 1,356 1,407
8.00%, 8/15/27, Pool #448975 846 877
8.00%, 8/15/27, Pool #436443 533 553
8.00%, 10/15/27, Pool #449189 558 579
8.00%, 10/15/27, Pool #449186 558 579
8.00%, 10/15/27, Pool #449190 479 497
14,619
Total U.S. Government Agencies (Cost $36,009) 36,263
U.S. Government Mortgage Backed (4.3%)
Government National Mortgage
Assoc. (4.3%):
8.00%, 7/15/17, Pool #780428 4,468 4,649
8.00%, 8/15/27, Pool #446820 1,846 1,916
7.50%, 11/19/27 4,200 4,211
Total U.S. Government Mortgage Backed
(Cost $10,906) 10,776
U.S. Treasury Obligations (29.5%)
U.S Treasury Notes (1.1%):
6.63%, 3/31/02 2,684 2,768
U.S. Treasury Bonds (28.4%):
4.75%, 9/30/98 4,311 4,281
5.88%, 1/31/99 20,560 20,620
6.00%, 8/15/00 19,177 19,331
6.38%, 3/31/01 11,097 11,301
7.88%, 11/15/04 6,400 7,126
7.00%, 7/15/06 7,472 8,004
70,663
Total U.S. Treasury Obligations (Cost $72,767) 73,431
Total Investments (Cost $248,265) <F1>--100.9% 251,052
Liabilities in excess of other assets (0.9)% (2,211)
TOTAL NET ASSETS--100.0% $248,841
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized appreciation
of securities as follows (amounts in thousands):
Unrealized appreciation $3,084
Unrealized depreciation (297)
Net unrealized appreciation $2,787
<F2> 144a security which is restricted as to resale to institutional investors.
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Investment Quality Bond Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Asset Backed Securities (2.3%)
Equicredit Home Equity Loan Trust,
Series 1997-3, Class A7,
6.93%, 2/15/29 1,100 $ 1,109
Equicredit Home Equity Loan Trust,
Series 1997-3, Class A8,
6.41%, 12/15/04 1,130 1,136
The Money Store Home Equity Trust,
Series 1997-B, Class A8,
6.90%, 7/15/38 1,800 1,836
Total Asset Backed Securities (Cost $4,029) 4,081
Collateralized Mortgage Obligations (3.6%)
First Union-Lehman Brothers
Commercial Mortgage,
Series 1997-C1, Class A3,
7.38%, 4/18/07 1,300 1,363
Lehman Large Loan,
Series 1997-LLI, Class A1,
6.79%, 6/12/04 4,000 4,086
Merrill Lynch Mortgage Investors, Inc.,
Series 1997-C1, Class A3,
7.12%, 6/18/29 1,050 1,089
Total Collateralized Mortgage Obligations
(Cost $6,429) 6,538
Commercial Paper (0.2%)
Financial Services (0.2%):
General Electric Capital Corp.,
5.79%, 11/3/97 419 419
Total Commercial Paper (Cost $419) 419
Corporate Bonds (27.3%)
Agriculture & Livestock (0.8%):
Cargill, Inc.,
5.95%, 5/15/37,
Putable 5/15/99 @ 100 <F2> 1,500 1,511
Automobiles (2.3%):
Daimler-Benz North America Corp.,
7.38%, 9/15/06 2,000 2,128
Ford Motor Co.,
9.00%, 9/15/01 1,000 1,089
General Motors Corp.,
9.13%, 7/15/01 939 1,029
4,246
Banks (3.8%):
BankAmerica Corp.,
9.63%, 2/13/01 1,000 1,101
Bankers Trust New York Corp.,
Series A, 6.70% 10/1/07,
MTN 875 874
Citicorp,
Series C,
7.00%, 7/1/07,
MTN 500 513
First Union Corp.,
9.45%, 6/15/99 1,020 1,074
Mellon Capital II,
Series B,
8.00%, 1/15/27,
Callable 1/15/07 @ 104,
Guaranteed by Mellon Bank Corp. 1,000 1,049
Societe Generale-New York,
7.40%, 6/1/06 1,250 1,310
SunTrust Banks, Inc.,
7.38%, 7/1/02 1,000 1,046
6,967
Brokerage Services (3.9%):
Lehman Brothers Holdings,
7.38%, 5/15/04 1,675 1,743
Merrill Lynch & Co., Inc.,
8.25%, 11/15/99 1,020 1,062
Merrill Lynch & Co., Inc.,
6.00%, 3/1/01 1,000 998
Morgan Stanley Group, Inc.,
5.63%, 3/1/99 1,000 998
Morgan Stanley Group, Inc.,
8.88%, 10/15/01 1,000 1,095
Salomon Brothers, Inc.,
6.70%, 12/1/98 1,200 1,211
7,107
Electronic & Electrical--
General (1.3%):
Philips Electronics N.V.,
7.13%, 5/15/25,
Putable 5/15/07 @ 100 2,300 2,398
Financial Services (0.9%):
Cez Finance BV,
7.13%, 7/15/07,
Guaranteed by Cez AS 1,050 1,070
Hutchison Whampoa Finance,
Series A,
6.95%, 8/15/07,
Guaranteed By Hutchison
Whampoa Ltd. <F2> 600 555
1,625
Industrial Goods & Services (7.3%):
Eaton Corp.,
9.38%, 4/1/99 2,500 2,513
Georgia-Pacific Corp.,
9.95%, 6/15/02 1,500 1,703
International Business Machines Corp.,
7.00%, 10/30/25 1,150 1,162
Lockheed Martin,
7.20%, 5/1/36 550 584
Raytheon Co.,
6.75%, 8/15/07 1,050 1,068
Telecommunications, Inc.,
9.80%, 2/1/12 2,600 3,222
USX Corp.,
7.20%, 2/15/04 1,500 1,543
Weyerhaeuser Co.,
6.95% 10/1/27 1,250 1,234
13,029
Insurance (4.1%):
Aon Capital Trust A,
8.21%, 1/1/27,
Guaranteed by Aon Corp. <F2> 1,000 1,085
Liberty Mutual,
8.20%, 5/4/07 <F2> 2,300 2,532
Metropolitan Life Insurance Co.,
6.30%, 11/1/03 <F2> 1,400 1,386
Prudential Insurance Co.,
8.30%, 7/1/25 <F2> 2,060 2,251
7,254
Oil & Gas Exploration,
Production & Services (0.4%):
Union Oil of California,
6.38%, 2/1/04 700 697
Publishing (1.4%):
Time Warner, Inc.,
9.15%, 2/1/23 2,100 2,483
Retail (0.5%):
Dayton Hudson Co.,
6.40%, 2/15/03 1,000 994
Utilities--Electric (0.6%):
Western Resources, Inc.,
6.88%, 8/1/04 1,000 1,020
Total Corporate Bonds (Cost $48,325) 49,331
U.S Treasury Bonds (5.9%)
8.00%, 11/15/21 3,112 3,783
6.50%, 11/15/26 6,685 6,977
Total U.S Treasury Bonds (Cost $10,192) 10,760
U.S. Government Mortgage Backed (39.2%)
Federal Home Loan Mortgage
Corp. (5.6%):
6.24%, 10/6/04 2,045 2,077
7.50%, 4/1/07, Gold Pool #E35216 677 693
6.50%, 5/1/09, Gold Pool #E0029 5,195 5,193
9.00%, 6/1/19, Pool #555324 2,020 2,149
10,112
Federal National Mortgage
Assoc. (5.7%):
6.29%, 2/11/02, MTN 2,610 2,643
5.90%, 10/10/02, MTN 1,665 1,665
6.00%, 3/1/09, Pool #190688 304 300
6.00%, 11/1/09, Pool #334108 229 227
6.00%, 6/1/11, Pool #313121 511 503
7.00%,10/2/27, Pool #366957 1,533 1,537
7.00%, 11/1/27, Pool #251286 370 370
7.00%, 10/1/27, Pool #356271 1,534 1,538
7.00%, 10/1/27, Pool #395775 597 598
7.00%, 10/15/27, Pool #402176 1,017 1,020
10,401
Government National Mortgage
Assoc. (27.9%):
6.50%, 2/15/09, Pool #385215 2,012 2,019
8.50%, 7/15/10, Pool #780516 3,727 3,919
9.00%, 2/15/17, Pool #182619 1,012 1,074
8.00%, 7/15/17, Pool #780428 3,093 3,219
8.50%, 9/15/17, Pool #251064 1,035 1,081
8.00%, 11/15/17, Pool #780263 1,987 2,067
9.00%, 12/15/19, Pool #284544 796 845
9.00%, 1/15/20, Pool #271737 433 459
6.50%, 7/15/23, Pool #357168 860 852
7.00%, 12/15/23, Pool #780468 4,613 4,654
7.50%, 12/15/23, Pool #780359 3,197 3,280
6.50%, 1/15/24, Pool #351405 1,810 1,787
7.00%, 6/15/24 3,498 3,530
7.50%, 11/15/24, Pool #780467 2,086 2,141
8.50%, 12/15/24, Pool #377351 4,348 4,548
8.00%, 7/15/26, Pool #421752 390 404
8.00%, 8/15/26, Pool #423932 389 404
8.00%, 8/15/26, Pool #423986 390 404
8.00%, 9/15/26, Pool #412663 389 404
8.00%, 9/15/26, Pool #421774 389 404
8.00%, 9/15/26, Pool #432949 390 404
8.00%, 11/15/26, Pool #431510 374 388
8.00%, 11/15/26, Pool #439445 511 531
8.00%, 3/15/27, Pool #440257 332 345
8.00%, 6/15/27, Pool #447649 928 963
7.50%, 7/15/27, Pool #447369 588 601
8.00%, 8/15/27, Pool #448975 592 615
8.00%, 8/15/27, Pool #446820 1,275 1,323
8.00%, 8/15/27, Pool #436443 366 379
7.50%, 9/15/27, Pool #430216 471 481
7.50%, 9/15/27, Pool #449463 393 401
8.00%, 9/15/27, Pool #448981 462 479
8.00%, 9/15/27, Pool #412318 462 479
7.50%, 10/15/27, Pool #458660 588 601
7.50%, 10/15/27, Pool #453882 588 601
7.50%, 10/15/27, Pool #458667 345 353
8.00%, 10/15/27, Pool #449186 389 404
8.00%, 10/15/27, Pool #449190 329 341
8.00%, 10/15/27, Pool #449189 389 404
7.50%, 11/19/27 2,900 2,907
50,495
Total U.S. Government Mortgage Backed
(Cost $70,604) 71,008
U.S. Treasury Notes (19.4%)
6.25%, 7/31/98 8,000 8,041
4.75%, 9/30/98 933 927
5.88%, 1/31/99 170 170
6.13%, 9/30/00 8,330 8,415
6.63%, 3/31/02 6,280 6,477
7.88%, 11/15/04 5,480 6,102
7.00%, 7/15/06 4,570 4,895
6.63%, 5/15/07 100 105
Total U.S. Treasury Notes (Cost $34,867) 35,132
Yankee Bonds (0.5%)
Utilities--Electric (0.5%):
Tenaga Nasional Berhad,
7.63%, 4/29/07 <F2> 875 827
Total Yankee Bonds (Cost $898) 827
Total Investments (Cost $175,763) <F1>--98.4% 178,096
Other assets in excess of liabilities 1.6% 2,911
TOTAL NET ASSETS--100.0% $181,007
<FN>
<F1> Represents cost for financial reporting purposes and differs from cost basis for federal
income tax purposes by the amount of losses recognized for financial reporting purposes in
excess of federal income tax reporting of approximately $5. Cost for federal income tax purposes
differs from value by net unrealized appreciation of securities as follows (amounts in thousands):
Unrealized appreciation $2,905
Unrealized depreciation (577)
Net unrealized appreciation $2,328
<F2> 144a security which is restricted as to resale to institutional investors.
MTN--Medium Term Note.
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Government Morgage Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
U.S. Government Agencies (81.5%)
Federal Home Loan Bank (0.5%):
5.60%, 11/3/97 504 $ 504
Federal Home Loan Mortgage
Corp. (8.4%):
6.50%, 5/1/09, Gold Pool #E0029 1,653 1,652
6.00%, 2/1/11, Pool #G10454 766 754
9.00%, 6/1/19, Pool #555324 4,528 4,817
9.50%, 8/1/21, Pool #D24289 133 141
6.50%, 5/1/26, Gold Pool #C8039 1,360 1,339
8,703
Federal National Mortgage
Assoc. (14.9%):
6.00%, 3/1/09, Pool#190688 651 642
6.00%, 11/1/09, Pool #334108 490 486
6.50%, 9/1/10, Pool #250354 2,985 2,979
6.50%, 9/1/10, Pool #303515 1,768 1,766
6.00%, 6/1/11, Pool #313121 1,095 1,077
6.50%, 4/1/12, Pool #125477 90 90
8.00%, 5/1/17, Pool #50000 939 969
8.00%, 2/1/23, Pool #190203 1,749 1,815
6.50%, 1/1/26, Pool #250452 2,159 2,123
7.00%, 10/1/27, Pool # 356271 1,575 1,579
7.00%, 10/2/27, Pool# 366957 1,575 1,579
7.00%, 11/1/27, Pool # 251286 380 380
15,485
Government National Mortgage
Assoc. (57.7%):
9.50%, 4/15/10, Pool #780142 3,502 3,792
8.50%, 7/15/10, Pool #780516 5,885 6,188
8.00%, 11/15/17, Pool #780263 1,378 1,433
9.50%, 11/15/17, Pool #267832 1,397 1,502
9.50%, 1/15/19, Pool #258274 158 169
8.50%, 12/15/19, Pool #282716 292 305
8.50%, 2/15/20, Pool #284049 22 22
9.50%, 5/15/20, Pool #288719 682 734
9.00%, 3/15/21, Pool #304622 1,082 1,148
8.50%, 5/15/21, Pool #300373 91 95
9.00%, 5/15/21, Pool #296005 737 781
9.00%, 6/15/21, Pool #323416 662 702
9.50%, 6/15/21, Pool #302940 1,437 1,546
8.00%, 5/15/22 4,520 4,681
9.00%, 2/15/23, Pool #264216 1,969 2,092
7.50%, 7/15/23, Pool #359786 3,354 3,427
8.00%, 8/15/23, Pool #362066 1,264 1,310
7.00%, 9/15/23, Pool #348273 4,099 4,120
7.00%, 10/15/23, Pool #348278 2,385 2,397
7.00%, 12/15/23, Pool #370993 3,604 3,623
6.50%, 1/15/24 2,607 2,573
7.00%, 1/15/24, Pool #371006 2,431 2,444
7.50%, 1/15/24, Pool #264236 2,358 2,410
7.00%, 8/15/24, Pool #780391 9,392 9,476
8.00%, 3/15/27, Pool #440257 427 443
7.50%, 9/15/27, Pool #430216 608 621
7.50%, 9/15/27, Pool #449463 508 519
8.00%, 9/15/27, Pool #412318 594 616
8.00%, 9/15/27, Pool #448981 594 616
59,785
Total U.S. Government Agencies (Cost $83,803) 84,477
U.S. Government Mortgage Backed (8.0%)
Government National Mortgage Assoc. (8.0%):
7.50%, 11/19/27 8,300 8,321
Total U.S. Government Mortgage Backed
(Cost $8,500) 8,321
U.S. Treasury Obligations (9.7%)
U.S Treasury Notes (9.7%):
6.13%, 9/30/00 4 4
6.63%, 3/31/02 1,250 1,289
6.13%, 8/15/07 5,850 5,978
6.38%, 8/15/27 2,750 2,832
Total U.S. Treasury Obligations (Cost $9,881) 10,103
Total Investments (Cost $102,184) <F1>--99.2% 102,901
Other assets in excess of liabilities 0.8% 860
TOTAL NET ASSETS--100.0% $103,761
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized appreciation of
securities as follows (amounts in thousands):
Unrealized appreciation $1,304
Unrealized depreciation (587)
Net unrealized appreciation $ 717
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Fund for Income October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Collateralized Mortgage Obligations (42.6%)
Bear Stearns Secured Investors Trust,
7.50%, 9/20/20 1,718 $ 1,723
Equicredit Home Equity Loan Trust,
Series 1997-3, Class A7,
6.93%, 2/15/29 800 806
Federal National Mortgage Assoc.,
9.25%, 3/25/18 1,332 1,432
General Electric Capital
Mortgage Services, Inc.,
7.00%, 3/25/08 1,000 1,010
Housing Securities Inc.,
7.25%, 4/25/08 1,700 1,736
Prudential Home Mortgage Securities,
7.00%, 1/25/08 1,176 1,183
Resolution Trust Corp.,
8.20%, 11/25/21 1,500 1,529
Total Collateralized Mortgage Obligations
(Cost $8,958) 9,419
Commercial Paper (5.1%)
Ford Motor Credit Corp.,
5.63%, 11/3/97 500 500
General Electric Capital Corp.,
5.79%, 11/3/97 627 627
Total Commercial Paper (Cost $1,127) 1,127
U.S. Government Agencies (35.8%)
8.25%, 3/25/04 540 541
8.50%, 2/1/05, Callable 2/1/00 @100 1,800 1,890
12.00%, 10/1/10, Pool #170038 7 7
13.00%, 12/1/12, Pool #001418 34 39
10.00%, 5/1/13, Pool #020396 8 9
12.00%, 8/1/13, Pool #003512 20 23
10.00%, 1/1/14, Pool #016880 9 10
12.00%, 7/1/14, Pool #250291 2 3
12.00%, 7/1/14, Pool #250291 1 2
11.00%, 9/20/14, Pool #120105 63 69
10.50%, 2/15/16, Pool #147054 29 32
10.00%, 3/15/16, Pool #150768 48 52
10.00%, 2/1/17, Pool #293015 21 22
10.00%, 6/15/17, Pool #220728 86 94
10.00%, 8/1/17, Pool #056613 5 6
10.00%, 8/1/17, Pool #050002 13 14
9.50%, 8/15/17, Pool #206258 33 36
9.50%, 8/15/17, Pool #219729 43 46
10.00%, 10/1/17, Pool #055662 11 12
10.00%, 10/1/17, Pool #050016 3 3
10.00%, 10/15/17, Pool #235046 78 85
10.00%, 11/1/17, Pool #056339 4 4
10.00%, 1/1/18, Pool #055629 4 4
10.00%, 1/1/18, Pool #058689 5 6
10.00%, 1/1/18, Pool #058411 4 4
10.50%, 1/1/18, Pool #057486 10 11
10.00%, 1/15/18, Pool #222734 40 43
10.00%, 1/15/18, Pool #231248 59 64
10.00%, 2/1/18, Pool #058906 19 20
10.00%, 2/15/18, Pool #225849 12 13
10.00%, 3/15/18, Pool #250776 12 13
9.50%, 5/15/18, Pool #227730 378 407
9.50%, 6/15/18, Pool #251316 36 39
10.00%, 7/15/18, Pool #232909 67 73
10.00%, 9/15/18, Pool #261759 58 63
10.00%, 9/15/18, Pool #217546 28 30
10.00%, 9/15/18, Pool #261614 44 47
10.00%, 9/15/18, Pool #247628 76 82
10.00%, 9/15/18, Pool #257398 72 78
10.00%, 11/15/18, Pool #226254 221 240
9.50%, 1/1/19, Pool #069358 19 20
10.00%, 1/15/19, Pool #207704 70 76
10.25%, 3/15/19, Pool #910650 47 51
10.25%, 6/15/19, Pool #911585 30 33
9.50%, 8/1/19, Pool #537138 125 133
10.00%, 9/1/19, Pool #539709 99 106
9.50%, 10/15/19, Pool #279064 125 135
9.50%, 11/1/19, Pool #541208 191 203
9.50%, 11/1/19, Pool #543648 38 41
10.00%, 7/15/20, Pool #293223 141 154
9.50%, 9/20/20, Pool #001471 563 601
10.00%, 6/15/21, Pool #304825 243 264
9.50%, 12/1/22, Pool #G00150 518 551
10.00%, 8/15/25, Pool #405484 670 729
8.00%, 7/15/26, Pool #421752 42 44
8.00%, 8/15/26, Pool #432932 42 44
8.00%, 8/15/26, Pool #423986 42 44
8.00%, 9/15/26, Pool #412663 42 44
8.00%, 9/15/26, Pool #421774 42 44
8.00%, 9/15/26, Pool #432949 42 43
8.00%, 11/15/26, Pool #439445 59 61
8.00%, 11/15/26, Pool #431510 32 34
8.00%, 6/15/27, Pool #447649 43 44
8.00%, 8/15/27, Pool #436443 41 43
8.00%, 10/15/27, Pool #449189 42 44
8.00%, 10/15/27, Pool #449186 42 44
8.00%, 10/15/27, Pool #449190 38 39
Total U.S. Government Agencies (Cost $7,698) 7,905
U.S. Government Mortgage Backed (6.4%)
9.50%, 12/1/01, Pool #501384 831 871
8.00%, 7/15/17, Pool #780428 129 134
8.00%, 8/15/27, Pool #446820 95 98
7.50%, 11/19/27 300 307
Total U.S. Government Mortgage Backed
(Cost $1,404) 1,410
U.S. Treasury Obligations (8.8%)
6.63%, 3/31/02 1,000 1,032
6.13%, 8/15/07 425 434
0.00%, 8/15/20 2,000 482
Total U.S. Treasury Obligations (Cost $1,870) 1,948
Total Investments (Cost $21,057) <F1>--98.7% 21,809
Other assets in excess of liabilities 1.3% 292
TOTAL NET ASSETS--100.0% $22,101
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized appreciation of
securities as follows (amounts in thousands):
Unrealized appreciation $803
Unrealized depreciation (51)
Net unrealized appreciation $752
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
National Municipal Bond Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Municipal Bonds (91.7%)
Alabama (5.7%):
Scottsboro, Warrant,
Series B, 5.30%, 7/1/06,
FSA 100 105
Scottsboro, Warrant,
Series B, 5.38%, 7/1/07,
Callable 7/1/06 @ 102, FSA 400 423
State Board of Education,
Bevill State Community College,
4.25%, 9/1/01, AMBAC 240 240
State Board of Education,
Bevill State Community College,
4.35%, 9/1/02, AMBAC 250 249
State Board of Education,
Bevill State Community College,
4.45%, 9/1/03, AMBAC 260 259
State Board of Education,
Bevill State Community College,
4.55%, 9/1/04, AMBAC 170 170
State Board of Education,
Bevill State Community College,
4.65%, 9/1/05, AMBAC 285 284
State Board of Education,
Bevill State Community College,
4.70%, 9/1/06, AMBAC 300 299
State Board of Education,
Bevill State Community College,
4.88%, 9/1/08,
Callable 9/1/07 @ 102, AMBAC 100 100
State Board of Education,
Bevill State Community College,
5.00%, 9/1/09,
Callable 9/1/07 @ 102, AMBAC 245 245
State Board of Education,
Bevill State Community College,
5.10%, 9/1/10,
Callable 9/1/07 @ 102, AMBAC 210 210
State Board of Education,
Bevill State Community College,
5.13%, 9/1/11,
Callable 9/1/07 @ 102, AMBAC 250 248
2,832
Alaska (0.5%):
Anchorage, GO,
5.25%, 10/1/02, FGIC 250 261
Arizona (12.3%):
Maricopa County School
District No. 11, GO,
Projects of 1996-Series A,
4.80%, 7/1/07, AMBAC 1,000 1,012
Maricopa County School
District No. 79, GO,
Litchfield Elementary,
Projects of 1995-Series D,
5.00%, 7/1/03, AMBAC 125 128
Maricopa County Unified
School District, No. 95
Queens Creek, GO, Series A,
5.20%, 7/1/05, AMBAC 125 131
Navajo County Unified
School District, GO, Series A,
5.00%, 7/1/06, MBIA 375 387
Pima County,
Arizona Industrial
Development Authority,
5.00%, 4/1/04, MBIA 1,000 1,028
Pima County,
Arizona Industrial
Development Authority,
5.25%, 4/1/06, MBIA 1,000 1,045
Pinal County School District,
Series A, GO,
5.40%, 7/1/07, FGIC 270 286
Yuma County School District, GO,
6.00%, 7/1/08, MBIA 600 667
Yuma County, Elementary School
District No. 001, GO,
5.50%, 7/1/14,
Callable 7/1/07 @ 101, MBIA 1,400 1,432
6,116
Arkansas (5.6%):
Fayetteville Public Facility Board,
Butterfield Trail Village,
4.10%<F2>, 9/1/27,
LOC Dresdner Bank AG 1,000 999
State Development Finance Authority,
Drivers' License Revenue,
State Police-HQ Wireless Data,
4.60%, 6/1/06, FGIC 500 501
Texarkana Public Facilities Board,
Waterworks Facilities Revenue,
4.90%, 9/1/05, FGIC 570 583
Texarkana Public Facilities Board,
Waterworks Facilities Revenue,
5.00%, 9/1/07, FGIC 250 257
Texarkana Public Facilities Board,
Waterworks Facilities Revenue,
5.13%, 9/1/09,
Callable 9/1/07 @ 100, FGIC 460 469
2,809
California (0.7%):
Walnut Valley Unified School District,
Series A, GO, 6.85%, 8/1/07, MBIA 300 354
Colorado (2.0%):
University of Northern Colorado,
Auxiliary Facilities System,
5.60%, 6/1/24,
Callable 6/1/07 @ 100, MBIA 1,000 1,022
Connecticut (0.4%):
State,
Special Tax Obligation Revenue Bond,
6.00%, 9/1/06 200 220
Florida (3.8%):
Indian Trace Community
Development District,
Water Management Special
Benefit Assessment,
5.00%, 5/1/09,
Callable 5/1/07 @ 101, MBIA 725 738
Indian Trace Community
Development District,
Water Management Special
Benefit Assessment,
5.00%, 5/1/11,
Callable 5/1/07 @ 101, MBIA 1,000 1,004
Orlando Utilities Commission,
Water & Electric Revenue,
5.80%, 10/1/06 150 164
1,906
Georgia (0.5%):
South Fulton Municipal Regional Jail,
5.20%, 12/1/05, MBIA 250 261
Hawaii (5.1%):
Honolulu City & County,
Series A, GO, 5.40%, 4/1/05, FSA 1,000 1,051
Honolulu City, GO,
6.00%, 11/1/05 1,385 1,516
2,567
Illinois (11.7%):
Chicago Public Building Commission,
6.05%, 1/1/06,
Callable 1/1/05 @ 100, AMBAC 250 273
Cicero,
Series A, GO,
5.35%, 12/1/06, AMBAC 530 556
Northlake,
Tax Increment, GO,
5.00%, 12/1/04, MBIA 500 516
Southern Illinois University,
Housing & Auxiliary Facilities System,
5.00%, 4/1/05, MBIA 100 102
Southern Illinois University,
Housing & Auxiliary Facilities System,
5.00%, 4/1/06, MBIA 125 127
Southern Illinois University,
Housing & Auxiliary Facilities System,
5.00%, 4/1/08,
Callable 4/1/07 @ 102, MBIA 200 202
State Educational Facilities Authority,
Shedd Aquarium Society,
4.85%, 7/1/05, AMBAC 500 506
State Health Facilities Authority,
5.55%, 10/1/06, FGIC 1,000 1,061
State Health Facilities Authority,
5.60%, 10/1/07, FGIC 2,310 2,457
5,800
Indiana (1.1%):
Westfield Elementary School
Building Corp.,
4.50%, 1/15/01, AMBAC 275 277
Westfield Elementary School
Building Corp.,
5.00%, 7/15/01, AMBAC 280 287
564
Iowa (2.3%):
State Finance Authority,
Hospital Facility Revenue,
Trinity Regional
Hospital Project,
5.00%, 7/1/02, FSA 550 564
State Finance Authority,
Hospital Facility Revenue,
Trinity Regional
Hospital Project,
5.10%, 7/1/03, FSA 585 602
1,166
Kansas (0.7%):
Haysville, Water & Wastewater Utility,
4.25%, 10/1/98, FSA 110 110
Haysville, Water & Wastewater Utility,
4.50%, 10/1/99, FSA 105 106
Haysville, Water & Wastewater Utility,
4.60%, 10/1/00, FSA 130 133
349
Michigan (3.7%):
Byron Center, GO,
5.40%, 5/1/07,
Callable 5/1/05 @ 101 255 268
Grosse Ile Township School District, GO,
6.00%, 5/1/22,
Callable 5/1/17 @ 100, FGIC 250 264
Leslie Public Schools, GO,
5.55%, 5/1/07,
Callable 5/1/05 @ 101, AMBAC 250 266
Municipal Bond Authority,
6.70%, 11/1/06,
Callable 11/1/04 @ 102 225 256
Municipal Bond Authority,
6.80%, 11/1/07,
Callable 11/1/04 @ 102 275 311
Rockford Public Schools,
5.25%, 5/1/22,
Callable 5/1/07 @ 100, FGIC 500 493
1,858
Minnesota (5.3%):
Southern Minnesota Municipal Power,
Series A, 4.70%, 1/1/02, AMBAC 2,000 2,032
State Higher Education Facilities Authority,
St. John's University,
Series Four-L, 5.30%, 10/1/12,
Callable 10/1/07 @ 100 600 601
2,633
Missouri (2.2%):
Excelsior Springs School
District Building Corp.,
6.50%, 3/1/09,
Callable 3/1/04 @ 100, FSA 500 549
West Plains Improvement Authority,
Leasehold Revenue,
5.00%, 5/1/06, MBIA 550 561
1,110
New Mexico (2.1%):
State Mortgage Finance Authority,
Single Family Mortgage Program,
Series C-3, 5.95%, 7/1/28,
Callable 1/1/07 @ 102,
GNMA/FNMA/FHLMC 1,000 1,025
Ohio (5.0%):
Butler County Transportation
Improvement District,
Series A, 5.00%, 4/1/07, FSA 1,000 1,027
Kent City School District, GO,
5.15%, 12/1/05, FGIC 250 261
Kent State University,
5.00%, 5/1/05, MBIA 230 237
Orrville Electric System Revenue,
4.60%, 12/1/04, AMBAC 130 131
State Higher Educational Facilities,
John Carroll University Project,
5.25%, 4/1/07 315 326
State, Special Obligation,
5.80%, 6/1/03, AMBAC 500 536
2,518
Pennsylvania (1.7%):
Erie, School District, GO,
0.00%, 5/1/23, MBIA 210 53
Jim Thorpe Area School District, GO,
Series A, 4.90%, 3/15/06, MBIA 125 127
Jim Thorpe Area School District, GO,
Series A, 5.25%, 3/15/11,
Callable 9/15/07 @ 100, MBIA 285 289
Jim Thorpe Area School District, GO,
Series A, 5.35%, 3/15/12,
Callable 9/15/07 @ 100, MBIA 200 204
Jim Thorpe Area School District, GO,
Series AA, 4.80%, 3/15/06, MBIA 175 177
850
South Carolina (0.5%):
Horry County, Airport Revenue,
Series C, 5.50%, 7/1/27,
Callable 7/1/07 @ 102, FSA 250 252
Tennessee (1.0%):
Dickson, Electric Utility,
5.00%, 3/1/03, MBIA 500 517
Texas (1.5%):
Conroe Independent School District, GO,
6.50%, 2/1/04 200 223
Keller Independent School District, GO,
6.20%, 8/15/04 200 220
State,
Series A, GO, 6.00%, 10/1/08 100 111
Ysleta Independent School District, GO,
5.60%, 8/15/02 200 211
765
Utah (1.0%):
State Water Finance Agency,
4.05%, 10/1/98, MBIA 500 501
Washington (10.2%):
King City School District, GO,
No. 411, Issaquah,
4.25%, 12/1/98, . 1,100 1,104
Pierce County School District,
No. 003, Puyallup, GO,
5.50%, 12/1/01, FGIC 605 634
Pierce County School District,
No. 320, Sumner, GO,
5.50%, 12/1/01, MBIA 1,290 1,354
Pierce County School District,
No.320, Sumner, GO,
5.50%, 12/1/02, MBIA 1,000 1,055
Seattle Municipal Light & Power,
6.00%, 7/1/03 200 216
Skagit County School District,
No. 103, Anacortes, GO,
4.75%, 12/1/01, FGIC 200 204
Spokane County School District, GO,
5.40%, 12/1/07, FGIC 500 529
5,096
Wisconsin (4.6%):
Kenosha Unified School District,
No. 001, GO, Promissory Notes,
5.00%, 4/1/03, AMBAC 325 334
Milwaukee Sewer District,
Series A, GO,
6.70%, 10/1/02 200 221
State Health & Educational
Facilities Authority,
5.20%, 12/15/07, MBIA 1,675 1,729
2,284
Wyoming (0.5%):
Sweetwater County School District, GO,
6.00%, 6/1/98 225 228
Total Municipal Bonds (Cost $44,349) 45,864
Investment Companies (8.6%)
Federated Municipal
Obligations Fund 2,040,056 2,040
Federated Tax-Free
Money Market Fund 2,243,015 2,243
Total Investment Companies (Cost $4,283) 4,283
Total Investments (Cost $48,632) <F1>--100.3% 50,147
Liabilities in excess of other assets (0.3)% (154)
TOTAL NET ASSETS--100.0% $49,993
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized appreciation of
securities as follows (amounts in thousands):
Unrealized appreciation $1,515
Unrealized depreciation (0)
Net unrealized appreciation $1,515
AMBAC--AMBAC Indemnity Corp.
FGIC--Financial Guaranty Insurance Co.
FHLMC--Federal Home Loan Mortgage Corp.
FSA--Insured by Financial Security Assurance
GO--General Obligation
MBIA--Municipal Bond Insurance Assoc.
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
New York Tax-Free Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
New York Municipal Bonds (97.4%)
Metropolitan Transportation
Authority, Transportation
Facilities,
Series I, 7.00%, 7/1/09,
AMBAC 250 $ 298
Metropolitan Transportation
Authority, Transportation
Facilities,
Series K, 7.50%, 7/1/17,
Prerefunded 7/1/98 @ 102,
AMBAC 1,200 1,253
Monroe-Woodbury Central
School District, GO,
5.70%, 5/15/26,
Callable 5/15/06 @ 102,
MBIA 500 516
Monroe-Woodbury Central
School District, GO,
5.70%, 5/15/27,
Callable 5/15/06 @ 102,
MBIA 300 310
Nassau County Industrial
Development Agency,
Civic Facilities,
Hofstra University Project,
6.75%, 8/1/11,
Callable 8/1/01 @ 102,
AMBAC 250 274
New York City Housing
Development Corp.,
Multi-Unit Mortgage,
Series A, 7.30%, 6/1/10,
Callable 6/1/01 @ 102, FHA 700 748
New York City Housing
Development Corp.,
Multi-Unit Mortgage,
Series A, 7.35%, 6/1/19,
Callable 6/1/01 @ 102, FHA 675 720
New York City Housing
Development Corp.,
Series 1, 7.38%, 4/1/17,
Callable 4/1/98 @ 101.5, MBIA 335 343
New York City Industrial
Development Agency,
Civic Facilities, USTA National
Tennis Center Project,
6.38%, 11/15/14,
Callable 11/15/04 @ 102, FSA 200 220
New York City Municipal Water
Finance Authority, Series A,
Water & Sewer System Revenue,
6.75%, 6/15/16,
Callable 6/15/01 @ 101, FGIC 325 353
New York City Municipal Water
Finance Authority,
Water & Sewer System Revenue,
6.75%, 6/15/16,
Prerefunded 6/15/01 @ 101,
FGIC-TCRS 325 356
New York City Transit Authority,
Transit Facilities,
Livingston Plaza Project,
7.50%, 1/1/20,
Prerefunded 1/1/00 @ 102, FSA 220 240
New York City, Cultural Resources,
Museum of Modern Art,
6.63%, 1/1/11,
Prerefunded 1/1/02 @ 102,
AMBAC 680 754
New York City,
Series B, GO, 7.00%, 10/1/18,
Callable 10/1/99 @ 100,
FSA, ETM 300 316
New York City,
Series C, GO, 7.00%, 2/1/12,
Callable 2/1/98 @ 101, FGIC-TCRS 60 61
Port Authority of
New York & New Jersey,
109th Series,, 5.38%, 7/15/27,
Callable 1/15/07 @ 101, FSA 500 499
State Dormitory Authority,
City University,
Series 2, 6.75%, 7/1/24,
Pre-refunded 7/1/04 @ 102, MBIA 700 807
State Dormitory Authority,
Ithaca College,
6.50%, 7/1/10,
Callable 7/1/01 @ 102, MBIA 750 815
State Dormitory Authority,
Judicial Facilities Leases,
Series B, 7.00%, 4/15/16,
Callable 4/15/01 @ 102, MBIA 225 247
State Dormitory Authority,
Pace University,
5.75%, 7/1/26,
Callable 7/1/07 @ 102, MBIA 500 518
State Dormitory Authority,
Siena College,
5.75%, 7/1/26,
Callable 7/1/07 @ 102, MBIA 250 259
State Dormitory Authority,
St. John's University,
5.70%, 7/1/26,
Callable 7/1/06 @ 102, MBIA 700 720
State Medical Care Facilities
Finance Agency,
7.38%, 8/15/19,
Prerefunded 8/15/99 @ 102, MBIA 330 355
State Medical Care Facilities
Finance Agency,
7.38%, 8/15/19,
Callable 8/15/99, MBIA 170 182
State Medical Care Facilities
Finance Agency,
North Shore University Hospital,
7.20%, 11/1/20,
Callable 11/1/00, MBIA 565 619
State Medical Care Facilities
Finance Agency, St. Luke's,
Series A, 7.10%, 2/15/27,
Callable 12/12/97 @ 102, FHA 550 562
State Medical Care Facilities
Finance Agency, St. Luke's,
Series B, 7.45%, 2/15/29,
Prerefunded 2/15/00 @ 102, MBIA 340 371
State Tollway Authority,
Series C, 6.00%, 1/1/25,
Callable 1/1/05 @ 102, FGIC 550 580
State Urban Development Corp.,
Correctional Facilities,
Series 1, 7.50%, 1/1/20,
Prerefunded 1/1/00 @ 102, FSA 400 436
State Urban Development Corp.,
Correctional Facilities,
Series D, 7.50%, 1/1/12,
Prerefunded 1/1/98 @ 102, AMBAC 1,000 1,026
State, GO, 6.75%, 8/1/18,
Callable 8/1/01 @ 102, AMBAC 370 406
State, GO, 6.75%, 8/1/19,
Callable 8/1/01 @ 102, AMBAC 325 357
Triborough Bridge & Tunnel
Authority,
Series T, 7.00%, 1/1/20,
Prerefunded 1/1/01 @ 102, MBIA 900 992
Triborough Bridge & Tunnel
Authority, Special Obligation,
Series B, 6.88%, 1/1/15,
Callable 1/1/02 @ 102, AMBAC 1,000 1,089
Total New York Municipal Bonds
(Cost $16,469) 17,602
Investment Companies (0.5%)
Providence of New York Fund 89,945 90
Total Investment Companies (Cost $90) 90
Total Investments (Cost $16,559) <F1>--97.9% 17,692
Other assets in excess of liabilities--2.1% 374
TOTAL NET ASSETS--100.0% $18,066
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows (amounts in thousands):
Unrealized appreciation $1,133
Unrealized depreciation (0)
Net unrealized appreciation $1,133
AMBAC--AMBAC Indemnity Corp.
FGIC--Fiancial Guaranty Insurance Co.
FHA--Federal Housing Administration
GO--General Obligation
MBIA--Municipal Bond Insurance Assoc.
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Ohio Municipal Bond Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Municipal Bonds (97.4%)
Alternative Minimum Tax Paper (15.6%)
Cuyahoga County
Multifamily Revenue,
6.60%, 10/20/30,
Callable 10/20/05 @ 102, GNMA 2,000 $ 2,121
State Education Loan,
Series A-1, 5.85%, 12/1/19,
Callable 6/1/07 @ 102, AMBAC 2,000 2,013
State Housing Finance Agency,
6.15%, 3/1/29,
Callable 9/1/07 @ 102, GNMA 1,500 1,572
Student Loan Funding Corp.,
Series A, 5.50%, 12/1/01 3,300 3,374
Student Loan Funding Corp.,
Series A, 5.85%, 8/1/04 3,000 3,127
Total Alternative Minimum Tax Paper 12,207
General Obligation Bonds (37.5%)
County, City & Special District (8.1%):
Beavercreek,
6.05%, 12/1/16,
Callable 12/1/07 @ 102 270 285
Butler County,
5.60%, 12/1/09,
Callable 12/1/06 @ 101, AMBAC 355 378
Butler County,
5.65%, 12/1/10,
Callable 12/1/06 @ 101, AMBAC 155 165
Cleveland,
5.00%, 8/1/18,
Callable 8/1/07 @ 102, MBIA 1,000 967
Cuyahoga Falls,
5.25%, 12/1/17,
Callable 12/1/07 @ 102, FGIC 500 500
Madison County,
7.00%, 12/1/19,
Callable 12/1/04 @ 102, AMBAC 600 692
Munroe Falls,
Series A, 6.95%, 12/1/14,
Callable 12/1/04 @ 101, AMBAC 1,000 1,142
Toledo,
5.63%, 12/1/11,
Callable 12/1/06 @ 102, AMBAC 1,000 1,055
Toledo,
5.50%, 12/1/12,
Callable 12/1/07 @ 102, FGIC 1,085 1,126
6,310
Education (23.5%):
Anthony Wayne Local School District,
5.75%, 12/1/18,
Callable 12/1/05 @ 101, FGIC 1,000 1,036
Avon Local School District,
5.50%, 12/1/04, AMBAC 665 709
Avon Local School District,
5.55%, 12/1/05, AMBAC 250 268
Batavia Local School District,
7.00%, 12/1/14,
Callable 12/1/05 @ 102, MBIA 1,500 1,747
Brecksville-Broadview Heights
City School District,
6.50%, 12/1/16,
Callable 12/1/06 @ 102, FGIC 1,000 1,131
Delaware City School District,
5.75%, 12/1/20,
Callable 12/1/05 @ 101, FGIC 1,000 1,031
Dublin City School District,
5.00%, 12/1/19,
Callable 12/1/07 @ 101, MBIA 1,000 967
Fairfield School District,
4.50%, 12/1/99 305 308
Forest Hills Local School District,
4.00%, 12/1/98, MBIA 165 165
Indian Valley Local School District,
7.00%, 12/1/14,
Callable 12/1/05 @ 102, AMBAC 2,500 2,912
Lakeview Local School District,
6.95%, 12/1/19,
Callable 12/1/04 @ 102, AMBAC 1,250 1,437
McComb Local School District,
4.70%, 12/1/06, MBIA 140 142
Oak Hills Local School District,
School Facility Construction
& Improvement,
Series B, 5.13%, 12/1/25,
Callable 12/1/07 @ 101, MBIA 1,000 976
Olentangy Local School District,
Series A, 6.25%, 12/1/14,
Callable 12/1/04 @ 102 500 541
Reynoldsburg City School District,
4.75%, 12/1/05, FGIC 10 10
Reynoldsburg City School District,
4.80%, 12/1/06, FGIC 235 238
Twinsburg Local School District,
5.90%, 12/1/21,
Callable 12/1/06 @ 102, FGIC 2,000 2,108
Upper Arlington City School District,
5.13%, 12/1/19,
Callable 12/1/06 @ 101, MBIA 2,500 2,453
Westlake, City School District,
Series A, 3.85%, 12/1/97 145 145
18,324
Public Facilities (Convention, Sport,
Public Buildings) (2.4%):
Centerville Capital Facilities,
5.63%, 12/1/26,
Callable 12/1/05 @ 101, MBIA 285 291
Crawford County,
Correctional Facilities,
6.75%, 12/1/19, AMBAC 1,385 1,576
1,867
Utility (Sewers, Telephone, Electric)
(3.5%):
Canton Waterworks System,
5.75%, 12/1/10,
Callable 12/1/05 @ 102, AMBAC 500 537
Huron County Landfill Issue II,
5.40%, 12/1/07, MBIA 285 304
Huron County Landfill Issue II,
5.60%, 12/1/09,
Callable 12/1/07 @ 102, MBIA 320 344
Lucas County Metropolitan
Sewer & Water District,
5.45%, 12/1/17,
Callable 12/1/07 @ 102 505 505
Toledo, Sewer Improvements,
6.10%, 12/1/14,
Callable 12/1/04 @ 102, AMBAC 1,000 1,075
2,765
Total General Obligation Bonds 29,266
Revenue Bonds (44.3%)
Education (8.7%):
Kent State University,
University Revenue,
5.50%, 5/1/28,
Callable 11/1/06 @ 102, MBIA 500 505
State Higher Education
Facility Revenue,
Series II B, 5.88%, 12/1/04,
Callable 12/1/01 @ 102 1,000 1,066
State Higher Educational
Facility Revenue,
John Carroll University Project,
5.05%, 4/1/04 150 154
State Higher Educational
Facility Revenue,
Xavier University,
6.00%, 5/15/08,
Callable 5/15/07 @ 102, MBIA 500 554
State Higher Educational
Facilty Revenue,
University of Dayton,
5.40%, 12/1/22,
Callable 12/1/07 @ 101, AMBAC 1,000 1,002
State Higher Educational
Facilty Revenue,
Xavier University,
5.30%, 5/15/17,
Callable 5/15/07 @ 102, MBIA 1,500 1,498
University of Akron,
General Receipts,
5.00%, 1/1/02, AMBAC 440 452
University of Cincinnati,
General Receipts,
Series AC, 5.00%, 6/1/17,
Callable 6/1/07 @ 100, MBIA 250 242
University of Cincinnati,
General Receipts,
Series AD, 5.10%, 6/1/11,
Callable 6/1/07 @ 101 350 348
University of Cincinnati,
General Receipts,
Series AD, 5.13%, 6/1/20,
Callable 6/1/07 @ 100, MBIA 1,000 981
6,802
Hospitals, Nursing Homes
& Health Care (15.4%):
Cuyahoga County Hospital,
University Hospital Health,
Series A, 5.63%, 1/15/21,
Callable 1/15/06 @ 102, MBIA 1,300 1,324
Franklin County Hospital,
Childrens Hospital,
4.50%, 11/1/98 330 332
Franklin County,
Riverside Hospital,
7.25%, 5/15/20,
Prerefunded 5/15/00
@ 102, MBIA 1,720 1,880
Garfield Heights,
Marymont Hospital,
6.70%, 11/15/15,
Callable 11/15/02 @ 102 1,000 1,082
Lake County Hospital
Improvement Facilities,
6.38%, 8/15/03, AMBAC 1,800 1,983
Lorain County Hospital,
Catholic Healthcare Partners,
5.50%, 9/1/27,
Callable 9/1/07 @ 102, MBIA 1,030 1,034
Lucas County Hospital,
Promedica Healthcare,
5.75%, 11/15/14,
Callable 11/15/06 @ 102, MBIA 2,000 2,091
Portage County Hospital,
6.50%, 11/15/03, MBIA 635 706
Portage County Hospital,
6.50%, 11/15/04, MBIA 675 757
Portage County Hospital,
6.50%, 11/15/05, MBIA 715 808
11,997
Housing (2.0%):
Cap Corp., Housing Mangement
Revenue, Bucyrus Estate,
5.75%, 7/1/06,
Callable 7/1/05 @ 102, MBIA 245 258
Cuyahoga County Multifamily,
5.60%, 6/20/08 370 383
Cuyahoga County Multifamily
Revenue, Water Street Assoc.,
6.15%, 12/20/26,
Callable 6/20/08 @ 105, GNMA 850 890
1,531
Public Facilities (Convention, Sport,
Public Buildings) (6.8%):
Ohio State Building Authority,
Sports Facilities Building,
5.00%, 10/1/07, FSA 450 463
Ohio State Public
Facilities Commission,
5.00%, 11/1/98 1,200 1,214
Puerto Rico Public Buildings
Authority, Government Facilities,
Series B, 5.00%, 7/1/27,
Callable 7/1/07 @ 101.5, AMBAC 1,000 963
State Building Authority,
Adult Correctional Facilities,
6.00%, 10/1/07,
Callable 10/1/03 @ 102 2,000 2,174
Toledo, Lucas County,
Convention Center Project,
5.50%, 10/1/10,
Callable 10/1/06 @ 102, MBIA 500 526
5,340
Transportation (0.6%):
Butler County Transportation
Improvement District,
Series A, 5.13%, 4/1/17,
Callable 4/1/08 @ 102, FSA 500 494
Utility (Sewers, Telephone, Electric) (10.8%):
Cleveland Public Power Systems,
Series 1, 5.00%, 11/15/24,
Callable 11/15/06 @ 102, MBIA 1,475 1,416
Cleveland Public Power Systems,
Series A, 7.00%, 11/15/24,
Prerefunded 11/15/04 @ 102,
MBIA 1,985 2,322
Cleveland Waterworks,
Series H, 5.75%, 1/1/21,
Callable 1/1/06 @ 102, MBIA 950 983
Hillsboro Sewer System,
4.45%, 6/1/01, MBIA 205 207
Huber Heights Water System,
5.55%, 12/1/10,
Callable 12/1/05 @ 102, MBIA 815 858
Huber Heights Water System,
Capital Appreciation,
0.00%, 12/1/22, MBIA 700 181
Huber Heights Water System,
Capital Appreciation,
0.00%, 12/1/24, MBIA 1,095 255
Huber Heights Water System,
Capital Appreciation,
0.00%, 12/1/25, MBIA 1,070 236
Orrville Electrical System,
5.00%, 12/1/10, AMBAC 1,000 1,004
Southwest Regional Water,
6.00%, 12/1/20,
Callable 12/1/05 @ 101, MBIA 500 531
Springboro Sewer Systems,
4.00%, 6/1/98, MBIA 135 135
Toledo Waterworks,
5.00%, 11/15/02, FGIC 300 311
8,439
Total Revenue Bonds 34,603
Total Municipal Bonds (Cost $72,312) 76,076
Investment Companies (1.1%)
Federated Ohio Municipal
Cash Trust Fund 828,561 829
Total Investment Companies (Cost $829) 829
Total Investments (Cost $73,141) <F1>--98.5% 76,905
Other assets in excess of liabilities--1.5% 1,138
TOTAL NET ASSETS--100.0% $78,043
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized appreciation
of securities as follows (amounts in thousands):
Unrealized appreciation $3,768
Unrealized depreciation (4)
Net unrealized appreciation $3,764
AMBAC--AMBAC Indemnity Corp.
FGIC--Insured by Financial Guaranty Insurance Corp.
FNMA--Federal National Mortgage Assoc.
FSA--Insured by Financial Security Assurance
GNMA--Insured by Government National Mortgage Assoc.
EDR--Economic Development Revenue
IDR--Industrial Development Revenue
LOC--Letter of Credit
MBIA--Insured by Municipal Bond Insurance Assoc.
GO--General Obligation
</TABLE>
See notes to financial staements
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Balanced Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (3.3%)
Financial Services (3.3%):
General Electric Capital Corp.,
5.79%, 11/3/97 11,362 $ 11,362
Total Commercial Paper (Cost $11,362)
11,362
Common Stocks (52.6%)
Aerospace/Defense (1.3%):
AlliedSignal, Inc. 67,400 2,427
Boeing Co. 40,800 1,953
4,380
Aluminum (0.5%):
Aluminum Co. of America 21,700 1,584
Automobiles (0.8%):
Chrysler Corp. 16,000 564
General Motors Corp. 35,000 2,247
2,811
Banks (4.2%):
BankAmerica Corp. 47,800 3,418
Chase Manhattan Corp. 23,400 2,700
First Union Corp. 48,200 2,365
Mellon Bank Corp. 28,000 1,444
Norwest Corp. 80,000 2,565
Wells Fargo & Co. 6,500 1,894
14,386
Beverages (1.8%):
Anheuser-Busch Cos., Inc. 84,000 3,355
PepsiCo, Inc. 80,000 2,945
6,300
Chemicals--General (0.8%):
Air Products & Chemicals, Inc. 25,500 1,938
Dow Chemical Co. 10,800 980
2,918
Computers & Peripherals (2.7%):
Cisco Systems, Inc. <F2> 28,000 2,297
Hewlett-Packard Co. 33,800 2,085
International Business Machines Corp. 50,000 4,903
9,285
Conglomerates (1.7%):
General Electric Co. 54,800 3,538
Textron, Inc. 42,800 2,474
6,012
Consumer Products (0.8%):
Colgate-Palmolive Co. 30,500 1,975
Newell Co. 22,600 867
2,842
Containers (0.3%):
Sonoco Products Co. 30,000 966
Cosmetics & Related (0.5%):
Avon Products, Inc. 27,100 1,775
Electrical Equipment (0.6%):
Emerson Electric Co. 42,200 2,213
Entertainment (0.5%):
Viacom, Inc., Class B <F2> 53,700 1,624
Financial Services (1.3%):
American Express Co. 20,300 1,583
Fannie Mae 61,200 2,965
4,548
Food Processing & Packaging (1.6%):
ConAgra, Inc. 63,000 1,898
Sara Lee Corp. 69,000 3,528
5,426
Forest Products--
Lumber & Paper (0.4%):
Bowater, Inc. 9,000 376
Mead Corp. 14,000 847
1,223
Health Care (0.6%):
Columbia/HCA Healthcare Corp. 68,500 1,935
Insurance (0.7%):
Everest Reinsurance Holdings, Inc. 65,500 2,464
Insurance-Multi-Line (3.0%):
Allstate Corp. 73,942 6,133
General Re Corp. 20,900 4,121
10,254
Medical Supplies (1.0%):
Biomet, Inc. 73,000 1,820
Medtronic, Inc. 40,000 1,740
3,560
Newspapers (0.7%):
Dow Jones & Co., Inc. 50,000 2,325
Oil & Gas Exploration,
Production & Services (0.7%):
Enron Corp. 67,600 2,569
Oil-Integrated Companies (7.1%):
Atlantic Richfield Co. 24,000 1,976
Chevron Corp. 45,001 3,732
Exxon Corp. 20,000 1,229
Mobil Corp. 81,400 5,927
Phillips Petroleum Co. 57,600 2,786
Royal Dutch Petroleum Co.,
New York Shares 51,600 2,715
Texaco, Inc. 114,000 6,492
24,857
Oilfield Services & Equipment (1.6%):
Baker Hughes, Inc. 77,100 3,542
Schlumberger, Ltd. 24,000 2,100
5,642
Paint, Varnishes, Enamels (0.2%):
Sherwin-Williams Co . 21,400 594
Pharmaceuticals (4.1%):
Abbott Laboratories 50,000 3,066
American Home Products Corp. 30,400 2,253
Bristol-Myers Squibb Co. 20,000 1,755
Merck & Co., Inc. 25,000 2,231
Pfizer, Inc. 74,200 5,250
14,555
Pollution Control Services
& Equipment (0.2%):
Waste Management, Inc. 35,000 818
Publishing (0.6%):
Time Warner, Inc. 35,500 2,048
Railroads (0.4%):
Union Pacific Corp. 23,000 1,409
Restaurants (0.1%):
Tricon Global Restaurants, Inc. <F2> 8,000 243
Retail (1.3%):
Dayton Hudson Corp. 48,400 3,040
Wal-Mart Stores, Inc. 38,800 1,363
4,403
Retail--Department Stores (0.7%):
May Department Stores Co. 33,000 1,778
Sears, Roebuck & Co. 16,000 670
2,448
Retail--Drug Stores (0.6%):
Walgreen Co. 77,600 2,183
Retail--Specialty Stores (0.6%):
AutoZone, Inc.<F2> 30,000 887
Lowe's Cos., Inc. 28,000 1,165
2,052
Semiconductors (1.1%):
Intel Corp. 31,400 2,418
LSI Logic Corp. <F2> 62,000 1,352
3,770
Software & Computer
Services (1.1%):
Microsoft Corp. <F2> 13,500 1,755
Oracle Corp. <F2> 52,750 1,887
3,642
Steel (0.2%):
USX--U.S. Steel Group, Inc. 17,100 581
Telecommunications (0.8%):
Lucent Technologies, Inc. 13,176 $ 1,086
WorldCom, Inc.<F2> 55,000 1,850
2,936
Utilities--Electric (1.7%):
Consolidated Edison Co.
of New York, Inc. 32,400 1,110
DQE, Inc. 47,000 1,454
FPL Group, Inc. 20,000 1,034
Ohio Edison Co. 15,000 371
Texas Utilities Co. 52,000 1,865
5,834
Utilities--Telecommunications
(3.7%):
Ameritech Corp. 42,000 2,730
AT&T Corp. 58,000 2,838
GTE Corp. 75,500 3,204
MCI Telecommunications Corp. 110,000 3,905
12,677
Total Common Stocks (Cost $121,257) 182,092
Foreign Common Stocks (3.8%)
Australia (0.2%):
Banks (0.0%):
National Australia Bank Ltd. 9,000 123
Construction (0.0%):
Leighton Holdings Ltd. 35,000 130
Leisure--Recreation,
Gaming (0.0%):
Aristocrat Leisure Ltd. 43,425 87
Publishing (0.2%):
Publishing & Broadcasting Ltd. 32,000 186
Total Australia 526
Austria (0.1%):
Containers (0.0%):
Mayr-Melnhof Karton AG 2,000 106
Steel (0.1%):
Voest-Alpine Stahl AG 2,500 109
Total Austria 215
Brazil (0.0%):
Utilities--Telecommunications
(0.0%):
Telecomunicacoes Brasileiras
S/A--Telebras ADR 500 51
Total Brazil 51
Britain (0.8%):
Banks (0.2%):
Allied Irish Banks PLC 21,000 176
HSBC Holdings PLC 5,000 126
National Westminster Bank PLC 8,000 116
418
Beverages (0.0%):
Bass PLC 8,000 111
Building Materials (0.0%):
Hanson PLC 25,000 128
Chemicals--General (0.0%):
BOC Group PLC 9,500 159
Containers (0.0%):
Jefferson Smurfit Group PLC 50,500 150
Electronic & Electrical--
General (0.0%):
Premier Farnell PLC 10,000 78
Leisure--Recreation,
Gaming (0.1%):
Ladbroke Group PLC 50,000 223
Retail--Department Stores (0.1%):
Marks & Spencer PLC 28,000 291
Retail--Specialty Stores (0.0%):
Burton Group PLC 50,000 106
Textile Manufacturing (0.0%):
Coats Viyella PLC 64,000 117
Transportation (0.3%):
Associated British Ports
Holdings PLC 30,000 143
National Express Group PLC 26,000 242
Peninsular & Oriental Steam
Navigation Co. 22,000 254
639
Utilities--Telecommunications
(0.0%):
British Telecommunications PLC 20,000 152
Utilities--Water (0.1%):
Severn Trent PLC 26,885 391
Total Britain 2,963
Canada (0.0%):
Forest Products--
Lumber & Paper (0.0%):
Abitibi-Consolidated, Inc. 5,000 71
Total Canada 71
Finland (0.2%):
Banks (0.2%):
Merita Ltd., Class A 87,000 425
Building Materials (0.0%):
Partek Oyg Abp 8,000 163
Pharmaceuticals (0.0%):
Orion-yhtyma OY, Class B 1,800 67
Total Finland 655
France (0.3%):
Chemicals--General (0.0%):
Rhone-Poulenc, Class A 3,900 170
Conglomerates (0.0%):
Compagnie Generale d'Industrie
et de Participations 450 147
Food Processing & Packaging (0.0%):
Groupe Danone 900 138
Industrial Goods & Services (0.2%):
Compagnie de Saint Gobain 2,350 339
Oil & Gas Exploration,
Production & Services (0.1%):
Elf Aquitaine SA 1,600 198
Total France 992
Germany (0.2%):
Airlines (0.0%):
Deutsche Lufthansa AG, Registered 5,000 88
Banks (0.0%):
Commerzbank AG 4,600 158
Chemicals--General (0.2%):
BASF AG 6,300 217
Insurance (0.0%):
Allianz AG 600 136
Total Germany 599
Hong Kong (0.1%):
Newspapers (0.0%):
South China Morning Post
(Holdings) Ltd. 125,000 108
Real Estate (0.1%):
Hang Lung Development Co. 45,000 62
Hutchison Whampoa Ltd. 19,000 132
194
Transportation (0.0%):
Cross Harbour Tunnel Co. 60,000 96
Utilities--Electric (0.0%):
Beijing Datang Power
Generation Co. Ltd. <F2> 75,000 38
Total Hong Kong 436
Italy (0.2%):
Automobiles (0.2%):
Fiat SpA 110,000 199
Banks (0.0%):
Istituto Bancario San Paolo di Torino 10,000 76
Financial Services (0.0%):
Istituto Mobiliare Italiano SpA 6,800 61
Food Processing & Packaging (0.0%):
Parmalat Finanziaria SpA 100,000 139
Utilities--Telecommunications
(0.0%):
Telecom Italia SpA 34,883 141
Total Italy 616
Japan (0.7%):
Automobiles (0.2%):
Honda Motor Co. Ltd. 13,000 436
Banks (0.1%):
Bank of Tokyo--Mitsubishi Ltd. 15,000 196
Construction (0.0%):
Sekisui House Ltd. 17,000 146
Cosmetics & Related (0.1%):
Kao Corp. 12,000 168
Shiseido Co. Ltd. 11,000 150
318
Electronic & Electrical--
General (0.2%):
Kyocera Corp. 2,000 115
Matsushita Electric Industrial Co. Ltd. 19,000 319
434
Entertainment (0.0%):
Nintendo Co. Ltd. 1,000 86
Financial Services (0.0%):
Takefuji Corp. 3,900 173
Forest Products--
Lumber & Paper (0.0%):
Nippon Paper Industries Co. 14,000 77
Household Goods--Appliances,
Furnishings & Electronics (0.0%):
Rinnai Corp. 5,000 81
Pharmaceuticals (0.1%):
Eisai Co. Ltd. 22,000 346
Printing (0.0%):
Toppan Printing Co. Ltd. 9,000 113
Real Estate (0.0%):
Sumitomo Realty & Development 18,000 132
Tools (0.0%):
Makita Corp. 10,000 141
Total Japan 2,679
Netherlands (0.2%):
Banks (0.1%):
ING Groep N.V. 4,497 189
Containers (0.1%):
Koninklijke Emballage
Indusrie Van Leer 9,000 182
Electronic & Electrical--
General (0.0%):
Philips Electronics NV 3,300 259
Oil-Integrated Companies (0.0%):
Royal Dutch Petroleum Co. 2,000 106
Total Netherlands 736
New Zealand (0.1%):
Fisheries (0.0%):
Sanford Ltd. 75,000 117
Household Goods--Appliances,
Furnishings & Electronics (0.1%):
Fisher & Paykel Industries Ltd. 43,100 137
Total New Zealand 254
Norway (0.1%):
Banks (0.0%):
Den Norske Bank ASA 30,000 136
Construction (0.1%):
Kvaerner ASA 2,400 123
Kvaerner ASA, Class B 600 29
152
Total Norway 288
Portugal (0.2%):
Banks (0.1%):
Banco Commercial Portugues, SA 11,000 224
Building Materials (0.1%):
Cimpor-Cimentos de Portugal,
SGPS, SA 10,000 253
Utilities--Telecommunications
(0.0%):
Portugal Telecom SA 2,700 111
Total Portugal 588
Singapore (0.0%):
Conglomerates (0.0%):
Jardine Strategic Holdings Ltd. 60,000 122
Total Singapore 122
Spain (0.2%):
Banks (0.1%):
Banco Santander SA 7,500 210
Corporacion Bancaria de Espana SA 2,000 111
321
Construction (0.1%):
Dragados & Construcciones, SA 10,000 203
Total Spain 524
Sweden (0.1%):
Conglomerates (0.1%):
Kinnevik AB, Class B 7,000 139
Industrial Goods & Services (0.0%):
Trelleborg AB, Class B 9,000 119
Radio & Television (0.0%):
Modern Times Group MTG AB,
Class B <F2> 7,000 50
Steel (0.0%):
Avesta Sheffield AB 12,500 94
Total Sweden 402
Switzerland (0.1%):
Banks (0.1%):
Credit Suisse Group, Registered 1,297 183
Insurance (0.0%):
Baloise Holding Ltd., Registered <F2> 120 217
Pharmaceuticals (0.0%):
Novartis AG, Registered 72 113
Total Switzerland 513
Total Foreign Common Stocks (Cost $12,016) 13,230
Preferred Stocks (0.1%)
Australia (0.0%):
Entertainment (0.0%):
Village Roadshow Ltd., Class A 57,000 106
Total Australia 106
Germany (0.1%):
Automobiles (0.0%):
Volkswagen AG 200 92
Consumer Products (0.0%):
Gardena Holding AG <F2> 2,000 47
Oil-Integrated Companies (0.1%):
RWE AG 4,100 151
Total Germany 290
Total Preferred Stocks (Cost $410) 396
Convertible Bonds (0.0%)
Banks (0.0%):
Mitsubishi Bank International
Finance Bermuda,
3.00%, 11/30/02 94 91
Total Convertible Bonds (Cost $100) 91
Convertible Stock (0.2%)
Automobiles (0.2%):
Ford Motor Co.,
Convertible Preferred,
callable 12/7/97 @ 51.68 4,300 603
Total Convertible Stock (Cost $370) 603
Asset Backed Securities (1.3%)
EQCC Home Equity Loan Trust,
Series 1997-3, Class A7,
6.93%, 2/15/29 800 806
EQCC Home Equity Loan Trust,
Series 1997-3, Class A8,
6.41%, 12/15/04 830 834
First Union-Lehman Brothers
Commercial Mortgage,
Series 1997-C1, Class A3,
7.38%, 4/18/07 750 787
Merrill Lynch Mortgage Investors, Inc.,
Series 1997-C1, Class A3,
7.12%, 6/18/29 650 674
The Money Store
Home Equity Trust,
Series 1997-B, Class A8,
6.90%, 7/15/38 1,350 1,378
Total Asset Backed Securities (Cost $4,393) 4,479
Collateralized Mortgage Obligations (0.9%)
Lehman Large Loan,
Series 1997-LLI, Class A,
6.79%, 6/12/04 2,900 2,962
Total Collateralized Mortgage
Obligations (Cost $2,940) 2,962
Corporate Bonds (11.2%)
Agriculture & Livestock (0.3%):
Cargill, Inc.,
5.95%, 5/15/37,
Putable 5/15/99 @ 100 <F3> 1,000 1,008
Automobiles (1.2%):
Daimler-Benz North America,
7.38%, 9/15/06 1,885 2,005
Ford Motor Co.,
9.00%, 9/15/01 100 109
General Motors Corp.,
9.13%, 7/15/01 2,000 2,193
4,307
Banks (1.3%):
BankAmerica Corp.,
9.63%, 2/13/01 300 330
BankAmerica Corp.,
8.38%, 3/15/02 1,000 1,076
Bankers Trust New York Corp.,
Series A,, 6.70%, 10/1/07 675 674
First Union Corp.,
9.45%, 8/15/01 1,200 1,331
Societe Generale-New York,
7.40%, 6/1/06 500 524
SunTrust Banks, Inc.,
7.38%, 7/1/02 400 419
4,354
Brokerage Services (1.7%):
Lehman Brothers Holdings,
7.38%, 5/15/04 1,000 1,041
Merrill Lynch & Co., Inc.,
8.25%, 11/15/99 1,000 1,041
Merrill Lynch & Co., Inc.,
6.00%, 3/1/01 1,000 998
Morgan Stanley Group, Inc.,
5.63%, 3/1/99 800 798
Morgan Stanley Group, Inc.,
8.88%, 10/15/01 750 821
Salomon Brothers, Inc.,
6.70%, 12/1/98 1,100 1,110
5,809
Computers & Peripherals (0.2%):
International Business
Machines Corp.,
7.00%, 10/30/25 850 859
Electronic & Electrical--
General (0.3%):
Philips Electronics N.V.,
putable 5/15/07 @ 100,
7.13%, 5/15/25* 1,000 1,043
Financial Services (1.5%):
Cez Finance BV,
7.13%, 7/15/07,
Guaranteed by Cez AS 1,150 1,172
Hutchison Whampoa Finance,
Series A, 6.95%, 8/15/07,
Guaranteed by Hutchison
Whampoa Ltd. <F3> 425 393
Liberty Mutual,
8.20%, 5/4/07 <F3> 2,500 2,751
Mellon Capital II,
Series B, 8.00%, 1/15/27,
Callable 1/15/07 @ 104,
Guaranteed by Mellon Bank Corp. 800 839
5,155
Industrial Goods & Services (2.0%):
Georgia-Pacific Corp.,
9.95%, 6/15/02 1,000 1,135
Lockheed Martin,
7.20%, 5/1/36 550 584
Raytheon Co.,
6.75%, 8/15/07 800 814
Raytheon Co.,
7.20%, 8/15/27 200 205
Telecommunications, Inc.,
9.80%, 2/1/12 2,425 3,007
USX Corp.,
7.20%, 2/15/04 500 514
Weyerhaeuser Co.,
6.95%, 10/1/27 950 938
7,197
Insurance (1.3%):
Aon Capital Trust A,
8.21%, 1/1/27,
Guaranteed by Aon Corp. <F3> 1,300 1,411
Metropolitan Life Insurance Co.,
6.30%, 11/1/03 <F3> 1,000 990
Prudential Insurance,
8.30%, 7/1/25 1,780 1,944
4,345
Oil & Gas Exploration,
Production & Services (0.3%):
Union Oil of California,
6.38%, 2/1/04 1,000 995
Publishing (0.6%):
Time Warner, Inc.,
9.15%, 2/1/23 1,650 1,951
Retail (0.1%):
Dayton Hudson Co.,
6.40%, 2/15/03 500 497
Utilities--Electric (0.4%):
Tenaga Nasional Berhad,
7.63%, 4/29/07 <F3> 425 402
Western Resources, Inc.,
6.88%, 8/1/04 1,000 1,020
1,422
Total Corporate Bonds (Cost $38,095) 38,942
U.S. Treasury Notes (9.6%)
4.75%, 9/30/98 11,649 11,569
5.88%, 1/31/99 770 772
6.13%, 9/30/00 3,510 3,545
6.63%, 3/31/02 9,039 9,323
7.88%, 11/15/04 1,915 2,132
7.00%, 7/15/06 5,435 5,822
Total U.S. Treasury Notes (Cost $32,878) 33,163
U.S Treasury Bonds (1.7%)
6.50%, 11/15/26 5,595 5,839
Total U.S Treasury Bonds (Cost $5,684) 5,839
U.S. Government Agencies (14.2%)
Federal Home Loan Mortgage
Corp. (2.1%):
6.24%, 10/6/04 1,615 1,640
7.50%, 4/1/07,Gold Pool #E35216 267 274
6.50%, 7/1/10, Gold Pool #E20189 561 561
6.50%, 12/1/10, Gold Pool #E00408 1,735 1,734
8.00%, 9/1/17, Pool #A01373 1,715 1,775
9.00%, 6/1/19, Pool #555324 1,314 1,398
7,382
Federal National Mortgage
Assoc. (3.3%):
6.29%, 2/11/02 2,060 2,087
5.90%,10/10/02 1,315 1,315
6.00%, 11/1/08, Pool #247872 1,591 1,569
6.00%, 3/1/09,Pool #190688 380 375
6.00%, 11/1/09, Pool #334108 286 283
6.50%, 9/1/10, Pool #303515 257 256
6.50%, 9/1/10, Pool #250354 433 433
6.00%, 6/1/11, Pool #313121 1,333 1,310
7.00%, 10/1/27, Pool # 251286 272 272
7.00%, 10/1/27, Pool #356271 1,127 1,130
7.00%, 10/2/27, Pool #366957 1,127 1,130
7.00%, 10/15/27, Pool #395775 437 438
7.00%, 10/15/27, Pool #402176 744 746
11,344
Government National Mortgage
Assoc. (8.8%):
9.50%, 7/15/09, Pool #34413 164 177
9.00%, 12/15/09, Pool #780009 848 895
8.50%, 7/15/10, Pool #780516 654 688
9.00%, 11/15/16, Pool #190846 139 147
8.00%, 7/15/17, Pool #780428 2,234 2,325
8.00%, 11/15/17, Pool #780263 1,312 1,365
9.00%, 9/15/19, Pool #271709 508 539
9.00%, 1/15/20, Pool #271737 595 632
9.00%, 2/15/20, Pool #209338 347 369
8.50%, 3/15/23, Pool #342556 292 306
7.50%, 11/15/23, Pool #366573 857 876
7.50%, 12/15/23, Pool #780359 2,408 2,470
7.00%, 12/15/23, Pool #780468 2,768 2,789
7.00%, 1/15/24, Pool #371006 777 781
6.50%, 1/15/24, Pool #351405 1,810 1,787
7.00%, 6/15/24 2,593 2,617
7.50%, 11/15/24, Pool #780467 746 765
8.00%, 7/15/26, Pool #421752 285 295
8.00%, 8/15/26, Pool #423932 284 295
8.00%, 8/15/26, Pool #423986 284 295
8.00%, 9/15/26, Pool #421774 284 295
8.00%, 9/15/26, Pool #432949 284 295
8.00%, 9/15/26, Pool #412663 285 295
8.00%, 11/15/26, Pool #431510 278 289
8.00%, 11/15/26, Pool #439445 380 394
8.00%, 3/15/27, Pool #440257 248 257
8.00%, 6/15/27, Pool #447649 685 711
7.50%, 7/15/27, Pool #447369 432 442
8.00%, 8/15/26, Pool #436443 271 281
8.00%, 8/15/27, Pool #448975 487 505
8.00%, 8/15/27, Pool #446820 937 972
7.50%, 9/15/27, Pool #449463 287 293
7.50%, 9/15/27, Pool #430216 344 351
8.00%, 9/15/27, Pool #412318 344 357
8.00%, 9/15/27, Pool #448981 344 357
8.00%, 10/15/27, Pool #449190 244 253
7.50%, 10/15/27, Pool #458667 253 259
8.00%, 10/15/27, Pool #449189 284 295
8.00%, 10/15/27, Pool #449186 284 295
7.50%, 10/15/27, Pool #458660 432 442
7.50%, 10/15/27, Pool #453882 432 442
7.50%, 11/19/27 2,100 2,105
30,598
Total U.S. Government Agencies (Cost $48,642) 49,324
Total Investments (Cost $278,148) <F1>--98.9% 342,483
Other assets in excess of liabilities--1.1% 3,741
TOTAL NET ASSETS--100.0% $346,224
<FN>
<F1> Represents cost for financial reporting purposes and differs from cost basis for
federal income tax purposes by the amount of losses recognized for financial
reporting purposes in excess of federal income tax reporting of approximately $295.
Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows (amounts in thousands):
Unrealized appreciation $67,202
Unrealized depreciation (3,162)
Net unrealized appreciation $64,040
<F2> Non-income producing securities.
<F3> 144a security which is restricted as to resale to institutional investors.
</TABLE>
See notes to financial statements.
<TABLE>
THE VICTORY PORTFOLIOS Schedule of Investments
Stock Index Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (12.2%)
Financial Services (12.2%):
General Electric Capital Corp.,
5.79%, 11/3/97 56,682 $ 56,682
Total Commercial Paper (Cost $56,682) 56,682
Common Stocks (87.0%)
Advertising (0.1%):
Interpublic Group of Cos., Inc. 7,092 337
Aerospace--Defense (1.6%):
AlliedSignal, Inc. 32,227 1,160
B.F. Goodrich Co. 3,079 137
Boeing Co. 57,010 2,730
General Dynamics Corp. 3,558 289
Lockheed Martin Corp. 11,043 1,050
Northrop Grumman Corp. 3,798 415
Raytheon Co. 13,457 730
United Technologies Corp. 13,406 938
7,449
Agriculture (0.1%):
Pioneer Hi-Bred International, Inc. 3,837 352
Airlines (0.3%):
AMR Corp. Delaware <F2> 5,235 610
Delta Air Lines, Inc. 4,184 422
Southwest Airlines Co. 8,314 271
U.S. Airways Group, Inc. <F2> 4,893 229
1,532
Aluminum (0.3%):
Alcan Aluminum Ltd. 12,926 369
Aluminum Co. of America 9,904 723
Reynolds Metal Co. 4,198 256
1,348
Apparel (0.0%):
Reebok Internnational Ltd.<F2> 3,204 118
Apparel--Footwear (0.3%):
Fruit of the Loom, Inc., Class A <F2> 4,173 109
Liz Claiborne, Inc. 3,984 202
Nike, Inc., Class B 16,441 772
VF Corp. 3,578 320
1,403
Automobiles (1.6%):
Chrysler Corp. 38,405 1,354
Ford Motor Co. 68,008 2,971
General Motors Corp. 41,516 2,665
Navistar International Corp. <F2> 4,158 96
PACCAR, Inc. 4,432 200
7,286
Automotive Parts (0.3%):
Cummins Engine Co., Inc. 2,179 133
Dana Corp. 5,944 278
Echlin, Inc. 3,590 118
Genuine Parts Co. 10,255 321
ITT Industries, Inc. 6,745 213
Meritor Automotive, Inc. <F2> 223 5
TRW, Inc. 7,018 401
1,469
Banks (5.5%):
Banc One Corp. 33,185 1,730
Bank of New York Co. 21,609 1,017
BankAmerica Corp. 39,769 2,845
Bankers Trust New York Corp. 5,666 669
Barnett Banks, Inc. 11,321 781
Chase Manhattan Corp. 24,114 2,782
Comerica, Inc. 6,009 475
First Chicago NBD Corp. 16,835 1,225
First Union Corp. 31,966 1,568
Huntington Bancshares, Inc. 10,773 348
J.P. Morgan & Co., Inc. 10,188 1,118
KeyCorp 12,369 757
MBNA Corp. 28,539 751
Mellon Bank Corp. 14,327 739
National City Corp. 12,255 732
NationsBank Corp. 40,538 2,427
Norwest Corp. 42,684 1,369
PNC Bank Corp. 17,480 830
Republic New York Corp. 3,120 330
SunTrust Banks, Inc. 12,177 789
Wachovia Corp. 9,085 684
Wells Fargo & Co. 5,007 1,459
25,425
Banks--Money Centers
Regional (1.6%):
BankBoston Corp. 8,296 672
Citicorp 26,085 3,263
CoreStates Financial Corp. 11,526 839
Fleet Financial Group, Inc. 14,235 915
State Street Corp. 9,144 510
U.S. Bancorp 13,935 1,417
7,616
Banks--Outside Money
Center (0.2%):
Fifth Third Bancorp 8,775 562
Providian Financial Corp. 5,340 198
760
Beverages (2.9%):
Anheuser-Busch Cos., Inc. 28,004 1,118
Brown-Forman Corp., Class B 3,929 193
Coca-Cola Co. 141,231 7,980
Coors (Adolph) Co. 2,111 75
PepsiCo, Inc. 87,150 3,208
Seagram Co. Ltd. 21,112 711
13,285
Broadcasting/Cable (0.1%):
Tele-Communications, Inc.,
Class A <F2> 24,229 556
Brokerage Services (0.8%):
Merrill Lynch & Co., Inc. 18,869 1,276
Morgan Stanley, Dean, Witter,
Discover & Co. 33,423 1,637
Salomon Brothers, Inc. 6,121 476
Schwab (Charles) Corp. 15,067 514
3,903
Building Materials (0.2%):
Armstrong World Industries, Inc. 2,321 154
Centex Corp. 1,658 97
Fleetwood Enterprises, Inc. 2,034 62
Kaufman & Broad Home Corp. 2,213 47
Masco Corp. 9,393 412
Pulte Corp. 1,198 45
817
Chemicals--General (2.2%):
Air Products & Chemicals, Inc. 6,242 474
Dow Chemical Co. 12,982 1,178
E.I. Du Pont de Nemours Co. 64,392 3,663
Eastman Chemical Co. 4,464 266
Englehard Corp. 8,219 143
FMC Corp.<F2> 2,119 171
Great Lakes Chemical Corp. 3,409 160
Hercules, Inc. 5,641 259
Mallinckrodt, Inc. 4,178 157
Monsanto Co. 33,567 1,435
Nalco Chemical Co. 3,805 152
PPG Industries, Inc. 10,210 578
Praxair, Inc. 8,998 392
Rohm & Haas Co. 3,509 292
Sigma-Aldrich Corp. 5,709 201
Union Carbide Corp. 7,074 323
W.R. Grace & Co. 4,136 281
10,125
Chemicals--Specialty (0.1%):
Millipore Corp. 2,481 97
Morton International, Inc. 7,974 263
360
Commercial Services (0.5%):
Automatic Data Processing, Inc. 16,675 852
CUC International, Inc. <F2> 23,322 688
Ecolab, Inc. 3,690 176
Federal Express Corp. <F2> 6,542 437
2,153
Computers & Peripherals (4.5%):
3Com Corp. <F2> 19,624 813
Apple Computer, Inc. <F2> 7,250 123
Bay Networks, Inc. <F2> 12,183 385
Cabletron Systems, Inc. <F2> 8,978 260
Cisco Systems, Inc. <F2> 38,099 3,125
Compaq Computer Corp. <F2> 43,047 2,744
Computer Sciences Corp. <F2> 4,392 312
Data General Corp. <F2> 2,724 52
Dell Computer, Inc. <F2> 18,836 1,509
Digital Equipment Corp. <F2> 8,703 436
EMC Corp. <F2> 14,049 787
Hewlett-Packard Co. 59,229 3,654
International Business
Machines Corp. 55,931 5,486
Seagate Technology, Inc. <F2> 13,925 378
Silicon Graphics, Inc. <F2> 10,080 148
Sun Microsystems, Inc. <F2> 21,005 719
Unisys Corp. <F2> 9,957 133
21,064
Conglomerates (1.1%):
Corning, Inc. 13,138 593
Crane Co. 2,615 109
Minnesota Mining &
Manufacturing Co. 23,658 2,164
National Service Industries, Inc. 2,568 114
Tenneco, Inc. 9,694 436
Textron, Inc. 9,396 543
Westinghouse Electric Corp. 40,137 1,061
Whitman Corp. 5,784 152
5,172
Construction (0.1%):
Fluor Corp. 4,779 196
Foster Wheeler Corp. 2,315 76
272
Consumer Products (1.6%):
American Greetings Corp., Class A 4,287 149
Clorox Co. 5,886 412
Colgate-Palmolive Co. 16,852 1,091
Jostens, Inc. 2,219 52
Newell Co. 9,060 348
Procter & Gamble Co. 76,918 5,230
7,282
Containers (0.3%):
Ball Corp. 1,718 60
Bemis, Inc. 3,020 115
Crown Cork & Seal, Inc. 7,308 330
Owens Corning 3,038 104
Owens-Illinois, Inc. <F2> 7,991 276
Rubbermaid, Inc. 8,537 205
Stone Container Corp. 5,657 68
Tupperware Corp. 3,488 87
1,245
Cosmetics & Related (0.8%):
Alberto Culver Co. 3,196 96
Avon Products, Inc. 7,539 494
Gillette Co. 31,875 2,839
International Flavor
& Fragance, Inc. 6,224 301
3,730
Diversified (0.2%):
Tyco International Ltd. 30,342 1,145
Electrical Equipment (3.0%):
Emerson Electric Co. 25,251 1,324
General Electric Co. 186,429 12,036
Johnson Controls, Inc. 4,770 214
Thomas & Betts Corp. 3,130 156
W.W. Grainger, Inc. 2,833 248
13,978
Electronic & Electrical--
General (1.4%):
Advanced Micro Devices, Inc. <F2> 8,022 185
AMP, Inc. 12,507 563
Andrew Corp. <F2> 5,137 119
EG&G, Inc. 2,606 54
General Signal Corp. 2,870 115
Harris Corp . 4,538 198
Honeywell, Inc. 7,261 494
KLA-Tencor Corp. <F2> 4,766 209
Motorola, Inc. 33,899 2,092
National Semiconductor Corp. <F2> 8,267 298
Rockwell International Corp. 11,891 583
Tandy Corp. 6,036 207
Tektronix, Inc. 1,903 113
Texas Instruments, Inc. 10,917 1,165
6,395
Entertainment (1.1%):
Brunswick Corp. 5,656 191
Harrah's Entertainment, Inc.<F2> 5,748 113
Hasbro, Inc. 7,231 210
King World Productions, Inc.<F2> 2,094 99
Loews Corp. 6,549 731
Viacom, Inc., Class B<F2> 20,095 608
Walt Disney Co. 38,443 3,162
5,114
Financial & Insurance (0.1%):
MBIA, Inc. 5,082 304
Financial Services (3.1%):
American Express Co. 26,694 2,082
American General Corp. 14,137 721
Beneficial Corp. 3,029 232
Countrywide Credit Industries, Inc. 6,101 209
Equifax, Inc. 8,592 267
Federal Home Loan Mortgage Corp. 39,574 1,499
Federal National Mortgage Assoc. 60,414 2,927
First Data Corp. 25,265 734
Golden West Financial Corp.,
Delaware 3,231 280
Green Tree Financial Corp. 7,735 326
H.F. Ahmanson & Co. 5,748 339
Household International, Inc. 6,081 689
TransAmerica Corp. 3,605 364
Travelers Group, Inc. 36,515 2,556
Washington Mutual, Inc. 14,262 976
14,201
Food Distributors (0.5%):
Albertsons, Inc. 13,994 516
American Stores Co. 15,505 398
Fleming Cos., Inc. 2,153 36
Giant Food, Inc., Class A 3,418 105
Great Atlantic & Pacific Tea, Inc. 2,179 67
Kroger Co.<F2> 14,485 473
SUPERVALU, Inc. 3,451 126
Sysco Corp. 9,932 397
Winn-Dixie Stores, Inc. 8,478 315
2,433
Food Processing & Packaging (2.0%):
Archer-Daniels-Midland Co. 31,892 710
Campbell Soup Co. 26,190 1,350
ConAgra, Inc. 26,930 811
CPC International, Inc. 8,178 810
General Mills, Inc. 9,106 601
H.J. Heinz Co. 21,020 976
Hershey Foods Corp. 8,136 450
Kellogg Co. 23,500 1,012
Quaker Oats Co. 7,822 374
Ralston-Ralston Purina Group 6,069 545
Sara Lee Corp. 27,351 1,398
Wm. Wrigley Jr. Co. 6,618 479
9,516
Forest Products--
Lumber & Paper (1.2%):
Boise Cascade Corp. 3,167 110
Champion International Corp. 5,463 301
Fort James Corp. 10,759 427
Georgia Pacific Corp. 5,210 442
International Paper Co. 17,220 775
Kimberly-Clark Corp. 31,699 1,646
Louisiana Pacific Corp. 6,224 131
Mead Corp. 2,980 180
Potlatch Corp. 1,648 82
Temple-Inland, Inc. 3,242 186
Union Camp Corp. 3,950 214
Westvaco Corp. 5,807 191
Weyerhauser Co. 11,354 542
Willamette Industries, Inc. 6,325 209
5,436
Funeral Services (0.1%):
Service Corp. International 14,323 436
Health Care (0.3%):
Columbia/HCA Healthcare Corp. 37,238 1,052
Humana, Inc. <F2> 9,316 196
1,248
Heavy Machinery (0.6%):
Case Corp. 4,246 254
Caterpillar Tractor, Inc. 21,435 1,098
Deere & Co. 14,356 755
Harnischfeger Industries, Inc. 2,814 111
Ingersoll Rand Co. 9,447 368
McDermott International, Inc. 3,162 115
2,701
Hotels & Motels (0.5%):
HFS, Inc. <F2> 9,039 637
Hilton Hotels Corp. 14,239 439
ITT Corp. <F2> 6,632 495
Marriott International, Inc. 7,240 505
Mirage Resorts, Inc. <F2> 10,181 255
2,331
Household Goods--Appliances,
Furnishings & Electronics (0.1%):
Maytag Corp. 5,613 187
Whirlpool Corp. 4,246 258
445
Industrial Goods & Services (0.1%):
Aeroquip-Vickers Inc. 1,599 83
Dover Corp. 6,332 428
511
Insurance--Life (0.1%):
Jefferson Pilot Corp. 4,032 312
Insurance--Multi-Line (2.7%):
Aetna, Inc. 8,532 606
Allstate Corp. 24,774 2,055
American International Group, Inc. 39,930 4,076
Aon Corp. 9,516 513
CIGNA Corp. 4,215 654
Conseco Inc. 10,698 467
General Re Corp. 4,534 894
Hartford Financial Services Group, Inc. 6,719 544
Lincoln National Corp. 5,805 399
Marsh & McLennan Cos., Inc. 9,593 681
MGIC Investment Corp. 6,499 392
Safeco Corp. 8,054 384
SunAmerica, Inc. 11,107 399
Torchmark Corp. 7,881 314
USF&G Corp. 6,312 128
12,506
Insurance--Property, Casualty,
Health (0.4%):
Chubb Corp. 9,821 651
Progressive Corp. 4,106 428
St. Paul Cos., Inc. 4,781 382
UNUM Corp. 7,946 387
1,848
Investment Company (0.1%):
TCI Ventures Group, Class A <F2> 13,594 314
Machine Tools (0.0%):
Cincinnati Milacron, Inc. 2,270 63
Manufacturing--
Capital Goods (0.2%):
Cooper Industries, Inc. 6,955 363
Illinois Tool Works, Inc. 14,202 698
1,061
Manufacturing--
Consumer Goods (0.2%):
Eaton Corp. 4,403 425
Mattel, Inc. 16,539 643
1,068
Manufacturing--Miscellaneous (0.6%):
Briggs & Stratton Corp. 1,443 72
NACCO Industries, Inc. 470 48
Pall Corp. 7,231 150
Thermo Electron Corp. <F2> 8,556 319
Unilever N.V. 36,456 1,946
Western Atlas, Inc. <F2> 3,075 265
2,800
Medical Services (0.4%):
Beverly Enterprises, Inc. <F2> 6,277 94
HEALTHSOUTH Corp. <F2> 25,277 646
Manor Care, Inc. 3,625 124
Tenet Healthcare Corp.<F2> 17,238 527
United Healthcare Corp. 10,679 495
1,886
Medical Supplies (0.9%):
Alza Corp., Class A <F2> 4,842 126
Bausch & Lomb, Inc. 3,156 124
Baxter International, Inc. 15,914 736
Becton Dickinson & Co. 6,957 320
Biomet, Inc. 6,335 158
Boston Scientific Corp. <F2> 11,055 503
C.R. Bard, Inc. 3,265 91
Guidant Corp. 8,439 485
Medtronic, Inc. 26,627 1,159
St. Jude Medical, Inc. <F2> 5,227 158
United States Surgical Corp. 4,182 113
3,973
Medical--Wholesale Drug
Distribution (0.1%):
Cardinal Health, Inc. 6,181 459
Metals--Fabrication (0.1%):
Phelps Dodge Corp. 3,440 256
Timken Co. 3,573 120
376
Mining (0.1%):
Asarco, Inc. 2,399 66
Cyprus Amax Minerals Co. 5,324 111
Inco Ltd. 9,508 196
373
Newspapers (0.5%):
Dow Jones & Co., Inc. 5,465 254
Gannett Co., Inc. 16,140 849
Knight-Ridder, Inc. 4,979 260
New York Times Co., Class A 5,460 299
Times Mirror Co., Class A 5,455 295
Tribune Co. 6,990 385
2,342
Office Equipment & Supplies
(Non-Computer Related) (0.6%):
Avery Dennison Corp. 5,872 234
Deluxe Corp. 4,694 154
IKON Office Solutions, Inc. 7,565 214
Moore Corp. Ltd. 5,032 81
Pitney Bowes, Inc. 8,216 652
Xerox Corp. 18,514 1,468
2,803
Oil & Gas Exploration,
Production & Services (1.3%):
Amerada Hess Corp. 5,225 321
Anadarko Petroleum Corp. 3,398 249
Apache Corp. 5,142 216
Ashland, Inc. 4,246 202
Burlington Resource, Inc. 10,037 491
Coastal Corp. 6,037 363
Columbia Gas System, Inc. 3,154 228
Helmerich & Payne, Inc. 1,426 115
Kerr-McGee Corp. 2,715 183
Occidental Petroleum Corp. 18,857 526
ONEOK, Inc. 1,590 55
Oryx Energy Co. <F2> 6,003 165
Pennzoil Co. 2,685 199
Rowan Cos., Inc. <F2> 4,927 192
Sonat, Inc. 4,884 224
Sun Co., Inc. 4,134 166
Union Pacific Resources Group, Inc. 14,451 356
Unocal Corp. 14,066 580
USX--Marathon Group 16,402 586
Williams Cos., Inc. 9,052 461
5,878
Oil-Integrated Companies (5.9%):
Amoco Corp. 27,948 2,562
Atlantic Richfield Co. 18,268 1,504
Chevron Corp. 37,279 3,092
Exxon Corp. 140,891 8,657
Mobil Corp. 44,750 3,258
Phillips Petroleum Co. 15,001 726
Royal Dutch Petroleum Co.,
New York Shares 122,097 6,425
Texaco, Inc. 30,561 1,740
27,964
Oilfield Services & Equipment (1.0%):
Baker Hughes, Inc. 9,608 441
Dresser Industries, Inc. 9,970 420
Halliburton Co. 14,436 861
Parker-Hannifin Corp. 6,360 266
Schlumberger, Ltd. 28,189 2,467
4,455
Paint, Varnishes, Enamels (0.1%):
Sherwin-Williams Co. 9,832 273
Pharmaceuticals (7.9%):
Abbott Laboratories 43,813 2,686
Allergan, Inc. 3,693 122
American Home Products Corp. 36,930 2,737
Amgen, Inc. <F2> 15,098 744
Bristol-Myers Squibb Co. 56,756 4,980
Cognizant Corp. 9,350 366
Crescendo Pharmaceuticals <F2> 230 3
Eli Lilly & Co. 63,348 4,236
Johnson & Johnson 75,775 4,348
Merck & Co., Inc. 68,777 6,139
Pfizer, Inc. 73,602 5,207
Pharmacia & Upjohn, Inc. 28,910 918
Schering-Plough Corp. 41,718 2,339
Warner-Lambert Co. 15,453 2,213
37,038
Photography (0.3%):
Eastman Kodak Co. 18,552 1,110
Polaroid Corp. 2,594 117
1,227
Pollution Control Services
& Equipment (0.2%):
Browning-Ferris Industries, Inc. 11,313 368
Safety-Kleen, Corp. 3,319 73
Waste Management, Inc. 25,820 604
1,045
Precision Instruments
& Related (0.0%):
Perkin-Elmer Corp. 2,494 156
Primary Metal & Mineral
Production (0.3%):
Barrick Gold Corp. 21,225 437
Battle Mountain Gold Co. 13,081 80
Echo Bay Mines Ltd. 7,937 32
Freeport-McMoRan
Copper & Gold, Inc., Class B 11,323 270
Homestake Mining Co. 8,356 103
Inland Steel Industries, Inc. 2,779 55
Newmont Mining Corp. 8,900 312
Placer Dome, Inc. 13,638 211
1,500
Publishing (0.6%):
Dun & Bradstreet Corp. 9,708 277
John H. Harland Co. 1,768 40
McGraw-Hill Cos., Inc. 5,633 368
Meredith Corp. 3,049 104
R.R. Donnelley & Sons Co. 8,331 272
Time Warner, Inc. 31,877 1,839
2,900
Radio & Television (0.4%):
Clear Channel Communications, Inc.<F2> 5,582 368
Comcast, Class A Special Shares 19,862 546
U.S. West Media Group <F2> 34,529 872
1,786
Railroads (0.7%):
Burlington Northern Santa Fe 8,857 841
CSX Corp. 12,405 678
Norfolk Southern Corp. 21,468 690
Union Pacific Corp. 14,070 862
3,071
Restaurants (0.5%):
Darden Restaurants, Inc. 8,712 99
McDonald's Corp. 39,176 1,755
Tricon Global Restaurants <F2> 8,715 264
Wendy's International, Inc. 7,500 158
2,276
Retail (1.4%):
Costco Cos., Inc. <F2> 12,102 466
Dayton Hudson Corp. 12,395 779
K-Mart Corp. <F2> 27,723 366
Wal-Mart Stores, Inc. 128,951 4,528
Woolworth Corp. <F2> 7,672 146
6,285
Retail--Department Stores (0.8%):
Dillard's, Inc., Class A 6,362 244
Federated Department
Stores, Inc. <F2> 11,908 524
Harcourt General, Inc. 4,029 202
J.C. Penney Co., Inc. 14,172 832
May Department Stores Co. 13,243 713
Mercantile Stores Co., Inc. 2,093 123
Nordstrom, Inc. 4,398 269
Sears, Roebuck & Co. 22,299 934
3,841
Retail--Drug Stores (0.4%):
CVS Corp. 9,793 600
Longs Drug Stores Corp. 2,229 56
Rite Aid Corp. 7,002 416
Walgreen Co. 28,031 788
1,860
Retail--Specialty Stores (1.1%):
AutoZone, Inc. <F2> 8,599 254
Charming Shoppes, Inc. <F2> 6,021 31
Circuit City Stores, Inc. 5,604 223
Gap, Inc. 15,267 812
Home Depot, Inc. 41,569 2,314
Limited, Inc. 15,462 364
Lowe's Cos., Inc. 9,893 412
Pep Boys--Manny, Moe & Jack 3,599 91
TJX Cos., Inc. 9,296 275
Toys "R" Us, Inc. <F2> 16,245 553
5,329
Rubber & Rubber Products (0.1%):
Cooper Tire & Rubber Co. 4,484 95
Goodyear Tire & Rubber Co. 8,882 556
651
Semiconductors (1.8%):
Applied Materials, Inc. <F2> 20,758 693
Intel Corp. 92,983 7,159
LSI Logic Corp. <F2> 8,083 176
Micron Technology, Inc. <F2> 11,997 322
8,350
Software & Computer
Services (3.0%):
Adobe Systems, Inc. 4,150 198
Autodesk, Inc. 2,731 101
Ceridian Corp. <F2> 4,595 179
Computer Associates
International, Inc. 20,723 1,545
HBO & Co 11,167 486
Microsoft Corp. <F2> 68,234 8,871
Novell, Inc. <F2> 19,833 167
Oracle Corp. <F2> 55,793 1,996
Parametric Technology Corp. <F2> 7,254 320
Shared Medical Systems Corp. 1,423 78
Siebel Systems Inc. <F2> 14 1
13,942
Steel (0.2%):
Allegheny Teledyne, Inc. 10,019 264
Armco, Inc. <F2> 6,097 35
Bethlehem Steel Corp. <F2> 6,413 64
Nucor Corp. 5,004 261
USX--U.S. Steel Group, Inc. 4,882 166
Worthington Industries, Inc. 5,508 114
904
Tax Return Preparation (0.0%):
H&R Block, Inc. 5,927 219
Telecommunications (1.5%):
Alltel Corp. 10,642 376
Bell Atlantic Corp. 44,201 3,530
DSC Communications Corp.<F2> 6,687 163
Northern Telecom Ltd. 14,928 1,339
Scientific-Atlanta, Inc. 4,416 82
Tellabs, Inc.<F2> 10,308 557
U.S. West Communications Group 27,294 1,087
7,134
Telecommunications--
Equipment (0.0%):
NextLevel Systems, Inc. <F2> 8,388 113
Telecommunications--
Services & Equipment (0.0%):
Frontier Corp. 9,347 202
Textile Manufacturing (0.0%):
Russell Corp. 2,077 61
Springs Industries, Inc., Class A 1,153 53
114
Tobacco & Tobacco Products (1.3%):
Fortune Brands, Inc. 9,757 323
Philip Morris Cos., Inc. 137,964 5,467
UST, Inc. 10,468 313
6,103
Tools & Hardware
Manufacturing (0.1%):
Black & Decker Corp. 5,377 205
Snap-On Tools, Inc. 3,483 150
Stanley Works 5,069 214
569
Transportation Leasing
& Trucking (0.1%):
Caliber System, Inc. 2,217 116
Ryder Systems, Inc. 4,426 154
270
Transportation Services (0.1%):
Laidlaw, Inc. 18,714 264
Utilities--Electric (2.1%):
American Electric Power Co. 10,773 509
Carolina Power & Light Co. 8,619 308
Central & South West Corp. 12,086 261
CINergy Corp. 8,979 296
Consolidated Edison Co.
of New York, Inc. 13,384 458
Detroit Edison Co. 8,263 254
Dominion Resources, Inc. 10,579 393
Duke Power Co. 20,490 990
Edison International 22,604 579
Entergy Corp 13,738 336
FPL Group, Inc. 10,369 536
Houston Industries, Inc. 16,244 353
Niagara Mohawk Power Corp. <F2> 8,224 80
Northern States Power Co. Minnesota 4,202 212
Ohio Edison Co. 8,688 215
PacifiCorp 16,865 366
Peco Energy Co. 12,672 287
PG&E Corp. 24,965 638
PP&L Resources, Inc . 9,387 203
Public Service Enterprise Group 13,209 343
Raychem Corp. 2,485 225
Southern Co. 38,975 894
Texas Utilities Co. 13,694 491
Unicom Corp. 12,317 345
Union Electric Co. 5,816 219
9,791
Utilities--Electric & Gas (0.1%):
Baltimore Gas & Electric Co. 8,409 231
GPU, Inc. 6,876 249
480
Utilities--Natural Gas (0.3%):
Consolidated Natural Gas Co. 5,432 294
Eastern Enterprises 1,164 46
Enron Corp. 17,423 661
NICOR, Inc. 2,767 107
Pacific Enterprises 4,744 155
Peoples Energy Corp. 2,001 72
1,335
Utilities--Telecommunications (5.0%):
AirTouch Communications, Inc. <F2> 28,683 1,108
Ameritech Corp. 31,313 2,035
AT&T Corp. 92,496 4,527
BellSouth Corp. 56,451 2,671
GTE Corp. 54,446 2,311
Lucent Technologies, Inc. 36,540 3,012
MCI Telecommunications Corp. 39,394 1,398
SBC Communications, Inc. 52,041 3,311
Sprint Corp. 24,510 1,275
WorldCom, Inc. <F2> 51,362 1,727
23,375
Total Common Stocks (Cost $287,651) 404,137
U.S. Treasury Bills (0.5%)
4.92%, 12/18/97 <F3> 2,340 2,325
4.95%, 12/26/97 <F3> 215 213
Total U.S. Treasury Bills (Cost $2,538) 2,538
Total Investments (Cost $346,871) <F1>--99.7% 463,357
Assets in excess of other liabilities--0.3% 1,658
TOTAL NET ASSETS--100.0% $465,015
<FN>
<F1> Represents cost for financial reporting purposes and differs from cost basis for federal
income tax purposes by the amount of losses recognized for financial reporting purposes
in excess of federal income tax reporting of approximately $781. Cost for federal income
tax purposes differs from value by net unrealized appreciation of securities as follows
(amounts in thousands):
Unrealized appreciation $122,809
Unrealized depreciation (7,104)
Net unrealized appreciation $115,705
<F2> Non-income producing securities.
<F3> Serves as collateral for futures contracts.
</TABLE>
<TABLE>
<CAPTION>
Number
of Market
Security Description Contracts Value
<S> <C> <C>
Futures Contracts (12.9%)
S & P 500 Index,
face amount $60,872,
expiring December 18, 1997 260 $60,060
Total Futures Contracts (Cost $60,872) $60,060
</TABLE>
See notes to financial statements.
<TABLE>
The Victory Portfolios Schedule of Investments
Diversified Stock Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (2.0%)
Financial Services (2.0%):
General Electric Capital Corp.,
5.79%, 11/3/97 15,762 $ 15,762
Total Commercial Paper (Cost $15,762) 15,762
Common Stocks (98.6%)
Aerospace/Defense (3.4%):
AlliedSignal, Inc. 452,200 16,279
B.F. Goodrich Inc. 167,500 7,464
Boeing Co. 72,000 3,447
27,190
Aluminum (1.1%):
Aluminum Co. of America 115,000 8,395
Automobiles (1.5%):
General Motors Corp. 180,000 11,554
Banks (9.7%):
Banc One Corp. 215,000 11,207
Chase Manhattan Corp. 90,000 10,384
First Union Corp. 260,000 12,754
Mellon Bank Corp. 204,000 10,519
NationsBank Corp. 185,000 11,077
Norwest Corp. 320,200 10,266
PNC Bank Corp. 235,000 11,163
77,370
Beverages (3.6%):
Anheuser-Busch Cos., Inc. 350,000 13,978
PepsiCo, Inc. 400,000 14,725
28,703
Brokerage Services (1.0%):
Bear Stearns Cos., Inc. 192,428 7,637
Chemicals--General (2.7%):
Air Products & Chemicals, Inc. 80,000 6,080
Nalco Chemical Co. 255,900 10,236
RPM Inc. 277,750 5,208
21,524
Computers & Peripherals (9.4%):
Cabletron Systems, Inc.<F2> 224,000 6,496
Cisco Systems, Inc.<F2> 25,000 2,051
Compaq Computer Corp.<F2> 150,000 9,563
Computer Sciences Corp.<F2> 130,000 9,222
Dell Computer, Inc.<F2> 96,000 7,692
Hewlett-Packard Co. 110,000 6,786
International Business
Machines Corp. 275,000 26,965
Seagate Technology, Inc.<F2> 245,000 6,646
75,421
Conglomerates (4.6%):
Corning, Inc. 145,000 6,543
General Electric Co. 126,600 8,174
Tenneco, Inc. 65,000 2,921
Textron, Inc. 85,000 4,914
Westinghouse Electric Corp. 512,500 13,549
36,101
Containers--Metal, Glass,
Paper, Plastic (2.2%):
Crown Cork & Seal, Inc. 250,000 11,266
Sonoco Products Co. 203,000 6,534
17,800
Electronic & Electrical--
General (1.8%):
Andrew Corp.<F2> 260,000 6,029
Motorola, Inc. 30,000 1,853
Texas Instruments, Inc. 60,000 6,401
14,283
Entertainment (0.9%):
Viacom, Inc., Class B<F2> 96,700 2,925
Walt Disney Co. 50,000 4,113
7,038
Financial Services (1.2%):
Franklin Resources, Inc. 25,000 2,247
Travelers Group, Inc. 100,000 7,000
9,247
Food Processing &
Packaging (1.5%):
Sara Lee Corp. 235,000 12,014
Forest Products--
Lumber & Paper (1.7%):
Bowater, Inc. 97,600 4,081
International Paper Co. 213,400 9,603
13,684
Health Care (0.7%):
Columbia/HCA Healthcare Corp. 200,000 5,650
Hotels & Motels (0.2%):
Mirage Resorts, Inc.<F2> 50,000 1,250
Household Goods--Appliances,
Furnishings & Electronics (1.0%):
Whirlpool Corp. 130,600 7,918
Insurance (2.9%):
American International Group, Inc. 128,025 13,066
General Re Corp. 49,500 9,761
22,827
Insurance--Multi-Line (1.4%):
Marsh & McLennan Cos., Inc. 160,000 11,360
Insurance--Property, Casualty,
Health (1.8%):
Everest Reinsurance Holdings, Inc. 228,500 8,598
Travelers Property Casualty Corp.,
Class A 147,000 5,310
13,908
Investment Company (0.5%):
TCI Ventures Group, Class A<F2> 158,252 3,650
Machine Tools (0.6%):
Kennametal, Inc. 100,000 4,850
Manufacturing--
Miscellaneous (1.1%):
Millipore Corp. 215,000 8,412
Medical Supplies (0.8%):
Biomet, Inc. 247,600 6,175
Newspapers (0.9%):
Dow Jones & Co., Inc. 160,000 7,440
Oil & Gas Exploration,
Production & Services (4.0%):
Enron Corp. 380,700 14,467
Unocal Corp. 420,000 17,325
31,792
Oil-Integrated Companies (3.6%):
Atlantic Richfield Co. 30,800 2,535
Exxon Corp. 76,000 4,669
Phillips Petroleum Co. 179,500 8,683
Royal Dutch Petroleum Co.,
New York Shares 40,000 2,105
Texaco, Inc. 181,000 10,306
28,298
Oilfield Services &
Equipment (4.1%):
Baker Hughes, Inc. 300,000 13,781
Dresser Industries, Inc. 225,600 9,503
Schlumberger, Ltd. 105,000 9,188
32,472
Pharmaceuticals (6.2%):
Abbott Laboratories 65,000 3,985
American Home Products Corp. 185,000 13,713
Merck & Co., Inc. 85,000 7,586
Pfizer, Inc. 350,000 24,762
50,046
Pollution Control Services
& Equipment (1.9%):
Browning-Ferris Industries, Inc. 123,400 4,011
Waste Management, Inc. 475,000 11,103
15,114
Publishing (1.2%):
Time Warner, Inc. 170,000 9,807
Radio & Television (0.8%):
Tele-Communications, Inc.,
Class A<F2> 276,748 6,348
Retail (2.1%):
Dayton Hudson Corp. 35,800 2,249
Wal-Mart Stores, Inc. 400,000 14,050
16,299
Retail--Department Stores (0.7%):
Nordstrom, Inc. 90,000 5,513
Retail--Drug Stores (0.7%):
Walgreen Co. 185,000 5,203
Retail--Specialty Stores (3.0%):
AutoZone, Inc.<F2> 315,000 9,312
Lowe's Cos., Inc. 208,000 8,658
OfficeMax, Inc.<F2> 450,000 6,019
23,989
Semiconductors (1.9%):
Intel Corp. 80,000 6,160
LSI Logic Corp.<F2> 400,000 8,725
14,885
Software & Computer
Services (1.8%):
America Online Inc<F2> 125,000 9,625
Computer Associates
International, Inc. 61,000 4,548
14,173
Tobacco & Tobacco
Products (0.8%):
UST, Inc. 207,000 6,197
Utilities--Electric (1.6%):
CINergy Corp. 121,700 4,016
Houston Industries, Inc. 100,000 2,175
Southern Co. 204,300 4,686
Texas Utilities Co. 58,500 2,099
12,976
Utilities--Telecommunications
(6.0%):
Ameritech Corp. 208,600 13,559
GTE Corp. 500,000 21,219
MCI Telecommunications Corp. 350,000 12,425
47,203
Total Common Stocks (Cost $630,222) 781,716
Total Investments (Cost $645,984)<F1>--100.6% 797,478
Liabilities in excess of other assets (0.6)% (5,010)
TOTAL NET ASSETS--100.0% $792,468
<FN>
<F1> Represents cost for financial reporting purposes and differs from cost basis for
federal income tax purposes by the amount of losses recognized for financial reporting
purposes in excess of federal income tax reporting of approximately $275. Cost for
federal income tax purposes differs from value by net unrealized appreciation of
securities as follows (amounts in thousands):
Unrealized appreciation $169,116
Unrealized depreciation (17,897)
Net unrealized appreciation $151,219
<F2> Non-income producing securities.
</TABLE>
See notes to financial statements.
<TABLE>
The Victory Portfolios Schedule of Investments
Lakefront Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Common Stocks (99.5%)
Aerospace/Defense (3.0%):
Boeing Co. 401 $ 19
United Technologies Corp. 265 19
38
Aluminum (2.1%):
Reynolds Metal Co. 425 26
Apparel-Footwear (1.4%):
Reebok International Ltd.<F2> 449 17
Automobiles (2.0%):
Ford Motor Co. 578 25
Automotive Parts (5.1%):
Federal-Mogul Corp. 673 28
Meritor Automotive, Inc.<F2> 143 3
TRW, Inc. 561 33
64
Banks (9.9%):
Bankers' Trust New York Corp. 240 28
Chase Manhattan Corp. 335 38
Citicorp 200 25
Wells Fargo & Co. 113 33
124
Brokerage Services (7.0%):
Lehman Brothers Holdings, Inc. 1,465 69
Paine Webber Group Inc. 425 19
88
Building Materials (1.8%):
Armstrong World Industries, Inc. 340 23
Chemicals-General (0.7%):
IMC Global, Inc. 280 9
Computers & Peripherals (8.2%):
Diebold, Inc. 810 36
Hewlett-Packard Co. 598 36
International Business Machines Corp. 318 31
103
Conglomerates (1.4%):
General Electric Co. 271 17
Consumer Products (1.8%):
Colgate-Palmolive Co. 336 22
Cosmetics & Related (2.4%):
Avon Products, Inc. 460 30
Electronic & Electrical--
General (7.1%):
Johnson Controls, Inc. 247 11
Rockwell International Corp. 430 21
Texas Instruments, Inc. 330 35
Varian Associates, Inc. 372 22
89
Financial Services (8.2%):
American Express Co. 496 39
Golden State Bancorp, Inc.<F2> 1,000 33
Travelers Group, Inc. 445 31
103
Health Care (0.6%):
Columbia/HCA Healthcare Corp. 239 7
Heavy Machinery (5.1%)
Caterpillar Tractor, Inc. 466 24
Deere & Co. 757 40
64
Medical Supplies (1.6%):
C.R. Bard, Inc. 711 20
Oil & Gas Exploration,
Production & Services (2.2%):
Williams Cos., Inc. 530 27
Oil-Integrated Companies (3.9%):
Mobil Corp. 348 26
Texaco, Inc. 408 23
49
Pharmaceuticals (7.0%):
Amgen, Inc.<F2> 530 26
Bristol-Myers Squibb Co. 312 27
Schering-Plough Corp. 616 35
88
Retail (2.9%):
K-Mart Corp.<F2> 2,805 37
Retail-Specialty Stores (2.5%):
Gap, Inc. 575 31
Rubber & Rubber Products (1.6%):
M.A. Hanna Co. 793 20
Semiconductors (3.1%):
Intel Corp. 512 39
Software & Computer Services (2.9%):
Computer Associates International, Inc. 495 37
Steel (1.4%):
LTV Corp. 1,470 18
Tobacco & Tobacco Products (2.6%):
Philip Morris Cos., Inc. 833 33
Total Common Stocks (Cost $1,106) 1,248
Investment Companies (0.3%)
Aim Treasury Portfolio 3,655 4
Total Investment Companies (Cost $4) 4
Total Investments (Cost $1,110)<F1>--99.8% 1,252
Other assets in excess of liabilities 0.2% 3
TOTAL NET ASSETS--100.0% $1,255
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows (amounts in thousands):
Unrealized appreciation $167
Unrealized depreciation (25)
Net unrealized appreciation $142
<F2> Non-income producing securities.
</TABLE>
See notes to financial statements.
<TABLE>
The Victory Portfolios Schedule of Investments
Real Estate Investment Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (8.1%)
Financial Services (8.1%):
General Electric Capital Corp.,
5.79%, 11/3/97 354 $ 354
Total Commercial Paper 354
Common Stocks (85.8%)
Commercial Services (2.6%):
Insignia Financial Group, Inc.
Class A<F2> 5,000 108
Crescent Operating, Inc.<F2> 200 5
113
Leisure Recreation,
Gaming (1.7%):
Hollywood Park, Inc.<F2> 4,000 75
Real Estate (81.5%):
Diversified (9.6%):
Cousins Properties, Inc. 2,400 75
Glenborough Realty Trust, Inc. 3,000 77
Security Capital U.S. Realty<F2> 7,000 99
Vornado Realty Trust 3,800 170
421
Health Care (4.8%):
Alexandria Real Estate Equities, Inc. 5,000 137
OMEGA Healthcare Investors, Inc. 2,000 72
209
Hotels & Motels (8.2%):
Host Marriott Corp.<F2> 2,800 59
La Quinta Inns, Inc. 2,000 36
Patriot American Hospitality, Inc. 3,499 115
Starwood Lodging Trust 2,500 150
360
Industrial (1.0%):
Bedford Property Investors, Inc. 2,000 41
Office (30.5%):
Boston Properties, Inc. 4,000 128
Brandywine Realty Trust 5,000 117
Cali Realty Corp. 4,500 182
Cornerstone Properties, Inc. 3,000 55
Crescent Real Estate Equities Co. 2,000 72
Equity Office Properties Trust 6,000 183
Green, (S.L.) Realty Corp.<F2> 2,000 50
Highwoods Properties, Inc. 2,000 69
Koger Equity, Inc. 6,000 130
Reckson Associates Realty Corp. 3,000 79
Spieker Properties, Inc. 3,000 117
Tower Realty Corp.<F2> 6,000 152
1334
Residential (19.3%):
Ambassador Apartments, Inc. 4,250 91
Apartment Investment &
Management Co. Class A 3,000 106
Avalon Properties, Inc. 5,000 147
Bay Apartment Communities, Inc. 2,500 98
Equity Residential Properties Trust 2,700 136
Gables Residential Trust 1,500 40
Irvine Apartment Communities,
Inc.<FN2> 1,380 42
Security Capital Pacific Trust 4,000 90
Smith, (Charles E.) Residential
Realty, Inc. 1,000 34
Summit Properties, Inc. 3,000 62
846
Retail (8.1%):
Excel Realty Trust, Inc. 4,000 120
Developers Diversified Realty Corp. 1,000 40
Simon DeBartolo Group, Inc. 2,000 62
Urban Shopping Centers, Inc. 2,000 65
Westfield America, Inc. 4,000 68
355
Total Real Estate 3,566
Total Common Stocks 3,754
Preferred Stock (1.3%)
Real Estate (1.3%):
Industrial (1.3%):
Security Capital Industrial
Trust, Convertible,
Callable 2/21/01 @ 25<F2> 1,900 60
Total Preferred Stock 60
Total Investments (Cost $3,674) <F1> (95.2%) 4,168
Other Assets in excess of Liabilities (4.8%) 208
TOTAL NET ASSETS--100.0% $4,376
<FN>
<F1> Represents cost for federal income tax purposes and differs from value by net
unrealized appreciation of securities as follows:
Unrealized appreciation $526
Unrealized depreciation (32)
Net unrealized appreciation $494
<F2> Represents non-income producing securities.
</TABLE>
See notes to financial statements.
<TABLE>
The Victory Portfolios Schedule of Investments
Value Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (2.7%)
Financial Services (2.7%):
General Electric Capital Corp.,
5.79%, 11/3/97 12,935 $ 12,935
Total Commercial Paper (Cost $12,935) 12,935
Common Stocks (97.3%)
Aerospace--Defense (3.4%):
AlliedSignal, Inc. 108,000 3,888
Boeing Co. 139,000 6,655
Raytheon Co. 104,000 5,642
16,185
Agriculture (0.9%):
Pioneer Hi-Bred International, Inc. 45,000 4,123
Aluminum (0.7%):
Aluminum Co. of America 43,000 3,139
Automobiles (2.4%):
Chrysler Corp. 144,000 5,076
General Motors Corp. 99,000 6,355
11,431
Banks (7.7%):
BankAmerica Corp. 180,000 12,869
Chase Manhattan Corp. 74,000 8,538
First Union Corp. 178,000 8,733
Mellon Bank Corp. 118,900 6,131
36,271
Beverages (2.1%):
Anheuser-Busch Cos., Inc. 137,900 5,508
PepsiCo, Inc. 126,000 4,638
10,146
Chemicals--General (1.7%):
Air Products & Chemicals, Inc. 48,500 3,686
Dow Chemical Co. 26,000 2,360
RPM Inc. 100,000 1,875
7,921
Chemicals--Specialty (0.6%):
Millipore Corp. 78,000 3,052
Commercial Services (0.7%):
Automatic Data Processing, Inc. 64,000 3,272
Computers & Peripherals (4.7%):
Bay Networks, Inc.<F2> 100,000 3,163
Cisco Systems, Inc.<F2> 50,000 4,102
Hewlett-Packard Co. 70,000 4,318
International Business
Machines Corp. 108,000 10,589
22,172
Conglomerates (1.2%):
Textron, Inc. 94,000 5,434
Consumer Products (1.1%):
Colgate-Palmolive Co. 38,350 2,483
Newell Co. 76,000 2,917
5,400
Containers (0.5%):
Sonoco Products Co. 67,100 2,160
Cosmetics & Related (0.9%):
Avon Products, Inc. 66,000 4,323
Electrical Equipment (3.2%):
Emerson Electric Co. 101,400 5,317
General Electric Co. 152,000 9,814
15,131
Entertainment (0.8%):
Viacom, Inc., Class B<F2> 119,000 3,600
Financial Services (3.4%):
American Express Co. 37,100 2,894
American General Corp. 95,000 4,845
Federal National Mortgage Assoc. 124,000 6,006
Household International, Inc. 20,000 2,265
16,010
Food Distributors (0.3%):
SUPERVALU, Inc. 39,600 1,450
Food Processing &
Packaging (2.8%):
ConAgra, Inc. 158,000 4,760
Sara Lee Corp. 170,000 8,691
13,451
Forest Products--
Lumber & Paper (1.2%):
Bowater, Inc. 55,000 2,300
Mead Corp. 54,000 3,267
5,567
Health Care (0.8%):
Columbia/HCA Healthcare Co 134,000 3,786
Insurance--Multi-Line (4.3%):
Aetna, Inc. 45,000 3,198
Allstate Corp. 146,000 12,109
General Re Corp. 26,000 5,127
20,434
Insurance--Property, Casualty,
Health (0.8%):
Everest Reinsurance Holdings, Inc. 103,000 3,875
Manufacturing--
Capital Goods (0.9%):
Cooper Industries, Inc. 85,000 4,431
Medical Supplies (1.7%):
Biomet, Inc. 150,000 3,741
Medtronic, Inc. 102,000 4,437
8,178
Mining (0.5%):
Cyprus Amax Minerals Co. 105,000 2,198
Newspapers (0.7%):
Dow Jones & Co., Inc. 70,000 3,255
Oil-Integrated Companies (11.3%):
Atlantic Richfield Co. 54,000 4,445
Chevron Corp. 172,800 14,332
Mobil Corp. 198,000 14,414
Phillips Petroleum Co. 148,000 7,160
Texaco, Inc. 216,000 12,299
52,650
Oilfield Services &
Equipment (1.2%):
Baker Hughes, Inc. 75,000 3,446
Schlumberger, Ltd. 27,500 2,406
5,852
Paint, Varnishes, Enamels (0.5%):
Sherwin-Williams Co. 88,800 2,464
Pharmaceuticals (7.2%):
Abbott Laboratories 74,000 4,537
American Home Products Corp. 70,000 5,189
Merck & Co., Inc. 46,800 4,177
Pfizer, Inc. 181,000 12,804
Pharmacia & Upjohn, Inc. 94,000 2,985
Schering-Plough Corp. 79,000 4,429
34,121
Pollution Control Services
& Equipment (0.4%):
Waste Management, Inc. 84,000 1,964
Radio & Television (0.6%):
Cox Communications, Inc.,
Class A<F2> 90,000 2,768
Railroads (0.6%):
Union Pacific Corp. 43,900 2,689
Retail (1.7%):
Dayton Hudson Corp. 110,000 6,909
Wal-Mart Stores, Inc. 25,100 882
7,791
Retail--Department Stores (2.0%):
J.C. Penney Co., Inc. 26,000 1,526
May Department Stores Co. 107,800 5,807
Sears, Roebuck & Co. 52,650 2,205
9,538
Retail--Drug Stores (0.7%):
Walgreen Co. 124,000 3,488
Retail--Specialty Stores (1.3%):
AutoZone, Inc.<F2> 107,000 3,163
Lowe's Cos., Inc. 73,000 3,039
6,202
Semiconductors (2.0%):
Intel Corp. 82,600 6,361
LSI Logic Corp.<F2> 137,600 3,001
9,362
Software & Computer
Services (1.7%):
Microsoft Corp.<F2> 33,500 4,355
Oracle Corp.<F2> 105,000 3,757
8,112
Steel (0.6%):
USX-U.S. Steel Group, Inc. 87,000 2,958
Tax Return Preparation (0.5%):
H&R Block, Inc. 62,700 2,320
Transportation Leasing
& Trucking (0.6%):
USFreightways Corp. 89,801 2,907
Utilities--Electric (4.3%):
CINergy Corp. 73,000 2,409
Consolidated Edison Co.
of New York, Inc. 88,001 3,014
DQE, Inc. 30,000 928
Houston Industries, Inc. 226,300 4,922
PacifiCorp 137,800 2,989
Texas Utilities Co. 174,000 6,242
20,504
Utilities--Natural Gas (2.2%):
Consolidated Natural Gas Co. 88,000 4,757
Enron Corp. 114,000 4,332
Peoples Energy Corp. 37,000 1,323
10,412
Utilities--Telecommunications
(7.9%):
Ameritech Corp. 97,900 6,364
AT&T Corp. 105,000 5,138
GTE Corp. 180,000 7,639
Lucent Technologies, Inc. 38,300 3,157
MCI Telecommunications Corp. 255,400 9,065
WorldCom, Inc.<F2> 156,000 5,246
36,609
Total Common Stocks (Cost $309,118) 459,106
Total Investments (Cost $322,051)<F1>--100.0% 472,041
Other assets in excess of liabilities 0.0% 6
TOTAL NET ASSETS--100.0% $472,047
<FN>
<F1> Represents cost for financial reporting purposes and differs from cost basis for federal
income tax purposes by the amount of losses recognized for financial reporting purposes in
excess of federal income tax reporting of approximately $126. Cost for federal income tax
purposes differs from value by net unrealized appreciation of securities as follows
(amounts in thousands):
Unrealized appreciation $156,527
Unrealized depreciation (6,663)
Net unrealized appreciation $149,864
<F2> Non-income producing securities.
</TABLE>
See notes to financial statements.
<TABLE>
The Victory Portfolios Schedule of Investments
Growth Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (1.3%)
Financial Services (1.3%):
General Electric Capital Corp.,
5.79%, 11/3/97 2,481 $ 2,481
Total Commercial Paper (Cost $2,481) 2,481
Common Stocks (98.3%)
Aerospace-Defense (2.3%):
AlliedSignal, Inc. 70,000 2,520
Boeing Co. 35,000 1,676
4,196
Airlines (0.8%):
Southwest Airlines Co. 47,500 1,550
Banks (5.2%):
BankAmerica Corp. 70,000 5,005
First Union Corp. 35,000 1,717
Norwest Corp. 90,000 2,886
9,608
Beverages (4.5%):
Anheuser-Busch Cos., Inc. 65,000 2,596
Coca-Cola Co. 60,000 3,390
PepsiCo, Inc. 65,000 2,393
8,379
Chemicals--General (1.9%):
Air Products & Chemicals, Inc. 30,000 2,280
RPM Inc. 65,000 1,219
3,499
Chemicals--Specialty (0.5%):
Millipore Corp. 25,000 978
Commercial Services (1.4%):
Automatic Data Processing, Inc. 50,000 2,556
Computers & Peripherals (4.6%):
3Com Corp.<F2> 35,000 1,450
Cisco Systems, Inc.<F2> 42,500 3,486
Compaq Computer Corp.<F2> 20,000 1,275
Hewlett-Packard Co. 20,000 1,234
Sun Microsystems, Inc.<F2> 30,000 1,028
8,473
Consumer Products (4.8%):
Colgate-Palmolive Co. 45,000 2,914
Newell Co. 50,000 1,919
Procter & Gamble Co. 60,000 4,080
8,913
Containers (0.8%):
Sonoco Products Co. 45,000 1,448
Cosmetics & Related (1.7%):
Avon Products, Inc. 25,000 1,637
Gillette Co. 17,500 1,559
3,196
Electrical Equipment (7.0%):
Emerson Electric Co. 68,000 3,566
General Electric Co. 120,000 7,747
W.W. Grainger, Inc. 20,000 1,749
13,062
Entertainment (1.3%):
Viacom, Inc., Class B<F2> 45,000 1,361
Walt Disney Co. 12,500 1,028
2,389
Financial Services (3.1%):
Federal National Mortgage Assoc. 75,000 3,633
First Data Corp. 35,000 1,017
Franklin Resources, Inc. 12,500 1,123
5,773
Food Processing &
Packaging (4.4%):
ConAgra, Inc. 70,000 2,109
CPC International, Inc. 15,000 1,485
General Mills, Inc. 30,000 1,980
Sara Lee Corp. 50,000 2,556
8,130
Forest Products--
Lumber & Paper (0.7%):
Mead Corp. 22,000 1,331
Health Care (1.5%):
Columbia/HCA Healthcare Corp. 50,000 1,412
Health Management Assoc., Inc.,
Class A<F2> 52,500 1,280
2,692
Insurance--Multi-Line (3.5%):
American International Group, Inc. 45,000 4,593
General Re Corp. 10,000 1,972
6,565
Insurance--Property, Casualty,
Health (0.6%):
Everest Reinsurance Holdings, Inc. 30,000 1,129
Medical Supplies (1.8%):
Biomet, Inc. 50,000 1,247
Medtronic, Inc. 50,000 2,175
3,422
Oil-Integrated Companies (5.3%):
Atlantic Richfield Co. 20,000 1,646
Chevron Corp. 40,000 3,318
Mobil Corp. 52,500 3,822
Phillips Petroleum Co. 20,000 968
9,754
Oilfield Services &
Equipment (1.3%):
Baker Hughes, Inc. 25,000 1,148
Schlumberger, Ltd. 15,000 1,313
2,461
Pharmaceuticals (12.7%):
Abbott Laboratories 60,000 3,679
American Home Products Corp. 50,000 3,706
Bristol-Myers Squibb Co. 5,000 439
Eli Lilly & Co. 15,000 1,003
Johnson & Johnson 50,000 2,869
Merck & Co., Inc. 26,500 2,365
Pfizer, Inc. 95,000 6,720
Schering-Plough Corp. 50,000 2,803
23,584
Retail (2.3%):
Dayton Hudson Corp. 35,000 2,198
Wal-Mart Stores, Inc. 60,000 2,108
4,306
Retail--Drug Stores (1.3%):
Walgreen Co. 85,000 2,391
Retail--Specialty Stores (4.3%):
AutoZone, Inc.<F2> 60,000 1,774
Home Depot, Inc. 90,000 5,006
OfficeMax, Inc.<F2> 90,000 1,204
7,984
Semiconductors (2.8%):
Intel Corp. 52,500 4,042
LSI Logic Corp.<F2> 50,000 1,091
5,133
Software & Computer
Services (4.9%):
Computer Associates
International, Inc. 22,500 1,678
Microsoft Corp.<F2> 37,500 4,875
Oracle Corp.<F2> 71,250 2,549
9,102
Tobacco & Tobacco
Products (1.4%):
Philip Morris Cos., Inc. 65,000 2,576
Transportation Leasing
& Trucking (0.6%):
USFreightways Corp. 32,500 1,052
Utilities--Natural Gas (1.1%):
Enron Corp. 55,000 2,090
Utilities--Telecommunications
(7.9%):
AirTouch Communications, Inc.<F2> 50,000 1,931
Ameritech Corp. 25,000 1,625
GTE Corp. 30,000 1,273
Lucent Technologies, Inc. 22,500 1,855
MCI Telecommunications Corp. 90,000 3,195
SBC Communications, Inc. 50,000 3,181
WorldCom, Inc.<F2> 45,000 1,513
14,573
Total Common Stocks (Cost $115,083) 182,295
Total Investments (Cost $117,564) (a)--99.6% 184,776
Other assets in excess of liabilities 0.4% 757
TOTAL NET ASSETS--100.0% $185,533
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized appreciation
of securities as follows (amounts in thousands):
Unrealized appreciation $69,438
Unrealized depreciation (2,226)
Net unrealized appreciation $67,212
<F2> Non-income producing securities.
</TABLE>
See notes to financial statements.
<TABLE>
The Victory Portfolios Schedule of Investments
Special Value Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (4.4%)
Financial Services (4.4%):
General Electric Capital Corp.,
5.79%, 11/3/97 18,638 $ 18,638
Total Commercial Paper (Cost $18,638) 18,638
Common Stocks (95.4%)
Aerospace/Defense (4.3%):
B.F. Goodrich Inc. 137,200 6,114
GenCorp, Inc. 224,399 5,484
Gulfstream Aerospace Corp.<F2> 91,800 2,662
Thiokol Corp. 40,900 3,745
18,005
Apparel--Footwear (1.4%):
Nine West Group, Inc.<F2> 169,000 5,968
Automotive Parts (2.2%):
Echlin, Inc. 140,500 4,602
Genuine Parts Co. 64,900 2,032
ITT Industries, Inc. 85,200 2,689
9,323
Banks (6.9%):
First of America Bank Corp. 131,800 7,347
First Security Corp. 204,700 5,936
First Tennessee National Corp. 70,400 4,057
Northern Trust Corp. 92,300 5,400
Summit Bancorp 137,100 5,852
28,592
Beverages (0.4%):
Coca-Cola Enterprises, Inc. 67,200 1,890
Brokerage Services (2.2%):
Bear Stearns Cos., Inc. 141,190 5,603
Donaldson, Lufkin & Jenrette, Inc. 54,100 3,801
9,404
Chemicals--General (2.3%):
Nalco Chemical Co. 136,000 5,439
RPM Inc. 145,200 2,723
WD-40 Co. 50,500 1,452
9,614
Commercial Services (1.3%):
Pittston Brink's Group 156,500 5,654
Computers & Peripherals (0.7%):
Quantum Corp.<F2> 93,600 2,960
Conglomerates (2.2%):
Mark IV Industries, Inc. 182,550 4,427
Whitman Corp. 191,700 5,032
9,459
Consumer Products (0.6%):
Newell Co. 70,200 2,694
Containers--Metal, Glass,
Paper, Plastic (3.6%):
Crown Cork & Seal, Inc. 110,800 4,993
Owens-Illinois, Inc.<F2> 179,800 6,203
Sonoco Products Co. 125,400 4,036
15,232
Electronic & Electrical--
General (2.9%):
Arrow Electronics, Inc.<F2> 98,000 2,781
Harris Corp. 95,400 4,162
Vishay Intertechnology, Inc.<F2> 216,507 5,182
12,125
Entertainment (1.0%):
Brunswick Corp. 119,700 4,040
Food Distributors, Supermarkets
& Wholesalers (0.8%):
Hannaford Brothers Co. 94,100 3,558
Food Processing &
Packaging (1.6%):
Dole Food Co. 85,800 3,802
McCormick & Co., Inc.
(non-voting shares) 125,400 3,135
6,937
Forest Products--
Lumber & Paper (1.2%):
Bowater, Inc. 117,600 4,917
Heavy Machinery (0.6%):
Harnischfeger Industries, Inc. 61,000 2,402
Hospital & Nursing Equipment
& Supplies (0.7%):
Hillenbrand Industries, Inc. 71,600 3,061
Household Goods--Appliances,
Furnishings & Electronics (2.0%):
Sunbeam Corp., Inc. 71,700 3,249
Whirlpool Corp. 84,400 5,117
8,366
Insurance (3.9%):
American Financial Group, Inc. 103,500 3,939
Amerin Corp.<F2> 93,000 2,127
Hartford Life, Inc. Class A 26,800 990
Horace Mann Educators Corp. 72,500 4,079
The PMI Group, Inc. 56,800 3,433
Transatlantic Holdings, Inc. 29,550 2,044
16,612
Insurance--Property, Casualty,
Health (1.7%):
Everest Reinsurance Holdings, Inc. 192,100 7,228
Leisure--Recreation,
Gaming (1.8%):
International Game Technology 294,200 7,520
Machine Tools (1.4%):
Kennametal, Inc. 121,300 5,883
Manufacturing--
Miscellaneous (2.0%):
Briggs & Stratton Corp. 45,200 2,249
Millipore Corp. 85,400 3,341
Pentair, Inc. 68,824 2,658
8,248
Medical Services (3.5%):
Apria Healthcare Group, Inc.<F2> 279,300 4,242
Coventry Corp.<F2> 252,700 3,522
Quorum Health Group, Inc.<F2> 295,500 7,166
14,930
Medical Supplies (1.3%):
Biomet, Inc. 224,400 5,596
Metals--Fabrication (1.0%):
Kaydon Corp. 138,400 4,204
Metals--Nonferrous (0.9%):
Titanium Metals Corp.<F2> 119,900 3,747
Newspapers (1.1%):
Tribune Co. 87,400 4,818
Oil & Gas Exploration,
Production & Services (3.5%):
Anadarko Petroleum Corp. 55,100 4,036
Enserch Exploration, Inc.<F2> 209,100 1,882
Reading & Bates Corp.<F2> 115,600 4,899
Sante Fe International Corp. 83,600 4,112
14,929
Oil Marketing & Refining (1.9%):
Ultramar Diamond Shamrock Corp. 108,572 3,352
Valero Energy Corp. 149,100 4,492
7,844
Oilfield Services &
Equipment (1.3%):
Baker Hughes, Inc. 122,800 5,641
Pharmaceuticals (1.6%):
Mylan Laboratories 307,500 6,746
Pollution Control Services
& Equipment (0.6%):
Browning-Ferris Industries, Inc. 76,300 2,480
Primary Metal & Mineral
Production (1.6%):
Minerals Technologies, Inc. 61,100 2,528
UCAR International, Inc.<F2> 114,900 4,309
6,837
Railroads (1.1%):
Canadian National Railway Co. 89,700 4,838
Real Estate Investment
Trusts (5.7%):
Cali Realty Corp. 169,800 6,876
Equity Residential Properties Trust 97,000 4,899
Kilroy Realty Corp. 148,600 3,938
Meditrust Corp. 131,100 5,605
Merry Land & Investment Co., Inc. 128,800 2,809
24,127
Retail--Specialty Stores (5.8%):
AutoZone, Inc.<F2> 118,600 3,506
General Nutrition Cos., Inc.<F2> 211,000 6,648
Heilig-Myers Co. 218,952 2,928
Limited, Inc. 133,500 3,146
OfficeMax, Inc.<F2> 457,900 6,124
Talbots, Inc. 76,144 1,827
24,179
Semiconductors (1.2%):
LSI Logic Corp.<F2> 222,500 4,853
Steel (0.7%):
Worthington Industries, Inc. 152,370 3,152
Tax Return Preparation (0.7%):
H&R Block, Inc. 76,100 2,816
Textile Manufacturing (1.8%):
Warnaco Group, Inc., Class A 268,000 7,571
Tobacco & Tobacco
Products (1.1%):
UST, Inc. 153,200 4,586
Transportation Leasing
& Trucking (1.8%):
GATX Corp. 116,000 7,489
Transportation Services (0.7%):
Laidlaw, Inc. 222,850 3,148
Utilities--Electric (6.2%):
CINergy Corp. 162,300 5,356
DPL, Inc. 76,210 1,891
DQE, Inc. 85,300 2,639
Florida Progress Corp. 76,600 2,494
New Century Energies, Inc. 161,300 6,734
PP&L Resources, Inc. 98,900 2,139
SCANA Corp. 180,400 4,555
25,808
Utilities--Natural Gas (0.6%):
KeySpan Energy Corp. 39,400 1,224
Washington Gas Light Co. 44,200 1,135
2,359
Total Common Stocks (Cost $312,096) 402,390
Total Investments (Cost $330,734)<F1>--99.8% 421,028
Other assets in excess of liabilities 0.2% 652
TOTAL NET ASSETS--100.0% $421,680
<FN>
<F1> Represents cost for financial reporting purposes and differs from cost basis for federal
income tax purposes by the amount of losses recognized for financial reporting purposes in
excess of federal income tax reporting of approximately $39. Cost for federal income tax
purposes differs from value by net unrealized appreciation of securities as follows (amounts in thousands):
Unrealized appreciation $98,954
Unrealized depreciation (8,699)
Net unrealized appreciation $90,255
<F2> Non-income producing securities.
</TABLE>
See notes to financial statements.
<TABLE>
The Victory Portfolios Schedule of Investments
Special Growth Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (7.5%)
Financial Services (7.5%):
General Electric Capital Corp.,
5.79%, 11/3/97 7,821 $ 7,821
Total Commercial Paper (Cost $7,821) 7,821
Common Stocks (91.2%)
Airlines (0.9%):
Trans World Airlines, Inc.<F2> 120,000 893
Apparel (1.0%):
Ashworth, Inc.<F2> 100,000 994
Apparel--Footwear (0.7%):
Steven Madden Ltd.<F2> 100,000 700
Banks (1.1%):
U.S. Trust Corp. 20,000 1,170
Broadcasting & Publishing (1.0%):
Westwood One, Inc.<F2> 35,000 1,074
Brokerage Services (1.7%):
Donaldson, Lufkin & Jenrette, Inc. 25,000 1,756
Chemicals--General (1.0%):
Brunswick Technologies, Inc.<F2> 54,000 999
Commercial Services (3.5%):
Cornell Corrections Inc.<F2> 60,000 1,080
Hooper Holmes, Inc. 100,000 1,474
Substance Abuse Technologies<F2> 250,000 63
Venture Seismic<F2> 120,000 1,058
3,675
Computers & Peripherals (4.8%):
Creative Technology Ltd.<F2> 60,000 1,526
Eltron International, Inc.<F2> 40,000 1,165
Standard Microsystems Corp.<F2> 80,200 927
UniComp, Inc.<F2> 140,000 1,374
4,992
Construction (0.5%):
Schuff Steel Co.<F2> 50,000 550
Containers (1.1%):
Mercury Interactive Corp.<F2> 50,000 1,125
Cosmetics & Related (1.0%):
French Fragrances, Inc.<F2> 100,000 1,069
Electrical Equipment (1.9%):
Printrak International, Inc.<F2> 68,200 691
Semitool Inc.<F2> 75,000 1,293
1,984
Electronic & Electrical--
General (3.2%):
Sipex Corp.<F2> 60,000 1,972
Uniphase Corp.<F2> 20,000 1,343
3,315
Entertainment (1.1%):
Speedfam International Inc.<F2> 30,000 1,114
Financial Services (1.1%):
Hambrecht & Quist Group<F2> 35,000 1,103
Leisure--Recreation,
Gaming (2.9%):
Anchor Gaming<F2> 20,000 1,570
The North Face, Inc.<F2> 60,000 1,418
2,988
Machinery & Engineering (0.5%):
Middleby Corp.<F2> 50,000 506
Manufacturing--
Miscellaneous (0.8%):
Flanders Corp.<F2> 100,000 800
Medical Labs & Testing
Services (1.3%):
Matritech Inc<F2> 120,300 812
Renex Corporation,<F2> 70,000 543
1,355
Medical Supplies (4.0%):
Bionx Implants, Inc.<F2> 40,000 835
Martek Biosciences Corp.<F2> 100,000 1,113
Spine-Tech, Inc.<F2> 25,000 778
Wesley Jessen VisionCare, Inc.<F2> 50,000 1,462
4,188
Metals--Nonferrous (0.9%):
International Precious Metals
Corp.<F2> 200,000 938
Oil & Gas Exploration,
Production & Services (6.9%):
Bellwether Exploration<F2> 80,000 1,000
Continental Natural Gas, Inc.<F2> 80,000 930
Magnum Hunter Resources Inc<F2> 80,000 565
Marine Drilling Cos., Inc.<F2> 50,000 1,481
Noble Drilling Corp.<F2> 50,000 1,779
Swift Energy Co.<F2> 60,000 1,556
7,311
Oilfield Services &
Equipment (11.5%):
Energy Ventures, Inc.<F2> 10,000 642
Global Industries Ltd.<F2> 70,000 1,409
Grey Wolf, Inc.<F2> 200,000 1,650
Midcoast Energy Resources, Inc. 56,600 1,362
Patterson Energy, Inc.<F2> 40,000 2,239
Pool Energy Services Co.<F2> 50,000 1,697
Pride International, Inc.<F2> 40,000 1,320
Varco International, Inc.<F2> 30,000 1,828
12,147
Pharmaceuticals (3.0%):
Collagenex Pharmaceuticals, Inc.<F2> 50,000 600
DUSA Pharmaceuticals, Inc.<F2> 100,000 1,213
Vivus, Inc.<F2> 50,000 1,318
3,131
Radio & Television (2.6%):
Echostar Communications<F2> 75,000 1,425
Jacor Communications, Inc.<F2> 30,000 1,256
2,681
Retail--Specialty Stores (1.1%):
Claire's Stores, Inc. 50,000 1,106
Software & Computer
Services (15.8%):
Accelr8 Technology Corp.<F2> 75,000 1,491
Ciber, Inc.<F2> 30,000 1,328
Hyperion Software Corp.<F2> 50,000 1,903
Intelligent Electronics, Inc.<F2> 250,000 1,328
Intuit, Inc.<F2> 40,000 1,305
ISG International Software
Group Ltd.<F2> 100,000 1,250
Lycos, Inc.<F2> 40,000 1,045
ONTRACK Data International, Inc.<F2> 50,000 1,019
Platinum Technology Inc<F2> 50,000 1,213
SEEC, Inc.<F2> 70,000 1,636
Summit Design, Inc.<F2> 60,000 870
Versant Object Technology Corp.<F2> 70,000 1,173
Visio Corp.<F2> 30,000 1,116
16,677
Steel (1.3%):
NS Group, Inc.<F2> 49,500 1,324
Telecommunications (6.0%):
American Communications
Services, Inc.<F2> 120,000 $ 1,350
Digital Microwave Corp.<F2> 30,000 1,080
Mobile Telecommunication
Technologies Corp.<F2> 75,000 1,247
Paging Network, Inc.<F2> 100,000 1,238
Tekelec<F2> 35,000 1,465
6,380
Telecommunications--Services
& Equipment (1.3%):
Star Telecommunications Inc.<F2> 60,000 1,388
Tobacco & Tobacco
Products (2.9%):
800-JR CIGAR, Inc.<F2> 40,000 1,250
General Cigar Holdings, Inc.<F2> 60,000 1,736
2,986
Transportation Leasing
& Trucking (1.3%):
Budget Group Inc., Class A,<F2> 40,000 1,400
Utilities--Telecommunications
(1.5%):
Pacific Gateway Exchange, Inc.<F2> 40,000 1,530
Total Common Stocks (Cost $78,574) 95,349
Rights & Warrants (0.0%)
Morrison Knudsen Corp.,
Expire 3/11/03<F2> 158 1
Total Rights & Warrants (Cost $0) 1
Total Investments (Cost $86,395)<F1>--98.7% 103,171
Other assets in excess of liabilities 1.3% 1,394
TOTAL NET ASSETS--100.0% $104,565
<FN>
<F1> Represents cost for financial reporting purposes and differs from cost basis for federal
income tax purposes by the amount of losses recognized for financial reporting purposes in
excess of federal income tax reporting of approximately $111. Cost for federal income tax
purposes differs from value by net unrealized appreciation of securities as follows
(amounts in thousands):
Unrealized appreciation $22,981
Unrealized depreciation (6,316)
Net unrealized appreciation $16,665
<F2> Non-income producing securities.
</TABLE>
See notes to financial statements.
<TABLE>
The Victory Portfolios Schedule of Investments
Ohio Regional Stock Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (2.2%)
Financial Services (2.2%):
General Electric Capital Corp.,
5.79%, 11/3/97 1,170 $ 1,170
Total Commercial Paper (Cost $1,170) 1,170
Common Stocks (97.7%)
Agriculture & Livestock (0.3%):
Andersons, Inc. 15,000 141
Airlines (2.7%):
Comair Holdings, Inc. 40,000 1,470
Amusement & Recreation
Services (0.9%):
Cedar Fair L.P. 10,000 489
Automotive Parts (4.9%):
Dana Corp. 24,000 1,124
Myers Industries, Inc. 21,780 383
TRW, Inc. 20,000 1,144
2,651
Banks (12.4%):
BancFirst Ohio Corp. 10,000 430
Charter One Financial, Inc. 24,150 1,404
FirstMerit Corp. 38,000 969
Huntington Bancshares, Inc. 11,000 355
Mahoning National Bancorp 5,100 139
National City Corp. 15,000 896
Park National Corp. 5,000 429
Provident Financial Group, Inc. 25,000 1,150
Second Bancorp, Inc. 4,470 104
Star Banc Corp. 17,000 834
6,710
Broadcasting & Publishing (1.9%):
Scripps (E.W.) Co., Class A 25,000 1,048
Brokerage Services (1.6%):
McDonald & Co. Investments 36,000 880
Building Materials (1.0%):
Holophane Corp.<F2> 5,000 114
Medusa Corp. 10,000 422
536
Chemicals--General (5.8%):
A. Schulman, Inc. 12,500 $ 281
Chemed Corp. 15,000 608
Ferro Corp. 20,000 748
Lubrizol Corp. 9,000 347
OM Group, Inc. 15,000 566
RPM Inc. 32,812 615
3,165
Commercial Services (0.2%):
BridgeStreet Accomodations, Inc.<F2> 9,000 104
Computers & Peripherals (4.4%):
Diebold, Inc. 38,000 1,674
Telxon Corp. 28,000 721
2,395
Conglomerates (2.8%):
Lancaster Colony Corp. 27,000 1,336
Park-Ohio Industries, Inc.<F2> 10,000 164
1,500
Consumer Products (2.1%):
American Greetings Corp., Class A 14,000 486
Gibson Greetings, Inc.<F2> 26,000 640
1,126
Containers (0.9%):
Owens Corning 15,000 514
Electronic & Electrical--
General (2.2%):
Cincinnati Microwave, Inc.<F2> 10,000 0
Pioneer-Standard Electronics, Inc. 73,000 1,195
Engineering, Industrial
Construction (0.2%):
Corrpro Cos., Inc.<F2> 10,000 133
Food Distributors (0.8%):
Kroger Co.<F2> 14,000 457
Food Processing &
Packaging (0.9%):
Chiquita Brands International, Inc. 20,000 336
J. M. Smucker Co., Class A 5,000 136
472
Forest Products--
Lumber & Paper (1.2%):
Mead Corp. 11,000 666
Health Care (1.9%):
Omnicare, Inc. 38,000 1,057
Hospital & Nursing Equipment
& Supplies (1.5%):
Invacare Corp. 36,000 828
Insurance (4.1%):
Cincinnati Financial Corp. 3,150 285
Ohio Casualty Corp. 18,000 797
State Auto Financial Corp. 40,500 1,134
2,216
Insurance--Property, Casualty,
Health (1.9%):
Progressive Corp. 10,000 1,043
Machine Tools (0.9%):
Cincinnati Milacron, Inc. 17,000 472
Monarch Machine Tool Co. 5,000 42
514
Manufacturing--
Capital Goods (6.4%):
Commercial Intertech Corp. 30,000 488
Gorman-Rupp Co. 45,000 848
Gradall Industries, Inc. 10,000 156
Lincoln Electric Co., Class A 16,000 614
Robbins & Myers, Inc. 20,000 758
Thor Industries, Inc. 20,000 579
3,443
Manufacturing--
Consumer Goods (0.0%):
Chart Industries, Inc. 1,000 22
Manufacturing--
Miscellaneous (1.3%):
Essef Corp.<F2> 42,000 719
Medical Supplies (0.3%):
Gliatech, Inc.<F2> 5,000 59
Meridian Diagnostics, Inc.<F2> 10,000 110
169
Metals--Fabrication (2.7%):
Amcast Industrial Corp. 15,000 381
Brush Wellman, Inc. 10,000 241
RMI Titanium Co.<F2> 10,000 238
Timken Co. 18,000 602
1,462
Mining (0.4%):
Cleveland-Cliffs, Inc. 5,500 239
Office Equipment & Supplies
(Non-Computer Related) (1.0%):
Reynolds & Reynolds Co., Class A 33,000 565
Oil & Gas Exploration,
Production & Services (5.7%):
Lomak Petroleum, Inc. 30,000 557
USX--Marathon Group 71,000 2,538
3,095
Oilfield Services &
Equipment (1.7%):
Parker-Hannifin Corp. 22,500 941
Paint, Varnishes, Enamels (1.4%):
Sherwin-Williams Co. 28,000 777
Pollution Control Services
& Equipment (0.0%):
Mid American Waste Systems, Inc.<F2> 20,100 0
Precision Instruments
& Related (1.4%):
Keithley Instruments, Inc. 75,000 778
Real Estate Investment
Trusts (0.7%):
Health Care REIT, Inc. 14,000 365
Restaurants (0.7%):
Bob Evans Farms, Inc. 10,000 189
Wendy's International, Inc. 10,000 210
399
Retail--Specialty Stores (1.6%):
Fabri-Centers of America, Class A<F2> 10,000 216
Fabri-Centers of America, Class B<F2> 10,000 203
Limited, Inc. 15,000 354
Value City Department Stores, Inc.<F2> 10,000 79
852
Rubber & Rubber Products (1.6%):
Cooper Tire & Rubber Co. 5,000 106
Goodyear Tire & Rubber Co. 12,000 751
857
Steel (1.9%):
Cold Metal Products, Inc.<F2> 7,000 42
Shiloh Industries, Inc.<F2> 25,000 453
Worthington Industries, Inc. 25,000 517
1,012
Telecommunications (0.7%):
Allen Telecom Inc.<F2> 20,000 379
Transportation Leasing
& Trucking (0.7%):
Caliber System, Inc. 6,000 313
Roadway Express, Inc. 3,000 83
396
Transportation--Marine (0.3%):
Oglebay Norton Co. 6,000 186
Utilities--Electric (6.1%):
American Electric Power Co. 29,000 1,370
CINergy Corp. 25,000 825
DPL, Inc. 43,000 1,067
3,262
Utilities--Telecommunications
(2.0%):
Cincinnati Bell, Inc. 40,000 1,080
Wholesale Distribution (1.6%):
Applied Industrial Technology, Inc. 30,000 872
Total Common Stocks (Cost $25,158) 53,180
Convertible Bonds (0.1%)
Medical Supplies (0.1%):
Meridian Diagnostics, Inc.,
7.00%, 9/1/06
callable 9/1/99 @ 104 75 73
Total Convertible Bonds (Cost $75) 73
Rights & Warrants (0.0%)
Cincinnati Microwave, Inc.,
Expire 12/31/98<F2> 10,000 $ 0
Total Rights & Warrants (Cost $15) 0
Total Investments (Cost $26,418)<F1>--100.0% 54,423
Liabilities in excess of other assets 0.0% (15)
TOTAL NET ASSETS--100.0% $54,408
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized appreciation
of securities as follows (amounts in thousands):
Unrealized appreciation $28,561
Unrealized depreciation (556)
Net unrealized appreciation $28,005
<F2> Non-income producing securities.
</TABLE>
See notes to financial statements.
<TABLE>
The Victory Portfolios Schedule of Investments
International Growth Fund October 31, 1997
(Amounts in Thousands, Except Shares)
<CAPTION>
Shares or
Principal Market
Security Description Amount Value
<S> <C> <C>
Commercial Paper (2.8%)
United States (2.8%):
Financial Services (2.8%):
General Electric Capital Corp.,
5.79%, 11/3/97 3,013 $ 3,013
Total Commercial Paper (Cost $3,013) 3,013
Foreign Common Stocks (91.4%)
Australia (3.2%):
Banks (0.9%):
National Australia Bank Ltd. 65,000 891
Construction (0.7%):
Leighton Holdings Ltd. 200,000 740
Leisure--Recreation,
Gaming (0.8%):
Aristocrat Leisure Ltd. 442,914 884
Publishing (0.8%):
Publishing & Broadcasting Ltd. 150,000 872
Total Australia 3,387
Austria (1.5%):
Steel (1.5%):
Boehler-Uddeholm AG 13,000 934
Voest-Alpine Stahl AG 15,000 650
Total Austria 1,584
Britain (20.2%):
Banks (2.0%):
Allied Irish Banks PLC 116,000 981
National Westminster Bank PLC 80,371 1,162
2,143
Beverages (0.5%):
Bass PLC 42,000 581
Building Materials (0.7%):
Hanson PLC 155,000 797
Chemicals--General (1.4%):
BOC Group PLC 90,000 1,508
Electronic & Electrical--
General (0.8%):
Premier Farnell PLC 105,000 817
Food Processing &
Packaging (0.6%):
Associated British Foods PLC 75,000 597
Insurance (1.5%):
Guardian Royal Exchange PLC 314,000 1,561
Leisure--Recreation,
Gaming (2.1%):
Ladbroke Group PLC 500,000 2,234
Oil-Integrated Companies (1.0%):
British Petroleum Co. PLC 75,000 1,102
Pharmaceuticals (1.6%):
SmithKline Beecham PLC 180,000 1,704
Retail--Specialty Stores (1.0%):
Burton Group PLC 525,000 1,116
Textile Manufacturing (0.8%):
Coats Viyella PLC 445,000 813
Transportation (3.7%):
Associated British Ports
Holdings PLC 135,000 643
National Express Group PLC 154,000 1,435
Peninsular & Oriental Steam
Navigation Co. PLC 150,000 1,738
3,816
Utilities--Telecommunications
(0.8%):
British Telecommunications PLC 112,000 848
Utilities--Water (1.7%):
Hyder PLC 117,000 1,765
Total Britain 21,402
Canada (0.6%):
Forest Products--
Lumber & Paper (0.6%):
Abitibi-Consolidated, Inc. 48,700 691
Total Canada 691
Finland (4.1%):
Banks (3.0%):
Merita Ltd., Class A 640,000 3,134
Building Materials (0.5%):
Partek Oyg Abp 27,000 549
Pharmaceuticals (0.6%):
Orion-yhtyma OY, Class B 18,000 665
Total Finland 4,348
France (6.4%):
Chemicals--General (1.3%):
Rhone-Poulenc, Class A 31,000 1,354
Conglomerates (1.1%):
Compagnie Generale d'Industrie
et de Participations 3,500 1,143
Food Processing &
Packaging (0.6%):
Groupe Danone 4,200 644
Industrial Goods & Services (1.2%):
Compagnie de Saint Gobain 8,950 1,287
Oil & Gas Exploration,
Production & Services (2.2%):
Elf Aquitaine SA 18,200 2,258
Total France 6,686
Germany (2.7%):
Airlines (0.8%):
Deutsche Lufthansa AG, Registered 45,000 792
Banks (0.7%):
Commerzbank AG 21,000 720
Chemicals--General (0.6%):
BASF AG 20,000 690
Insurance (0.6%):
Allianz AG 2,900 655
Total Germany 2,857
Hong Kong (2.5%):
Hotels & Motels (0.3%):
Regal Hotels International 1,968,844 372
Newspapers (0.8%):
South China Morning Post
(Holdings) Ltd. 1,000,000 867
Transportation--Marine (1.0%):
Hong Kong Ferry Holdings 725,000 994
Utilities--Electric (0.4%):
Beijing Datang Power Generation
Co. Ltd.<F2> 915,000 462
Total Hong Kong 2,695
Hungary (1.3%):
Oil-Integrated Companies (0.4%):
MOL Magyar Olaj-es
Gazipari RT GDR 22,000 477
Utilities--Telecommunications
(0.9%):
Matav RT(b) 2,100 929
Total Hungary 1,406
Italy (4.8%):
Automobiles (1.5%):
Fiat SpA 935,000 1,693
Banks (0.6%):
Istituto Bancario San Paolo
di Torino SpA 80,000 608
Financial Services (0.5%):
Istituto Mobiliare Italiano SpA 54,500 488
Food Processing &
Packaging (1.1%):
Parmalat Finanziaria SpA 840,000 1,168
Utilities--Telecommunications
(1.1%):
Telecom Italia SpA 283,139 1,146
Total Italy 5,103
Japan (18.7%):
Automobiles (2.2%):
Honda Motor Co. Ltd. 33,000 1,111
Toyota Motor Corp. 45,000 1,254
2,365
Banks (0.7%):
Bank of Tokyo-Mitsubishi Ltd. 56,000 731
Construction (0.9%):
Sekisui House Ltd. 115,000 985
Cosmetics & Related (1.7%):
Kao Corp. 36,000 503
Shiseido Co. Ltd. 93,000 1,268
1,771
Electronic & Electrical--
General (3.5%):
Hitachi Ltd. 134,000 1,031
Kyocera Corp. 15,000 859
Minebea Co. Ltd. 50,000 499
Sony Corp. 16,000 1,328
3,717
Entertainment (0.6%):
Nintendo Co. Ltd. 7,000 605
Financial Services (1.4%):
Takefuji Corp. 33,800 1,504
Forest Products--
Lumber & Paper (1.2%):
Nippon Paper Industries Co. 225,000 1,231
Household Goods--Appliances,
Furnishings & Electronics (0.7%):
Rinnai Corp. 44,000 717
Insurance (0.9%):
Tokio Marine & Fire Insurance Co. 100,000 998
Pharmaceuticals (0.5%):
Eisai Co. Ltd. 34,000 534
Printing (0.9%):
Toppan Printing Co. Ltd. 78,000 979
Real Estate (0.6%):
Sumitomo Realty & Development 90,000 658
Retail--Department Stores (0.9%):
Marui Co. Ltd. 55,000 928
Tools (1.2%):
Makita Corp. 88,000 1,237
Utilities--Telecommunications
(0.8%):
Nippon Telegraph & Telephone Corp. 100 848
Total Japan 19,808
Netherlands (4.9%):
Banks (1.6%):
ING Groep N.V. 40,000 1,680
Containers (1.0%):
Koninklijke Emballage Indistrie
Van Leer N.V. 54,500 1,104
Electronic & Electrical--
General (1.6%):
Phillips Electronics N.V. 22,000 1,722
Household Goods--Appliances,
Furnishings & Electronics (0.7%):
Hunter Douglas N.V. 18,000 742
Total Netherlands 5,248
New Zealand (1.7%):
Fisheries (0.6%):
Sanford Ltd. 400,000 624
Household Goods--Appliances,
Furnishings & Electronics (1.1%):
Fisher & Paykel Industries Ltd. 380,400 1,210
Total New Zealand 1,834
Norway (3.9%):
Banks (1.4%):
Den Norske Bank ASA 340,000 1,540
Construction (0.9%):
Kvaerner ASA 15,000 773
Kvaerner ASA, Class B 4,400 212
985
Shipping (1.6%):
Bergesen d.y. ASA, Class A 58,000 1,690
Total Norway 4,215
Portugal (2.4%):
Banks (0.6%):
Banco Commercial Portugues, SA 30,000 611
Building Materials (0.6%):
Cimpor-Cimentos de Portugal,
SGPS, SA 25,000 633
Utilities--Electric (0.3%):
Electricidade de Portugal SA 20,000 352
Utilities--Telecommunications
(0.9%):
Portugal Telecom SA, Registered 22,000 903
Total Portugal 2,499
Singapore (0.8%):
Conglomerates (0.8%):
Jardine Strategic Holdings Ltd. 275,000 880
Total Singapore 880
Spain (3.8%):
Banks (1.0%):
Corporacion Bancaria
de Espana SA 20,000 1,112
Construction (1.7%):
Dragados & Construcciones SA 90,000 1,826
Utilities--Telecommunications
(1.1%):
Telefonica de Espana SA 42,000 1,147
Total Spain 4,085
Sweden (3.1%):
Conglomerates (1.2%):
Kinnevik AB, Class B 60,000 1,194
Industrial Goods & Services (0.7%):
Trelleborg AB, Class B 60,000 794
Radio & Television (0.4%):
Modern Times Group MTG AB,
Class B<F2> 60,000 429
Steel (0.8%):
Avesta Sheffield AB 120,000 898
Total Sweden 3,315
Switzerland (4.8%):
Banks (2.8%):
Credit Suisse Group, Registered 17,530 2,476
Liechtenstein Global Trust AG 1,000 501
2,977
Food Processing &
Packaging (0.9%):
Nestle SA, Registered 650 918
Pharmaceuticals (1.1%):
Novartis AG, Registered 800 1,257
Total Switzerland 5,152
Total Common Stocks (Cost $84,748) 97,195
Convertible Bonds (0.9%)
Banks (0.9%):
Mitsubishi Bank International
Finance Bermuda,
3.00%, 11/30/02 943 910
Total Convertible Bonds (Cost $943) 910
Preferred Stocks (2.5%)
Australia (1.0%):
Entertainment (1.0%):
Village Roadshow Ltd., Class A 560,000 1,046
Total Australia 1,046
Germany (1.5%):
Automobiles (0.5%):
Volkswagen AG 1,150 530
Consumer Products (0.4%):
Gardena Holding AG<F2> 19,000 444
Oil-Integrated Companies (0.6%):
RWE AG 18,750 691
Total Germany 1,665
Total Preferred Stocks (Cost $2,994) 2,711
Total Investments (Cost $94,899)<F1>--97.6% 103,829
Other assets in excess of liabilities 2.4% 2,544
TOTAL NET ASSETS--100.0% $106,373
<FN>
<F1> Cost for federal income tax purposes differs from value by net unrealized appreciation
of securities as follows (amounts in thousands):
Unrealized appreciation $13,960
Unrealized depreciation (5,030)
Net unrealized appreciation $ 8,930
<F2> Non-income producing securities.
</TABLE>
See notes to financial statements.
<TABLE>
Statements of Assets and Liabilities
The Victory Portfolios October 31, 1997
(Amounts in Thousands, Except Per Share Amounts)
<CAPTION>
U.S. Government Prime Financial
Obligations Obligations Reserves
Fund Fund Fund
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost $ 365,652 $ 663,926 $ 779,156
Repurchase agreements, at cost 1,327,945 72,387 45,988
Total 1,693,597 736,313 825,144
Interest receivable 5,619 3,411 4,284
Prepaid expenses and other assets -- 10 --
Total Assets 1,699,216 739,734 829,428
LIABILITIES:
Dividends payable 6,703 2,802 3,413
Payable to brokers for investments purchased -- -- 24,933
Accrued expenses and other payables:
Investment advisory fees 481 202 341
Administration fees 16 8 8
Custodian fees 27 13 16
Transfer agent fees 29 20 14
Shareholder service fees -- 130 --
Shareholder service fees--Select Shares 229 -- --
Other 123 110 61
Total Liabilities 7,608 3,285 28,786
NET ASSETS:
Capital 1,691,709 736,435 800,829
Undistributed (distributions in excess of) net investment income (80) -- (173)
Accumulated undistributed net realized gains
(losses) from investment transactions (21) 14 (14)
Net Assets $ 1,691,608 $ 736,449 $ 800,642
Net Assets
Investor Shares $ 456,133 -- --
Select Shares 1,235,475 -- --
Total $ 1,691,608 -- --
Outstanding units of beneficial interest (shares)
Investor Shares 456,110 -- --
Select Shares 1,235,578 -- --
Total 1,691,688 736,435 800,548
Net asset value
Offering and redemption price per share -- $ 1.00 $ 1.00
Offering and redemption price per share--Investor Shares $ 1.00 -- --
Offering and redemption price per share--Select Shares $ 1.00 -- --
</TABLE>
See notes to financial statements.
<TABLE>
Statements of Assets and Liabilities
The Victory Portfolios October 31, 1997
(Amounts in Thousands, Except Per Share Amounts)
<CAPTION>
Ohio
Tax-Free Municipal
Money Money
Market Market
Fund Fund
<S> <C> <C>
ASSETS:
Investments, at amortized cost $412,085 $ 655,490
Interest and dividends receivable 3,104 5,287
Receivable from brokers for investments sold -- 5
Prepaid expenses and other assets 5 --
Total Assets 415,194 660,782
LIABILITIES:
Dividends payable 1,088 1,683
Payable to brokers for investments purchased 1,701 7,749
Accrued expenses and other payables:
Investment advisory fees 118 189
Administration fees 5 7
Custodian fees 8 12
Accounting fees 1 2
Transfer agent fees 6 11
Shareholder service fees 10 92
Other 33 59
Total Liabilities 2,970 9,804
NET ASSETS:
Capital 412,224 650,978
Net Assets $412,224 $ 650,978
Outstanding units of beneficial interest (shares) 412,222 650,974
Net asset value
Offering and redemption price per share $ 1.00 $ 1.00
</TABLE>
See notes to financial statements.
<TABLE>
Statements of Assets and Liabilities
The Victory Portfolios October 31, 1997
(Amounts in Thousands, Except Per Share Amounts)
<CAPTION>
Investment Government
Limited Term Intermediate Quality Bond Mortgage
Income Fund Income Fund Fund Fund
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $80,821; $248,265; $175,763 & $102,184) $ 81,158 $ 251,052 $ 178,096 $ 102,901
Cash -- -- -- 1
Interest receivable 715 3,255 2,441 795
Receivable for capital shares issued 89 86 525 --
Receivable from brokers for investments sold 1,454 4,363 5,410 8,699
Prepaid expenses and other assets 1 -- 7 --
Total Assets 83,417 258,756 186,479 112,396
LIABILITIES:
Payable to brokers for investments purchased 1,434 9,680 5,239 8,500
Payable for capital shares redeemed 7 5 22 --
Accrued expenses and other payables:
Investment advisory fees 35 132 94 44
Administration fees 1 3 2 1
Custodian fees 2 5 6 4
Transfer agent fees 3 6 10 5
Shareholder service fees 6 20 16 9
Other 16 64 83 72
Total Liabilities 1,504 9,915 5,472 8,635
NET ASSETS:
Capital 84,645 251,209 194,379 105,122
Undistributed net investment income 31 119 73 --
Net unrealized appreciation/depreciation
from investments 337 2,787 2,333 717
Accumulated undistributed net realized
losses from investment transactions (3,100) (5,274) (15,778) (2,078)
Net Assets $ 81,913 $ 248,841 $ 181,007 $ 103,761
Outstanding units of beneficial interest (shares) 8,237 25,890 18,509 9,497
Net asset value
Redemption price per share $ 9.94 $ 9.61 $ 9.78 $ 10.93
Maximum sales charge 2.00% 5.75% 5.75% 5.75%
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest cent) $ 10.14 $ 10.20 $ 10.38 $ 11.60
</TABLE>
See notes to financial statements.
<TABLE>
Statements of Assets and Liabilities
The Victory Portfolios October 31, 1997
(Amounts in Thousands, Except Per Share Amounts)
<CAPTION>
National Ohio
Municipal New York Municipal
Fund For Bond Tax-Free Bond
Income Fund Fund Fund
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $21,057; $48,632; $16,559 & $73,141) $ 21,809 $ 50,147 $ 17,692 $ 76,905
Interest and dividends receivable 173 675 363 1,498
Receivable for capital shares issued 132 250 33 176
Receivable from brokers for investments sold 359 289 -- --
Prepaid expenses and other assets -- 21 8 4
Total Assets 22,473 51,382 18,096 78,583
LIABILITIES:
Payable to brokers for investments purchased 307 1,297 -- 485
Payable for capital shares redeemed 32 55 8 --
Accrued expenses and other payables:
Investment advisory fees 5 -- 4 34
Administration fees -- 1 -- 1
Custodian fees 2 2 1 2
Transfer agent fees 13 11 8 4
Shareholder service fees 3 -- -- 8
Shareholder service fees--Class A -- 10 3 --
Shareholder service and 12b-1 fees--Class B -- 2 2 --
Other 10 11 4 6
Total Liabilities 372 1,389 30 540
NET ASSETS:
Capital 22,959 48,594 16,888 73,588
Undistributed net investment income 9 16 8 28
Net unrealized appreciation/depreciation from investments 752 1,515 1,133 3,764
Accumulated undistributed net realized gains
(losses) from investment transactions (1,619) (132) 37 663
Net Assets $ 22,101 $ 49,993 $ 18,066 $ 78,043
Net Assets
Class A $ 47,705 $ 15,335
Class B 2,288 2,731
Total $ 49,993 $ 18,066
Outstanding units of beneficial interest (shares)
Class A 4,539 1,210
Class B 218 215
Total 2,253 4,757 1,425 6,660
Net asset value
Redemption price per share $ 9.81 $ 11.72
Redemption price per share--Class A $ 10.51 $ 12.68
Offering price per share--Class B<F1> $ 10.51 $ 12.69
Maximum sales charge 2.00% 5.75% 5.75% 5.75%
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest cent) $ 10.01 $ 12.44
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest cent)--Class A $ 11.15 $ 13.45
<FN>
<F1>Redemption price per Class B Share varies based on length of time held.
</TABLE>
See notes to financial statements.
<TABLE>
Statements of Assets and Liabilities
The Victory Portfolios October 31, 1997
(Amounts in Thousands, Except Per Share Amounts)
<CAPTION>
Stock Diversified
Balanced Index Stock Value Growth
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (Cost $278,148; $346,871;
$645,984; $322,051 & $117,564) $342,483 $463,357 $ 797,478 $472,041 $184,776
Interest and dividends receivable 1,952 480 733 607 170
Receivable for capital shares issued 55 157 1,002 1 --
Receivable from brokers for investments sold 6,050 -- 2,810 1,476 2,215
Net variation margin on open futures contracts -- 1,359 -- -- --
Reclaims receivable 31 -- -- -- --
Prepaid expenses and other assets 3 42 5 3 3
Total Assets 350,574 465,395 802,028 474,128 187,164
LIABILITIES:
Payable for capital shares redeemed 2 -- 39 -- --
Payable to brokers for investments purchased 3,924 141 8,815 1,580 1,431
Accrued expenses and other payables:
Investment advisory fees 298 184 459 417 164
Administration fees 4 -- 8 5 2
Custodian fees 9 34 16 10 4
Accounting fees -- -- 1 -- --
Transfer agent fees 18 8 86 8 6
Shareholder service fees -- -- -- 36 15
Shareholder service fees--Class A 31 -- 74 -- --
Shareholder service and 12b-1 fees--Class B 3 -- 26 -- --
Other 61 13 36 25 9
Total Liabilities 4,350 380 9,560 2,081 1,631
NET ASSETS:
Capital 263,377 320,737 551,092 282,972 105,436
Undistributed (distributions in excess of)
net investment income 155 683 124 167 (3)
Net unrealized appreciation/depreciation
from investments and futures contracts 64,518 115,674 151,494 149,990 67,212
Net unrealized appreciation/depreciation from translation
of assets and liabilities in foreign currencies (183) -- -- -- --
Accumulated undistributed net realized gains
from investment transactions 18,737 27,921 89,758 38,918 12,888
Accumulated undistributed net realized losses
from foreign currency transactions (380) -- -- -- --
Net Assets $346,224 $465,015 $ 792,468 $472,047 $185,533
Net Assets
Class A $342,933 $ 762,270
Class B 3,291 30,198
Total $346,224 $ 792,468
Outstanding units of beneficial interest (shares)
Class A 24,733 42,924
Class B 237 1,714
Total 24,970 24,807 44,638 27,651 10,300
Net asset value
Redemption price per share $ 18.75 $ 17.07 $ 18.01
Redemption price per share--Class A $ 13.87 $ 17.76
Offering price per share--Class B<F1> $ 13.88 $ 17.62
Maximum sales charge 5.75% 5.75% 5.75% 5.75% 5.75%
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest cent) $ 19.89 $ 18.11 $ 19.11
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest cent)--Class A $ 14.72 $ 18.84
<FN>
<F1> Redemption price per Class B Share varies based on length of time held.
</TABLE>
See notes to financial statements.
<TABLE>
Statements of Assets and Liabilities
The Victory Portfolios October 31, 1997
(Amounts in Thousands, Except Per Share Amounts)
<CAPTION>
Ohio
Special Special Regional International
Value Growth Stock Growth Lakefront
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (Cost $330,734; $86,395;
$26,418; $94,899 & $1,110) $421,028 $103,171 $ 54,423 $ 103,829 $ 1,252
Interest and dividends receivable 444 1 43 330 1
Receivable for capital shares issued 726 6 -- 12 --
Receivable from brokers for investments sold 370 2,012 -- 2,088 --
Reclaim receivable -- -- -- 386 --
Unamortized organization costs -- -- -- -- 26
Prepaid expenses and other assets 6 2 4 1 47
Total Assets 422,574 105,192 54,470 106,646 1,326
LIABILITIES:
Payable for capital shares redeemed 4 -- 1 -- --
Payable to brokers for investments purchased 424 501 -- 83 --
Payable for organization costs -- -- -- -- 30
Accrued expenses and other payables:
Investment advisory fees 368 97 36 108 1
Administration fees 5 1 1 1 1
Custodian fees 9 6 2 25 2
Accounting fees 1 4 -- -- 24
Transfer agent fees 26 3 14 16 5
Shareholder service fees -- 8 -- -- --
Shareholder service fees--Class A 38 -- 5 10 --
Shareholder service and 12b-1 fees--Class B 1 -- -- -- --
Other 18 7 3 30 8
Total Liabilities 894 627 62 273 71
NET ASSETS:
Capital 299,379 76,532 21,628 91,560 1,091
Undistributed (distributions in excess of)
net investment income 301 (1) 1 -- 2
Net unrealized appreciation from investments 90,294 16,776 28,005 9,888 142
Net unrealized appreciation (depreciation)
from translation of assets and liabilities
in foreign currencies -- -- -- (952) --
Accumulated undistributed net realized gains
from investment transactions 31,706 11,258 4,774 3,776 20
Accumulated undistributed net realized gains
from foreign currency transactions -- -- -- 2,101 --
Net Assets $421,680 $104,565 $ 54,408 $ 106,373 $ 1,255
Net Assets
Class A $420,020 $ 53,703 $ 106,189
Class B 1,660 705 184
Total $421,680 $ 54,408 $ 106,373
Outstanding units of beneficial interest (shares)
Class A 25,181 2,280 7,977
Class B 101 30 14
Total 25,282 6,420 2,310 7,991 111
Net asset value
Redemption price per share $ 16.29 $ 11.29
Redemption price per share--Class A $ 16.68 $ 23.56 $ 13.31
Offering and redemption price per share--Class B $ 16.49 $ 23.28 $ 13.07
Maximum sales charge 5.75% 5.75% 5.75% 5.75% 5.75%
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest cent) $ 17.28 $ 11.98
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest cent)--Class A $ 17.70 $ 25.00 $ 14.12
</TABLE>
See notes to financial statements.
<TABLE>
Statements of Assets and Liabilities
The Victory Portfolios October 31, 1997
(Amounts in Thousands, Except Per Share Amounts)
<CAPTION>
Real Estate
Investment
Fund
<S> <C>
ASSETS:
Investments, at value (Cost $3,674) $ 4,168
Interest and dividends receivable 8
Receivable for capital shares issued 31
Receivable from brokers for investments sold 169
Unamortized organization costs 18
Prepaid expenses and other assets 27
Total Assets 4,421
LIABILITIES:
Payable for organization costs 20
Accrued expenses and other payables:
Accounting fees 15
Custodian fees 1
Transfer agent fees 5
Other 4
Total Liabilities 45
NET ASSETS:
Capital 3,842
Undistributed net investment income 20
Net unrealized appreciation/depreciation from investments 494
Accumulated undistributed net realized gains (losses)
from investment transactions 20
Net Assets $ 4,376
Outstanding units of beneficial interest (shares) 362
Net asset value
Redemption price per share $ 12.07
Maximum sales charge 5.75%
Maximum offering price per share (100%/(100%-maximum sales charge)
of net asset value adjusted to nearest cent) $ 12.81
</TABLE>
See notes to financial statements.
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
U.S. Government Prime Financial
Obligations Obligations Reserves
Fund Fund Fund
<S> <C> <C> <C>
Investment Income:
Interest income $84,659 $30,124 $45,862
Expenses:
Investment advisory fees 5,388 1,871 4,088
Administration fees 2,258 791 1,210
Shareholder service fees -- 1,266 --
Shareholder service fees--Select Shares 1,981 -- --
Accounting fees 98 93 89
Custodian fees 293 111 162
Legal and audit fees 160 69 96
Trustees' fees and expenses 50 17 27
Transfer agent fees 119 77 52
Registration and filing fees 147 29 21
Printing fees 227 203 21
Other 10 7 11
Total Expenses 10,731 4,534 5,777
Expenses voluntarily reduced -- -- (301)
Net Expenses 10,731 4,534 5,476
Net Investment Income 73,928 25,590 40,386
Realized Gains from Investments:
Net realized gains from investment transactions 72 14 10
Change in net assets resulting from operations $74,000 $25,604 $40,396
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Tax-Free Ohio Municipal
Money Market Money Market
Fund Fund
<S> <C> <C>
Investment Income:
Interest income $13,834 $22,927
Dividend income 358 227
Total Income 14,192 23,154
Expenses:
Investment advisory fees 1,321 3,114
Administration fees 563 924
Shareholder service fees 619 1,362
Accounting fees 80 100
Custodian fees 78 122
Legal and audit fees 44 83
Trustees' fees and expenses 12 21
Transfer agent fees 26 43
Registration and filing fees 19 25
Printing fees 32 70
Other 5 8
Total Expenses 2,799 5,872
Expenses voluntarily reduced (38) (1,209)
Net Expenses 2,761 4,663
Net Investment Income 11,431 18,491
Realized Gains from Investments:
Net realized gains from investment transactions -- --
Change in net assets resulting from operations $11,431 $18,491
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Limited Investment Government
Term Intermediate Quality Mortgage
Income Fund Income Fund Bond Fund Fund
<S> <C> <C> <C> <C>
Investment Income:
Interest income $6,001 $17,870 $11,130 $8,109
Expenses:
Investment advisory fees 434 1,963 1,202 566
Administration fees 130 393 240 170
Shareholder service fees 92 261 188 116
Accounting fees 34 67 57 38
Custodian fees 20 57 46 27
Legal and audit fees 11 26 55 14
Trustees' fees and expenses 3 8 5 4
Transfer agent fees 18 25 43 17
Registration and filing fees 8 41 13 7
Printing fees 2 -- 26 3
Other 3 7 4 --
Total Expenses 755 2,848 1,879 962
Expenses voluntarily reduced (16) (341) (209) --
Net Expenses 739 2,507 1,670 962
Net Investment Income 5,262 15,363 9,460 7,147
Realized/Unrealized Gains (Losses) from Investments:
Net realized gains (losses) from investment transactions (915) (248) 1,537 (160)
Change in unrealized appreciation/depreciation
from investments 331 1,664 1,026 1,733
Net realized/unrealized gains (losses) from investments (584) 1,416 2,563 1,573
Change in net assets resulting from operations $4,678 $16,779 $12,023 $8,720
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
National New York Ohio
Fund For Municipal Tax-Free Municipal
Income Bond Fund Fund Bond Fund
<S> <C> <C> <C> <C>
Investment Income:
Interest income $1,568 $2,000 $1,098 $4,075
Dividend income -- 86 12 100
Total Income 1,568 2,086 1,110 4,175
Expenses:
Investment advisory fees 98 240 97 457
Administration fees 29 65 27 114
Shareholder service fees 44 -- -- 82
Shareholder service fees--Class A -- 89 31 --
Shareholder service fees and 12b-1 fees--Class B -- 22 27 --
Accounting fees 48 57 49 46
Custodian fees 17 13 5 19
Legal and audit fees 8 13 13 9
Trustees' fees and expenses 1 1 1 2
Transfer agent fees 49 35 31 15
Registration and filing fees 11 30 2 5
Printing fees 13 17 12 4
Other 1 2 -- 2
Total Expenses 319 584 295 755
Expenses voluntarily reduced (110) (240) (89) (80)
Expenses before reimbursement from distributor 209 344 206 675
Expenses reimbursed by distributor (15) (161) (16) --
Net Expenses 194 183 190 675
Net Investment Income 1,374 1,903 920 3,500
Realized/Unrealized Gains (Losses) from Investments:
Net realized gains from investment transactions 99 280 37 663
Change in unrealized appreciation/depreciation
from investments (32) 1,209 15 1,203
Net realized/unrealized gains from investments 67 1,489 52 1,866
Change in net assets resulting from operations $1,441 $3,392 $ 972 $5,366
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Balanced Stock Index Diversified Value Growth
Fund Fund Stock Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest income $ 8,671 $ 2,809 $ 1,697 $ 929 $ 240
Dividend income 3,841 6,015 12,311 9,011 2,384
Foreign tax withholding (54) (42) (7) (60) --
Total Income 12,458 8,782 14,001 9,880 2,624
Expenses:
Investment advisory fees 3,163 2,290 4,561 4,397 1,710
Administration fees 473 568 1,035 655 256
Shareholder service fees -- -- -- 438 173
Shareholder service fees--Class A 325 -- 771 -- --
Shareholder service fees and 12b-1 fees--Class B 24 -- 200 -- --
Accounting fees 90 121 120 84 52
Custodian fees 88 164 145 92 39
Legal and audit fees 49 48 91 53 17
Trustees' fees and expenses 10 11 23 14 6
Transfer agent fees 71 35 383 32 22
Registration and filing fees 32 32 48 18 14
Printing fees 11 2 60 5 4
Other -- 9 18 11 5
Total Expenses 4,336 3,280 7,455 5,799 2,298
Expenses voluntarily reduced (354) (1,142) -- -- --
Expenses before reimbursement from distributor 3,982 2,138 7,455 5,799 2,298
Expenses reimbursed by distributor (7) -- -- -- --
Net Expenses 3,975 2,138 7,455 5,799 2,298
Net Investment Income 8,483 6,644 6,546 4,081 326
Realized/Unrealized Gains (Losses) from
Investments and Foreign Currencies
Net realized gains from investment transactions 19,086 31,506 90,018 39,027 12,914
Net realized losses from foreign currency transactions (129) -- -- -- --
Net change in unrealized appreciation/depreciation
from investments 26,776 57,624 68,082 60,140 28,590
Net change in unrealized depreciation from translation
of assets and liabilities in foreign currencies (3) -- -- -- --
Net realized/unrealized gains from investments
and foreign currencies 45,730 89,130 158,100 99,167 41,504
Change in net assets resulting from operations $54,213 $95,774 $164,646 $103,248 $41,830
See notes to financial statements
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Special Special Ohio International
Value Growth Regional Growth Lakefront
Fund Fund Stock Fund Fund Fund <F1>
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest income $ 914 $ 207 $ 54 $ 233 $ 1
Dividend income 6,231 209 913 2,791 11
Foreign tax withholding (21) -- -- (248) --
Total Income 7,124 416 967 2,776 12
Expenses:
Investment advisory fees 3,525 921 375 1,317 7
Administration fees 525 138 75 180 1
Shareholder service fees -- 92 -- -- 1
Shareholder service fees--Class A 382 -- 56 121 --
Shareholder service fees and 12b-1 fees--Class B 10 -- 5 2 --
Accounting fees 88 39 46 71 24
Custodian fees 86 35 15 229 2
Legal and audit fees 47 13 7 26 5
Amortization of organization costs -- -- -- -- 4
Trustees' fees and expenses 11 4 2 4 --
Transfer agent fees 112 14 51 57 5
Registration and filing fees 36 15 9 20 --
Printing fees 9 2 5 7 3
Other 10 2 1 4 --
Total Expenses 4,841 1,275 647 2,038 52
Expenses voluntarily reduced -- -- -- -- (5)
Expenses before reimbursement from distributor 4,841 1,275 647 2,038 47
Expenses reimbursed by distributor (10) -- (9) (12) (47)
Net Expenses 4,831 1,275 638 2,026 --
Net Investment Income (Loss) 2,293 (859) 329 750 12
Realized/Unrealized Gains (Losses) from
Investments and Foreign Currencies:
Net realized gains from investment transactions 31,722 12,119 4,782 5,879 20
Net realized losses from foreign
currency transactions -- -- -- (752) --
Net change in unrealized appreciation
(depreciation) from investments 47,587 6,482 9,508 1,684 142
Net realized/unrealized gains from investments
and foreign currencies 79,309 18,601 14,290 6,811 162
Change in net assets resulting from operations $81,602 $17,742 $14,619 $7,561 $174
<FN>
<F1> The Lakefront Fund commenced operations on March 3, 1997.
See notes to financial statements
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Real Estate
Investment Fund <F1>
<S> <C>
Investment Income:
Interest income $ 65
Dividend income 14
Total Income 79
Expenses:
Investment advisory fees 16
Administration fees 2
Accounting fees 15
Custodian fees 1
Legal and audit fees 2
Amortization of organization costs 2
Transfer agent fees 5
Registration and filing fees 1
Printing fees 1
Total Expenses 45
Expenses voluntarily reduced (18)
Expenses before reimbursement from distributor 27
Expenses reimbursed by distributor (27)
Net Expenses --
Net Investment Income 79
Realized/Unrealized Gains (Losses) from Investments:
Net realized gains from investment transactions 20
Net change in unrealized appreciation/depreciation from investments 494
Net realized/unrealized gains from investments 514
Change in net assets resulting from operations $593
<FN>
<F1> The Real Estate Investment Fund commenced operations on April 30, 1997.
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
U.S. Government Prime Financial
Obligations Fund Obligations Fund Reserves Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1997 <F1> 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 73,928 $ 58,184 $ 25,590 $ 21,953 $ 40,386 $ 38,933
Net realized gains from
investment transactions 72 24 14 13 10 4
Change in net assets resulting
from operations 74,000 58,208 25,604 21,966 40,396 38,937
Distributions to Shareholders:
From net investment income -- (58,184) (25,590) (21,953) (40,213) (38,877)
Investor Shares (19,759) -- -- -- -- --
Select Shares (54,089) -- -- -- -- --
In excess of net investment income (80) -- -- -- (173) --
From net realized gains from
investment transactions -- -- (13) -- -- --
Change in net assets from
distributions to shareholders (73,928) (58,184) (25,603) (21,953) (40,386) (38,877)
Capital Transactions:
Proceeds from shares issued 4,097,261 3,877,755 1,535,027 1,282,599 1,739,900 2,348,380
Dividends reinvested 30,384 13,036 22,658 18,208 2,086 2,546
Cost of shares redeemed (3,793,926) (3,497,927) (1,317,256) (1,261,067) (1,709,344) (2,345,866)
Change in net assets from
capital transactions 333,719 392,864 240,429 39,740 32,642 5,060
Change in net assets 333,791 392,888 240,430 39,753 32,652 5,120
Net Assets:
Beginning of period 1,357,817 964,929 496,019 456,266 767,990 762,870
End of period $ 1,691,608 $ 1,357,817 $ 736,449 $ 496,019 $ 800,642 $ 767,990
Share Transactions:
Issued 4,097,261 3,877,755 1,535,027 1,282,599 1,739,900 2,348,379
Reinvested 30,384 13,036 22,658 18,208 2,086 2,546
Redeemed (3,793,926) (3,497,927) (1,317,256) (1,261,167) (1,709,344) (2,345,866)
Change in shares 333,719 392,864 240,429 39,640 32,642 5,059
<FN>
<F1>Effective January 8, 1997, the U.S. Government Obligations Fund designated the existing shares as Select Shares and
commenced offering Investor Shares.
See notes to financial statements
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Tax-Free Ohio Municipal
Money Market Fund Money Market
Year Year Year Year
Ended Ended Ended Ended
October 31, October 31, October 31, October 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 11,431 $ 9,527 $ 18,491 $ 17,162
Net realized gains from investment transactions -- 3 -- --
Change in net assets resulting from operations 11,431 9,530 18,491 17,162
Distributions to Shareholders:
From net investment income (11,431) (9,527) (18,491) (17,162)
In excess of net investment income -- -- -- (216)
From net realized gains from investment transactions (3) (3) -- --
In excess of net realized gains from investment
transactions -- (57) -- (17)
Change in net assets from distributions to shareholders (11,434) (9,587) (18,491) (17,395)
Capital Transactions:
Proceeds from shares issued 578,925 562,564 1,046,897 1,157,311
Dividends reinvested 5,978 3,035 14,588 10,022
Cost of shares redeemed (517,472) (528,472) (971,638) (1,116,601)
Change in net assets from capital transactions 67,431 37,127 89,847 50,732
Change in net assets 67,428 37,070 89,847 50,499
Net Assets:
Beginning of period 344,796 307,726 561,131 510,632
End of period $ 412,224 $ 344,796 $ 650,978 $ 561,131
Share Transactions:
Issued 578,925 562,564 1,046,897 1,157,311
Reinvested 5,978 3,035 14,588 10,022
Redeemed (517,472) (528,472) (971,638) (1,116,601)
Change in shares 67,431 37,127 89,847 50,732
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Limited Term Intermediate Investment Quality
Income Fund Income Fund Bond Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 5,262 $ 8,481 $ 15,363 $ 12,201 $ 9,460 $ 8,159
Net realized gains (losses) from
investment transactions (915) (475) (248) (1,103) 1,537 (1,769)
Net change in unrealized appreciation/
depreciation from investments 331 (1,765) 1,664 (428) 1,026 177
Change in net assets resulting
from operations 4,678 6,241 16,779 10,670 12,023 6,567
Distributions to Shareholders:
From net investment income (5,310) (8,481) (15,376) (12,201) (9,369) (7,938)
In excess of net investment income -- (125) -- (14) -- --
In excess of net realized gains (losses)
from investment transactions -- (122) -- (52) -- --
Tax Return of Capital -- -- -- -- -- (122)
Change in net assets from
distributions to shareholders (5,310) (8,728) (15,376) (12,267) (9,369) (8,060)
Capital Transactions:
Proceeds from shares issued 22,820 29,303 50,003 145,956 61,463 54,446
Proceeds from shares issued
in connection with acquisition -- -- -- -- 18,518 --
Dividends reinvested 4,476 8,683 11,254 12,260 6,852 8,045
Cost of shares redeemed (34,770) (117,482) (85,906) (47,813) (59,287) (35,439)
Change in net assets from
capital transactions (7,474) (79,496) (24,649) 110,403 27,546 27,052
Change in net assets (8,106) (81,983) (23,246) 108,806 30,200 25,559
Net Assets:
Beginning of period 90,019 172,002 272,087 163,281 150,807 125,248
End of period $ 81,913 $ 90,019 $248,841 $272,087 $181,007 $150,807
Share Transactions:
Issued 2,294 2,898 5,259 15,335 6,404 5,668
Issued in connection with acquisition -- -- -- -- 1,929 --
Reinvested 451 864 1,186 1,286 715 840
Redeemed (3,500) (11,710) (9,028) (5,005) (6,198) (3,676)
Change in shares (755) (7,948) (2,583) 11,616 2,850 2,832
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Government Fund For
Mortgage Fund Income
Year Year Year Year
Ended Ended Ended Ended
October 31, October 31, October 31, October 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 7,147 $ 8,396 $ 1,374 $ 1,558
Net realized gains (losses) from investment transactions (160) (338) 99 28
Net change in unrealized appreciation/depreciation
from investments 1,733 (1,193) (32) (261)
Change in net assets resulting from operations 8,720 6,865 1,441 1,325
Distributions to Shareholders:
From net investment income (7,064) (7,983) (1,362) (1,558)
In excess of net investment income -- -- -- (65)
Tax return of capital (28) (180) -- (102)
Change in net assets from distributions to shareholders (7,092) (8,163) (1,362) (1,725)
Capital Transactions:
Proceeds from shares issued 15,588 22,111 6,619 4,189
Dividends reinvested 3,890 8,134 852 1,208
Cost of shares redeemed (43,337) (39,058) (6,265) (6,937)
Change in net assets from capital transactions (23,859) (8,813) 1,206 (1,540)
Change in net assets (22,231) (10,111) 1,285 (1,940)
Net Assets:
Beginning of period 125,992 136,103 20,816 22,756
End of period $103,761 $125,992 $22,101 $20,816
Share Transactions:
Issued 1,442 2,051 678 425
Reinvested 361 758 88 124
Redeemed (4,019) (3,629) (644) (708)
Change in shares (2,216) (820) 122 (159)
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
National Municipal New York Ohio Municipal
Bond Fund Tax-Free Fund Bond Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 1,903 $ 1,628 $ 920 $ 848 $ 3,500 $ 3,158
Net realized gains (losses) from
investment transactions 280 (400) 37 56 663 549
Net change in unrealized appreciation/
depreciation from investments 1,209 (189) 15 (194) 1,203 148
Change in net assets resulting
from operations 3,392 1,039 972 710 5,366 3,855
Distributions to Shareholders:
From net investment income -- -- -- -- (3,511) (3,158)
From net investment income by class:
Class A (1,836) (1,581) (846) (744) -- --
Class B (68) (43) (118) (104) -- --
In excess of net investment income (1) -- (10) (6) -- (15)
From net realized gains from
investment transactions -- -- (56) (10) -- (11)
In excess of net realized gains from
investment transactions -- (45) -- -- -- --
Change in net assets from
distributions to shareholders (1,905) (1,669) (1,030) (864) (3,511) (3,184)
Capital Transactions:
Proceeds from shares issued 24,696 64,998 5,155 3,250 18,452 23,494
Dividends reinvested 1,664 1,564 674 635 945 3,096
Cost of shares redeemed (16,620) (39,586) (3,974) (4,789) (16,672) (13,829)
Change in net assets from
capital transactions 9,740 26,976 1,855 (904) 2,725 12,761
Change in net assets 11,227 26,346 1,797 (1,058) 4,580 13,432
Net Assets:
Beginning of period 38,766 12,420 16,269 17,327 73,463 60,031
End of period $ 49,993 $ 38,766 $18,066 $16,269 $ 78,043 $ 73,463
Share Transactions:
Issued 2,396 6,352 408 248 1,602 2,070
Reinvested 162 156 53 50 82 273
Redeemed (1,616) (3,926) (314) (369) (1,450) (1,219)
Change in shares 942 2,582 147 (71) 234 1,124
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Diversified
Balanced Fund Stock Index Fund Stock Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 8,483 $ 7,480 $ 6,644 $ 4,712 $ 6,546 $ 6,880
Net realized gains (losses) from
investment transactions 19,086 8,750 31,506 3,924 90,018 67,743
Net realized gains (losses) from
foreign currency transactions (129) (289) -- -- -- --
Net change in unrealized
appreciation/depreciation
from investments 26,776 19,657 57,624 35,634 68,082 41,714
Change in unrealized appreciation/
depreciation from translation
of assets and liabilities in
foreign currencies (3) 56 -- -- -- --
Change in net assets resulting
from operations 54,213 35,654 95,774 44,270 164,646 116,337
Distributions to Shareholders:
From net investment income -- -- (6,516) (4,526) -- --
From net investment income by class:
Class A (8,296) (7,390) -- -- (6,667) (6,646)
Class B (30) (12) -- -- -- (23)
In excess of net investment income -- -- -- -- (47) --
From net realized gains from
investment transactions (8,510) (1,376) (6,553) (3,041) (67,736) (33,023)
Change in net assets from
distributions to shareholders (16,836) (8,778) (13,069) (7,567) (74,450) (39,692)
Capital Transactions:
Proceeds from shares issued 77,476 86,059 164,875 109,909 446,487 141,320
Dividends reinvested 14,909 8,753 12,031 7,563 72,928 39,534
Cost of shares redeemed (58,523) (47,776) (71,720) (37,873) (396,524) (87,667)
Change in net assets from
capital transactions 33,862 47,036 105,186 79,599 122,891 93,187
Change in net assets 71,239 73,912 187,891 116,302 213,087 169,832
Net Assets:
Beginning of period 274,985 201,073 277,124 160,822 579,381 409,549
End of period $346,224 $274,985 $465,015 $277,124 $ 792,468 $579,381
Share Transactions:
Issued 5,958 7,405 9,543 7,985 26,479 9,901
Reinvested 1,173 754 741 563 4,886 3,022
Redeemed (4,462) (4,113) (4,140) (2,755) (23,505) (6,214)
Change in shares 2,669 4,046 6,144 5,793 7,860 6,709
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Special
Value Fund Growth Fund Value Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 4,081 $ 5,358 $ 326 $ 796 $ 2,293 $ 2,081
Net realized gains from
investment transactions 39,027 17,738 12,914 6,303 31,722 20,290
Net change in unrealized
appreciation/depreciation
from investments 60,140 51,084 28,590 21,351 47,587 21,511
Change in net assets resulting
from operations 103,248 74,180 41,830 28,450 81,602 43,882
Distributions to Shareholders:
From net investment income (4,329) (5,326) (380) (765) -- --
From net investment income by class:
Class A -- -- -- -- (2,649) (1,910)
Class B -- -- -- -- -- --
In excess of net investment income -- -- (28) -- (1) --
From net realized gains from
investment transactions (17,674) (8,483) (6,303) (4,494) (19,845) (5,473)
Change in net assets from
distributions to shareholders (22,003) (13,809) (6,711) (5,259) (22,495) (7,383)
Capital Transactions:
Proceeds from shares issued 102,144 66,804 50,795 39,189 121,506 88,238
Dividends reinvested 9,573 13,808 5,917 5,250 18,750 7,377
Cost of shares redeemed (102,998) (54,771) (54,051) (28,130) (67,529) (36,968)
Change in net assets from
capital transactions 8,719 25,841 2,661 16,309 72,727 58,647
Change in net assets 89,964 86,212 37,780 39,500 131,834 95,146
Net Assets:
Beginning of period 382,083 295,871 147,753 108,253 289,846 194,700
End of period $ 472,047 $382,083 $185,533 $147,753 $421,680 $289,846
Share Transactions:
Issued 6,399 5,130 2,949 2,989 7,849 6,706
Reinvested 652 1,101 398 425 1,359 591
Redeemed (6,344) (4,214) (3,188) (2,183) (4,404) (2,846)
Change in shares 707 2,017 159 1,231 4,804 4,451
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Special Ohio Regional International
Growth Fund Stock Fund Growth Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income (loss) $ (859) $ (463) $ 329 $ 337 $ 750 $ 728
Net realized gains (losses) from
investment transactions 12,119 4,480 4,782 869 5,879 7,046
Net realized losses from foreign
currency transactions -- -- -- -- (752) (1,537)
Net change in unrealized
appreciation/depreciation
from investments 6,482 7,642 9,508 5,662 1,684 2,689
Change in unrealized appreciation
from translation of assets and
liabilities in foreign currencies -- -- -- -- -- (3,200)
Change in net assets resulting
from operations 17,742 11,659 14,619 6,868 7,561 5,726
Distributions to Shareholders:
From net investment income by class:
Class A -- -- (335) (337) (128) (144)
Class B -- -- -- -- -- --
In excess of net investment income -- -- (3) -- -- --
From net realized gains from
investment transactions (4,070) -- (869) (869) (4,172) --
In excess of net realized gains
from investment transactions -- -- -- (616) -- --
Change in net assets from
distributions to shareholders (4,070) -- (1,207) (1,822) (4,300) (144)
Capital Transactions:
Proceeds from shares issued 42,610 33,870 8,397 8,066 32,867 47,665
Dividends reinvested 3,006 -- 877 1,805 2,596 144
Cost of shares redeemed (42,560) (12,027) (13,898) (8,345) (53,986) (38,233)
Change in net assets from
capital transactions 3,056 21,843 (4,624) 1,526 (18,523) 9,576
Change in net assets 16,728 33,502 8,788 6,572 (15,262) 15,158
Net Assets:
Beginning of period 87,837 54,335 45,620 39,048 121,635 106,477
End of period $104,565 $ 87,837 $ 54,408 $45,620 $106,373 $121,635
Share Transactions:
Issued 2,812 2,512 402 473 2,433 3,700
Reinvested 216 -- 45 111 202 11
Redeemed (2,819) (902) (678) (492) (3,996) (2,996)
Change in shares 209 1,610 (231) 92 (1,361) 715
See notes to financial statements.
</TABLE>
<TABLE>
Statements of Operations
The Victory Portfolios For the Year Ended October 31, 1997
(Amounts in Thousands)
<CAPTION>
Real Estate
Lakefront Fund <F1> Investment Fund <F2>
Period Ended Period Ended
October 31, October 31,
1997 1997
<S> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 12 $ 79
Net realized gains (losses) from investment transactions 20 20
Net change in unrealized appreciation appreciation/depreciation
from investments 142 494
Change in net assets resulting from operations 174 593
Distributions to Shareholders:
From net investment income (10) (59)
From net realized gains from investment transactions -- --
Change in net assets from distributions to shareholders (10) (59)
Capital Transactions:
Proceeds from shares issued 1,089 3,842
Dividends reinvested 5 --
Cost of shares redeemed (3) --
Change in net assets from capital transactions 1,091 3,842
Change in net assets 1,255 4,376
Net Assets:
Beginning of period -- --
End of period $1,255 $4,376
Share Transactions:
Issued 111 363
Reinvested -- --
Redeemed -- --
Change in shares 111 363
<FN>
<F1> The Lakefront Fund commenced operations on March 3, 1997.
<F2> The Real Estate Investment Fund commenced operations on April 30, 1997.
See notes to financial statements.
</TABLE>
Notes to Financial Statements
The Victory Portfolios October 31, 1997
1. Organization:
The Victory Portfolios (collectively, the "Trust" and individually,
a "Fund") was organized on December 6, 1995 as a successor to a company
of the same name organized as a Massachusetts business trust on February
5, 1986. The Trust is registered under the Investment Company Act
of 1940, as amended, (the "1940 Act") as an open-end investment company
established as a Delaware business trust. The Trust is authorized
to issue an unlimited number of shares which are units of beneficial
interest with a par value of $0.001. The Trust presently offers shares
of 25 active funds. Included are the financial statements and financial
highlights of the U.S. Government Obligations Fund, Prime Obligations
Fund, Financial Reserves Fund, Tax-Free Money Market Fund, Ohio Municipal
Money Market Fund, Limited Term Income Fund, Intermediate Income Fund,
Investment Quality Bond Fund, Government Mortgage Fund, Fund for Income,
National Municipal Bond Fund, New York Tax-Free Fund, Ohio Municipal
Bond Fund, Balanced Fund, Stock Index Fund, Diversified Stock Fund,
Value Fund, Growth Fund, Special Value Fund, Special Growth Fund,
Ohio Regional Stock Fund, International Growth Fund, Lakefront Fund,
and the Real Estate Investment ("REI") Fund.
The U.S. Government Obligations Fund is authorized to issue two classes
of shares: Investor Shares and Select Shares. The National Municipal
Bond Fund, New York Tax-Free Fund, Balanced Fund, Diversified Stock
Fund, Special Value Fund, Ohio Regional Stock Fund and International
Growth Fund are authorized to issue two classes of shares: Class A
Shares and Class B Shares. Each class of shares in a Fund has identical
rights and privileges except with respect to fees paid under shareholder
servicing or distribution plans, expenses allocable exclusively to
each class of shares, voting rights on matters affecting a single
class of shares, and the exchange privilege of each class of shares.
The U.S. Government Obligations Fund and The Prime Obligations Fund
seek to provide current income consistent with liquidity and stability
of principal. The Financial Reserves Fund seeks to obtain as high
a level of current income as is consistent with preserving capital
and providing liquidity. The Tax-Free Money Market Fund seeks to provide
current interest income free from federal income taxes consistent
with relative liquidity and stability of principal. The Ohio Municipal
Money Market Fund seeks to provide current income exempt from federal
income tax and the personal income taxes imposed by the State of Ohio
and Ohio municipalities consistent with the stability of principal.
The Limited Term Income Fund seeks to provide income consistent with
limited fluctuation of principal. The Intermediate Income Fund and
Investment Quality Bond Fund seek to provide a high level of income.
The Government Mortgage Fund seeks to provide a high level of current
income consistent with safety of principal. The Fund for Income seeks
to provide a high level of current income consistent with preservation
of shareholders' capital. The National Municipal Bond 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
New York Tax-Free 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 Ohio
Municipal Bond Fund seeks to produce a high level of current interest
income which is exempt from both federal income tax and Ohio personal
income tax. The Balanced Fund seeks to provide income and long-term
growth of capital. The Stock Index 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 Diversified
Stock Fund and the Growth Fund seek to provide long term growth of
capital. The Value Fund seeks to provide long-term growth of capital
and dividend income. The Special Value Fund seeks to provide long-term
growth of capital and dividend income. The Special Growth Fund and
The Ohio Regional Stock Fund seek to provide capital appreciation.
The International Growth Fund seeks to provide capital growth consistent
with reasonable investment risk. The Lakefront Fund seeks to provide
long-term growth of capital and income. The REI Fund seeks to provide
total return through investments in real estate-related securities.
2. Reorganization
On June 13, 1997, the Investment Quality Bond Fund acquired all the
net assets of the Government Bond Fund pursuant to a plan of reorganization
approved by the Government Bond shareholders on May 16, 1997. The
acquisition was accomplished by a tax-free exchange of 1,929,000 shares
of the Investment Quality Bond Fund (valued at $18,518,000) for the
1,801,000 Class A shares and the 136,000 Class B shares of the Government
Bond Fund outstanding on June 13, 1997. The Government Bond Fund's
net assets at that date ($18,518,000), including $53,000 of unrealized
appreciation, were combined with those of the Investment Quality Bond
Fund ($149,437,000).
3. Significant Accounting Policies:
The following is a summary of significant accounting policies followed
by the Trust in the preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles. The
preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of
income and expenses for the period. Actual results could differ from
those estimates.
Securities Valuation:
Investments of the U.S. Government Obligations Fund, Prime Obligations
Fund, Financial Reserves Fund, Tax-Free Money Market Fund, and Ohio
Municipal Money Market Fund (collectively "the money market funds")
are valued at either amortized cost which approximates market value,
or at original cost which, combined with accrued interest, approximates
market value. Under the amortized cost valuation method, discount
or premium is amortized on a constant basis to the maturity of the
security. In addition, the money market funds may not (a) purchase
any instrument with a remaining maturity greater than 397 days unless
such instrument is subject to a demand feature within 397 days, or
(b) maintain a dollar-weighted-average portfolio maturity which exceeds
90 days.
Investments in common and preferred stocks, corporate bonds, commercial
paper, municipal and foreign government bonds, U.S. Government securities
and securities of U.S. Government agencies of the Limited Term Income
Fund, Intermediate Income Fund, Investment Quality Bond Fund, Government
Mortgage Fund, Fund for Income, National Municipal Bond Fund, New
York Tax-Free Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock
Index Fund, Diversified Stock Fund, Value Fund, Growth Fund, Special
Value Fund, Special Growth Fund, Ohio Regional Stock Fund, International
Growth Fund, Lakefront Fund and REI Fund, (collectively "the variable
net asset value funds"), and investments in Real Estate Investment
Trusts of the REI Fund are valued at their market values determined
on the basis of the latest available bid prices in the principal market
(closing sales prices if the principal market is an exchange) in which
such securities are normally traded or on the basis of valuation procedures
approved by the Board of Trustees. Investments in investment companies
are valued at their respective net asset values as reported by such
companies. Investments in foreign securities, currency holdings and
other assets and liabilities of the Balanced Fund and International
Growth Fund are valued based on quotations from the primary market
in which they are traded and are translated from the local currency
into U.S. dollars using current exchange rates. The differences between
the cost and market values of investments held by the variable net
asset value funds are reflected as either unrealized appreciation
or depreciation.
Securities Transactions and Related Income:
Securities transactions are accounted for on the date the security
is purchased or sold (trade date). Interest income is recognized on
the accrual basis and includes, where applicable, the pro rata amortization
of premium or accretion of discount. Dividend income is recorded on
the ex-dividend date, net of foreign taxes withheld. Gains or losses
realized on sales of securities are determined by comparing the identified
cost of the security lot sold with the net sales proceeds.
Foreign Currency Translation:
The accounting records of the Trust are maintained in U.S. dollars.
Investment securities and other assets and liabilities of the Balanced
Fund and the International Growth Fund denominated in a foreign currency
are translated into U.S. dollars at the current exchange rate. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the exchange rate on the dates of
the transactions.
The Trust isolates that portion of the results of operations resulting
from changes in foreign exchange rates from those resulting from changes
in market prices of securities held.
Realized foreign exchange gains or losses arise from sales and maturities
of securities, sales of foreign currencies, currency exchange fluctuations
between the trade and settlement dates of securities transactions,
and the difference between the amount of assets and liabilities recorded
and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities, including investments
in securities, resulting from changes in currency exchange rates.
Repurchase Agreements:
Each Fund may acquire repurchase agreements from financial institutions
such as banks and broker-dealers which the Funds' investment adviser
deems creditworthy under guidelines approved by the Board of Trustees,
subject to the seller's agreement to repurchase such securities at
a mutually agreed-upon date and price. The repurchase price generally
equals the price paid by a Fund plus interest negotiated on the basis
of current short-term rates, which may be more or less than the rate
on the underlying securities. The seller, under a repurchase agreement,
is required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued
interest). Securities subject to repurchase agreements are held by
the Funds' custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. Repurchase agreements are considered
to be loans by a Fund under the 1940 Act.
Forward Currency Contracts:
A forward currency contract ("forward") is an agreement between two
parties to buy and sell a currency at a set price on a future date.
The market value of the forward fluctuates with changes in currency
exchange rates. The forward is marked-to-market daily and the change
in market value is recorded by a Fund as unrealized appreciation or
depreciation. When the forward is closed, the Fund records a realized
gain or loss equal to the fluctuation in value during the period the
forward was open. A Fund could be exposed to risk if a counterparty
is unable to meet the terms of a forward or if the value of the currency
changes unfavorably.
Futures Contracts:
The Balanced Fund, Stock Index Fund, Diversified Stock Fund, Value
Fund, Growth Fund, Special Value Fund, Special Growth Fund, Ohio Regional
Stock Fund, International Growth Fund, and Lakefront Fund may enter
into contracts for the future delivery of securities or foreign currencies
and futures contracts based on a specific security, class of securities,
foreign currency or an index, purchase or sell options on any such
futures contracts and engage in related closing transactions. A futures
contract on a securities index is an agreement obligating either party
to pay, and entitling the other party to receive, while the contract
is outstanding, cash payments based on the level of a specified securities
index. The Trust may enter into futures contracts in an effort to
hedge against market risks. The acquisition of put and call options
on futures contracts will give the Trust the right (but not the obligation),
for a specified price, to sell or to purchase the underlying futures
contract, upon exercise of the option, at any time during the option
period. Futures transactions involve brokerage costs and require the
Trust to segregate assets to cover contracts that would require it
to purchase securities or currencies. A Fund may lose the expected
benefit of futures transactions if interest rates, exchange rates
or securities prices change in an unanticipated manner. Such unanticipated
changes may also result in lower overall performance than if the Fund
had not entered into any futures transactions. In addition, the value
of a Fund's futures positions may not prove to be perfectly or even
highly correlated with the value of its portfolio securities or foreign
currencies, limiting a Fund's ability to hedge effectively against
interest rate, exchange rate and /or market risk and giving rise to
additional risks. There is no assurance of liquidity in the secondary
market for purposes of closing out futures positions.
Securities Purchased on a When-Issued Basis:
Each Fund may purchase securities on a "when-issued" basis. When-issued
securities are securities purchased for delivery beyond the normal
settlement date at a stated price and/or yield, thereby, involving
the risk that the price and/or yield obtained may be more or less
than those available in the market when delivery takes place. At the
time a Fund makes the commitment to purchase a security on a when-issued
basis, the Fund records the transaction and reflects the value of
the security in determining net asset value. Normally, the settlement
date occurs within one month of the purchase. A segregated account
is established and the Funds maintain cash and marketable securities
at least equal in value to commitments for when-issued securities.
Securities purchased on a when-issued basis do not earn income until
settlement date.
Securities Lending:
The U.S. Government Obligations Fund, Prime Obligations Fund, Financial
Reserves Fund, Tax-Free Money Market Fund, Ohio Municipal Money Market
Fund, Limited Term Income Fund, Intermediate Income Fund, Investment
Quality Bond Fund, Government Mortgage Fund, Fund for Income, Balanced
Fund, Stock Index Fund, Diversified Stock Fund, Value Fund, Growth
Fund, Special Value Fund, Special Growth Fund, Ohio Regional Stock
Fund, International Growth Fund, Lakefront Fund and the REI Fund may,
from time to time, lend securities from their portfolio to broker-dealers,
banks, financial institutions and institutional borrowers of securities
approved by the Board. The Trust will limit its securities lending
to 33 1/3% of the total assets of each Fund. Key Trust Company of
Ohio, N.A. ("Key Trust"), an affiliate of the Adviser, serves as the
lending agent for the Trust pursuant to a Securities Lending Agency
Agreement (the "Lending Agreement"). Under guidelines established
by the Board of Trustees, Key Trust must maintain the loan collateral
at all times in an amount equal to at least 102% of the current market
value of the loaned securities in the form of cash or U.S. Government
obligations, to secure the return of the loaned securities. Key Trust,
at the direction of the Adviser, may invest the collateral in short-term
debt instruments that the Adviser has determined present minimal credit
risks. There is a risk of delay in receiving collateral or in receiving
the securities loaned or even a loss of rights in the collateral should
the borrower of the securities fail financially. By lending its securities,
a Fund can increase its income by continuing to receive interest or
dividends on the loaned securities as well as either investing the
cash collateral in short-term instruments or obtaining yield in the
form of interest paid by the borrower when U.S. Government securities
are used as collateral. Loans are subject to termination by the Trust
or the borrower at any time. During the year ended October 31, 1997,
the Trust did not loan any securities.
Dividends to Shareholders:
Dividends from net investment income are declared daily and paid monthly
for the money market funds. Dividends from net investment income are
declared and paid quarterly for the Stock Index Fund, Diversified
Stock Fund, Value Fund, Growth Fund, Special Value Fund, Special Growth
Fund, Ohio Regional Stock Fund, International Growth Fund, Lakefront
Fund, and the REI Fund. Dividends from net investment income are declared
and paid monthly for the Limited Term Income Fund, Intermediate Income
Fund, Investment Quality Bond Fund, Government Mortgage Fund, Fund
for Income, National Municipal Bond Fund, New York Tax-Free Fund,
Ohio Municipal Bond Fund, and Balanced Fund. Distributable net realized
capital gains, if any, are declared and distributed at least annually.
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal
income tax regulations which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary
or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the components of
net assets based on their federal tax-basis treatment; temporary differences
do not require reclassification. Dividends and distributions to shareholders
which exceed net investment income and realized capital gains for
financial reporting purposes but not for tax purposes are reported
as dividends in excess of net investment income or distributions in
excess of net realized gains. To the extent they exceed net investment
income and net realized gains for tax purposes, they are reported
as distributions of capital.
Federal Income Taxes:
It is the policy of each Fund to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and
net realized capital gains sufficient to relieve it from all, or substantially
all, federal income taxes.
Other:
Expenses that are directly related to one of the Funds are charged
directly to that Fund. Other operating expenses of the Trust are prorated
to each Fund on the basis of relative net assets or other appropriate
basis. Fees paid under a Fund's shareholder servicing or distribution
plans are borne by the specific class of shares to which they apply.
All expenses in connection with Lakefront and REI's organization and
registration under the 1940 Act and the Securities Act of 1933 will
be paid by those Funds. Such expenses are being amortized over a period
of five years commencing with the respective inception dates.
4. Purchases and Sales of Securities:
Purchases and sales of securities (excluding short-term securities)
for the year ended October 31, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Purchases Sales
<S> <C> <C>
Limited Term Income Fund $115,936 $133,532
Intermediate Income Fund 485,621 516,450
Investment Quality Bond Fund 398,969 371,833
Government Mortgage Fund 127,433 147,743
Fund for Income 5,338 5,107
National Municipal Bond Fund 70,873 61,860
New York Tax-Free Fund 4,485 2,344
Ohio Municipal Bond Fund 57,418 53,774
Balanced Fund 334,570 319,219
Stock Index Fund 153,451 37,428
Diversified Stock Fund 515,589 419,315
Value Fund 107,351 114,237
Growth Fund 34,778 37,061
Special Value Fund 176,221 131,848
Special Growth Fund 172,958 179,669
Ohio Regional Stock Fund 3,793 8,997
International Growth Fund 133,427 155,684
Lakefront Fund 1,471 383
REI Fund 3,902 605
</TABLE>
5. Related Party Transactions:
Investment advisory services are provided to all the Funds by Key
Asset Management Inc. ("the Adviser"), a wholly owned subsidiary of
KeyBank National Association ("Key"), formerly Society National Bank,
a wholly owned subsidiary of KeyCorp. On February 28, 1997, Key Asset
Management Inc. became the surviving corporation after the reorganization
of four indirect investment adviser subsidiaries of KeyCorp, including
KeyCorp Mutual Fund Advisers. Lakefront Capital Investors, Inc. serves
as the sub-adviser for the Lakefront Fund. Under the terms of the
investment advisory agreements, the Adviser is entitled to receive
fees based on a percentage of the average daily net assets of the
Funds. KeyTrust Company of Ohio, serving as custodian for all of the
Funds, receives custodian fees in addition to reimbursement of actual
out-of-pocket expenses incurred.
Key and its affiliated brokerage and banking companies also serve
as Shareholder Servicing Agent for those funds with Shareholder Servicing
Plans. As such, Key and its affiliates provide support services to
their clients who are shareholders, which may include establishing
and maintaining accounts and records, processing dividend and distribution
payments, providing account information, assisting in processing of
purchase, exchange and redemption requests, and assisting shareholders
in changing dividend options, account designations and addresses.
For providing such services, Key and its affiliates may receive a
fee of up to 0.25% of the average daily net assets of the Funds serviced.
BISYS Fund Services (the "Administrator"), an indirect, wholly-owned
subsidiary of The BISYS Group, Inc. ("BISYS") serves as the administrator
and distributor to the Trust. Certain officers of the Trust are affiliated
with BISYS. Such officers receive no direct payments or fees from
the Trust for serving as officers.
Under the terms of the administration agreement, effective October
1, 1997, the Administrator's fee is computed at the annual rate of
0.15% of each Fund's average daily net assets of $300 million and
less, 0.12% of each Fund's average daily net assets between $300 million
and $600 million and 0.10% of each Fund's average daily net assets
greater than $600 million. Under a Sub-Administration agreement, BISYS
pays Key Asset Management Inc. a fee of up to 0.05% of each Fund's
average daily net assets to perform some of the administrative duties
for the Funds. Prior to October 1, 1997, the Administrator's fee was
computed at the annual rate of 0.15% of each Fund's average daily
net assets. Pursuant to a 12b-1 Plan, the Distributor may receive
fees computed at the annual rate of 0.75% of the average daily net
assets of Class B Shares of the National Municipal Bond Fund, New
York Tax-Free Fund, Balanced Fund, Diversified Stock Fund, Special
Value Fund, Ohio Regional Stock Fund and International Growth Fund
for providing distribution services and is entitled to receive commissions
on sales of shares of the variable net asset value funds. For the
year ended October 31, 1997, the Distributor received approximately
$1,936,000 from commissions earned on sales of shares of the variable
net asset value funds, a portion of which the Distributor reallowed
to dealers of the Funds' shares including approximately $1,935,000
to affiliates of the Funds. BISYS Fund Services, Ohio, Inc. (the Company),
an affiliate of BISYS, serves the Trust as Mutual Fund Accountant.
Under the terms of the Fund Accounting Agreement, the Company's fee
is based on a percentage of average daily net assets.
Fees may be voluntarily reduced or reimbursed to assist the Trust
in maintaining competitive expense ratios.
Additional information regarding related party transactions is as
follows for the year ended October 31, 1997:
<TABLE>
<CAPTION>
Investment
Advisory Administration
Fees Fees
Percentage
of Average Voluntary Voluntary
Daily Fee Fee
Net Assets Reductions Reductions
<S> <C> <C> <C>
(000) (000)
U.S. Government Obligations Fund 0.35% $ -- $ --
Prime Obligations Fund 0.35% -- --
Financial Reserves Fund 0.50% 301 --
Tax-Free Money Market Fund 0.35% 38 --
Ohio Municipal Money Market Fund 0.50% 833 376
Limited Term Income Fund 0.50% 16 --
Intermediate Income Fund 0.75% 341 --
Investment Quality Bond Fund 0.75% 209 --
Government Mortgage Fund 0.50% -- --
Fund for Income 0.50% 92 18
National Municipal Bond Fund 0.55% 240 --
New York Tax-Free Fund 0.55% 73 16
Ohio Municipal Bond Fund 0.60% 80 --
Balanced Fund 1.00% 354 --
Stock Index Fund 0.60% 574 568
Diversified Stock Fund 0.65% -- --
Value Fund 1.00% -- --
Growth Fund 1.00% -- --
Special Value Fund 1.00% -- --
Special Growth Fund 1.00% -- --
Ohio Regional Stock Fund 0.75% -- --
International Growth Fund 1.10% -- --
Lakefront Fund 1.00% 5 --
Real Estate Investment Fund 1.00% 16 2
</TABLE>
6. Capital Share Transactions:
Transactions in capital shares for the Funds with multiple share classes
were as follows (amounts in thousands):
<TABLE>
<CAPTION>
National Municipal
Bond Fund New York Tax-Free Fund
Year Year Year Year
Ended Ended Ended Ended
October 31, October 31, October 31, October 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Capital Transactions:
Class A Shares:
Proceeds from shares issued $ 24,151 $ 63,557 $ 4,570 $ 2,391
Dividends reinvested 1,600 1,520 559 547
Cost of shares redeemed (16,416) (39,445) (3,498) (4,419)
Total $ 9,335 $ 25,632 $ 1,631 $(1,481)
Class B Shares:
Proceeds from shares issued $ 545 $ 1,441 $ 585 $ 859
Dividends reinvested 64 44 115 88
Cost of shares redeemed (204) (141) (476) (370)
Total $ 405 $ 1,344 $ 224 $ 577
Share Transactions:
Class A Shares:
Issued 2,343 6,209 362 181
Reinvested 156 152 44 43
Redeemed (1,596) (3,912) (277) (341)
Total 903 2,449 129 (117)
Class B Shares:
Issued 53 143 46 67
Reinvested 6 4 9 7
Redeemed (20) (14) (37) (28)
Total 39 133 18 46
</TABLE>
<TABLE>
<CAPTION>
Balanced Fund Diversified Stock Fund Special Value Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996<F1> 1997 1996<F1> 1997 1996<F1>
<S> <C> <C> <C> <C> <C> <C>
Capital Transactions:
Class A Shares:
Proceeds from shares issued $ 75,657 $ 84,671 $ 426,586 $133,383 $120,389 $ 87,823
Dividends reinvested 14,836 8,742 71,806 39,512 18,714 7,377
Cost of shares redeemed (58,208) (47,743) (394,709) (87,452) (67,494) (36,916)
Total $ 32,285 $ 45,670 $ 103,683 $ 85,443 $ 71,609 $ 58,284
Class B Shares:
Proceeds from shares issued $ 1,819 $ 1,388 $ 19,901 $ 7,937 $ 1,117 $ 415
Dividends reinvested 73 11 1,122 22 36 --
Cost of shares redeemed (315) (33) (1,815) (215) (35) (52)
Total $ 1,577 $ 1,366 $ 19,208 $ 7,744 $ 1,118 $ 363
Share Transactions:
Class A Shares:
Issued 5,819 7,287 25,259 9,364 7,776 6,676
Reinvested 1,167 753 4,810 3,020 1,357 591
Redeemed (4,438) (4,110) (23,399) (6,199) (4,402) (2,842)
Total 2,548 3,930 6,670 6,185 4,731 4,425
Class B Shares:
Issued 139 118 1,220 537 73 30
Reinvested 6 1 76 2 2 --
Redeemed (24) (3) (106) (15) (2) (4)
Total 121 116 1,190 524 73 26
<FN>
<F1> Effective March 1, 1996, the Fund designated the existing shares
as Class A Shares and commenced offering Class B Shares.
</TABLE>
<TABLE>
<CAPTION>
Ohio Regional International
Stock Fund Growth Fund
Year Year Year Year
Ended Ended Ended Ended
October 31, October 31, October 31, October 31,
1997 1996<F1> 1997 1996<F1>
<S> <C> <C> <C> <C>
Capital Transactions:
Class A Shares:
Proceeds from shares issued $ 8,156 $ 7,754 $ 32,789 $ 47,527
Dividends reinvested 869 1,805 2,590 144
Cost of shares redeemed (13,887) (8,344) (53,968) (38,212)
Total $ (4,862) $ 1,215 $(18,589) $ 9,459
Class B Shares:
Proceeds from shares issued $ 241 $ 312 $ 78 $ 138
Dividends reinvested 8 -- 6 --
Cost of shares redeemed (11) (1) (18) (21)
Total $ 238 $ 311 $ 66 $ 117
Share Transactions:
Class A Shares:
Issued 390 455 2,427 3,689
Reinvested 45 111 201 11
Redeemed (678) (492) (3,995) (2,994)
Total (243) 74 (1,367) 706
Class B Shares:
Issued 12 18 6 11
Reinvested -- -- 1 --
Redeemed -- -- (1) (2)
Total 12 18 6 9
<FN>
<F1> Effective March 1, 1996, the Fund designated the existing shares
as Class A Shares and commenced offering Class B Shares.
</TABLE>
<TABLE>
<CAPTION>
U.S. Government
Obligations Fund
Year Year
Ended Ended
October 31, October 31,
1997 1996<F1>
<S> <C> <C>
Capital Share Transactions:
Investor Shares:
Proceeds from shares issued $ 1,096,594 $ --
Dividends reinvested 9 --
Cost of shares redeemed (640,492) --
Total $ 456,111 $ --
Select Shares:
Proceeds from shares issued $ 3,000,667 $ 3,877,755
Dividends reinvested 30,375 13,036
Cost of shares redeemed (3,153,434) (3,497,927)
Total $ (122,392) $ 392,864
<FN>
<F1> Effective February 1, 1996, the U.S. Government Obligations Fund
designated the existing shares as Select Shares and commenced offering
Investor Shares.
</TABLE>
7. Concentration of Credit Risk:
The Ohio Municipal Money Market Fund, New York Tax-Free Fund, and
Ohio Municipal Bond Fund invest primarily in debt obligations issued
by the respective states and their political subdivisions, agencies
and public authorities to obtain funds for various public purposes
and the Ohio Regional Stock Fund invests in equity securities issued
by organizations domiciled in Ohio. These Funds are more susceptible
to economic and political factors that may adversely affect companies
domiciled within each of the states and issuers of the States' specific
municipal securities than are municipal bond funds and stock funds
that are not geographically concentrated to the same extent.
8. Federal Income Tax Information (Unaudited):
For the taxable year ended October 31, 1997, the following percentages
of income dividends paid by the following funds qualify for the dividends
received deduction available to corporations:
<TABLE>
<CAPTION>
Qualified Dividend Income
<S> <C>
Balanced Fund 31.43%
Stock Index Fund 54.74%
Lakefront Fund 22.83%
Ohio Regional Stock Fund 98.97%
Value Fund 62.75%
Diversified Stock Fund 35.01%
Growth Fund 96.35%
Special Value Fund 48.15%
Real Estate Investment Fund 11.14%
</TABLE>
The Victory Portfolios designate the following exempt-interest dividends
for the year ended October 31, 1997 (amounts in thousands):
<TABLE>
<CAPTION>
<S> <C>
Tax Free Money Market Fund $11,222
Ohio Municipal Money Market Fund 18,215
New York Tax-Free Bond Fund 914
National Municipal Bond Fund 1,905
Ohio Municipal Bond Fund 3,372
</TABLE>
During the year ended October 31, 1997, the following Funds paid long-term
capital gain distributions in the following amounts (amounts in thousands):
<TABLE>
<CAPTION>
<S> <C>
International Growth Fund $ 4,172
Ohio Regional Stock Fund 866
Value Fund 15,348
Diversified Stock Fund 44,747
Growth Fund 4,653
Special Value Fund 10,709
Special Growth Fund 4,070
Balanced Fund 8,222
Stock Index Fund 4,803
New York Tax-Free Bond Fund 37
</TABLE>
As of October 31, 1997, for Federal income tax purposes, the following
funds have capital loss carryforwards available to offset future capital
gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
Amount Expires
<S> <C> <C>
Financial Reserves Money Market Fund $ 13 2001
U.S. Government Obligations Fund 22 2002
National Municipal Bond Fund 131 2004
Limited Term Income Fund 1,642 2002
Limited Term Income Fund 553 2003
Limited Term Income Fund 906 2005
Investment Quality Bond Fund 8,729 2002
Intermediate Income Fund 2,498 2001
Intermediate Income Fund 1,386 2002
Intermediate Income Fund 869 2003
Intermediate Income Fund 521 2005
Government Mortgage Fund 1,969 2002
Government Mortgage Fund 109 2005
Fund for Income 704 2001
Fund for Income 588 2002
Fund for Income 328 2003
</TABLE>
As of October 31, 1997, the following fund has additional capital
loss carryforwards subject to limitations on availability to offset
future capital gains, if any, as the successor of a merger with the
Government Bond Fund (amounts in thousands):
<TABLE>
<CAPTION>
Amount Expires
<S> <C> <C>
Investment Quality Bond Fund $3,523 2001
Investment Quality Bond Fund 2,760 2002
Investment Quality Bond Fund 755 2003
Investment Quality Bond Fund 6 2004
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
U.S. Government Obligations Fund
Investor Select
Shares<F2> Shares<F2>
Period Year
Ended Ended
October 31, October 31, Year Ended October 31,
1997 1997 1996 1995<F3> 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.041 0.047 0.049 0.052 0.032 0.026
Distributions
Net investment income (0.041) (0.047) (0.049) (0.052) (0.032) (0.026)
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 4.19%<F4> 4.75% 4.96% 5.38% 3.30% 2.62%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $456,133 $1,235,475 $1,357,817 $964,929 $412,048 $515,734
Ratio of expenses to
average net assets 0.56%<F5> 0.74% 0.61% 0.58% 0.63 0.60%
Ratio of net investment income
to average net assets 4.95%<F5> 4.75% 4.84% 5.28% 3.20% 2.57%
Ratio of expenses to
average net assets<F1> <F6> <F6> <F6> 0.60% 0.80% <F6>
Ratio of net investment income
to average net assets<F1> <F6> <F6> <F6> 5.26% 3.03% <F6>
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios
would have been as indicated.
<F2> Effective January 8, 1997, the Fund designated the existing shares as Select Shares and commenced offering Investor Shares.
<F3> Effective June 5, 1995, the Victory U.S. Treasury Money Market Portfolio merged into the U.S. Government Obligations Fund.
Financial highlights for the periods prior to June 5, 1995 represent the U.S. Government Obligations Fund.
<F4> Not annualized.
<F5> Annualized.
<F6> There were no voluntary fee reductions during the period.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Prime Obligations Fund
Year Ended October 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.048 0.047 0.051 0.035 0.030
Net realized losses from
investment transactions -- -- -- (0.003) --
Total from Investment Activities 0.048 0.047 0.051 0.032 0.030
Distributions
Net investment income (0.048) (0.047) (0.051) (0.035) (0.030)
Capital transactions -- -- -- 0.003<F2> --
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 4.89% 4.81% 5.26% 3.57% 3.05%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $736,449 $496,019 $456,266 $782,303 $720,024
Ratio of expenses to
average net assets 0.85% 0.87% 0.74% 0.62% 0.60%
Ratio of net investment income
to average net assets 4.79% 4.72% 5.09% 3.52% 2.96%
Ratio of expenses to
average net assets<F1> <F3> <F3> <F3> 0.79% <F3>
Ratio of net investment income
to average net assets<F1> <F3> <F3> <F3> 3.35% <F3>
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios
would have been as indicated.
<F2> During 1994, KeyCorp made a capital contribution of approximately $2,506,000 for losses realized from the disposition
of certain securities.
<F3> There were no voluntary fee reductions during the period.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Financial Reserves Fund
Year Ended October 31,
1997 1996 1995<F2> 1994 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.049 0.049 0.054 0.035 0.030
Distributions
Net investment income (0.049) (0.049) (0.054) (0.035) (0.030)
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 5.04% 5.00% 5.50% 3.57% 2.81%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $800,642 $767,990 $762,870 $433,266 $457,872
Ratio of expenses to
average net assets 0.67% 0.67% 0.60% 0.57% 0.55%
Ratio of net investment income
to average net assets 4.94% 4.89% 5.40% 3.48% 2.78%
Ratio of expenses to
average net assets<F1> 0.71% 0.75% 0.76% 0.73% 0.70%
Ratio of net investment income
to average net assets<F1> 4.90% 4.81% 5.24% 3.32% 2.63%
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios
would have been as indicated.
<F2> Effective June 5, 1995, the Victory Financial Reserves Portfolio became the Financial Reserves Fund.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Tax-Free Money Market Fund
Year Ended October 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.030 0.030 0.034 0.021 0.020
Distributions
Net investment income (0.030) (0.030) (0.034) (0.021) (0.020)
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 3.07% 3.04% 3.42% 2.17% 2.06%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $412,224 $344,796 $307,726 $198,561 $189,351
Ratio of expenses to
average net assets 0.73% 0.78% 0.61% 0.60% 0.59%
Ratio of net investment income
to average net assets 3.03% 2.97% 3.36% 2.14% 2.04%
Ratio of expenses to
average net assets<F1> 0.74% 0.80% 0.62% 0.79% 0.60%
Ratio of net investment income
to average net assets<F1> 3.02% 2.95% 3.35% 1.95% 2.02%
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Ohio Municipal Money Market Fund
Two
Year Year Months
Ended Ended Ended
October 31, October 31, October 31, Year Ended August 31,
1997 1996 1995 1995<F2> 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.030 0.030 0.006 0.033 0.021 0.021
Distributions
Net investment income (0.030) (0.030) (0.006) (0.033) (0.021) (0.021)
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 3.01% 3.11% 0.55%<F3> 3.33% 2.10% 2.14%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $650,978 $561,131 $510,632 $502,453 $318,132 $262,681
Ratio of expenses to
average net assets 0.75% 0.67% 0.64%<F4> 0.63% 0.65% 0.65%
Ratio of net investment income
to average net assets 2.97% 3.03% 3.31%<F4> 3.33% 2.08% 2.12%
Ratio of expenses to
average net assets<F1> 0.94% 0.97% 0.92%<F4> 0.94% 0.76% 0.72%
Ratio of net investment income
to average net assets<F1> 2.78% 2.73% 3.03%<F4> 3.02% 1.97% 2.05%
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> Effective June 5, 1995, the Victory Ohio Municipal Money Market Portfolio became the Ohio Municipal Money Market Fund.
<F3> Not annualized.
<F4> Annualized.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Limited Term Income Fund
Year Ended October 31,
1997 1996 1995<F2> 1994 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 10.01 $ 10.15 $ 9.88 $ 10.53 $ 10.45
Investment Activities
Net investment income 0.61 0.63 0.57 0.54 0.57
Net realized and unrealized
gains (losses) from investments (0.07) (0.14) 0.27 (0.61) 0.08
Total from Investment Activities 0.54 0.49 0.84 (0.07) 0.65
Distributions
Net investment income (0.61) (0.62) (0.57) (0.54) (0.57)
In excess of net investment income -- (0.01) -- -- --
Net realized gains -- -- -- (0.04) --
Total Distributions (0.61) (0.63) (0.57) (0.58) (0.57)
Net Asset Value, End of Period $ 9.94 $ 10.01 $ 10.15 $ 9.88 $ 10.53
Total Return (excludes sales charges) 5.57% 4.94% 8.77% (0.66)% 6.39%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $81,913 $90,019 $172,002 $79,150 $81,771
Ratio of expenses to
average net assets 0.85% 0.86% 0.78% 0.79% 0.77%
Ratio of net investment income
to average net assets 6.06% 5.90% 5.77% 5.29% 5.49%
Ratio of expenses to
average net assets<F1> 0.87% 0.89% 0.79% 0.97% 0.78%
Ratio of net investment income
to average net assets<F1> 6.04% 5.87% 5.76% 5.10% 5.48%
Portfolio turnover 139% 221% 97% 41% 50%
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> 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.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Intermediate Income Fund
Year Year Year December 30,
Ended Ended Ended 1993
October 31, October 31, October 31, to October 31,
1997 1996 1995 1994<F2>
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 9.56 $ 9.69 $ 9.25 $ 10.00
Investment Activities
Net investment income 0.56 0.56 0.60 0.52
Net realized and unrealized gains
(losses) from investments 0.05 (0.13) 0.44 (0.76)
Total from Investment Activities 0.61 0.43 1.04 (0.24)
Distributions
Net investment income (0.56) (0.56) (0.60) (0.51)
Net Asset Value, End of Period $ 9.61 $ 9.56 $ 9.69 $ 9.25
Total Return (excludes sales charges) 6.62% 4.56% 11.65% (2.48)%<F3>
Ratios/Supplemental Data:
Net Assets, End of Period (000) $248,841 $272,087 $163,281 $112,923
Ratio of expenses to
average net assets 0.96% 0.94% 0.82% 0.79%<F4>
Ratio of net investment income
to average net assets 5.87% 5.81% 6.32% 6.23%<F4>
Ratio of expenses to
average net assets<F1> 1.09% 1.11% 1.06% 1.25%<F4>
Ratio of net investment income
to average net assets<F1> 5.74% 5.64% 6.08% 5.77%<F4>
Portfolio turnover 195% 164% 98% 55%
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Investment Quality Bond Fund
Year Year Year December 30,
Ended Ended Ended 1993
October 31, October 31, October 31, to October 31,
1997<F6> 1996 1995 <F5> 1994<F2>
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 9.63 $ 9.76 $ 9.10 $ 10.00
Investment Activities
Net investment income 0.57 0.57 0.62 0.53
Net realized and unrealized gains
(losses) from investments 0.14 (0.13) 0.67 (0.92)
Total from Investment Activities 0.71 0.44 1.29 (0.39)
Distributions
Net investment income (0.56) (0.56) (0.62) (0.51)
In excess of net investment income -- -- (0.01) --
Tax return of capital -- (0.01) -- --
Total Distributions
Net Asset Value, End of Period $ 9.78 $ 9.63 $ 9.76 $ 9.10
Total Return (excludes sales charges) 7.67% 4.65% 14.63% (3.92)%<F3>
Ratios/Supplemental Data:
Net Assets, End of Period (000) $181,007 $150,807 $125,248 $94,685
Ratio of expenses to
average net assets 1.04% 1.01% 0.88% 0.79%<F4>
Ratio of net investment income
to average net assets 5.90% 5.99% 6.59% 6.33%<F4>
Ratio of expenses to
average net assets<F1> 1.17% 1.14% 1.10% 1.25%<F4>
Ratio of net investment income
to average net assets<F1> 5.77% 5.86% 6.37% 5.87%<F4>
Portfolio turnover 249% 182% 160% 90%
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> 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.
<F6> Effective June 13, 1997, the Victory Government Bond Fund merged into the Investment Quality Bond Fund.
Financial highlights for the periods prior to June 13, 1997 represent the Investment Quality Bond Fund.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Government Mortgage Fund
Year Ended October 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 10.76 $ 10.86 $ 10.33 $ 11.36 $ 11.07
Investment Activities
Net investment income 0.69 0.70 0.72 0.68 0.66
Net realized and unrealized
gains(losses) from investments 0.16 (0.12) 0.62 (1.02) 0.32
Total from Investment Activities 0.85 0.58 1.34 (0.34) 0.98
Distributions
Net investment income (0.68) (0.67) (0.71) (0.67) (0.66)
Net realized gains -- -- -- (0.02) (0.03)
In excess of net realized gains -- -- (0.08) -- --
Tax return of capital <F3> (0.01) (0.02) -- --
Total Distributions (0.68) (0.68) (0.81) (0.69) (0.69)
Net Asset Value, End of Period $ 10.93 $ 10.76 $ 10.86 $ 10.33 $ 11.36
Total Return (excludes sales charges) 8.22% 5.54% 13.55% (3.01)% 9.05%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $103,761 $125,992 $136,103 $148,168 $132,738
Ratio of expenses to
average net assets 0.85% 0.89% 0.77% 0.76% 0.75%
Ratio of net investment income
to average net assets 6.32% 6.46% 6.81% 6.38% 5.92%
Ratio of expenses to
average net assets<F1> <F2> 0.90% 0.79% 0.96% 0.76%
Ratio of net investment income
to average net assets<F1> <F2> 6.45% 6.80% 6.18% 5.92%
Portfolio turnover 115% 127% 59% 132% 50%
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> There were no voluntary fee reductions during the period.
<F3> Amount rounds to less than $0.01.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Fund for Income
February 1,
1994
through
Year Ended October 31, October 31, Year Ended January 31,
1997 1996 1995<F4> 1994 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 9.77 $ 9.93 $ 9.43 $ 10.14 $ 10.57 $ 10.55
Investment Activities
Net investment income 0.68 0.68 0.73 0.52 0.80 0.80
Net realized and unrealized
gains (losses) on investments 0.03 (0.08) 0.43 (0.71) (0.41) 0.06
Total from
Investment Activities 0.71 0.60 1.16 (0.19) 0.39 0.86
Distributions
Net investment income (0.67) (0.68) (0.66) (0.51) (0.80) (0.80)
In excess of net
investment income -- (0.03) -- (0.01) -- --
Net realized gains -- -- -- -- (0.02) (0.04)
Tax return of capital -- (0.05) -- -- -- --
Total Distributions (0.67) (0.76) (0.66) (0.52) (0.82) (0.84)
Net Asset Value, End of Period $ 9.81 $ 9.77 $ 9.93 $ 9.43 $ 10.14 $ 10.57
Total Return (excludes sales charges) 7.58% 6.35% 12.75% (1.99)%<F2> 3.75% 8.45%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $22,101 $20,816 $22,756 $29,358 $46,632 $55,075
Ratio of expenses to
average net assets 0.99% 1.02% 1.12% 1.12%<F3> 1.13% 1.12%
Ratio of net investment income
to average net assets 6.98% 7.05% 7.62% 7.21%<F3> 7.65% 7.56%
Ratio of expenses to
average net assets<F1> 1.63% 1.73% 1.58% 1.26%<F3> <F5> <F5>
Ratio of net investment income
to average net assets<F1> 6.34% 6.34% 7.16% 7.07%<F3> <F5> <F5>
Portfolio turnover 26% 25% 35% 18% 47% 23%
<FN>
<F1> 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.
<F2> Not annualized.
<F3> Annualized.
<F4> Effective June 5, 1995, the Victory Fund For Income Portfolio became the Fund For Income.
<F5> There were no voluntary fee reductions during the period.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
National Municipal Bond Fund
Class A
Six
Year Year Months Year
Ended Ended Ended Ended
October 31, October 31, October 31, April 30,
1997 1996 1995<F5> 1995<F6>
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 10.16 $ 10.06 $ 9.59 $ 9.64
Investment Activities
Net investment income 0.45 0.44 0.24 0.44
Net realized and
unrealized gains (losses)
from investments 0.35 0.13 0.46 (0.05)
Total from
Investment Activities 0.80 0.57 0.70 0.39
Distributions
Net investment income (0.45) (0.44) (0.23) (0.44)
In excess of net
investment income -- -- -- --
In excess of net realized gains -- (0.03) -- --
Total Distributions (0.45) (0.47) (0.23) (0.44)
Net Asset Value,
End of Period $ 10.51 $ 10.16 $ 10.06 $ 9.59
Total Return
(excludes sales charges) 8.10% 5.83% 7.39%<F3> 4.21%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $47,705 $36,958 $11,964 $5,118
Ratio of expenses to
average net assets 0.36% 0.29% 0.02%<F4> 0.20%
Ratio of net investment income
(loss) to average net assets 4.43% 4.37% 5.11%<F4> 5.01%
Ratio of expenses to
average net assets<F1> 1.27% 1.35% 2.57%<F4> 3.95%
Ratio of net investment income
to average net assets<F1> 3.52% 3.31% 2.56%<F4> 1.26%
Portfolio turnover<F7> 154% 143% 72% 52%
<FN>
<F1> 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.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> Effective June 5, 1995, the Victory National Municipal Bond Portfolio became the National Municipal Bond Fund.
<F6> Effective September 26, 1994, the Fund designated the existing shares as Class A Shares and commenced offering Class B
Shares.
<F7> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
National Municipal Bond Fund
Class B
Six September
Year Year Months 26, February 3,
Ended Ended Ended 1994 to 1994 to
October 31, October 31, October 31, April 30, April 30,
1997 1996 1995<F5> 1995<F6> 1994<F2>
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.16 $10.07 $ 9.59 $ 9.53 $10.00
Investment Activities
Net investment income 0.33 0.35 0.20 0.28 0.08
Net realized and
unrealized gains (losses)
from investments 0.34 0.13 0.47 0.05 (0.36)
Total from
Investment Activities 0.67 0.48 0.67 0.33 (0.28)
Distributions
Net investment income (0.32) (0.35) (0.19) (0.27) (0.08)
In excess of net
investment income -- (0.01) -- -- --
In excess of net realized gains -- (0.03) -- -- --
Total Distributions (0.32) (0.39) (0.19) (0.27) (0.08)
Net Asset Value,
End of Period $10.51 $10.16 $10.07 $ 9.59 $ 9.64
Total Return
(excludes sales charges) 6.74% 4.85% 6.99%<F3> 3.54%<F3> (2.82)%<F3>
Ratios/Supplemental Data:
Net Assets, End of Period (000) $2,288 $1,808 $ 456 $ 147 $ 494
Ratio of expenses to
average net assets 1.60% 1.20% 0.96%<F4> (0.05)%<F4> 0.65%<F4>
Ratio of net investment income
(loss) to average net assets 3.18% 3.50% 4.15%<F4> 4.35%<F4> 3.15%<F4>
Ratio of expenses to
average net assets<F1> 2.62% 2.17% 3.67%<F4> 2.63%<F4> 26.10%<F4>
Ratio of net investment income
to average net assets<F1> 2.16% 2.53% 1.44%<F4> 1.67%<F4> (22.30)%<F4>
Portfolio turnover<F7> 154% 143% 72% 52% 13%
<FN>
<F1> 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.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> Effective June 5, 1995, the Victory National Municipal Bond Portfolio became the National Municipal Bond Fund.
<F6> Effective September 26, 1994, the Fund designated the existing shares as Class A Shares and commenced offering Class B
Shares.
<F7> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
New York Tax-Free Fund
Class A
January 1,
1994 to
Year Ended October 31, October 31,
1997 1996 1995<F4> 1994<F5>
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 12.73 $ 12.85 $ 12.39 $ 13.54
Investment Activities
Net investment income 0.68 0.68 0.87 0.57
Net realized and unrealized
gains (losses)
from investments 0.03 (0.11) 0.42 (1.15)
Total from
Investment Activities 0.71 0.57 1.29 (0.58)
Distributions
Net investment income (0.72) (0.68) (0.83) (0.57)
In excess of net
investment income -- -- -- --
Net realized gains (0.04) (0.01) -- --
Total Distributions (0.76) (0.69) (0.83) (0.57)
Net Asset Value,
End of Period $ 12.68 $ 12.73 $ 12.85 $ 12.39
Total Return
(excludes sales charges) 5.77% 4.53% 10.82% (4.31)%<F2>
Ratios/Supplemental Data:
Net Assets, End of Period (000) $15,335 $13,754 $15,374 $17,840
Ratio of expenses to
average net assets 0.94% 0.93% 1.16% 0.91%<F3>
Ratio of net investment income
to average net assets 5.32% 5.25% 5.50% 5.33%<F3>
Ratio of expenses to
average net assets<F1> 1.49% 1.58% 1.96% 1.25%<F3>
Ratio of net investment income
to average net assets<F1> 4.77% 4.60% 4.70% 4.99%<F3>
Portfolio turnover<F7> 11% 0% 18% 18%
<FN>
<F1> 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.
<F2> Not annualized.
<F3> Annualized.
<F4> Effective June 5, 1995, the Victory New York Tax-Free Portfolio became the New York Tax-Free Fund.
<F5> Effective September 26, 1994, the Fund designated the existing shares as Class A Shares and commenced offering Class B
Shares.
<F6> Amount is less than $1,000.
<F7> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
New York Tax-Free Fund
Class B
September,
26, Year
1994 to Ended
Year Ended October 31, October 31, December 31,
1997 1996 1995<F4> 1994<F5> 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $12.74 $12.86 $12.39 $12.62 $ 12.76
Investment Activities
Net investment income 0.57 0.57 0.85 0.07 0.70
Net realized and unrealized
gains (losses)
from investments 0.03 (0.10) 0.36 (0.23) 0.84
Total from
Investment Activities 0.60 0.47 1.21 (0.16) 1.54
Distributions
Net investment income (0.56) (0.57) (0.74) (0.07) (0.70)
In excess of net
investment income (0.05) (0.01) -- -- --
Net realized gains (0.04) (0.01) -- -- (0.06)
Total Distributions (0.65) (0.59) (0.74) (0.07) (0.76)
Net Asset Value,
End of Period $12.69 $12.74 $12.86 $12.39 $ 13.54
Total Return
(excludes sales charges) 4.88% 3.72% 10.18% (1.25)%<F2> 12.34%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $2,731 $2,515 $1,953 <F6> $28,530
Ratio of expenses to
average net assets 1.82% 1.65% 2.02% 0.52%<F3> 0.87%
Ratio of net investment income
to average net assets 4.46% 4.52% 5.94% 5.94%<F3> 5.28%
Ratio of expenses to
average net assets<F1> 2.68% 2.34% 2.25% 0.86%<F3> 0.96%
Ratio of net investment income
to average net assets<F1> 3.60% 3.83% 5.71% 5.60%<F3> 5.19%
Portfolio turnover<F7> 11% 0% 18% 18% 12%
<FN>
<F1> 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.
<F2> Not annualized.
<F3> Annualized.
<F4> Effective June 5, 1995, the Victory New York Tax-Free Portfolio became the New York Tax-Free Fund.
<F5> Effective September 26, 1994, the Fund designated the existing shares as Class A Shares and commenced offering Class B
Shares.
<F6> Amount is less than $1,000.
<F7> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Ohio Municipal Bond Fund
Year Ended October 31,
1997 1996 1995<F1> 1994 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 11.43 $ 11.32 $ 10.33 $ 11.52 $ 10.52
Investment Activities
Net investment income 0.53 0.54 0.52 0.49 0.52
Net realized and unrealized
gains (losses) from investments 0.29 0.11 1.00 (0.94) 1.00
Total from Investment Activities 0.82 0.65 1.52 (0.45) 1.52
Distributions
Net investment income (0.53) (0.54) (0.52) (0.49) (0.52)
In excess of net investment income -- -- (0.01) -- --
Net realized gains -- -- -- (0.25) --
Total Distributions (0.53) (0.54) (0.53) (0.74) (0.52)
Net Asset Value, End of Period $ 11.72 $ 11.43 $ 11.32 $ 10.33 $ 11.52
Total Return (excludes sales charges) 7.37% 5.87% 15.03% (4.08)% 14.75%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $78,043 $73,463 $60,031 $57,704 $50,676
Ratio of expenses to
average net assets 0.89% 0.89% 0.66% 0.51% 0.42%
Ratio of net investment income
to average net assets 4.60% 4.72% 4.78% 4.58% 4.77%
Ratio of expenses to
average net assets<F1> 0.99% 1.05% 0.94% 1.09% 0.86%
Ratio of net investment income
to average net assets<F1> 4.50% 4.56% 4.49% 4.01% 4.33%
Portfolio turnover 74% 81% 125% 53% 151%
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Balanced Fund
Class A Shares Class B Shares
March 1, December 30,
Year Year Year 1996 Year 1993
Ended Ended Ended through Ended through
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996<F5> 1997 1996<F5> 1995 1994<F2>
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 12.33 $ 11.01 $ 12.34 $ 11.51 $ 9.62 $ 10.00
Investment Activities
Net investment income 0.36 0.36 0.19 0.14 0.41 0.33
Net realized
and unrealized
gains (losses) from
investments
and foreign currencies 1.90 1.39 1.89 0.85 1.40 (0.39)
Total from Investment
Activities 2.26 1.75 2.08 0.99 1.81 (0.06)
Distributions
Net investment income (0.35) (0.36) (0.17) (0.14) (0.41) (0.32)
In excess of net
investment income -- -- -- (0.02) (0.01) --
Net realized gains (0.37) (0.07) (0.37) -- -- --
Total Distributions (0.72) (0.43) (0.54) (0.16) (0.42) (0.32)
Net Asset Value,
End of Period $ 13.87 $ 12.33 $ 13.88 $ 12.34 $ 11.01 $ 9.62
Total Return
(excludes sales charges) 19.02% 16.27% 17.43% 15.73%<F6> 19.24% (0.57)%<F3>
Ratios/Supplemental Data:
Net Assets,
End of Period (000) $342,933 $273,553 $ 3,291 $ 1,432 $201,073 $127,285
Ratio of expenses to
average net assets 1.25% 1.27% 2.56% 2.46%<F4> 0.98% 0.87%<F4>
Ratio of net investment income
to average net assets 2.69% 3.14% 1.36% 1.78%<F4> 4.05% 3.97%<F4>
Ratio of expenses to
average net assets<F1> 1.36% 1.43% 2.95% 2.67%<F4> 1.36% 1.49%<F4>
Ratio of net investment income
to average net assets<F1> 2.58% 2.98% 0.97% 1.57%<F4> 3.67% 3.35%<F4>
Portfolio turnover<F7> 109% 80% 109% 80% 69% 118%
Average commission
rate paid<F8> $ 0.0356 $ 0.0084 $0.0356 $0.0084 -- --
<FN>
<F1> 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.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> Effective March 1, 1996, the Fund designated the existing shares as Class A Shares and commenced offering Class B Shares.
<F6> Represents total return for the Fund for the period November 1, 1995 through February 29, 1996 plus total return for Class
B Shares for the period March 1, 1996 through October 31, 1996. The total return for the Class B Shares for the period from
March 1, 1996 through October 31, 1996 was 8.72%.
<F7> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of
shares issued.
<F8> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Stock Index Fund
December 3,
1993
Year Ended October 31, to October 31,
1997 1996 1995 1994<F2>
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 14.85 $ 12.50 $ 10.18 $ 10.00
Investment Activities
Net investment income 0.29 0.28 0.27 0.20
Net realized and unrealized
gains from investments 4.23 2.58 2.31 0.16
Total from Investment Activities 4.52 2.86 2.58 0.36
Distributions
Net investment income (0.29) (0.28) (0.26) (0.18)
Net realized gains (0.33) (0.23) -- --
Total Distributions (0.62) (0.51) (0.26) (0.18)
Net Asset Value,
End of Period $ 18.75 $ 14.85 $ 12.50 $ 10.18
Total Return (excludes sales charges) 31.16% 23.38% 25.72% 3.66%<F3>
Ratios/Supplemental Data:
Net Assets, End of Period (000) $465,015 $277,124 $160,822 $89,686
Ratio of expenses to
average net assets 0.56% 0.57% 0.55% 0.58%<F4>
Ratio of net investment income
to average net assets 1.74% 2.14% 2.53% 2.35%<F4>
Ratio of expenses to
average net assets<F1> 0.86% 0.89% 0.87% 1.10%<F4>
Ratio of net investment income
to average net assets<F1> 1.44% 1.82% 2.21% 1.82%<F4>
Portfolio turnover 11% 4% 12% 1%
Average commission rate paid<F5> $ 0.0212 $ 0.0186 -- --
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Diversified Stock Fund
Class A Shares Class B Shares
March 1,
Year Year Year 1996
Ended, Ended Ended through
October 31, October 31, October 31, October 31, Year Ended October 31,
1997 1996<F2> 1997 1996<F2> 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 15.75 $ 13.62 $ 15.71 $ 14.18 $ 12.68 $ 13.39 $ 12.16
Investment Activities
Net investment income 0.16 0.20 (0.06) 0.07 0.27 0.25 0.18
Net realized and
unrealized
gains from
investments 3.84 3.21 3.85 1.57 2.33 0.64 1.50
Total from
Investment
Activities 4.00 3.41 3.79 1.64 2.60 0.89 1.68
Distributions
Net investment income (0.16) (0.19) -- (0.07) (0.27) (0.23) (0.21)
In excess of net
investment income -- -- (0.05) (0.04) (0.01) -- --
Net realized gains (1.83) (1.09) (1.83) -- (1.38) (1.37) (0.24)
Total
Distributions (1.99) (1.28) (1.88) (0.11) (1.66) (1.60) (0.45)
Net Asset Value,
End of Period $ 17.76 $ 15.75 $ 17.62 $ 15.71 $ 13.62 $ 12.68 $ 13.39
Total Return
(excludes sales charges) 27.96% 27.16% 26.48% 26.61%<F4> 23.54% 7.39% 14.04%
Ratios/Supplemental Data:
Net Assets,
End of Period (000) $762,270 $571,153 $30,198 $ 8,228 $409,549 $263,227 $257,405
Ratio of expenses to
average net assets 1.03% 1.05% 2.19% 2.07%<F3> 0.92% 0.89% 0.89%
Ratio of net
investment income
to average net assets 0.97% 1.40% (0.29)% 0.11%<F3> 2.11% 2.06% 1.45%
Ratio of expenses to
average net assets <F1> <F7> 1.08% <F7> 2.08%<F3> 0.95% 1.10% 0.90%
Ratio of net
investment income
to average net
assets<F1> <F7> 1.37% <F7> 0.10%<F3> 2.07% 1.86% 1.43%
Portfolio
turnover<F5> 63% 94% 63% 94% 75% 104% 86%
Average commission
rate paid<F6> $ 0.0505 $ 0.0504 $0.0505 $0.0504 -- -- --
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> Effective March 1, 1996, the Fund designated the existing shares as Class A Shares and commenced offering Class B Shares.
<F3> Annualized.
<F4> Represents total return for the Fund for the period November 1, 1995 through February 29, 1996 plus total return for Class
B Shares for the Period March 1, 1996 through October 31, 1996. The total return for the Class B shares for the period from
March 1, 1996 through October 31, 1996 was 11.62%.
<F5> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
<F6> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
<F7> There were no voluntary fee reductions during the period.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Value Fund
Year Year Year December 3,
Ended Ended Ended 1993
October 31, October 31, October 31, to October 31,
1997 1996 1995<F5> 1994<F2>
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 14.18 $ 11.87 $ 10.13 $ 10.00
Investment Activities
Net investment income 0.15 0.20 0.27 0.21
Net realized and unrealized
gains from investments 3.57 2.65 1.92 0.11
Total from Investment Activities 3.72 2.85 2.19 0.32
Distributions
Net investment income (0.16) (0.20) (0.27) (0.19)
In excess of net investment income -- -- (0.01) --
Net realized gains (0.67) (0.34) (0.17) --
Total Distributions (0.83) (0.54) (0.45) (0.19)
Net Asset Value, End of Period $ 17.07 $ 14.18 $ 11.87 $ 10.13
Total Return (excludes sales charges) 27.24% 24.66% 22.28% 3.27%<F3>
Ratios/Supplemental Data:
Net Assets, End of Period (000) $472,047 $382,083 $295,871 $188,184
Ratio of expenses to
average net assets 1.32% 1.33% 0.99% 0.92%<F4>
Ratio of net investment income
to average net assets 0.93% 1.56% 2.55% 2.32%<F4>
Ratio of expenses to
average net assets<F1> <F7> 1.35% 1.30% 1.48%<F4>
Ratio of net investment income
to average net assets<F1> <F7> 1.54% 2.24% 1.76%<F4>
Portfolio turnover 25% 28% 23% 39%
Average commission rate paid<F6> $ 0.0530 $ 0.0524 -- --
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> 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.
<F6> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
<F7> There were no voluntary fee reductions during the period.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Growth Fund
December 3,
1993
Year Ended October 31, to October 31,
1997 1996 1995<F5> 1994<F2><F6>
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 14.57 $ 12.15 $ 10.23 $ 10.00
Investment Activities
Net investment income 0.03 0.08 0.11 0.10
Net realized and unrealized
gains on investments 4.07 2.93 1.97 0.22
Total from Investment
Activities 4.10 3.01 2.08 0.32
Distributions
Net investment income (0.04) (0.08) (0.11) (0.09)
Net realized gains (0.62) (0.51) (0.05) --
Total Distributions (0.66) (0.59) (0.16) (0.09)
Net Asset Value,
End of Period $ 18.01 $ 14.57 $ 12.15 $ 10.23
Total Return
(excludes sales charges) 29.08% 25.66% 20.54% 3.22%<F3>
Ratios/Supplemental Data:
Net Assets, End of Period (000) $185,533 $147,753 $108,253 $66,921
Ratio of expenses to
average net assets 1.34% 1.33% 1.07% 0.94%<F4>
Ratio of net investment income
to average net assets 0.19% 0.64% 1.00% 1.10%<F4>
Ratio of expenses to
average net assets<F1> <F8> 1.39% 1.42% 1.51%<F4>
Ratio of net investment income
to average net assets<F1> <F8> 0.58% 0.65% 0.52%<F4>
Portfolio turnover 21% 27% 107% 28%
Average commission rate paid<F7> $ 0.0592 $ 0.0618 -- --
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> Effective June 5, 1995, the Victory Equity Portfolio merged into the Growth Fund. Financial highlights for the periods
prior to June 5, 1995 represent the Growth Fund.
<F6> Effective March 17, 1994, the Society Earnings Momentum Fund merged into the Growth Fund. Financial highlights
for the period prior to March 17, 1994 represent the Growth Fund.
<F7> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
<F8> There were no voluntary fee reductions during the period.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Special Value Fund
Class A Shares Class B Shares
March 1, December 3,
Year Year Year 1996 Year 1993
Ended Ended Ended through Ended through
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996<F5> 1997 1996<F5> 1995 1994<F2>
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 14.15 $ 12.15 $ 14.09 $ 12.89 $ 10.49 $ 10.00
Investment Activities
Net investment income (loss) 0.10 0.12 (0.04) 0.01 0.15 0.11
Net realized and unrealized
gains on investments 3.50 2.33 3.41 1.23 1.71 0.48
Total from Investment
Activities 3.60 2.45 3.37 1.24 1.86 0.59
Distributions
Net investment income (0.12) (0.11) -- (0.01) (0.15) (0.10)
In excess of net
investment income -- -- (0.02) (0.03) -- --
Net realized gains (0.95) (0.34) (0.95) -- (0.05) --
Total Distributions (1.07) (0.45) (0.97) (0.04) (0.20) (0.10)
Net Asset Value,
End of Period $ 16.68 $ 14.15 $ 16.49 $ 14.09 $ 12.15 $ 10.49
Total Return
(excludes sales charges) 27.05% 20.60% 25.41% 19.80%<F6> 18.01% 5.92%<F3>
Ratios/Supplemental Data:
Net Assets,
End of Period (000) $420,020 $289,460 $ 1,660 $ 386 $194,700 $118,600
Ratio of expenses to
average net assets 1.37% 1.37% 2.66% 2.51%<F4> 1.04% 1.00%<F4>
Ratio of net investment
income (loss)
to average net assets 0.65% 0.88% (0.62%) (0.31)%<F4> 1.35% 1.23%<F4>
Ratio of expenses to
average net assets<F1> 1.37% 1.40% 3.63% 3.75%<F4> 1.30% 1.49%<F4>
Ratio of net investment
income (loss)
to average net assets<F1> 0.65% 0.85% (1.59%) (1.55)%<F4> 1.09% 0.74%<F4>
Portfolio turnover<F7> 39% 55% 39% 55% 39% 18%
Average commission
rate paid<F8> $ 0.0503 $ 0.0501 $0.0503 $0.0501 -- --
<FN>
<F1> 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.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> Effective March 1, 1996, the Fund designated the existing shares as Class A Shares and commenced offering Class B Shares.
<F6> Represents total return for the Fund for the period November 1, 1995 through February 29, 1996 plus total return for Class
B Shares for the Period March 1, 1996 through October 31, 1996. The total return for the Class B shares for the period from
March 1, 1996 through October 31, 1996 was 9.66%.
<F7> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
<F8> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Special Growth Fund
Year Year Six Months Year January 11,
Ended Ended Ended Ended 1994 to
October 31, October 31, October 31, April 30, April 30,
1997 1996 1995 1995<F5> 1994<F2>
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 14.14 $ 11.81 $ 10.54 $ 9.82 $ 10.00
Investment Activities
Net investment income (loss) (0.13) (0.07) -- 0.02 (0.01)
Net realized and unrealized
gains (losses) on investments 2.93 2.40 1.27 0.72 (0.17)
Total from
Investment Activities 2.80 2.33 1.27 0.74 (0.18)
Distributions
Net investment income -- -- -- (0.02) --
Net realized gains (0.65) -- -- -- --
Total Distributions (0.65) -- -- (0.02) --
Net Asset Value,
End of Period $ 16.29 $ 14.14 $ 11.81 $ 10.54 $ 9.82
Total Return
(excludes sales charges) 20.62% 19.73% 12.05%<F3> 7.51% (1.80)<F3>
Ratios/Supplemental Data:
Net Assets, End of Period (000) $104,565 $87,837 $54,335 $20,796 $30,867
Ratio of expenses to
average net assets 1.38% 1.47% 0.65%<F4> 1.04% 0.82%<F4>
Ratio of net investment income
(loss) to average net assets (0.93%) (0.62)% (0.13)%<F4> 0.17% (0.27)%<F4>
Ratio of expenses to
average net assets<F1> <F7> 1.51% 1.40%<F4> 1.35% 1.47%<F4>
Ratio of net investment loss
to average net assets<F1> <F7> (0.66)% (0.88)%<F4> (0.14)% (0.92)%<F4>
Portfolio turnover 195% 152% 54% 102% 61%
Average commission rate paid<F6> $ 0.0541 $0.0468 -- -- --
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred,
the ratios would have been as indicated.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> 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.
<F6> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
<F7> There were no voluntary fee reductions during the period.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Ohio Regional Stock Fund
Class A Shares Class B Shares
March 1,
Year Year Year 1996
Ended, Ended Ended through
October 31, October 31, October 31, October 31, Year Ended October 31,
1997 1996<F2> 1997 1996<F2> 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 17.95 $ 15.94 $ 17.87 $ 16.43 $ 14.56 $ 14.69 $ 12.12
Investment Activities
Net investment
income (loss) 0.14 0.14 (0.14) (0.03) 0.17 0.18 0.16
Net realized and
unrealized gains
from investments 5.96 2.62 5.90 1.51 2.13 0.39 2.63
Total from
Investment
Activities 6.10 2.76 5.76 1.48 2.30 0.57 2.79
Distributions
Net investment income (0.14) (0.14) -- -- (0.17) (0.17) (0.18)
In excess of net
investment income -- -- -- (0.04) (0.01) -- --
Net realized gains (0.35) (0.36) (0.35) -- (0.65) (0.53) (0.04)
In excess of net
realized gains -- (0.25) -- -- (0.09) -- --
Total Distributions (0.49) (0.75) (0.35) (0.04) (0.92) (0.70) (0.22)
Net Asset Value,
End of Period $ 23.56 $ 17.95 $ 23.28 $ 17.87 $ 15.94 $ 14.56 $ 14.69
Total Return
(excludes sales charges) 34.61% 17.79% 32.71% 16.95%<F3 > 16.93% 3.96% 23.16%
Ratios/Supplemental Data:
Net Assets,
End of Period (000) $53,703 $45,294 $ 705 $ 326 $39,048 $33,965 $34,926
Ratio of expenses to
average net assets 1.26% 1.39% 2.65% 2.61%<F4> 1.20% 1.04% 1.04%
Ratio of net investment
income (loss) to
average net assets 0.67% 0.79% (0.76%) (0.60)%<F4> 1.13% 1.27% 1.17%
Ratio of expenses to
average net assets<F1> 1.26% 1.40% 4.25% 3.50%<F4> 1.24% 1.27% 1.06%
Ratio of net investment
income (loss) to
average net assets<F1> 0.67% 0.78% (2.36%) (1.49)%<F4> 1.09% 1.04% 1.15%
Portfolio turnover<F5> 8% 6% 8% 6% 11% 14% 7%
Average commission
rate paid<F6> $0.0579 $0.0513 $0.0579 $0.0513 -- -- --
<FN>
<F1> 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.
<F2> Effective March 1, 1996, the Fund designated the existing shares as Class A Shares and commenced offering Class B Shares.
<F3> Represents total return for the Fund for the period November 1, 1995 through February 29, 1996 plus total return for Class
B Shares for the period March 1, 1996 through October 31, 1996. The total return for the Class B shares for the period from
March 1, 1996 through October 31, 1996 was 9.03%.
<F4> Annualized.
<F5> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
<F6> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
International Growth Fund
Class A Shares Class B Shares
March 1,
Year Year Year 1996
Ended, Ended Ended through
October 31, October 31, October 31, October 31, Year Ended October 31,
1997 1996<F2> 1997 1996<F2> 1995<F3> 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 13.01 $ 12.33 $ 12.93 $ 12.79 $ 13.32 $ 11.93 $ 8.93
Investment Activities
Net investment income (loss) 0.09 0.08 (0.06) -- 0.05 (0.01) (0.03)
Net realized and
unrealized gains (losses)
from investments and
foreign currencies 0.67 0.62 0.65 0.14 (0.42) 1.40 3.03
Total from
Investment Activities 0.76 0.70 0.59 0.14 (0.37) 1.39 3.00
Distributions
Net investment income (0.01) (0.02) -- -- -- -- --
Net realized gains (0.45) -- (0.45) -- (0.55) -- --
Tax return of capital -- -- -- -- (0.07) -- --
Total Distributions (0.46) (0.02) (0.45) -- (0.62) -- --
Net Asset Value,
End of Period $ 13.31 $ 13.01 $ 13.07 $ 12.93 $ 12.33 $ 13.32 $ 11.93
Total Return
(excludes sales charges) 6.04% 5.65% 4.68% 4.89%<F4> (2.50)% 11.65% 33.59%
Ratios/Supplemental Data:
Net Assets,
End of Period (000) $106,189 $121,517 $ 184 $ 118 $106,477 $81,307 $30,629
Ratio of expenses to
average net assets 1.69% 1.73% 3.07% 2.91%<F5> 1.53% 1.48% 1.46%
Ratio of net investment
income (loss) to
average net assets 0.63% 0.64% (0.68)% (0.10)%<F5> 0.75% (0.51)% (0.74)%
Ratio of expenses to
average net assets<F1> 1.69% 1.75% 10.01% 6.46%<F5> 1.65% 1.83% 1.63%
Ratio of net investment
income (loss) to
average net assets<F1> 0.63% 0.62% (7.62)% (3.65)%<F5> 0.63% (0.86)% (0.91)%
Portfolio turnover<F6> 116% 178% 116% 178% 68% 51% 45%
Average commission
rate paid<F7> $ 0.0274 $ 0.0242 $0.0274 $0.0242 -- -- --
<FN>
<F1> 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.
<F2> Effective March 1, 1996, the Fund designated the existing shares as Class A Shares and commenced offering Class B Shares.
<F3> Effective June 5, 1995, the Victory Foreign Markets Portfolio merged into the International Growth Fund.
Financial highlights for the periods prior to June 5, 1995 represent the International Growth Portfolio.
<F4> Represents total return for the Fund for the period November 1, 1995 through February 29, 1996 plus total return for Class
B Shares for the period March 1, 1996 through October 31, 1996. The total return for the Class B shares for the period from
March 1, 1996 through October 31, 1996 was 1.11%.
<F5> Annualized.
<F6> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
<F7> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
See notes to financial statements.
</TABLE>
<TABLE>
The Victory Portfolios Financial Highlights
<CAPTION>
Real Estate
Lakefront Fund Investment Fund
March 3, 1997 April 30, 1997
through through
October 31, October 31,
1997<F2> 1997<F2>
<S> <C> <C>
Net Asset Value, Beginning of Period $ 10.00 $ 10.00
Investment Activities
Net investment income 0.12 0.23
Net realized and unrealized losses from investments 1.27 2.01
Total from Investment Activities $ 1.39 $ 2.24
Distributions
Net investment income (0.10) (0.17)
Total Distributions (0.10) (0.17)
Net Asset Value, End of Period $ 11.29 $ 12.07
Total Return (excludes sales charges) 13.87% <F3> 22.42%<F3>
Ratios/Supplemental Data:
Net Assets, End of Period (000) $ 1,255 $ 4,376
Ratio of expenses to average net assets 0.00%<F4> 0.00%<F4>
Ratio of net investment income to average net assets 1.67%<F4> 5.11%<F4>
Ratio of expenses to average net assets<F1> 7.27%<F4> 2.93%<F4>
Ratio of net investment income to average net assets<F1> (5.60%)<F4> 2.18%<F4>
Portfolio turnover 36% 21%
Average commission rate paid<F5> $0.0798 $0.0464
<FN>
<F1> 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.
<F2> Period from commencement of operations.
<F3> Not annualized.
<F4> Annualized.
<F5> Represents the total dollar amount of commissions paid on portfolio security transactions divided by total number
of shares purchased and sold by the Fund for which commissions were charged.
See notes to financial statements.
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
The Victory Portfolios
We have audited the accompanying statements of assets and liabilities
of The Victory Portfolios (comprising, respectively, the U.S. Government
bligations Fund, Prime Obligations Fund, Financial Reserves Fund, Tax-Free
Money Market Fund, Ohio Municipal Money Market Fund, Limited Term Income
Fund, Intermediate Income Fund, Investment Quality Bond Fund, Government
Mortgage Fund, Fund for Income, National Municipal Bond Fund, New York
Tax-Free Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock Index Fund,
Diversified Stock Fund, Value Fund, Growth Fund, Special Value Fund, Special
Growth Fund, Ohio Regional Stock Fund, International Growth Fund, Lakefront
Fund and Real Estate Investment Fund), including the schedules of investments,
as of October 31, 1997, and the related statements of operations and changes
in net assets, and the financial highlights for each period presented except
as noted in the next paragraph. These financial statements and financial
highlights are the responsibility of The Victory Portfolios' management.
Our responsibility is to express an opinion on these financial statements
and financial highlights based on our audits.
The Financial Reserves Fund's financial highlights for each of the two
years in the period ended October 31, 1994 were audited by other
auditors, whose reports dated December 2, 1994 and December 17,
1993, respectively, expressed unqualified opinions on those financial
highlights. The Ohio Municipal Money Market Fund's financial highlights
for each of the two years in the period ended August 31, 1994 were
audited by other auditors, whose reports dated October 7, 1994 and
October 13, 1993, respectively, expressed unqualified opinions on
those financial highlights. The Fund for Income's financial highlights
for the period ended October 31, 1994 and for each of the two years in
the period ended January 31, 1994 were audited by other auditors, whose
reports dated December 2, 1994 and February 28, 1994, respectively, expressed
unqualified opinions on those financial highlights. The National Municipal
Bond Fund's financial highlights for the periods ended April 30, 1995 and
1994 were audited by other auditors, whose report dated June 20, 1995
expressed an unqualified opinion on those financial highlights. The New
York Tax-Free Fund's financial highlights for the period ended October 31,
1994, and the year ended December 31, 1993 were audited by other auditors,
whose reports dated December 2, 1994 and January 31, 1994, respectively,
expressed unqualified opinions on those financial highlights. The Special
Growth Fund's financial highlights for the year ended April 30, 1995 and
1994 were audited by other auditors, whose report dated June 20, 1995
expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation and verification by examination of securities owned as
of October 31, 1997, by correspondence with the custodians and brokers
or other auditing procedures where confirmations from brokers were not
received. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above, except as noted in the second paragraph,
present fairly, in all material respects, the financial position
of each of the respective funds comprising The Victory Portfolios
as of October 31, 1997, and the results of their operations,
the changes in their net assets and the financial highlights
for the periods presented in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
December 15, 1997
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