Rule 497(e)
Registration No. 33-8982
Dear Shareholder:
The Victory Funds Prospectuses are being revised. Effective October 1, 1997, Key
Asset Management Inc. will assume the duties of sub-administrator to the Funds.
Shareholders will not pay additional fees because of this change. Effective
September 1, 1997, the sales charge for the funds indicated has been changed.
This information is important and should be kept with a copy of your Prospectus.
- --------------------------------------------------------------------------------
The Victory Funds
National Municipal Bond Fund
New York Tax-Free Fund
Ohio Municipal Bond Fund
Supplement Dated September 1, 1997
to the Prospectus Dated March 1, 1997
The Prospectus of the above named funds is supplemented as follows:
1. The paragraph under "Fees and Expenses" on page 2 is revised as
follows:
The National Municipal Bond Fund and New York Tax-Free Fund offer two classes of
shares: Class A and Class B. The Ohio Municipal Bond Fund offers only Class A
shares. If you purchase Class A shares of a Fund, you may pay a sales charge of
up to 5.75% of the offering price, depending on the Fund in which you invest and
the amount you invest. If you purchase Class B shares of a Fund, you will not
pay an initial sales charge; however, you may pay a deferred sales charge if you
sell (redeem) your shares within six years of purchase, and you will pay
additional distribution expenses. In either case, you also will incur expenses
for investment advisory, administrative, and shareholder services, all of which
are included in a Fund's expense ratio. See "Choosing a Share Class."
2. The table on page 3 titled "General Information about each of the
Funds" is replaced as follows:
<TABLE>
<CAPTION>
- ---------------------------- --------------------- ------------------------ ------------------ --------------------
Estimated Annual
Inception Expenses Maximum Newspaper
Victory Fund Date After Waivers Sales Charge Abbreviation*
(as a % of net assets)
- ---------------------------- --------------------- ------------------------ ------------------ --------------------
<S> <C> <C> <C> <C>
National Municipal Bond 2/3/94 0.30% 5.75% Victory
Fund --Class A NatMunA
- ---------------------------- --------------------- ------------------------ ------------------ --------------------
National Municipal Bond 9/26/94 1.54% 5.00% Victory
Fund -- Class B NatMunB
- ---------------------------- --------------------- ------------------------ ------------------ --------------------
New York Tax-Free 2/11/91 0.93% 5.75% Victory
Fund -- Class A NYTxFA
- ---------------------------- --------------------- ------------------------ ------------------ --------------------
New York Tax-Free 9/26/94 2.17% 5.00% Victory
Fund -- Class B NYTxFB
- ---------------------------- --------------------- ------------------------ ------------------ --------------------
Ohio Municipal Bond 5/18/90 0.90% 5.75% Victory
Fund -- Class A OH Muni
- ---------------------------- --------------------- ------------------------ ------------------ --------------------
</TABLE>
*All newspapers do not use the same abbreviation.
<PAGE>
3. On page 4 for the NATIONAL MUNICIPAL BOND FUND and page 6 for the
NEW YORK TAX-FREE FUND, the first table under "Fund Expenses" is replaced as
follows:
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------- ----------------------
Shareholder Transaction Expenses* Class A Shares Class B Shares
---------------------------------------------------- ---------------------- ----------------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases 5.75% NONE
(as a percentage of offering price)
---------------------------------------------------- ---------------------- ----------------------
Sales Charge Imposed on Reinvested Dividends NONE NONE
---------------------------------------------------- ---------------------- ----------------------
Deferred Sales Charge NONE 5.00%**
---------------------------------------------------- ---------------------- ----------------------
Redemption Fees NONE NONE
---------------------------------------------------- ---------------------- ----------------------
Exchange Fees NONE NONE
---------------------------------------------------- ---------------------- ----------------------
</TABLE>
*You may be charged additional fees if you purchase, exchange, or
redeem shares through a broker or agent.
**5% in the first year, declining to 1% in the sixth year, with no
charge after the sixth year.
4. On page 8 for the OHIO MUNICIPAL BOND FUND, the first table under
"Fund Expenses" is replaced as follows:
<TABLE>
<CAPTION>
---------------------------------------------------- -----------------------------------------
Shareholder Transaction Expenses* Class A Shares
---------------------------------------------------- -----------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases 5.75%
(as a percentage of offering price)
---------------------------------------------------- -----------------------------------------
Sales Charge Imposed on Reinvested Dividends NONE
---------------------------------------------------- -----------------------------------------
Deferred Sales Charge NONE
---------------------------------------------------- -----------------------------------------
Redemption Fees NONE
---------------------------------------------------- -----------------------------------------
Exchange Fees NONE
---------------------------------------------------- -----------------------------------------
</TABLE>
*You may be charged additional fees if you purchase, exchange, or
redeem shares through a broker or agent.
5. The last paragraphs and tables on the pages indicated are replaced
with the following:
EXAMPLE: You would pay the following expenses on a $1,000 investment in
the Fund, assuming: (1) a 5% annual return and (2) redemption at the end of each
time period.
On page 4 for the NATIONAL MUNICIPAL BOND FUND:
<TABLE>
<CAPTION>
--------------------- ---------------- ----------------- ------------------- -----------------
1 Year 3 Years 5 Years 10 Years
--------------------- ---------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Class A Shares $60 $67 $73 $93
--------------------- ---------------- ----------------- ------------------- -----------------
Class B Shares $66 $79 $104 $150
--------------------- ---------------- ----------------- ------------------- -----------------
</TABLE>
On page 6 for the NEW YORK TAX-FREE FUND:
<TABLE>
<CAPTION>
--------------------- ---------------- ----------------- ------------------- -----------------
1 Year 3 Years 5 Years 10 Years
--------------------- ---------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Class A Shares $66 $85 $106 $165
--------------------- ---------------- ----------------- ------------------- -----------------
Class B Shares $72 $98 $136 $218
--------------------- ---------------- ----------------- ------------------- -----------------
</TABLE>
On page 8 for the OHIO MUNICIPAL BOND FUND:
<TABLE>
<CAPTION>
--------------------- ---------------- ----------------- ------------------- -----------------
1 Year 3 Years 5 Years 10 Years
--------------------- ---------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Class A Shares $66 $85 $104 $162
--------------------- ---------------- ----------------- ------------------- -----------------
</TABLE>
<PAGE>
6. The table under "Calculation of Sales Charges -- Class A" on page 16
is revised as follows:
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Reallowance
Your investment as a % of as a % of as a % of the
Offering Price Your Investment Offering Price
- -------------------------------------- ----------------------- ----------------------- ------------------------------
<S> <C> <C> <C>
Up to $50,000 5.75% 6.10% 5.00%
- -------------------------------------- ----------------------- ----------------------- ------------------------------
$50,000 up to $100,000 4.50% 4.71% 4.00%
- -------------------------------------- ----------------------- ----------------------- ------------------------------
$100,000 up to $250,000 3.50% 3.63% 3.00%
- -------------------------------------- ----------------------- ----------------------- ------------------------------
$250,000 up to $500,000 2.50% 2.56% 2.00%
- -------------------------------------- ----------------------- ----------------------- ------------------------------
$500,000 up to $1,000,000 2.00% 2.04% 1.75%
- -------------------------------------- ----------------------- ----------------------- ------------------------------
$1,000,000 and above* 0.00% 0.00% *
- -------------------------------------- ----------------------- ----------------------- ------------------------------
</TABLE>
*There is no initial sales charge on purchases of $1 million or more. However, a
contingent deferred sales charge (CDSC) of up to 1.00% of the purchase price
will be charged to the shareholder if shares are redeemed in the first year
after purchase, or at .50% within two years of the purchase. This charge will be
based on either the cost of the shares or net asset value at the time of
redemption, whichever is lower. There will be no CDSC on reinvested
distributions. Investment Professionals may be paid at a rate of up to 1.00% of
the purchase price.
7. Effective October 1, 1997, under "Organization and Management of the
Funds," the first paragraph on page 22 in the subtopic "The Administrator,
Distributor, and Fund Accountant" should be replaced with the following:
BISYS Fund Services is the Administrator and the Distributor. BISYS is paid a
fee at the following annual rate based on the Fund's average daily net assets as
the Administrator: .15% for portfolio assets of $300 million and less, .12% for
the next $300 million through $600 million of portfolio assets; and .10% for
portfolio assets greater than $600 million. Under a Sub-Administration
Agreement, BISYS pays Key Asset Management Inc. to perform some of the
administrative duties for the Fund. BISYS pays Key Asset Management Inc. a
sub-administration fee at an annual rate of up to .05% of the Fund's average
daily net assets. BISYS does not charge a fee for its services as Distributor.
BISYS Fund Services Ohio, Inc. receives a fee as the Fund's Accountant.
Please insert this Supplement in the front of your Prospectus. Investors wishing
to obtain more information should call the Funds at 800-KEY-FUND(R).
VF-TEFI-SUP1
