Rule 497(e)
Registration No. 33-8982
Dear Shareholder:
The Prospectus for the Convertible Securities Fund is being revised. This
supplement provides important information about the investment policies and
strategies for the Fund. Please keep a copy of this supplement with your
Prospectus.
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The Victory Funds
Convertible Securities Fund
Supplement Dated July 23, 1998
to the Prospectus Dated March 23, 1998
1. On page 6 replace the second sentence under "Investment Policies and
Strategies" and on page 24 of the "Appendix--Lower Rated Securities" replace the
first sentence with the following:
Investments in securities are not limited by credit quality. Lower quality or
lower-rated debt securities are sometimes referred to as "junk bonds."
2. On page 6 replace the last set of bullet points in the left column with the
following:
Under normal market conditions, the Fund:
-May invest up to 35% of total assets in:
|X| Corporate debt securities
|X| Common stock
|X| U.S. Government securities and high-quality short-term debt obligations
|X| Preferred stock
|X| Repurchase agreements
3. On page 22 under the heading, "Other Securities and Investment Practices" the
percentage limitation for Repurchase Agreements is changed from 20% to 35%.
4. On page 23 under the heading, "Other Securities and Investment Practices" the
percentage limitation for Restricted Securities is changed from 10% to 15%.
5. All references to Cooper & Lybrand L.L.P. and Price Waterhouse LLP are
changed to PricewaterhouseCoopers LLP.
If you would like more information about the Victory Funds call 800-539-FUND or
800-539-3863.
VF-CONV-SUP1
<PAGE>
Rule 497(e)
Registration No. 33-8982
Victory Portfolios
Convertible Securities Fund
Federal Money Market Fund
Supplement Dated July 23, 1998
to the Statement of Additional Information (SAI)
Dated March 23, 1998
The SAI for the above funds is being revised as follows:
1. All references to the Independent Accountants are changed to
PricewaterhouseCoopers LLP.
2. The first sentence under "Foreign Securities" on page 10 should be replaced
with the following:
Securities of foreign issuers may, in the opinion of the Adviser, present
attractive investment opportunities, and the Convertible Securities Fund may
invest up to 10% of its total assets in such securities.
3. Item 4 on page 17 should be revised as follows:
Each of the Funds will not:
Borrow money, except that (a) the Convertible Securities Fund may enter
into commitments to purchase securities in accordance with its investment
program, including delayed-delivery and when-issued securities and reverse
repurchase agreements, provided that the total amount of any such borrowing does
not exceed 33 1/3% of the Fund's total assets; and (b) the Convertible
Securities Fund may borrow money for temporary or emergency purposes in an
amount not exceeding 5% of the value of its total assets at the time when the
loan is made. Any borrowing representing more than 5% of the Convertible
Securities Fund's total assets must be repaid before the Convertible Securities
Fund may make additional investments. The Federal Money Market Fund may not
borrow any money.
4. On page 37 under "Purchase, Redemption and Pricing" the second paragraph
has been amended and restated as follows:
With respect to the Convertible Securities Fund, securities traded on
securities exchanges or the NASDAQ National Market are valued at the last sales
price on the exchange where the security is primarily traded or, lacking any
sales, at the last available bid quotation. Securities traded over-the-counter
are valued at the last available bid quotation based upon pricing procedures
approved by the Board of Trustees. Securities for which quotations are not
readily available and any other assets (other than money market instruments) are
valued at fair value as determined in good faith by or under the supervision of
the Board of Trustees. The Federal Money Market Fund values all its portfolio
securities at amortized cost in accordance with Rule 2a-7 under the 1940 Act and
procedures adopted pursuant thereto. The amortized cost method values a security
initially at its cost and thereafter assumes a constant amortization of any
discount or premium regardless of the impact of fluctuating interest rates on
the market value of the security. This method does not take into account
unrealized gains or losses. The Convertible Securities Fund values fixed income
securities at market value, except for money market instruments having a
maturity of less than 60 days which are valued at amortized cost.
If you would like more information about the Victory Funds call 800-539-FUND or
800-539-3863.
VF-CS-FM-SAI-SUPP1
