Rule 497(e)
Registration No. 33-8982
THE VICTORY PORTFOLIOS
BALANCED FUND
DIVERSIFIED STOCK FUND
VALUE FUND
STOCK INDEX FUND
OHIO REGIONAL STOCK FUND
GROWTH FUND
SPECIAL VALUE FUND
SPECIAL GROWTH FUND
INTERNATIONAL GROWTH FUND
REAL ESTATE INVESTMENT FUND
AMENDMENT DATED JUNE 1, 1998
TO THE PROSPECTUS DATED MARCH 1, 1998
The Prospectus is amended as follows:
1. INTERNATIONAL GROWTH FUND:
PORTFOLIO MANAGEMENT
Manager of Managers. Key Asset Management Inc. ("KAM"), the investment
adviser, serves as a Manager of Managers of the Victory International Growth
Fund ("International Growth Fund"). That is, KAM may select one or more
subadvisers to manage the International Growth Fund's assets. KAM evaluates each
subadviser's skills, investment styles and strategies in light of KAM's analysis
of the international securities markets. Under its Advisory Agreement with The
Victory Portfolios (the "Trust"), KAM oversees the investment advisory services
that a subadviser provides to the International Growth Fund. If KAM engages more
than one subadviser, KAM may reallocate assets among subadvisers when it
believes it is appropriate. KAM provides investment advice with respect to
short-term debt securities. KAM has the ultimate responsibility for the
International Growth Fund's investment performance because it is responsible for
overseeing all subadvisers and recommending to the Trust's Board of Trustees
(the "Board") that it hire, terminate or replace a particular subadviser.
The Trust and KAM have obtained an order from the Securities and
Exchange Commission that allows KAM to serve as a Manager of Managers. The order
lets KAM, subject to certain conditions, select new subadvisers with the
approval of the Board, without obtaining shareholder approval. The order also
allows KAM to change the terms of agreements with the subadvisers or to keep a
subadviser even if certain events would otherwise require that a subadvisory
agreement terminate. The Trust will notify shareholders of any subadviser
change. Shareholders, however, also have the right to terminate an agreement
with a particular subadviser. If KAM hires more than one subadviser, the order
also allows the International Growth Fund to disclose only the aggregate amount
of fees paid to all subadvisers.
<PAGE>
Indocam International Investment Services, S.A. KAM has entered into a
Portfolio Management Agreement with Indocam International Investment Services,
S.A. ("IIIS"), a French corporation located in Paris, France. IIIS serves as
subadviser for all of the International Growth Fund's assets (other than
short-term debt instruments). IIIS and its advisory affiliates ("Indocam") the
global asset management component of the Credit Agricole banking and financial
services group. As of December 31, 1997, Indocam managed approximately $124
billion for its clients.
Eric Taze-Bernard, Ayaz Ebrahim, Didier Le Conte, and Jean-Claude
Kaltenbach will be directly responsible for the management of the International
Growth Fund. Mr. Taze-Bernard, the lead portfolio manager, has been employed by
IIIS (or its affiliates) since 1987 and currently is the Head of Strategy of
Asset Allocation of IIIS. Mr. Ebrahim is the Director and Portfolio Manager of
IIIS, Hong Kong. Mr. Ebrahim has been employed by IIIS (or its affiliates) since
1991. Mr. Le Conte is the Senior Portfolio Manager responsible for European
Equities at IIIS and has been employed by IIIS (or its affiliates) since 1966.
Mr. Kaltenbach is the Head of Equity Management at IIIS and has been employed by
IIIS (or its affiliates) since 1994. Prior to his employment by IIIS, Mr.
Kaltenbach was the Head of Asset Management at Union Europeenne de CIC since
1988.
KAM, and not the International Growth Fund, pays IIIS a subadvisory fee
equal, on an annual basis, to 0.55% of the International Growth Fund's average
daily net assets.
VF-IGF-SUPP2
<PAGE>
Rule 497(e)
Registration No. 33-8982
Dear Shareholder:
The Prospectus for the following Victory Funds is being revised. This supplement
provides important information about: updates to portfolio management
information for certain Funds; changes to appropriately reflect the Special
Growth Fund's investment policies and strategies; changes to appropriately
reflect the Funds' diversification requirements; and changes to appropriately
reflect certain Funds' investments in real estate investment trusts. This
information is important and should be kept with your Prospectus.
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The Victory Funds
Balanced Fund
Diversified Stock Fund
Value Fund
Stock Index Fund
Ohio Regional Stock Fund
Growth Fund
Special Value Fund
Special Growth Fund
International Growth Fund
Real Estate Investment Fund
Supplement Dated June 1, 1998
to the Prospectus Dated March 1, 1998,
as amended June 1, 1998
1. On page 8 for the VALUE FUND, the following paragraph replaces the
information under "Portfolio Management:"
Judith A. Jones and Neil A. Kilbane are the Portfolio Managers of the Value
Fund. Ms. Jones has been the Portfolio Manager of the Value Fund since its
inception in December 1993. She is a Portfolio Manager and Senior Managing
Director of Key Asset Management Inc., and has been in the investment business
since 1967. Mr. Kilbane has been a Portfolio Manager of the Value Fund since
April, 1998. He is a Portfolio Manager and Managing Director of Key Asset
Management Inc. and has been in the investment business since 1986.
2. On page 10 for the STOCK INDEX FUND, the following paragraph replaces the
information under "Portfolio Management:"
Theresa Hemmi is the Portfolio Manager of the Stock Index Fund, a position she
has held since May, 1998. She is a Portfolio Manager and Director of Key Asset
Management Inc. and has been in the investment business since 1994.
3. On page 16 for the SPECIAL VALUE FUND, the following paragraph replaces the
information under "Portfolio Management:"
Anthony Aveni, Barbara Myers and Paul Danes are the Portfolio Managers of the
Special Value Fund. Mr. Aveni has been a Portfolio Manager of the Special Value
Fund since its inception in December 1993. He is a Director of, and the Chief
Investment Officer and a Senior Managing Director with, Key Asset Management
Inc. and has been in the investment business since 1981. Mr. Myers has been a
Portfolio Manager of the Special Value Fund since June 1995. She is a Portfolio
Manager and Director with Key Asset Management Inc. and has been in the
investment business since 1987. Mr. Danes has been a Portfolio Manager of the
Special Value Fund since October 1995. He is a Portfolio Manager and Director
with Key Asset Management Inc. and has been in the investment business since
1987.
<PAGE>
4. On page 18 for the SPECIAL GROWTH FUND, the following paragraph replaces the
first paragraph under the heading "Investment Policies and Strategy:"
The Special Growth Fund pursues its investment objective by investing primarily
in equity securities of companies with market capitalization of $1 billion or
less.
and, the following paragraph replaces the information under "Portfolio
Management:"
Annette Geddes is the Portfolio Manager of the Special Growth Fund, a position
she has held since June 1996. She is a Portfolio Manager and Senior Managing
Director of Key Asset Management Inc. and has been in the investment business
since 1967.
5. On page 22 for the REAL ESTATE INVESTMENT FUND, the following paragraph
replaces the information under "Portfolio Management:"
Patrice Derrington and Richard E. Salomon are the Portfolio Managers
of the Real Estate Investment Fund. Ms. Derrington is a Managing
Director and Portfolio Manager of Key Asset Management Inc. and has
been in the real estate, investment and finance business since 1991.
Mr. Salomon is a Director of, and a Senior Managing Director with, Key
Asset Management Inc. and has been in the investment advisory business
since 1982.
6. On page 25, the following paragraph replaces the information under the
heading "Investment Limitations," "Diversification Requirements - SEC
Requirement"
Diversification Requirements
SEC Requirement: Each Fund (other than the Real Estate Investment Fund)
is "diversified" according to certain federal securities provisions regarding
the diversification of its assets. Generally, under these provisions, a Fund
must invest at least 75% of its total assets so that no more than 5% of its
total assets are invested in the securities of any one issuer.
7. On pages 40 and 41, under the heading, "Other Securities and Investment
Practices," the percentages in the table under "Real Estate Investment Trusts"
should be revised as indicated:
<TABLE>
<CAPTION>
- ------------------------------------------- ------------ ---------------- -------------- -------------- ---------------
Diversified Stock Ohio Regional
List of Allowable Investments Balanced Stock Value Index Stock
and Investment Practices Fund Fund Fund Fund Fund
- ------------------------------------------- ------------ ---------------- -------------- -------------- ---------------
- ------------------------------------------- ------------ ---------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
REAL ESTATE INVESTMENT TRUSTS. Shares of
ownership in real estate investment 25% 25% 25% 25% 25%
trusts or mortgages on real estate.
- ------------------------------------------- ------------ ---------------- -------------- -------------- ---------------
- ------------------------------------------- ------------ ---------------- -------------- ---------------
Special Special International
List of Allowable Investments Growth Value Growth Growth
and Investment Practices(continued) Fund Fund Fund Fund
- ------------------------------------------- ------------ ---------------- -------------- ---------------
- ------------------------------------------- ------------ ---------------- -------------- ---------------
REAL ESTATE INVESTMENT TRUSTS. Shares of
ownership in real estate investment 25% 25% 25% 25%
trusts or mortgages on real estate.
- ------------------------------------------- ------------ ---------------- -------------- ---------------
</TABLE>
If you would like more information about the Victory Funds call (800)
539-FUND or (800) 539-3863.
VF-EQTY-SUP1
