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[LETTERHEAD OF PRICEWATERHOUSECOOPERS APPEARS HERE]
Independent Accountants' Report
To the Trustees of The Victory Portfolios
We have examined management's assertion about The Victory Portfolios'
(comprising the Gradison Government Reserves Fund, Institutional Money Market
Fund, Federal Money Market Fund, 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,
Fund For Income, Government Mortgage Fund, Investment Quality Bond Fund,
National Municipal Bond Fund, New York Tax-Free Fund, Ohio Municipal Bond Fund,
Balanced Fund, Convertible Securities Fund, Real Estate Investment Fund, Value
Fund, Lakefront Fund, Established Value Fund, Diversified Stock Fund, Stock
Index Fund, Growth Fund, Special Value Fund, Ohio Regional Stock Fund, Small
Company Opportunity Fund, International Growth Fund, LifeChoice Conservative
Investor Fund, LifeChoice Moderate Investor Fund, and LifeChoice Growth Investor
Fund) compliance with the requirements of subsections (b) and (c) of Rule
17f-2 under the Investment Company Act of 1940 as of October 31, 1999, included
in the accompanying Management Statement Regarding Compliance with Certain
Provisions of the Investment Company Act of 1940. Management is responsible for
The Victory Portfolios' compliance with those requirements. Our responsibility
is to express an opinion on management's assertion about The Victory Portfolios'
compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about The Victory Portfolios' compliance
with those requirements and performing such other procedures as we considered
necessary in the circumstances. Included among our procedures were the following
tests performed as of October 31, 1999, with respect to securities of The
Victory Portfolios:
. Count and inspection of all securities located in the vault of Key Trust
Company of Ohio, N.A. in Cleveland, Ohio;
. Confirmation, or other procedures as we considered necessary, of all
securities held in book entry form by the Federal Reserve Bank of Cleveland,
Depository Trust Company, or Bank of New York;
. Confirmation, or other procedures as we considered necessary, of all
securities out for transfer with brokers;
. Confirmation, or other procedures as we considered necessary, of all
repurchase agreements with brokers/banks and agreement of underlying
collateral with Key Trust Company of Ohio, N.A.'s records;
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. Confirmation, or other procedures as we considered necessary, of all mutual
fund investments with transfer agents; and
. Reconciliation of all such securities to the books and records of The Victory
Portfolios and Key Trust Company of Ohio N.A.
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on The Victory Portfolios'
compliance with specified requirements.
In our opinion, management's assertion that The Victory Portfolios were in
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 of the
Investment Company Act of 1940 as of October 31, 1999, with respect to
securities reflected in the investment accounts of The Victory Portfolios is
fairly stated, in all material respects.
This report is intended solely for the information and use of management of The
Victory Portfolios and the Securities and Exchange Commission and should not be
used for any other purpose.
/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
December 16, 1999
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Management Statement Regarding Compliance With Certain Provisions
of the Investment Company Act of 1940
We, as members of management of The Victory Portfolios (comprising the Gradison
Government Reserves Fund, Institutional Money Market Fund, Federal Money Market
Fund, 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, Fund For Income, Government
Mortgage Fund, Investment Quality Bond Fund, National Municipal Bond Fund, New
York Tax-Free Fund, Ohio Municipal Bond Fund, Balanced Fund, Convertible
Securities Fund, Real Estate Investment Fund, Value Fund, Lakefront Fund,
Established Value Fund, Diversified Stock Fund, Stock Index Fund, Growth Fund,
Special Value Fund, Ohio Regional Stock Fund, Small Company Opportunity Fund,
International Growth Fund, LifeChoice Conservative Investor Fund, LifeChoice
Moderate Investor Fund, and LifeChoice Growth Investor Fund) are responsible for
complying with the requirements of subsections (b) and (c) of Rule 17f-2,
"Custody of Investments by Registered Management Investment Companies," of the
Investment Company Act of 1940. We are also responsible for establishing and
maintaining effective internal controls over compliance with those requirements.
We have performed an evaluation of The Victory Portfolios' compliance with the
requirements of subsections (b) and (c) of Rule l7f-2 as of October 31, 1999.
Based on this evaluation, we assert that The Victory Portfolios were in
compliance with the provisions of subsections (b) and (c) of Rule 17f-2 of the
Investment Company Act of 1940 as of October 31, 1999, with respect to
securities reflected in the investment accounts of The Victory Portfolios.
The Victory Portfolios
