As filed with the Securities and Exchange Commission on June 17, 1999
File No. 33-8982
ICA No. 811-4852
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 51 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 52
The Victory Portfolios
(Exact name of Registrant as Specified in Trust Instrument)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Office)
(800) 362-5365
(Area Code and Telephone Number)
Copy to:
George Stevens, Esq. Carl Frischling, Esq.
BISYS Fund Services Kramer Levin Naftalis & Frankel LLP
3435 Stelzer Road 919 Third Avenue
Columbus, Ohio 43219 New York, New York 10022
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this
registration statement becomes effective.
It is proposed that this filing will become effective:
<TABLE>
<CAPTION>
<S> <C>
|_| Immediately upon filing pursuant to paragraph (b) |_| on ____________ pursuant to paragraph (b)
|X| 60 days after filing pursuant to paragraph (a)(1) |_| on (date) pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2) |_| on (date) pursuant to paragraph (a)(2) of rule 485.
</TABLE>
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CROSS-REFERENCE SHEET
THE VICTORY PORTFOLIOS
(Pursuant to Rule 404 showing location in the prospectus for
the Stock Index Fund, a series of The Victory Portfolios, of the responses to
the Items in Part A and location in the Statement of Additional Information for
this Fund of the responses to the Items in Part B of Form N-1A).
Part A
------
Form N-1A,
Item Number Prospectus Caption
----------- ------------------
1(a) Front Cover Page
(b) Back Cover Page
2(a) Risk/Return Summary - Investment Objective
(b) Risk/Return Summary - Principal Investment Strategies
(c) Risk/Return Summary - Principal Risks
3 Risk/Return Summary - Fund Expenses
4(a) Risk/Return Summary - Investment Objective
(b) Risk/Return Summary - Principal Investment Strategies
(c) Risk Factors
5(a) Not Applicable
(b) Not Applicable
(c) Not Applicable
6(a) Organization and Management of the Funds
(b) Not Applicable
7(a) Share Price
(b) How to Buy Shares
(c) How to Sell Shares
(d) Dividends, Distributions and Taxes
(e) Important Information about Taxes
(f) Not Applicable
8(a) Not Applicable
(b) Organization and Management of the Funds - Distribution
and Service Plan
(c) Not Applicable
9 Financial Highlights
<PAGE>
Part B
------
Form N-1A,
Item No. Statement of Additional Information Caption
-------- -------------------------------------------
10(a) Front Cover Page
(b) Table of Contents
11(a) Additional Information - Description of Shares
(b) Not Applicable
12(a) Statement of Additional Information
(b) Instruments in Which the Funds Can Invest
(c) Investment Policies and Limitations
(d) Temporary Defensive Measures - Short-Term Obligations
(e) Advisory and Other Contracts -- Portfolio Turnover
13(a) Trustees and Officers - Board of Trustees
(b) Trustees and Officers - Board of Trustees; Officers
(c) Trustees and Officers - Board of Trustees
(d) Trustees and Officers - Board of Trustees
(e) Trustees and Officers - Officers
14(a) Additional Information
(b) Additional Information
(c) Trustees and Officers - Officers
15(a) Advisory and Other Contracts - Investment Adviser
(b) Advisory and Other Contracts - Distributor
(c) Advisory and Other Contracts - Investment Adviser
(d) Transfer Agent; Other Servicing Plans; Distribution and
Service Plan; Fund Accountant; Legal Counsel
(e) Not Applicable
(f) Additional Purchase, Exchange, and Redemption
Information - Dealer Reallowances
(g) Distribution Plan
(h) Administrator; Transfer Agent; Custodian; Independent
Accountants; Legal Counsel
16(a) Portfolio Transactions
(b) Portfolio Transactions
(c) Portfolio Transactions
(d) Portfolio Transactions
<PAGE>
(e) Not Applicable
17(a) Additional Information - Description of Shares
(b) Not Applicable
18(a) Additional Purchase, Exchange, and Redemption
Information; Purchasing Shares
(b) Not Applicable
(c) Additional Purchase, Exchange, and Redemption
Information; Purchasing Shares
(d) Additional Purchase, Exchange, and Redemption
Information
19(a) Taxes
(b) Taxes
20(a) Distributor
(b) Not Applicable
(c) Not Applicable
21(a) Performance of the Money Market Funds
(b) Performance of the Non-Money Market Funds
22(a) Independent Accountants
(b) Independent Accountants
(c) Not Applicable
Part C
- ------
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE>
The prospectus for the Stock Index Fund dated March 1, 1999, as supplemented
March 29, 1999, is incorporated by reference to: (1) post-effective amendment
no. 47 to The Victory Portfolios' registration statement on Form N-1A filed
electronically with the Securities and Exchange Commission on February 26, 1999,
and (2) a filing submitted pursuant to Rule 497(e) under the Securities Act of
1933, as amended, filed electronically with the Securities and Exchange
Commission on March 29, 1999.
The statement of additional information for the Stock Index Fund dated March 1,
1999, as supplemented March 29, 1999 and April 26, 1999, is incorporated by
reference to: (1) post-effective amendment no. 47 to The Victory Portfolios'
registration statement on Form N-1A filed electronically with the Securities and
Exchange Commission on February 26, 1999, (2) a filing submitted pursuant to
Rule 497(e) under the Securities Act of 1933, as amended, filed electronically
with the Securities and Exchange Commission on March 29, 1999, and (3) a filing
submitted pursuant to Rule 497(e) under the Securities Act of 1933, as amended,
filed electronically with the Securities and Exchange Commission on April 26,
1999.
<PAGE>
Dear Shareholder:
Effective June 30, 1999, Victory Stock Index Fund will begin offering Class G
Shares. This supplement provides Class G information and revises Class A fund
expense information. This supplement should be included in the current
Prospectus for this Victory Fund. This information is important and is part of
your Prospectus.
- --------------------------------------------------------------------------------
The Victory Portfolios
Value Fund
Diversified Stock Fund
Stock Index Fund
Growth Fund
Special Value Fund
Ohio Regional Stock Fund
International Growth Fund
Supplement dated June 30, 1999
To the Prospectus dated March 1, 1999,
as supplemented March 29, 1999
1. On page 9, in the Risk/Return Summary for the Stock Index Fund, replace
the "Fund Expenses" section with the following information:
<TABLE>
<CAPTION>
Shareholder Transaction Expenses
(paid directly from your investment)* Class A Class G
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.75% NONE
---------------------------------------------------------------------- ----------------- -----------------
Maximum Sales Charge Imposed On Reinvested Dividends NONE NONE
---------------------------------------------------------------------- ----------------- -----------------
Deferred Sales Charge NONE** NONE
---------------------------------------------------------------------- ----------------- -----------------
Redemption Fees NONE NONE
---------------------------------------------------------------------- ----------------- -----------------
Exchange Fees NONE NONE
* You may be charged additional fees if you buy, exchange, or sell shares
through a broker or agent.
** Except for investments of $1 million or more. See "Investing with Victory -- Calculation
of Sales Charges -- Class A."
The Annual Fund Operating Expenses table below illustrates the
operating expenses that you will incur as a shareholder of the
Stock Index Fund. The Fund pays these expenses from its
assets.
Annual Fund Operating Expenses Class A Class G /1/
Management Fees 0.60% 0.60%
------------------------------------------------------------ ----------------- ----------------
Distribution (12b-1) Fees 0.00% 0.00%
------------------------------------------------------------ ----------------- ----------------
Other Expenses 0.24% 0.49% /2/
----- -----
------------------------------------------------------------ ----------------- ----------------
Total Fund Operating Expenses 0.84% /3/ 1.09% /4/
===== =====
/1/ The estimated Class G expenses for the fiscal year ending
October 31, 1999 are based on historical expenses of Class
A Shares of the Stock Index Fund.
/2/ Includes a shareholder servicing fee of 0.25%.
/3/ For the fiscal year ended October 31, 1998, Key Asset
Management Inc., the Stock Index Fund's investment adviser
(the Adviser), waived a portion of its fee so that the
Fund's net operating expenses equaled 0.57% for Class A
Shares. This waiver is currently in effect, but the
Adviser may terminate it at any time.
/4/ For the fiscal year ending October 31, 1999, the Adviser
anticipates that it will voluntarily waive its fees so
that the net operating expenses of Class G Shares of the
Stock Index Fund will equal 0.82%. The Adviser may
terminate this waiver at any time.
</TABLE>
<PAGE>
EXAMPLE
The following Example is designed to help you compare the cost
of investing in the Stock Index Fund with the cost of
investing in other mutual funds. The Example assumes that you
invest $10,000 in the Stock Index Fund for the time periods
shown and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a
5% return each year and that the Stock Index Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C> <C>
Class A $656 $828 $1,014 $1,553
Class G $111 $347 $601 $1,329
</TABLE>
2. On page 25, under "Choosing a Share Class," add the following information:
The Stock Index Fund also offers Class G Shares which have no
front-end sales charge. The following information may help you
to compare Class G Shares of the Stock Index Fund to its Class
A Shares:
Class G
-------
o No front-end sales charge. All your money goes to work for
you right away.
o No deferred sales charge.
o Higher annual expenses than Class A Shares.
o No automatic conversion to Class A Shares.
o Class G Shares are sold only by certain broker-dealers.
3. On page 35, under "Shareholder Servicing Plan," please add the following
paragraph at the end of the section:
Pursuant to the Shareholder Servicing Plan described above, Class G shares of
the Stock Index Fund also will pay to shareholder servicing agents a
monthly service fee at an annual rate of 0.25% of the average daily net
assets of the Stock Index Fund.
4. On page 35, under "Distribution Plan," please add the following paragraph
at the end of the section:
Victory has adopted a Distribution and Service Plan for Class G Shares of the
Stock Index Fund under Rule 12b-1 under the Investment Company Act of 1940.
Class G Shares of the Stock Index Fund do not pay expenses under this plan.
Please insert this Supplement in the front of your Prospectus. If you want to
obtain more information, please call the Funds at 800-539-FUND or Gradison
McDonald at 513-579-5999 or 800-869-5999.
VF-EQTY-SUP1
<PAGE>
Registration Statement
of
THE VICTORY PORTFOLIOS
----------------------
on
Form N-1A
PART C. OTHER INFORMATION
Item 23.
Exhibits:
---------
(a)(1) Certificate of Trust (1)
(a)(2) Delaware Trust Instrument dated December 6, 1995, as amended. (2)
(b) Bylaws, Amended and Restated as of August 28, 1998.(3)
(c) The rights of holders of the securities being registered are set
out in Articles II, VII, IX and X of the Trust Instrument
referenced in Exhibit (a)(2) above and in Article IV of the Bylaws
referenced in Exhibit (b) above.
(d)(1) Investment Advisory Agreement dated as of March 1, 1997 between
Registrant and Key Asset Management Inc. ("KAM"), with Schedule A
amended as of March 1, 1997, March 2, 1998 and May 29, 1998. (4)
(d)(2) Investment Advisory Agreement dated March 1, 1997 between
Registrant and KAM regarding the Lakefront Fund and Real Estate
Investment Fund. (5)
(d)(3) Schedule A to the Investment Advisory Agreement between
Registrant and KAM regarding the Lakefront Fund and Real Estate
Investment Fund, as amended December 11, 1998, to include the
Gradison Government Reserves Fund and Established Value Fund.
(d)(4) Investment Sub-Advisory Agreement dated March 1, 1997 between KAM
and Lakefront Capital Investors, Inc. regarding the Lakefront
Fund. (5)
- --------------------------------
1 Filed as an Exhibit to Post-Effective Amendment No. 26 to
Registrant's Registration Statement on Form N-1A filed
electronically on December 28, 1995, accession number
0000950152-95-003085.
2 Filed as an Exhibit to Post-Effective Amendment No. 36 to
Registrant's Registration Statement on Form N-1A filed
electronically on February 26, 1998, accession number
0000922423-98-000264.
3 Filed as an Exhibit to Post-Effective Amendment No. 44 to
Registrant's Registration Statement on Form N-1A filed
electronically on November 19, 1998, accession number
0000922423-98-001323.
4 Filed as an Exhibit to Post-Effective Amendment No. 42 to
Registrant's Registration Statement on Form N-1A filed
electronically on July 29, 1998, accession number
0000922423-98-000725.
5 Filed as an Exhibit to Post-Effective Amendment No. 34 to
Registrant's Registration Statement on Form N-1A filed
electronically on December 12, 1997, accession number
0000922423-97-001015.
C-1
<PAGE>
(d)(5) Investment Advisory Agreement dated June 1, 1998 between
Registrant and KAM regarding the International Growth Fund. (4)
(d)(6) Portfolio Management Agreement dated June 1, 1998 between
Registrant, KAM and Indocam International Investment Services,
S.A. regarding the International Growth Fund. (6)
(e)(1) Distribution Agreement dated June 1, 1996 between Registrant and
BISYS Fund Services Limited Partnership ("BISYS"). (4)
(e)(2) Schedule I to the Distribution Agreement, as revised Decembet 11,
1998.
(f) None.
(g)(1)(a) Amended and Restated Mutual Fund Custody Agreement dated August 1,
1996 between Registrant and Key Trust of Ohio, Inc., with
Attachment B revised as of March 2, 1998. (4)
(g)(1)(b) Schedule a to the Mutual Fund Custody Agreement, as revised
December 11, 1998.
(g)(2) Custody Agreement dated May 31, 1996 between Morgan Stanley Trust
Company and Key Trust Company of Ohio. (7)
(h)(1) Form of Broker-Dealer Agreement. (8)
(h)(2)(a) Administration Agreement dated October 1, 1997 between Registrant
and BISYS, with Schedule II-B amended as of March 2, 1998. (4)
(h)(2)(b) Schedule I to the Administration Agreement, as revised December
11, 1998.
(h)(3)(a) Sub-Administration Agreement dated October 1, 1997 between BISYS
and KAM. (4)
(h)(3)(b) Schedule A to the Sub-Administration Agreement, as revised
December 11, 1998.
(h)(4)(a) Transfer Agency and Service Agreement dated July 12, 1996 between
Registrant and State Street Bank and Trust Company. (4)
(h)(4)(b) Schedule A to the Transfer Agency Agreement, as revised December
11, 1998.
(h)(5) Fund Accounting Agreement dated June 1, 1999 between Registrant
and BISYS Fund Services Ohio, Inc.
(h)(6) Purchase Agreement is incorporated herein by reference to Exhibit
13(c) to Post-Effective Amendment No. 7 to Registrant's
Registration Statement on Form N-1A filed on December 1, 1989.
(i) Consent of Kramer Levin Naftalis & Frankel LLP.
- -----------------------
6 Filed as an Exhibit to Post-Effective Amendment No. 40 to
Registrant's Registration Statement on Form N-1A filed
electronically on June 12, 1998, accession number
0000922423-98-000602.
7 Filed as an Exhibit to Post-Effective Amendment No. 30 to
Registrant's Registration Statement on Form N-1A filed
electronically on July 30, 1996, accession number
0000922423-96-000344.
8 Filed as an Exhibit to Post-Effective Amendment No. 27 to
Registrant's Registration Statement on Form N-1A filed
electronically on January 31, 1996, accession number
0000922423-96-000047.
C-2
<PAGE>
(j) Consent of PricewaterhouseCoopers LLP.
(k) Not applicable.
(l)(1) Purchase Agreement dated November 12, 1986 between Registrant and
Physicians Insurance Company of Ohio is incorporated herein by
reference to Exhibit 13 to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A filed on November
13, 1986.
(l)(2) Purchase Agreement dated October 15, 1989 is incorporated herein
by reference to Exhibit 13(b) to Post-Effective Amendment No. 7 to
Registrant's Registration Statement on Form N-1A filed on December
1, 1989.
(m)(1)(a) Distribution and Service Plan dated June 5, 1995. (4)
(m)(1)(b) Schedule I to the Distribution and Service Plan as revised May 11,
1999.
(m)(2) Distribution Plan dated June 5, 1995 for Class B Shares of
Registrant with Schedule I amended as of February 1, 1996. (6)
(m)(3) Distribution and Service Plan dated December 11, 1998 for Class G
Shares of Registrant. (9)
(m)(4)(a) Shareholder Servicing Plan dated June 5, 1995. (4)
(m)(4)(b) Schedule I to the Shareholder Servicing Plan, as revised May 11,
1999.
(m)(5) Form of Shareholder Servicing Agreement. (1)
(n) Financial Data Schedule.
(o) Amended and Restated Rule 18f-3 Multi-Class Plan as of May 11,
1999.
Powers of Attorney of Roger Noall and Frank A. Weil. (10 )
Powers of Attorney of Leigh A. Wilson, Harry Gazelle, Thomas F.
Morrissey, H. Patrick Swygert and Eugene J. McDonald. (2)
Item 24. Persons Controlled by or Under Common Control with Registrant.
-------------------------------------------------------------
None.
Item 25. Indemnification
---------------
Article X, Section 10.02 of Registrant's Delaware Trust Instrument, as amended,
incorporated herein as Exhibit (a)(2) hereto, provides for the indemnification
of Registrant's Trustees and officers, as follows:
- ----------------------------
9 Filed as an Exhibit to Post-Effective Amendment No. 45 to
Registrant's Registration Statement on Form N-1A filed
electronically on January 26, 1999, accession number
0000922423-99-000059.
10 Filed as an Exhibit to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-14 filed
electronically on February 3, 1998, accession number
0000922423-98-000095.
C-3
<PAGE>
Section 10.02 Indemnification.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified by
the Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office or (B) not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (A) by the court or other body approving
the settlement; (B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a defense to
any claim, action, suit or proceeding of the character described in Subsection
(a) of this Section 10.02 may be paid by the Trust or Series from time to time
prior to final disposition thereof upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him to the
Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 10.02; provided, however, that either (i)
such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under this Section 10.02."
C-4
<PAGE>
Indemnification of the Fund's principal underwriter, custodian, fund accountant,
and transfer agent is provided for, respectively, in Section V of the
Distribution Agreement incorporated by reference as Exhibit 6(a) hereto, Section
28 of the Custody Agreement incorporated by reference as Exhibit 8(a) hereto,
Section 5 of the Fund Accounting Agreement incorporated by reference as Exhibit
9(d) hereto, and Section 7 of the Transfer Agency Agreement incorporated by
reference as Exhibit 9(c) hereto. Registrant has obtained from a major insurance
carrier a trustees' and officers' liability policy covering certain types of
errors and omissions. In no event will Registrant indemnify any of its trustees,
officers, employees or agents against any liability to which such person would
otherwise be subject by reason of his willful misfeasance, bad faith, or gross
negligence in the performance of his duties, or by reason of his reckless
disregard of the duties involved in the conduct of his office or under his
agreement with Registrant. Registrant will comply with Rule 484 under the
Securities Act of 1933 and Release 11330 under the Investment Company Act of
1940 in connection with any indemnification.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to trustees, officers, and controlling persons or
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Investment Company
Act of 1940, as amended, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of the Investment Adviser
--------------------------------------------------------
KAM is the investment adviser to each Fund of The Victory Portfolios. KAM is a
wholly-owned indirect subsidiary of KeyCorp, a bank holding company which had
total assets of approximately $80 billion as of March 31, 1999. KeyCorp is a
leading financial institution doing business in 13 states from Maine to Alaska,
providing a full array of trust, commercial, and retail banking services. Its
non-bank subsidiaries include investment advisory, securities brokerage,
insurance, bank credit card processing, mortgage and leasing companies. KAM and
its affiliates have over $76 billion in assets under management, and provides a
full range of investment management services to personal and corporate clients.
Lakefront Capital Investors, Inc. ("Lakefront"), sub-adviser of the Lakefront
Fund, 127 Public Square, Cleveland, Ohio 44114, was incorporated in 1991.
Indocam International Investment Services, S.A. ("IIIS") serves as the
sub-adviser to the International Growth Fund. IIIS and its advisory affiliates
("Indocam") are the global asset management component of the Credit Agricole
banking and financial services group. IIIS is a registered investment adviser
with the SEC and also serves as the investment adviser to the France Growth Fund
and as subadviser for the BNY Hamilton International Equity Fund and the John
Hancock European Equity Fund. Indocam has affiliates which are engaged in the
brokerage business. The principal office of IIIS is 90 Blvd. Pasteur, 75730
Paris, CEDEX, 15 -- France.
To the knowledge of Registrant, none of the directors or officers of KAM,
Lakefront, or IIIS, except those set forth below, is or has been at any time
during the past two calendar years engaged in any other
C-5
<PAGE>
business, profession, vocation or employment of a substantial nature, except
that certain directors and officers of KAM also hold positions with KeyCorp or
its subsidiaries.
The principal executive officers and directors of KAM are as follows:
- ---------------------------------------------------------------------
Directors:
- ----------
William G. Spears o Senior Managing Director and Chairman
Richard J. Buoncore o Senior Managing Director, President and Chief
Executive Officer.
Bradley E. Turner o Senior Managing Director and Chief Operating
Officer
Anthony Aveni o Senior Managing Director and Chief Investment
Officer of Society Asset Management Division.
Vincent DeP. Farrell o Senior Managing Director and Chief Investment
Officer of Spears, Benzak, Salomon & Farrell
Division.
Richard E. Salomon o Senior Managing Director.
Gary R. Martzolf o Senior Managing Director.
Other Officers:
Charles G. Crane o Senior Managing Director and Chief Market
Strategist.
James D. Kacic o Chief Financial Officer, Chief Administrative
Officer, and Senior Managing Director. William
R. Allen o Managing Director.
Michael Foisel o Assistant Treasurer.
Michael Stearns o Chief Compliance Officer.
William J. Blake o Secretary.
Steven N. Bulloch o Assistant Secretary. Also, Senior Vice
President and Senior Counsel of KeyCorp
Management Company.
Kathleen A. Dennis o Senior Managing Director.
The business address of each of the foregoing individuals is 127 Public Square,
Cleveland, Ohio 44114.
The principal executive officer and director of Lakefront is:
- -------------------------------------------------------------
Nathaniel E. Carter o President and Chief Investment Officer.
The business address of the foregoing individual is 127 Public Square,
Cleveland, Ohio 44114.
The principal executive officers and directors of IIIS are as follows:
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Jean-Claude Kaltenbach o Chairman and CEO.
Ian Gerald McEvatt o Director. Claude Doumic o Director.
Didier Guyot de la Pommeraye o Director. Charles Vergnot o Director.
Eric Jostrom o Director. Gerard Sutterlin o Secretary General.
</TABLE>
C-6
<PAGE>
The business address of each of the foregoing individuals is 90 Blvd. Pasteur,
75730 Paris, CEDEX 15 -- France.
Item 27. Principal Underwriter
---------------------
(a) BISYS Fund Services, Registrant's administrator, also acts as the
distributor for the following investment companies as of June 17, 1999.
<TABLE>
<CAPTION>
<S> <C>
Alpine Equity Trust MMA Praxis Mutual Funds
American Performance Funds M.S.D. & T. Funds
AmSouth Mutual Funds Pacific Capital Funds
The BB&T Mutual Funds Group The Parkstone Advantage Fund
The Coventry Group Pegasus Funds
ESC Strategic Funds, Inc. Puget Sound Alternative Investment Series Trust
The Eureka Funds Republic Advisor Funds Trust
Fifth Third Funds Republic Funds Trust
Hirtle Callaghan Trust The Riverfront Funds, Inc.
HSBC Funds Trust Sefton Funds
HSBC Mutual Funds Trust SSgA Liquidity Fund
The Infinity Mutual Funds, Inc. The Sessions Group
INTRUST Funds Trust Summit Investment Trust
The Kent Funds The Victory Variable Insurance Funds
Magna Funds Vintage Mutual Funds, Inc.
Mercantile Mutual Funds, Inc.
Meyers Investment Trust
(b) Directors, officers and partners of BISYS Fund Services, Inc., the General
Partner of BISYS Fund Services, as of June 15, 1998 were as follows:
Lynn J. Mangum o Chairman and CEO. William Tomko o Senior Vice
President.
Dennis Sheehan o Director, Executive Vice Michael D. Burns o Vice President.
President and Treasurer.
J. David Huber o President. David Blackmore o Vice President.
Kevin J. Dell o Vice President and Secretary. Steve Ludwig o Compliance Officer.
Mark Rybarczyk o Senior Vice President. Robert Tuch o Assistant Secretary.
</TABLE>
The business address of each of the foregoing individuals is BISYS Fund
Services, Inc., 3435 Stelzer Road, Columbus, Ohio 43215.
Item 28. Location of Accounts and Records
--------------------------------
(1) Key Asset Management Inc., 127 Public Square, Cleveland, Ohio 44114-1306
(records relating to its functions as investment adviser and
sub-administrator).
(2) Lakefront Capital Investors, Inc., 127 Public Square, Cleveland, Ohio
44114 (records relating to its function as investment sub-adviser for the
Lakefront Fund only).
C-7
<PAGE>
(3) Indocam International Investment Services, S.A., 9, rue Louis Murat,
Paris, France 75008 (records relating to its function as investment
sub-adviser for the International Growth Fund only).
(4) KeyBank National Association, 127 Public Square, Cleveland, Ohio
44114-1306 (records relating to its function as shareholder servicing
agent).
(5) BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219
(records relating to its functions as administrator and fund accountant).
(6) BISYS Fund Services Limited Partnership, 3435 Stelzer Road, Columbus,
Ohio 43219 (records relating to its function as distributor).
(7) State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110-3875 (records relating to its function as transfer
agent).
(8) Boston Financial Data Services, Inc. Two Heritage Drive, Quincy,
Massachusetts 02171 (records relating to its functions as dividend
disbursing agent and shareholder servicing agent).
(9) Key Trust Company of Ohio, N.A., 127 Public Square, Cleveland, Ohio
44114-1306 (records relating to its functions as custodian and securities
lending agent).
(10) Chase Manhattan Bank, 55 Water Street, Room 728, New York, New York 10041
(records relating to its function as sub-custodian of the Balanced Fund,
Convertible Securities Fund, International Growth Fund, Lakefront Fund,
and Real Estate Investment Fund).
Item 29. Management Services
-------------------
None.
Item 30. Undertakings
------------
None.
NOTICE
A copy of the Certificate of Trust of Registrant is on file with the Secretary
of State of Delaware and notice is hereby given that this Post-Effective
Amendment to Registrant's Registration Statement has been executed on behalf of
Registrant by officers of, and Trustees of, Registrant as officers and as
Trustees, respectively, and not individually, and that the obligations of or
arising out of this instrument are not binding upon any of the Trustees,
officers or shareholders of Registrant individually but are binding only upon
the assets and property of Registrant.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the
Investment Company Act, Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, duly authorized, in the City of
New York, and the State of New York on this 17th day of June, 1999.
THE VICTORY PORTFOLIOS
By: /s/ Leigh A. Wilson
-------------------
Leigh A. Wilson, President and Trustee
Pursuant to the requirements of the Securities Act, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Roger Noall Chairman of the Board and Trustee June 17, 1999
- ---------------
Roger Noall
/s/ Leigh A. Wilson Trustee June 17, 1999
- -------------------
Leigh A. Wilson
/s/ Joel B. Engle Treasurer June 17, 1999
- -----------------
Joel B. Engle
/s/ Harry Gazelle* Trustee June 17, 1999
- -----------------
Harry Gazelle
/s/ Thomas F. Morissey* Trustee June 17, 1999
- -----------------------
Thomas F. Morrissey
/s/ H. Patrick Swygert* Trustee June 17, 1999
- -----------------------
H. Patrick Swygert
/s/ Frank A. Weil* Trustee June 17, 1999
- ------------------
Frank A. Weil
/s/ Eugene J. McDonald* Trustee June 17, 1999
- -----------------------
Eugene J. McDonald
</TABLE>
- --------------------------------
*
By: /s/ Carl Frischling
-------------------
Carl Frischling
Attorney-in-fact
<PAGE>
THE VICTORY PORTFOLIOS
INDEX TO EXHIBITS
Item 23.
Exhibit Number
EX-99.B5 Schedule A to the Investment Advisory Agreement between
Registrant and KAM regarding the Lakefront Fund and Real
Estate Investment Fund, as amended December 11, 1998, to
include the Gradison Government Reserves Fund and
Established Value Fund.
EX-99.B6 Schedule I to the Distribution Agreement, as revised
December 11, 1998.
EX-99.B8 Schedule A to the Mutual Fund Custody Agreement, as
revised December 11, 1998.
EX-99.B9.a Schedule I to the Administration Agreement, as revised
December 11, 1998.
EX-99.B9.b Schedule A to the Sub-Administration Agreement, as
revised December 11, 1998.
EX-99.B9.c Schedule A to the Transfer Agency Agreement, as revised
December 11, 1998.
EX-99.B9.d Fund Accounting Agreement dated June 1, 1999 between
Registrant and BISYS Fund Services Ohio, Inc.
EX-99.B10 Consent of Kramer Levin Naftalis & Frankel LLP.
EX-99.B11 Consent of PricewaterhouseCoopers LLP.
EX-99.B15.a Schedule I to the Distribution and Service Plan, as
revised May 11, 1999.
EX-99.B15.b Schedule I to the Shareholder Servicing Plan, as revised
May 11, 1999.
EX-99.B16 Amended and Restated Rule 18f-3 Multi-Class Plan as of
May 11, 1999.
EX.99.B27.1 Financial Data Schedule.
SCHEDULE A
TO THE INVESTMENT ADVISORY AGREEMENT DATED MARCH 1, 1997
BETWEEN THE VICTORY PORTFOLIOS AND
KEY ASSET MANAGEMENT INC.
As amended December 11, 1998
Name of Fund Fee*
- ------------ ----
1. The Victory Lakefront Fund 1.00%
2. The Victory Real Estate Investment Fund 1.00%
3. The Victory Established Value Fund **
4. The Victory Gradison Government Reserves Fund ***
- -----------------
* As a percentage of average daily net assets. Note, however, that the Adviser
shall have the right, but not the obligation, to voluntarily waive any portion
of the advisory fee from time to time. Any such voluntary waiver will be
irrevocable and determined in advance of rendering investment advisory services
by the Adviser, and shall be in writing and signed by the parties hereto.
** Based on the average daily net assets at an annual rate of 0.65% on the first
$100 million, 0.55% on the next $100 million, 0.45% in excess of $200 million.
*** Based on the average daily net assets at an annual rate of 0.50% on the
first $400 million, 0.45% on the next $600 million, 0.40% on the next $1
billion, and 0.35% in excess of $2 billion.
SCHEDULE I
TO THE DISTRIBUTION AGREEMENT DATED JUNE 1, 1996 BETWEEN
THE VICTORY PORTFOLIOS AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Amended as of December 11, 1998
<TABLE>
<CAPTION>
<S> <C>
1. Victory Balanced Fund 26. Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
2. Victory Diversified Stock Fund 27. Victory Convertible Securities Fund
Class A Shares 28. Victory LifeChoice Conservative Investor Fund
Class B Shares 29. Victory LifeChoice Growth Investor Fund
3. Victory Government Mortgage Fund 30. Victory LifeChoice Moderate Investor Fund
4. Victory Growth Fund 31. Victory Maine Municipal Bond Fund (Intermediate)
5. Victory Financial Reserves Fund 32. Victory Maine Municipal Bond Fund
(Short-Intermediate)
6. Victory Fund for Income 33. Victory Michigan Municipal Bond Fund
7. Victory Institutional Money Market Fund 34. Victory Equity Income Fund
Investor Shares 35. Victory National Municipal Bond Fund (Long)
Select Shares 36. Victory National Municipal Bond Fund
8. Victory Intermediate Income Fund (Short-Intermediate)
9. Victory International Growth Fund 37. Victory Established Value Fund
Class A Shares 38. Victory Gradison Government Reserves Fund
Class B Shares
10. Victory Investment Quality Bond Fund
11. Victory Lakefront Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Real Estate Investment Fund
20. Victory Special Growth Fund (eff 3/29/99 Small
Company Opportunity Fund)
21. Victory Special Value Fund
Class A Shares
Class B Shares
22. Victory Stock Index Fund
23. Victory Tax-Free Money Market Fund
24. Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25. Victory Value Fund
</TABLE>
SCHEDULE 1
TO THE AMENDED AND RESTATED MUTUAL FUND
CUSTODY AGREEMENT DATED AUGUST 1, 1996
BETWEEN THE VICTORY PORTFOLIOS
AND KEY TRUST COMPANY OF OHIO, INC.
Amended as of December 11, 1998
<TABLE>
<CAPTION>
<S> <C>
Victory Balanced Fund Victory Federal Money Market
Class A Shares Investor Shares
Class B Shares Select Shares
Victory Diversified Stock Fund Victory Convertible Securities Fund
Class A Shares Victory LifeChoice Conservative Investor Fund
Class B Shares Victory LifeChoice Growth Investor Fund
Victory Government Mortgage Fund Victory LifeChoice Moderate Investor Fund
Victory Growth Fund Victory Maine Municipal Bond Fund
Victory Financial Reserves Fund (Intermediate)
Victory Fund for Income Victory Maine Municipal Bond Fund
Victory Institutional Money Market Fund (Short-Intermediate)
Investor Shares Victory Michigan Municipal Bond Fund
Select Shares Victory Equity Income Fund
Victory Intermediate Income Fund Victory National Municipal Bond Fund (Long)
Victory International Growth Fund Victory National Municipal Bond Fund
Class A Shares (Short-Intermediate)
Class B Shares Victory Established Value Fund
Victory Investment Quality Bond Fund Victory Gradison Government Fund
Victory Lakefront Fund
Victory Limited Term Income Fund
Victory National Municipal Bond Fund
Class A Shares
Class B Shares
Victory New York Tax-Free Fund
Class A Shares
Class B shares
Victory Ohio Municipal Bond Fund
Victory Ohio Municipal Money Market Fund
Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
Victory Prime Obligations Fund
Victory Real Estate Investment Fund
Victory Special Growth Fund
(eff. 3/29/99 Small Company Opportunity Fund)
Victory Special Value Fund
Class A Shares
Class B Shares
Victory Stock Index Fund
Victory Tax-Free Money Market Fund
Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
Victory Value Fund
</TABLE>
SCHEDULE 1
TO THE ADMINISTRATION AGREEMENT DATED
OCTOBER 1, 1997 BETWEEN
THE VICTORY PORTFOLIOS AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Amended as of December 11, 1998
<TABLE>
<CAPTION>
<S> <C>
1. Victory Balanced Fund 26. Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
2. Victory Diversified Stock Fund 27. Victory Convertible Securities Fund
Class A Shares 28 Victory LifeChoice Conservative Investor Fund
Class B Shares 29 Victory LifeChoice Growth Investor Fund
3. Victory Government Mortgage Fund 30. Victory LifeChoice Moderate Investor Fund
4. Victory Growth Fund 31. Victory Maine Municipal Bond Fund (Intermediate)
5. Victory Financial Reserves Fund 32. Victory Maine Municipal Bond Fund (Short-Intermediate)
6. Victory Fund for Income 33. Victory Michigan Municipal Bond Fund
7. Victory Institutional Money Market Fund 34. Victory Equity Income Fund
Investor Shares 35. Victory National Municipal Bond Fund (Long)
Select Shares
8. Victory Intermediate Income Fund 36. Victory National Municipal Bond Fund
9. Victory International Growth Fund (Short-Intermediate)
Class A Shares 37. Victory Established Value Fund
Class B Shares 38 Victory Gradison Government Reserves Fund
10. Victory Investment Quality Bond Fund
11. Victory Lakefront Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Real Estate Investment Fund
20. Victory Special Growth Fund
(eff. 3/29/99 Small Company Opportunity Fund)
21. Victory Special Value Fund
22. Victory Stock Index Fund
23. Victory Tax-Free Money Market Fund
24. Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25. Victory Value Fund
</TABLE>
SCHEDULE A
SUB-ADMINISTRATION AGREEMENT DATED OCTOBER 1, 1997
BETWEEN
BISYS FUND SERVICES LIMITED PARTNERSHIP
AND
KEY ASSET MANAGEMENT INC.
Amended as of December 11, 1998
<TABLE>
<CAPTION>
<S> <C>
Funds
1. Balanced Fund 24. Lakefront Fund
2. Diversified Stock Fund 25. Real Estate Investment Fund
3. Government Mortgage Fund 26. Federal Money Market Fund
4. Growth Fund 27. Convertible Securities Fund
5. Intermediate Income Fund 28. Maine Municipal Bond Fund (Intermediate)
6. International Growth Fund 29. Maine Municipal Bond Fund (Short-Intermediate)
7. Investment Quality Bond Fund 30. Michigan Municipal Bond Fund
8. Limited Term Income Fund 31. Equity Income Fund
9. Ohio Municipal Bond Fund 32. National Municipal Bond Fund (Long)
10. Ohio Regional Stock Fund 33. National Municipal Bond Fund (Short-Intermediate)
11. Prime Obligations Fund
12. Special Growth Fund 34. Established Value Fund
(eff 3/29/99 Small Company Opportunity Fund) 35. Gradison Government Reserves Fund
13. Special Value Fund
14. Stock Index Fund
15. Tax-Free Money Market Fund
16. U.S. Government Obligations Fund
17. Value Fund
18. Financial Reserves Fund
19. Fund for Income
20. Institutional Money Market Fund
21. National Municipal Bond Fund
22. New York Tax-Free Fund
23. Ohio Municipal Money Market Fund
</TABLE>
SCHEDULE A
TO THE TRANSFER AGENCY AND SERVICE AGREEMENT
DATED JULY 12, 1996 BETWEEN THE VICTORY PORTFOLIOS
AND STATE STREET BANK AND TRUST COMPANY
Amended as of December 11, 1998
<TABLE>
<CAPTION>
<S> <C>
1. Victory Balanced Fund 26. Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
2. Victory Diversified Stock Fund 27. Victory Convertible Securities Fund
Class A Shares 28. Victory LifeChoice Conservative Investor Fund
Class B Shares 29. Victory LifeChoice Growth Investor Fund
3. Victory Government Mortgage Fund 30. Victory LifeChoice Moderate Investor Fund
4. Victory Growth Fund 31. Victory Maine Municipal Bond Fund (Intermediate)
5. Victory Financial Reserves Fund 32. Victory Maine Municipal Bond Fund
6. Victory Fund for Income (Short-Intermediate)
7. Victory Institutional Money Market Fund 33. Victory Michigan Municipal Bond Fund
Investor Shares 34. Victory Equity Income Fund
Select Shares 35. Victory National Municipal Bond Fund (Long)
6. Victory Fund for Income 36. Victory National Municipal Bond Fund
9. Victory International Growth Fund (Short-Intermediate)
Class A Shares 37. Victory Established Value Fund
Class B Shares 38. Victory Gradison Government Reserves Fund
10. Victory Investment Quality Bond Fund
11. Victory Lakefront Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Real Estate Investment Fund
20. Victory Special Growth Fund (eff 3/29/99 Small
Company Opportunity Fund)
21. Victory Special Value Fund
Class A Shares
Class B Shares
22. Victory Stock Index Fund
23. Victory Tax-Free Money Market Fund
24. Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25. Victory Value Fund
</TABLE>
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 1st day of June, 1999 between THE VICTORY
PORTFOLIOS (the "Trust"), a Delaware business trust having its principal place
of business at 3435 Stelzer Road, Columbus, Ohio 43219, on behalf of each Fund
listed on Schedule A, individually and not jointly, and BISYS FUND SERVICES
OHIO, INC. ("BISYS"), a corporation organized under the laws of the State of
Ohio and having its principal place of business at 3435 Stelzer Road, Columbus,
Ohio 43219.
WHEREAS, the Trust desires that BISYS perform certain fund accounting
services for each investment portfolio of the Trust identified on Schedule A
hereto (individually referred to herein as a "Fund" and collectively as the
"Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS FUND ACCOUNTANT. BISYS will keep and maintain the
following books and records of each Fund pursuant to Rule 31a-1 under the
Investment Company Act of 1940, as amended (the "Rule"):
a. Journals containing an itemized daily record in detail of
all purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required by subsection (b)(1) of the Rule;
b. General and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense accounts, including interest
accrued and interest received, as required by subsection (b)(2)(i) of the Rule;
c. Separate ledger accounts required by subsection (b)(2)(ii)
and (iii) of the Rule; and
d. A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule.
All such books and records shall be the property of the Trust, and BISYS agrees
to make such books and records available for inspection by the Trust or by the
Securities and Exchange commission at reasonable times and otherwise to keep
confidential all records and other information relative to the Trust; except
when requested to divulge such information by duly-constituted authorities or
court process, or when requested by the Trust.
<PAGE>
In addition to the maintenance of the books and records specified
above, BISYS shall perform the following account services daily for each Fund:
a. Calculate the net asset value per Share;
b. Calculate the dividend and capital gain distribution,
if any;
c. Calculate the yield;
d. Provide the following reports:
(i) a current security position report;
(ii) a summary report of transactions and pending
maturities (including the principal, cost, and accrued interest on each
portfolio security in maturity date order); and
(iii) a current cash position report (including cash
available from portfolio sales and maturities and sales of a Fund's Shares less
cash needed for redemptions and settlement of portfolio purchases);
e. Such other similar services with respect to a Fund as may be
reasonable requested by the Trust.
2. COMPENSATION. See Schedule B attached.
3. EFFECTIVE DATE. This Agreement shall become effective with respect to a Fund
as of the date first written above (the "Effective Date").
4. DURATION AND TERMINATION. This Agreement shall become effective on the
Effective Date and, unless earlier terminated as provided herein, shall continue
as to a particular Fund until May 31, 2001 and thereafter, if not terminated,
this Agreement shall continue automatically as to a particular Fund for
successive terms of two years; provided, that such continuance is specifically
approved (a) by the vote of a majority of those members of the Trust's Board of
Trustees who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the vote of (i) the Trust's Board of Trustees or (ii) a
majority of the outstanding voting securities of such Fund.
This Agreement may be terminated without penalty (a) by provision of a notice of
nonrenewal in the manner set forth below, (b) upon mutual agreement of the
parties, or (c) for "cause" (as defined below) by the party alleging cause upon
the provision of sixty days' notice. Written notice of nonrenewal must be
provided at least sixty days prior to the end of the then-current term. After
such termination, for so long as BISYS, with the written consent of the Trust,
in fact continues to perform any one or more of the services contemplated by
this Agreement or any schedule or exhibit hereto, the provisions of this
Agreement, including without limitation the
2
<PAGE>
provisions dealing with indemnification, shall continue in full force and
effect. Compensation due BISYS through the date of such termination and unpaid
by the Trust upon such termination shall be immediately due and payable upon and
notwithstanding such termination. BISYS shall be entitled to collect from the
Trust, in addition to the compensation described under Section 2 hereof, the
amount of all of BISYS' cash disbursements for services in connection with
BISYS' activities in effecting such termination, including without limitation,
the delivery to the Trust and/or its designees of the Trust's property, records,
instruments and documents, or any copies thereof. Subsequent to such termination
for a reasonable fee, BISYS will provide the Trust with reasonable access to any
Trust documents or records remaining in its possession.
For purposes of this Agreement, "cause" shall mean (a) a material
breach that has not been cured within thirty (30) days following written notice
of such breach from the non-breaching party; (b) a final, unappealable judicial,
regulatory or administrative ruling or order in which the party to be terminated
has been found guilty of criminal or unethical behavior in the conduct of its
business; (c) financial difficulties on the part of the party to be terminated
which are evidenced by the authorization or commencement of, or involvement by
way of pleading, answer, consent or acquiescence in, a voluntary or involuntary
case under Title 11 of the United States Code, as from time to time is in
effect, or any applicable law, other than said Title 11, of any jurisdiction
relating to the liquidation or reorganization of debtors or to the modification
or alteration of the rights of creditors; (d) any circumstance which
substantially impairs the performance of the obligations and duties of the party
to be terminated, or the ability to perform those obligations and duties, as
contemplated herein; or (e) a failure to cure any Year 2000 deficiencies
pursuant to Section 10 of this Agreement.
The parties acknowledge that, in the event of a change of control (as
defined in the Investment Company Act of 1940, as amended) of BISYS or of Key
Asset Management Inc., the Trust's investment adviser, BISYS may be replaced as
fund accountant for the Trust prior to the expiration of the initial two-year
term or any subsequent two-year term. In that connection, the parties agree
that, notwithstanding the replacement of BISYS as referenced above, the Trust
shall remain responsible for the payment of fees to BISYS hereunder for the
remainder of the then-current contract term. The amount of such fees will be
based on the average net assets of the Funds for the twelve months prior to such
replacement. In the event that the Trust is responsible for the payment of fees
to BISYS as Fund Accountant, in accordance with the provisions of this
paragraph, the parties acknowledge and agree that the Trust shall not be
responsible for making payments or reimbursements to BISYS for BISYS' cash
disbursements relating to services in connection with conversion activities
(including, but not limited to, the delivery of the Trust's property, records,
instruments and documents, or any copies thereof).
5. STANDARD OF CARE; INDEMNIFICATION. BISYS shall use its best efforts
to insure the accuracy of all services performed under this Agreement, but shall
not be liable to the Trust for any action taken or omitted by BISYS in the
absence of bad faith, willful misconduct or negligence. BISYS assumes no
responsibility hereunder, and shall not be liable, for any damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control. A Fund agrees to indemnify and hold harmless BISYS, its employees,
3
<PAGE>
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' actions taken or non-actions with respect to the
performance of services under this Agreement with respect to such Fund or based,
if applicable, upon information, instructions or requests with respect to such
Fund given or made to BISYS by an officer of the Trust thereunto duly
authorized; provided that this indemnification shall not apply to actions or
omissions of BISYS in cases of its own willful misconduct or negligence, and
further provided that prior to confessing any claim against it which may be the
subject of this indemnification, BISYS shall give the Trust written notice of
and reasonable opportunity to defend against said claim in its own name or in
the name of BISYS.
6. HEADINGS. Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
7. ASSIGNMENT. This Agreement and the rights and duties hereunder shall
not be assignable with respect to a Fund by either of the parties hereto except
by the specific written consent of the other party.
8. GOVERNING LAW. This Agreement shall be governed by and provisions
shall be construed in accordance with the laws of the State of Ohio.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. A copy of
the Trust's Certificate of Trust is on file with the Secretary of the State of
Delaware, and notice is hereby given that this instrument is executed on behalf
of the Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
Shareholders individually but are binding only upon the assets and property of
the Trust.
10. YEAR 2000. Fund Accountant agrees to perform comprehensive tests on
the systems it utilizes to provide the services hereunder to simulate the actual
turning of the century. These tests shall be intended to identify any
operational issues caused by the century change at midnight December 31, 1999.
Fund Accountant agrees to use all commercially reasonable efforts to implement
by June 30, 1999, all necessary updates and changes for such systems, if any, to
accommodate the turn of the century. Fund Accountant agrees to provide to the
Trust quarterly updates on the status of its Year 2000 readiness project and to
make its personnel reasonably available to address any questions or concerns.
In the event that, at any time prior to October 1, 1999, the Trust reasonably
determines, as a result of the periodic updates provided by Fund Accountant,
that any of the systems Fund Accountant utilizes to perform the services
hereunder will not be Year 2000 ready by December 31, 1999, and that such lack
of readiness will have a materially adverse effect on the Trust, the Trust shall
have the right to terminate this agreement upon providing written notice to Fund
Accountant describing, in reasonable detail, the basis for its termination;
provided however that
4
<PAGE>
Fund Accountant shall have sixty (60) days following receipt of any such notice
to cure any deficiencies to the Trust's reasonable satisfaction. Promptly upon
becoming aware of any such, Fund Accountant agrees to use all commercially
reasonable efforts to cure any defect or deficiency that relates to the turn of
the century in any system that Fund Accountant utilizes to provide services
hereunder.
11. REFERENCES TO A FUND. Every reference to a Fund will be deemed a
reference solely to the particular Fund (as set forth in Schedule A, as may be
amended from time to time). Under no circumstances shall the rights, obligations
or remedies with respect to a particular Fund constitute a right, obligation or
remedy applicable to any other Fund. In particular, and without otherwise
limiting the scope of this paragraph, BISYS shall not have any right to set off
claims of a Fund by applying property of any other Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE VICTORY PORTFOLIOS, on behalf of the Funds listed on Schedule A,
individually and not jointly
By: __________________________________
Title: _______________________________
BISYS FUND SERVICES OHIO, INC.
By: __________________________________
Title: _______________________________
<PAGE>
Schedule A
to the Fund Accounting Agreement
between The Victory Portfolios
and BISYS Fund Services Ohio, Inc.
Dated as of June 1, 1999
<TABLE>
<CAPTION>
<S> <C>
Name of Portfolio Victory LifeChoice Growth Investor Fund
Victory Balanced Fund Victory LifeChoice Moderate Investor Fund
Victory Convertible Securities Fund Victory Limited Term Income Fund
Victory Diversified Stock Fund Victory National Municipal Bond Fund
Victory Established Value Fund Victory New York Tax-Free Fund
Victory Federal Money Market Fund Victory Ohio Municipal Money Market Fund
Victory Financial Reserves Fund Victory Ohio Municipal Bond Fund
Victory Fund for Income Victory Ohio Regional Stock Fund
Victory Government Mortgage Fund Victory Prime Obligations Fund
Victory Gradison Government Reserved Fund Victory Real Estate Investment Fund
Victory Growth Fund Victory Small Company Opportunity Fund
Victory Institutional Money Market Fund Victory Special Value Fund
Victory Intermediate Income Fund Victory Stock Index Fund
Victory International Growth Fund Victory Tax-Free Money Market Fund
Victory Investment Quality Bond Fund Victory U.S. Government Obligations Fund
Victory Lakefront Fund Victory Value Fund
Victory LifeChoice Conservative Investor Fund
</TABLE>
THE VICTORY PORTFOLIOS, on behalf of the Funds listed on this Schedule A,
individually and not jointly
By: __________________________________
BISYS FUND SERVICES OHIO, INC.
By: __________________________________
A-1
<PAGE>
Schedule B
to the Fund Accounting Agreement
between The Victory Portfolios
and BISYS Fund Services Ohio, Inc.
Dated as of June 1, 1999
Fund accounting fees will be determined based on a combination of
asset-based charges (subject to minimums), transaction charges, and
out-of-pocket expenses. Asset-based fees are accrued daily upon average total
net assets of a Fund.
Asset charges per Fund - Annually
- ---------------------------------
Net Assets Amounts
---------- -------
First $100 million .03%
Next $100 million .02%
Next $300 million .01%
Over $500 million .005% for all Funds other than money market Funds;
each money market Fund will have no incremental asset charge in excess of
$120,000.
Minimum Monthly Asset Charge
- ----------------------------
The above charge will be subject to a minimum monthly amount of $2,500
per taxable Fund, $2,917 per tax-free Fund, and $3,333 per international Fund.
Transaction Charges per Fund
- ----------------------------
$5 per security transaction (including foreign exchanges, patents,
corporate actions, and margin payments).
Multiple Class Charges
- ----------------------
A $833 per month charge will be assessed for each class of shares after
the first class, for all Funds other than money market Funds in existence on the
Effective Date of this Agreement. This is separate from and in addition to other
charges and the minimum charge.
Out-of-Pocket Expenses
Out-of-pocket expenses incurred on behalf of the Fund will be billed
monthly and include, but not be limited to:
o Payment to pricing or corporate actions vendors
o Costs in obtaining prices for non-exchange traded securities
o Postage and communication (wires, modem fees)
o Courier expenses
o Microfilming, archiving, etc.
B-1
<PAGE>
Schedule B (Additional)
to the Fund Accounting Agreement
between The Victory Portfolios (LifeChoice Funds)
and BISYS Fund Services Ohio, Inc.
Dated as of June 1, 1999
Fund accounting fees will be determined based on a combination of asset-based
charges (subject to minimums), transaction charges, and out-of-pocket expenses.
Asset-based fees are accrued daily based upon average total net assets of a
Fund.
Asset charges per Fund - Annually
Net Assets Amounts
- ---------- -------
First $100 Million .02%
Over $100 Million .01% ($60,000 asset charge cap for
each LifeChoice Fund)
Minimum Monthly Asset Charge
- ----------------------------
The above charge will be subject to a minimum monthly amount of $1,666.66 per
taxable Fund.
Transaction Charges per Fund
- ----------------------------
$5 per security transaction (including foreign exchanges, patents, corporate
actions, and margin payments).
Multiple Class Charges
- ----------------------
A $833 per month charge will be assessed for each class of shares after the
first class. This is separate from and in addition to other charges and the
minimum charge.
Out-Of-Pocket Expenses
- ----------------------
Out-of-pocket expenses incurred on behalf of the Fund will be billed monthly and
include, but not be limited to: Payment to pricing or corporate actions vendors
Costs in obtaining prices for non-exchange traded securities Postage and
communication (wires, modem fees) Microfilming, archiving, etc.
<PAGE>
THE VICTORY PORTFOLIOS
By: __________________________________
Title: _______________________________
BISYS FUND SERVICES OHIO, INC.
By: __________________________________
Title: _______________________________
KRAMER LEVIN NAFTALIS & FRANKEL LLP
9 1 9 T H I R D A V E N U E
NEW YORK, N.Y. 10022 - 3852
(212) 715 - 9100
FAX
(212) 715-8000
-----
WRITER'S DIRECT NUMBER
(212) 715-9100
June 17, 1999
The Victory Portfolios
3435 Stelzer Road
Columbus, Ohio 43219
Re: The Victory Portfolios
Post-Effective Amendment No.51
File Nos. 33-8892;811-4582
------------------------------
Dear Ladies and Gentlemen:
We hereby consent to the reference of our firm as Counsel in this
Post- Effective Amendment No. 51 to Registration Statement No. 33-8898 on Form
N-1A.
Very truly yours,
/s/ Kramer Levin Naftalis and Frankel LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective Amendment No. 51
to the Registration Statement of The Victory Portfolios on Form N-1A (File No.
33-8982) of our reports dated December 11, 1998 on our audits of the financial
statements and financial highlights of The Victory Portfolios (comprising,
respectively, 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, 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, Diversified Stock Fund, Stock Index Fund, Growth Fund, Special Value Fund,
Ohio Regional Stock Fund, International Growth Fund, Special Growth Fund,
Institutional Money Market Fund, Federal Money Market Fund, LifeChoice Moderate
Growth Fund, LifeChoice Growth Fund and LifeChoice Conservative Growth Fund),
which reports are included in the Annual Reports to Shareholders for the year
ended October 31, 1998. We also consent to the references to our Firm under the
captions "Financial Statements" and "Independent Accountants" in the Statement
of Additional Information incorporated by reference in this Post-Effective
Amendment No. 51 to Registration Statement of The Victory Portfolios on Form
N-1A (File No. 33-8982).
PricewaterhouseCoopers LLP
Columbus, Ohio
June 17, 1999
SCHEDULE I
TO THE Distribution and Service Plan
dated June 5, 1995 OF THE VICTORY
PORTFOLIOS
Amended as of May 11, 1999
This Distribution Plan shall be adopted with respect to the Shares of the
following Funds of The Victory Portfolios:
1. Victory Financial Reserves Fund
2. Victory Fund for Income
3. Victory Institutional Money Market Fund
Select Shares
Investor Shares
4. Victory Lakefront Fund
5. Victory National Municipal Bond Fund
Class A Shares
6. Victory New York Tax-Free Fund
Class A Shares
7. Victory Ohio Municipal Money Market Fund
8. Victory Real Estate Investment Fund
9. Victory Federal Money Market Fund
Select Shares
Investor Shares
10. Victory Convertible Securities Fund
11. Victory LifeChoice Conservative Investor Fund
12. Victory LifeChoice Growth Investor Fund
13. Victory LifeChoice Moderate Investor Fund
14. Victory Maine Municipal Bond Fund (Intermediate)
15. Victory Maine Municipal Bond Fund Class A Shares (Short-Intermediate)
16. Victory Michigan Municipal Bond Fund
17. Victory Equity Income Fund
18. Victory National Municipal Bond Fund (Long)
19. Victory National Municipal Bond Fund (Short-Intermediate)
20. Victory Stock Index Fund
Class G Shares
SCHEDULE I
----------
TO THE SHAREHOLDER SERVICING PLAN OF THE
VICTORY PORTFOLIOS DATED JUNE 5, 1995.
Amended as of May 11, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------- ------------------------------------------------------------
<S> <C>
1. Victory Balanced Fund 26. Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
2. Victory Diversified Stock Fund 27. Victory Convertible Securities Fund
Class A Shares 28. Victory LifeChoice Conservative Investor Fund*
Class B Shares 29. Victory LifeChoice Growth Investor Fund*
3. Victory Government Mortgage Fund 30. Victory LifeChoice Moderate Investor Fund*
4. Victory Growth Fund
5. Victory Financial Reserves Fund 31. Victory Maine Municipal Bond Fund (Intermediate)
6. Victory Fund for Income 32. Victory Maine Municipal Bond Fund
7. Victory Institutional Money Market Fund (Short-Intermediate)
Investor Shares 33. Victory Michigan Municipal Bond Fund
Select Shares 34. Victory Equity Income Fund
8. Victory Intermediate Income fund 35. Victory National Municipal Bond Fund (Long)
9. Victory International Growth Fund 36. Victory National Municipal Bond Fund
Class A Shares (Short Intermediate)
Class B Shares
10. Victory Investment Quality Bond Fund 37. Victory Established Value Fund
11. Victory Lakefront Fund 38. Victory Gradison Government Reserves Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Real Estate Investment Fund
20. Victory Special Growth Fund
(eff 3/29/99 Small Company Opportunity Fund)
21. Victory Special Value Fund
Class A Shares
Class G Shares
22. Victory Stock Index Fund
Class A Shares
Class G Shares
23. Victory Tax-Free Money Market Fund
24. Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25. Victory Value Fund
- ----------------------------------------------------------- ------------------------------------------------------------
* Although these Funds have been approved for the Plan, no fees are taken for
the LifeChoice Funds.
</TABLE>
THE VICTORY PORTFOLIOS
AMENDED AND RESTATED
RULE 18f-3 MULTI-CLASS PLAN
---------------------------
I. Introduction.
-------------
Pursuant to Rule 18f-3 under the Investment Company Act of
1940, as amended (the "1940 Act"), the following sets forth the method for
allocating fees and expenses among each class of shares of the various series
(each series a "Fund") of The Victory Portfolios (the "Trust") that issue
multiple classes of shares, whether now existing or subsequently established
(the "Multi-Class Funds"). In addition, this Rule 18f-3 Multi-Class Plan (the
"Plan") sets forth the shareholder servicing arrangements, distribution
arrangements, conversion features, exchange privileges, and other shareholder
services of each class of shares in the Multi-Class Funds.
The Trust is an open-end series investment company registered
under the 1940 Act, the shares of which are registered on Form N-1A under the
Securities Act of 1933, as amended (Registration Nos. 33-8982 and 811-4851).
Upon the effective date of this Plan, the Trust hereby elects to offer multiple
classes of shares in the Multi-Class Funds pursuant to the provisions of Rule
18f-3 and this Plan. This Plan does not make any material changes to the general
class arrangements and expense allocations previously approved by the Board of
Trustees of the Trust (the "Board").
The Trust currently consists of the following 38 separate
Funds:
<TABLE>
<CAPTION>
<S> <C>
Balanced Fund Limited Term Income Fund
Convertible Securities Fund Maine Municipal Bond Fund (Short-Term)
Diversified Stock Fund Maine Municipal Bond Fund (Intermediate)
Equity Income Fund Michigan Municipal Bond Fund
Established Value Fund National Municipal Bond Fund
Federal Money Market Fund National Municipal Bond Fund (Short-Intermediate)
Financial Reserves Fund National Municipal Bond Fund (Long)
Fund For Income New York Tax-Free Fund
Government Mortgage Fund Ohio Municipal Bond Fund
Gradison Government Reserves Fund Ohio Municipal Money Market Fund
Growth Fund Ohio Regional Stock Fund
Institutional Money Market Fund Prime Obligations Fund
Intermediate Income Fund Real Estate Investment Fund
International Growth Fund Small Company Opportunity Fund
Investment Quality Bond Fund Special Value Fund
Lakefront Fund Stock Index Fund
LifeChoice Conservative Investor Fund Tax-Free Money Market Fund
LifeChoice Moderate Investor Fund U.S. Government Obligations Fund
LifeChoice Growth Investor Fund Value Fund
<PAGE>
The Funds are authorized to issue the following classes of
shares representing interests in the same underlying portfolio of assets of the
respective Fund:
THE MULTI-CLASS FUNDS THE NON-MULTI-CLASS FUNDS
CLASS A, CLASS B AND CLASS G SHARES CLASS A SHARES
Diversified Stock Fund Convertible Securities Fund
International Growth Fund Equity Income Fund
Financial Reserves Fund
Government Mortgage Fund
Growth Fund
Intermediate Income Fund
CLASS A SHARES AND CLASS B SHARES Investment Quality Bond Fund
Balanced Fund LifeChoice Growth Fund
National Municipal Bond Fund LifeChoice Income and Growth Fund
New York Tax-Free Fund LifeChoice Moderate Growth Fund
Ohio Regional Stock Fund Lakefront Fund
Special Value Fund Limited Term Income Fund
Maine Municipal Bond Fund (Short-Term)
Maine Municipal Bond Fund (Intermediate)
Michigan Municipal Bond Fund
National Municipal Bond Fund (Short-Intermediate)
CLASS A SHARES AND CLASS G SHARES National Municipal Bond Fund (Long)
Fund for Income Ohio Municipal Money Market Fund
Ohio Municipal Bond Fund Prime Obligations Fund
Small Company Opportunity Fund Real Estate Investment Fund
Stock Index Fund Tax-Free Money Market Fund
Value Fund
CLASS G SHARES
INVESTOR SHARES AND SELECT SHARES Established Value Fund
Federal Money Market Fund Gradison Government Reserves Fund
Institutional Money Market Fund
U.S. Government Obligations Fund
</TABLE>
I. Class Arrangements.
-------------------
The following summarizes the front-end sales charges,
contingent deferred sales charges, Rule 12b-1 distribution fees, shareholder
servicing fees, conversion features, exchange privileges, and other shareholder
services applicable to each particular class of shares of the Funds. Additional
details regarding such fees and services are set forth in each Fund's current
Prospectus and Statement of Additional Information.
A. Class A Shares:
1. Maximum Initial Sales Load: 5.75% (of the offering price).
Exceptions: Fund for Income and Limited Term Income Fund
have an initial sales charge of 2.00% (of the offering
price). Exceptions: Financial Reserves Fund, Ohio
Municipal Money Market Fund, Prime Obligations Fund, and
Tax-Free Money Market Fund have no sales charge.
2
<PAGE>
2. Contingent Deferred Sales Charge: None.
3. Rule 12b-1 Distribution Fees: None. Exceptions: Class A
Shares of the Convertible Securities Fund, Financial
Reserves Fund, Fund For Income, Lakefront Fund, LifeChoice
Conservative Investor Fund, LifeChoice Moderate Investor
Fund, LifeChoice Growth Investor Fund, National Municipal
Bond Fund, New York Tax-Free Fund, Ohio Municipal Money
Market Fund, and Real Estate Investment Fund each have a
Rule 12b-1 Plan pursuant to which no fees are paid.
4. Shareholder Servicing Fees: Up to 0.25% per annum of
average daily net assets. Exceptions: Financial Reserves
Fund and Stock Index Fund do not have shareholder
servicing plans or fees.
5. Conversion Features: None.
6. Exchange Privileges: Class A shares may be exchanged with
Class A shares of other Funds without incurring a sales
charge. However, exchanges made into a Fund with a higher
sales charge require payment of the percentage-point
difference between the higher and lower sales charges. For
example, investors that exchange Class A shares from the
Fund for Income or the Limited Term Income Fund to
purchase Class A shares of a Fund with a 5.75% sales
charge would pay the 3.75% difference in sales charge.
Class A shares may be exchanged with Investor Class shares
or Select Class shares of Federal Money Market Fund,
Institutional Money Market Fund, and U.S. Government
Obligations Fund without incurring a sales charge.
7. Other Shareholder Services: As provided in the Fund's
Prospectus. These services do not differ from those
applicable to Class B shares.
B. Class B Shares:
1. Initial Sales Load: None
2. Contingent Deferred Sales Charge ("CDSC"): 5% in the first
year, declining to 1% in the sixth year, and eliminated
thereafter. The CDSC is based on the original purchase
cost of investment or the net asset value of the shares at
the time of redemption, whichever is lower.
3. Rule 12b-1 Distribution Fees: 0.75% per annum of the
average daily net assets.
4. Shareholder Servicing Fees: Up to 0.25% per annum of the
average daily net assets.
3
<PAGE>
5. Conversion Features: Class B shares convert automatically
to Class A shares eight years after purchase, based on
relative net asset values of the two classes. Class B
shares acquired by the reinvestment of dividends and
distributions are included in the conversion.
6. Exchange Privileges: Class B shares may be exchanged with
Class B shares of other Funds without incurring a sales
charge.
7. Other Shareholder Services: As provided in the Fund's
Prospectus. These services do not differ from those
applicable to Class A shares.
C. Investor Shares:
1. Maximum Initial Sales Load: None.
2. CDSC: None.
3. Rule 12b-1 Distribution Fees: Federal Money Market Fund,
Institutional Money Market Fund and U.S. Government
Obligations Fund each have a Rule 12b-1 Plan pursuant to
which no fees are paid.
4. Shareholder Servicing Fees: None.
5. Conversion Features: None.
6. Exchange Privileges: Investor shares may be exchanged with
Investor shares of other Funds at relative net asset
value. Investor shares may be exchanged with Class A
shares of other Funds; however, such exchanges require
payment of the sales charge of the other Fund's Class A
shares.
7. Other Shareholder Services: As provided in the Fund's
Prospectus.
D. Select Shares:
1. Maximum Initial Sales Load: None.
2. CDSC: None.
3. Rule 12b-1 Distribution Fees: None. Exception: Federal
Money Market Fund, Institutional Money Market Fund and
U.S. Government Obligations Fund each has a Rule 12b-1
Plan pursuant to which no fees are paid.
4. Shareholder Servicing Fees: Up to 0.25% per annum of the
average daily net assets.
5. Conversion Features: None.
4
<PAGE>
6. Exchange Privileges: Select shares may be exchanged with
Select shares of other Funds at relative net asset value.
Select shares may be exchanged with Class A shares of
other Funds; however, such exchanges require payment of
the sales charge of the other Fund's Class A shares.
7. Other Shareholder Services: As provided in the Fund's
Prospectus.
E. Class G Shares
1. Maximum Initial Sales Load: None.
2. CDSC: None.
3. Rule 12b-1 Distribution Fees: Small Company Opportunity
Fund, Diversified Stock Fund, International Growth Fund,
and Established Value Fund: up to 0.50% per annum of
average daily net assets (of which 0.25% is designated for
shareholder servicing); Fund For Income and Ohio Municipal
Bond Fund: up to 0.25% per annum of average daily net
assets (designated for shareholder servicing); Gradison
Government Reserves Fund: up to 0.10% per annum of average
daily net assets (designated for shareholder servicing);
Class G Shares of the Stock Index Fund have a Rule 12b-1
Plan pursuant to which no fees are paid.
4. Shareholder Servicing Fees: None; except that Class G
Shares of the Stock Index Fund bear a shareholder
servicing fee of up to 0.25% per annum of its average
daily net assets.
5. Conversion Features: None.
6. Exchange Privileges: Class G shares may be exchanged with
Class G Shares, Select Shares, or any single class money
market fund shares of a Victory Fund without paying a
sales charge. Shareholders who own Class G Shares as of
the time of the reorganization of the Gradison Funds with
certain series of the Trust can exchange into Class A
Shares of any Victory Fund that does not offer Class G
Shares without paying a sales charge.
7. Other Shareholder Services: As provided in the Fund's
Prospectus.
5
<PAGE>
II. Allocation of Expenses.
-----------------------
Pursuant to Rule 18f-3 under the 1940 Act, the Trust shall
allocate to each class of shares in a Multi-Class Fund (i) any fees and expenses
incurred by the Trust in connection with the distribution of such class of
shares (other than with respect to the money market Funds) under a distribution
plan adopted for such class of shares pursuant to Rule 12b-1 ("Rule 12b-1 Fees")
and (ii) any fees and expenses incurred by the Trust under a shareholder
servicing plan in connection with the provision of shareholder services to the
holders of such class of shares ("Service Plan Fees"). In addition, pursuant to
Rule 18f-3, the Trust may allocate the following fees and expenses (the "Class
Expenses") to a particular class of shares in a single Multi-Class Fund:
1. transfer agent fees identified by the transfer agent as being
attributable to such class of shares;
2. printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses, reports, and
proxies to current shareholders of such class of shares or to
regulatory agencies with respect to such class of shares;
3. blue sky registration or qualification fees incurred by such class of
shares;
4. Securities and Exchange Commission registration fees incurred by such
class of shares;
5. the expense of administrative personnel and services (including, but
not limited to, those of a fund accountant or dividend paying agent
charged with calculating net asset values or determining or paying
dividends) as required to support the shareholders of such class of
shares;
6. litigation or other legal expenses relating solely to such class of
shares;
7. fees of the Board incurred as result of issues relating to such class
of shares;
8. independent accountants' fees relating solely to such class of shares;
and
9. shareholder meeting expenses for meetings of a particular class.
Class Expenses, Rule 12b-1 Fees, and Service Plan Fees are the
only expenses allocated to the classes disproportionately. The Class Expenses
allocated to each share of a class during a year will differ from the Class
Expenses allocated to each share of any other class by less than 50 basis points
of the average daily net asset value of the class of shares with the smallest
average daily net asset value.
The initial determination of fees and expenses that will be
allocated by the Trust to a particular class of shares and any subsequent
changes thereto will be reviewed by the Board
6
<PAGE>
and approved by a vote of the Board including a majority of the Trustees who are
not interested persons of the Trust. The Board will monitor conflicts of
interest among the classes and agree to take any action necessary to eliminate
conflicts.
Income, realized and unrealized capital gains and losses, and
any expenses of a Fund not allocated to a particular class of such Fund by this
Plan shall be allocated to each class of such Fund on the basis of the relative
net assets (settled shares), as defined in Rule 18f-3, of that class in relation
to the net assets of such Fund.
Income, realized and unrealized capital gains and losses, and
any expenses of a non-money market Fund not allocated to a particular class of
any such Fund pursuant to this Plan shall be allocated to each class of the Fund
on the basis of the net asset value of that class in relation to the net asset
value of the Fund.
Any dividends and other distributions on shares of a class
will differ from dividends and other distributions on shares of other classes
only as a result of the allocation of Class Expenses, Rule 12b-1 Fees, Service
Plan Fees, and the effects of such allocations.
The Investment Adviser will waive or reimburse its management
fee in whole or in part only if the fee is waived or reimbursed to all shares of
a Fund in proportion to their relative average daily net asset values. The
Investment Adviser, and any entity related to the Investment Adviser, who
charges a fee for a Class Expense will waive or reimburse that fee in whole or
in part only if the revised fee more accurately reflects the relative costs of
providing to each class the service for which the Class Expense is charged.
III. Board Review.
-------------
The Board shall review this Plan as frequently as it deems
necessary. Prior to any material amendment(s) to this Plan, the Board, including
a majority of the Trustees that are not interested persons of the Trust, shall
find that the Plan, as proposed to be amended (including any proposed amendments
to the method of allocating Class Expenses and/or Fund expenses), is in the best
interest of each class of shares of a Multi-Class Fund individually and the Fund
as a whole. In considering whether to approve any proposed amendment(s) to the
Plan, the Board shall request and evaluate such information as it considers
reasonably necessary to evaluate the proposed amendment(s) to the Plan. Such
information shall address the issue of whether any waivers or reimbursements of
advisory or administrative fees could be considered a cross-subsidization of one
class by another and other potential conflicts of interest between classes.
7
<PAGE>
In making its initial determination to approve this Plan, the
Board has focused on, among other things, the relationship between or among the
classes and has examined potential conflicts of interest among classes
(including those potentially involving a cross-subsidization between classes)
regarding the allocation of fees, services, waivers and reimbursements of
expenses, and voting rights. The Board has evaluated the level of services
provided to each class and the cost of those services to ensure that the
services are appropriate and the allocation of expenses is reasonable. In
approving any subsequent amendments to this Plan, the Board shall focus on and
evaluate such factors as well as any others it deems necessary.
Adopted May 24, 1995; Effective June 5, 1995
Amended and Restated:
December 6, 1995;
February 14, 1996;
May 31, 1996;
February 19, 1997;
October 22, 1997;
December 3, 1997;
August 28, 1998;
December 11, 1998;
February 23, 1999; and
May 11, 1999
8
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000802716
<NAME> THE VICTORY PORTFOLIOS
<SERIES>
<NUMBER> 131
<NAME> VICTORY STOCK INDEX FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 471381
<INVESTMENTS-AT-VALUE> 625551
<RECEIVABLES> 1262
<ASSETS-OTHER> 1245
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 627486
<PAYABLE-FOR-SECURITIES> 42
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 297
<TOTAL-LIABILITIES> 339
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 411170
<SHARES-COMMON-STOCK> 29827
<SHARES-COMMON-PRIOR> 24807
<ACCUMULATED-NII-CURRENT> 1044
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 47426
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 167507
<NET-ASSETS> 627147
<DIVIDEND-INCOME> 6956
<INTEREST-INCOME> 6969
<OTHER-INCOME> (31)
<EXPENSES-NET> 3283
<NET-INVESTMENT-INCOME> 10611
<REALIZED-GAINS-CURRENT> 47395
<APPREC-INCREASE-CURRENT> 51833
<NET-CHANGE-FROM-OPS> 109839
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10250
<DISTRIBUTIONS-OF-GAINS> 27890
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11821
<NUMBER-OF-SHARES-REDEEMED> 8801
<SHARES-REINVESTED> 2000
<NET-CHANGE-IN-ASSETS> 162132
<ACCUMULATED-NII-PRIOR> 683
<ACCUMULATED-GAINS-PRIOR> 27921
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3480
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4864
<AVERAGE-NET-ASSETS> 580099
<PER-SHARE-NAV-BEGIN> 18.75
<PER-SHARE-NII> .37
<PER-SHARE-GAIN-APPREC> 3.37
<PER-SHARE-DIVIDEND> .36
<PER-SHARE-DISTRIBUTIONS> 1.10
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.03
<EXPENSE-RATIO> .57
<FN>
</FN>
</TABLE>
