Rule 497(e)
Registration No. 33-8982
Dear Shareholder:
The Victory Funds' Prospectuses are being revised. Effective October 19, 1998,
the minimum initial investment for IRA accounts has been reduced from $250 to
$100. The merger of McDonald & Company Investments Inc. with KeyCorp brought
together two mutual fund families, the Gradison Funds and The Victory
Portfolios, under a single management structure. The Boards of both the Gradison
Funds and The Victory Portfolios recognized that several of the Gradison and
Victory Funds had substantially similar investment objectives and policies. If
Gradison shareholders approve, the Gradison Government Income Fund, a series of
Gradison Custodian Trust, will be reorganized into newly established Class G
shares of the Victory Fund for Income in March 1999. This Supplement also
provides current information related to the investment strategies of the Fund
for Income and new portfolio manager information for the Fund for Income,
Intermediate Income Fund and the Limited Term Income Fund. This information is
important and is part of your Prospectus.
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The Victory Portfolios
Fund for Income
Government Mortgage Fund
Intermediate Income Fund
Investment Quality Bond Fund
Limited Term Income Fund
Supplement Dated January 26, 1999
to the Prospectus Dated March 1, 1998
The Prospectus of the above Funds is supplemented as follows:
1. On page 3 under "Purchases" and any other sections of the Prospectus that
refer to the minimum initial investment for Individual Retirement Accounts,
replace the amount to open an Individual Retirement Account with a minimum of
$100 rather than $250.
2. On page 3 under "General Information about each of the Funds" insert the
following paragraph:
On December 11, 1998, the Board of Trustees of The Victory Portfolios approved a
Plan of Reorganization to acquire all of the assets and liabilities of Gradison
Government Income Fund in exchange for Class G Shares of the Fund for Income. If
the Gradison Fund shareholders approve this Plan, the exchange will take place
on or about March 26, 1999 and Class G Shares of the Fund for Income will be
distributed to the Gradison Fund shareholders. This reorganization will not
affect the total asset value of your investment in the Fund for Income. At the
time of the reorganization, the Fund for Income will assume the performance and
accounting history of Gradison Government Income Fund.
3. On page 4, replace the "Investment Policies and Strategy" and "Portfolio
Management" sections for the Fund for Income with the following:
Principal Investment Strategies:
The Fund for Income pursues its investment objective by investing primarily in
securities issued by the U.S. Government and its agencies or instrumentalities.
The Fund for Income currently invests only in securities that are guaranteed by
the full faith and credit of the U.S. Government and repurchase agreements
collateralized by such securities.
Under normal market conditions, the Fund for Income primarily invests in:
o Mortgage-backed obligations and collateralized mortgage obligations
(CMOs) issued by the Government National Mortgage Association (GNMA).
The Fund for Income will invest at least 65% of its total assets in
GNMA securities.
o Obligations issued or guaranteed by the U.S. Government or by its
agencies or instrumentalities with maturities generally in the range
of 2 to 30 years
<PAGE>
The Fund for Income may invest in repurchase agreements collateralized by the
securities described above.
The Fund for Income may, but is not required to, use derivative instruments,
including
o Writing covered call options
o Engaging in closing options transactions
Please see the definition of a derivative instrument in the "Other Securities
and Investment Practices" section at the end of this Prospectus.
Portfolio Management:
Thomas M. Seay and Trenton Fletcher are the Co-Portfolio Managers of the Fund
for Income, and together are primarily responsible for the day-to-day management
of the Fund for Income's portfolio. Mr. Seay has been the Co-Portfolio Manager
of the Fund for Income since January 1999. Mr. Seay, a Senior Vice President of
McDonald Investments Inc., served as Portfolio Manager of the Gradison
Government Income Fund since April, 1998. From March 1987 until April 1998 he
served as Vice President and Fixed Income Portfolio Manager, Lexington
Management Corporation. Mr. Fletcher has served as Portfolio Manager of the
Victory Fund for Income since January 1998. A Portfolio Manager and Director of
Key Asset Management Inc. (KAM), he has been associated with KAM or its
affiliates since 1989.
4. On page 8 replace "Portfolio Management" for the Intermediate Income Fund
with the following:
Eric Rasmussen is the Portfolio Manager of the Intermediate Income Fund, a
position he has held since December 1998. Mr. Rasmussen is Managing Director,
Taxable Fixed Income Investments, KAM, and Managing Director, Applied Technology
Investments, the passive investment division of KAM. Prior to managing the
Intermediate Income Fund, Mr. Rasmussen headed Corporate Treasury where he was
responsible for issuance of bank and holding company debt and an interest rate
swap book, and has been with KAM or an affiliate since 1988.
5. On page 12 replace "Portfolio Management" for the Limited Term Income Fund
with the following:
Deborah Svoboda has been the Portfolio Manager of the Limited Term Income Fund
since September 1998. Ms. Svoboda has been Portfolio Manager and Managing
Director of KAM since 1998, prior to which she was a Senior Vice President
responsible for asset-backed securities syndication and marketing for McDonald &
Company Investments Inc.
6. All references to Coopers & Lybrand L.L.P. are changed to
PricewaterhouseCoopers LLP.
7. On page 20 add the following information under Item 4, "Sales Charge
Reductions and Waivers for Class A Shares -- Waivers for certain investors:"
f. Participants in tax-deferred retirement plans that meet at least one of the
following requirements: more than $1 million in plan assets; or 100 eligible
employees; or if all of the plan's transactions are executed through a single
financial institution or service organization which has an agreement to sell the
Victory Funds in connection with such accounts.
Please insert this Supplement in the front of your Prospectus. Investors wishing
to obtain more information should call the Funds at 800-539-FUND.
-2-
VF-TXFI-SUP
<PAGE>
Dear Shareholder:
The Victory Funds' Prospectuses are being revised. Effective October 19, 1998,
the minimum investment for IRA accounts has been reduced from $250 to $100. The
merger of McDonald & Company Investments Inc. with KeyCorp brought together two
mutual fund families, the Gradison Funds and The Victory Portfolios, under a
single management structure. The Boards of both the Gradison Funds and The
Victory Portfolios recognized that several of the Gradison and Victory Funds had
substantially similar investment objectives and policies. If Gradison
shareholders approve, the Gradison Ohio Tax-Free Income Fund, a series of
Gradison-McDonald Municipal Custodian Trust, will be reorganized into newly
established Class G shares of the Victory Ohio Municipal Bond Fund in March
1999. This information is important and is part of your Prospectus.
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The Victory Portfolios
National Municipal Bond Fund
New York Tax-Free Fund
Ohio Municipal Bond Fund
Supplement Dated January 26, 1999
to the Prospectus Dated March 1, 1998
The Prospectus of the above Funds is supplemented as follows:
1. On page 3 under "Purchases" and any other sections of the Prospectus that
refer to the minimum initial investment for Individual Retirement Accounts,
replace the amount to open an Individual Retirement Account with a minimum of
$100 rather than $250.
2. On page 3 under "General Information about each of the Funds" insert the
following paragraph:
On December 11, 1998 the Board of Trustees of The Victory Portfolios approved a
Plan of Reorganization to acquire all the assets and liabilities of Gradison
Ohio Tax-Free Income Fund in exchange for Class G Shares of the Ohio Municipal
Bond Fund. If the Gradison Fund shareholders approve this Plan, the exchange
will take place on or about March 26, 1999 and Class G Shares of the Ohio
Municipal Bond Fund will be distributed to the Gradison Fund shareholders. This
reorganization will not affect the total asset value of your investment in the
Ohio Municipal Bond Fund.
3. All references to Coopers & Lybrand L.L.P. are changed to
PricewaterhouseCoopers LLP.
4. On page 16 add the following information under Item 4, "Sales Charge
Reductions and Waivers for Class A Shares -- Waivers for certain investors:"
f. Participants in tax-deferred retirement plans that meet at least one of the
following requirements: more than $1 million in plan assets; or 100 eligible
employees; or if all of the plan's transactions are executed through a single
financial institution or service organization which has an agreement to sell the
Victory Funds in connection with such accounts.
Please insert this Supplement in the front of your Prospectus. Investors wishing
to obtain more information should call the Funds at 800-539-FUND.
VF-TEFI-SUP
<PAGE>
Dear Shareholder:
The Victory Funds' Prospectuses are being revised. Effective October 19, 1998,
the minimum investment for IRA accounts has been reduced from $250 to $100. The
merger of McDonald & Company Investments Inc. with KeyCorp brought together two
mutual fund families, the Gradison Funds and The Victory Portfolios, under a
single management structure. The Boards of both the Gradison Funds and The
Victory Portfolios recognized that several of the Gradison and Victory Funds had
substantially similar investment objectives and policies. If Gradison
shareholders approve, certain Gradison Funds, all of which are series of
Gradison Growth Trust, will be reorganized into certain Victory Funds as
indicated below in March 1999. After the reorganization, the Special Growth Fund
will be renamed the "Small Company Opportunity Fund" and assume the financial
history and performance of the Gradison Opportunity Value Fund. This supplement
also provides current information regarding the investment policies and
portfolio managers of the Funds affected by the reorganization. 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
Special Growth Fund
Balanced Fund
Real Estate Investment Fund
Supplement Dated January 26, 1999
to the Prospectus Dated March 1, 1998
as Supplemented August 1, 1998
The Prospectus of the above Funds is supplemented as follows:
1. On page 3 under "Purchases" and any other sections in the Prospectus that
refer to the minimum initial investment for Individual Retirement Accounts,
replace the amount to open an Individual Retirement Account with a minimum of
$100 rather than $250.
2. On page 3 under "General Information about each of the Funds" insert the
following paragraph:
On December 11, 1998 the Board of Trustees of The Victory Portfolios approved a
Plan of Reorganization to acquire all the assets and liabilities of the
following Gradison Funds in exchange for Class G Shares of the following Victory
Funds. If the Gradison Fund shareholders approve this Plan, the exchange will
take place on or about March 26, 1999, and Class G Shares of the Victory Funds
will be distributed to the Gradison Fund shareholders. This reorganization will
not affect the total asset value of your investment. At the time of the
reorganization, the Special Growth Fund will assume the performance and
accounting history of Gradison Opportunity Value Fund.
Gradison Fund To Merge With Victory Fund
Gradison Growth & Income Fund -> Victory Diversified Stock Fund
Gradison International Fund -> Victory International Growth Fund
Gradison Opportunity Value Fund -> Victory Special Growth Fund
<PAGE>
3. On page 6 replace the "Investment Policies and Strategy" section for the
Diversified Stock Fund with the following:
Principal Investment Strategies: The Diversified Stock Fund pursues its
investment objective by investing primarily in equity securities and securities
convertible into common stocks traded on U.S. exchanges and issued by large,
established companies.
Key Asset Management Inc. (KAM or the Adviser), the Diversified Stock Fund's
investment adviser, seeks to invest in both growth and value securities. In
making investment decisions, the Adviser may consider cash flow, book value,
dividend yield, growth potential, quality of management, adequacy of revenues,
earnings, capitalization, relation to historical earnings, the value of the
issuer's underlying assets, and expected future relative earnings growth. The
Adviser will pursue investments that provide above average dividend yield or
potential for appreciation.
Under normal market conditions, the Diversified Stock Fund:
o Will invest at least 80% of its total assets in equity securities of large,
established companies and securities convertible or exchangeable into
common stock, including:
o Growth stocks, which are stocks of companies that the Adviser believes
will regularly experience earnings growth; and
o Value stocks, which are stocks that the Adviser believes are
intrinsically worth more than their market value.
o May invest up to 20% of its total assets in:
o Preferred stocks
o Investment grade corporate debt securities
o Short-term debt obligations
o U.S. Government obligations
The Diversified Stock Fund may, but is not required to, use derivative
instruments. Please see the definition of a derivative instrument in the "Other
Securities and Investments" section at the end of this Prospectus.
4. On page 16 replace the "Investment Policies and Strategy" section for the
International Growth Fund as follows:
Principal Investment Strategies: The International Growth Fund pursues its
objective by investing primarily in equity securities of foreign corporations,
most of which are denominated in foreign currencies.
The International Growth Fund will invest most of its assets in securities of
companies traded on exchanges outside of the U.S. including developed and
emerging countries. In making investment decisions, KAM and Indocam
International Investment Services, S.A., the International Growth Fund's
sub-adviser, may analyze the economies of foreign countries and the growth
potential for individual sectors and securities.
Under normal market conditions, the International Growth Fund:
o Will invest at least 65% of its total assets in:
o Securities (including "sponsored" and "unsponsored" American
Depositary Receipts) of companies that derive more than 50% of their
gross revenues from, or have more than 50% of their assets, outside
the United States.
o Securities for which the principal trading markets are located in at
least three different countries (excluding the United States).
o May invest up to 20% of its total assets in securities of companies located
in emerging countries.
o May invest up to 35% of its total assets in cash equivalents and fixed
income securities, including U.S. Government obligations.
-2-
<PAGE>
The International Growth Fund's high portfolio turnover rate may result in
higher expenses and taxable gain distributions. The Fund may, but is not
required to, use derivative contracts. Please refer to the definition of a
derivative instrument in the "Other Securities and Investment Practices" section
at the end of the Prospectus.
5. On page 16 for the International Growth Fund, add the following paragraph to
"Portfolio Management" and delete the information on page 37 regarding Eric
Taze-Bernard.
Conrad R. Metz and Leslie Globits are primarily responsible for the management
of the International Growth Fund. Mr. Metz is a Managing Director of KAM, and
formerly served as the Portfolio Manager of the International Growth Fund. He
previously was Senior Vice President, International Equities, at Bailard Biehl &
Kaiser, and has over 20 years experience in global equity research and portfolio
management. Mr. Globits, a Managing Director of KAM, was previously a Senior
Financial Analyst and Assistant Vice President in KeyCorp's Corporate Treasury
Department, and has been with KAM or an affiliate since 1987.
6. If shareholders approve the reorganization, on March 29, 1999 the name of the
Special Growth Fund will change to the Small Company Opportunity Fund. On page
18 replace the "Investment Policies and Strategy" and "Portfolio Management"
sections for the Special Growth Fund with the following:
Principal Investment Strategies: The Fund invests primarily in common stocks of
smaller companies that are exhibiting the potential for high earnings growth in
relation to their price-earnings ratio. Of the 5,000 U.S. companies with the
largest market capitalizations, KAM considers those in the lower 80% to be
"small companies." Currently, the upper end of market capitalizations of small
companies is approximately $1.2 billion, but this amount may increase or
decrease over time. The Adviser uses a computer model to select securities that
appear favorably priced.
Under normal market conditions, the Fund:
o Will invest at least 80% of its total assets in equity securities of small
companies. These equity investments include:
o Common stock
o Convertible preferred stock
o Debt convertible or exchangeable into equity securities
o Securities convertible into common stock
o May invest up to 20% of its total assets in:
o Equity securities of larger companies (those with market
capitalizations in the top 20% of the 5,000 largest U.S. companies)
o Investment-grade debt securities
o Preferred stocks
o Short-term debt obligations
o Repurchase agreements
Portfolio Management:
William J. Leugers, Jr., Daniel R. Shick, and Gary H. Miller are the
Co-Portfolio Managers of the Fund, and together are primarily responsible for
the day-to-day management of the Fund's portfolio. Messrs. Leugers and Shick
have served as Co-Portfolio Managers of the Gradison Opportunity Value Fund
since 1984 and 1993, respectively. They also are Co-Portfolio Managers of the
Gradison Established Value Fund. Mr. Leugers is a Managing Director of McDonald
Investments Inc. and has been associated with McDonald Investments Inc. or its
affiliates since 1975. Mr. Shick is a Managing Director of McDonald Investments
Inc. and has been with McDonald Investments Inc. or its affiliates since 1972.
Mr. Miller is a Vice President and Portfolio Manager of Gradison-McDonald. He
has been associated with Gradison-McDonald since 1987.
-3-
<PAGE>
7. On page 30 add the following information under Item 4, "Sales Charge
Reductions and Waivers for Class A Shares -- Waivers for certain investors:"
f. Participants in tax-deferred retirement plans that meet at least one of the
following requirements: more than $1 million in plan assets; or 100 eligible
employees; or if all of the plan's transactions are executed through a single
financial institution or service organization which has an agreement to sell the
Victory Funds in connection with such accounts.
Please insert this Supplement in the front of your Prospectus. Investors wishing
to obtain more information should call the Funds at 800-539-FUND.
-4-
VF-EQTY-SUP
<PAGE>
Dear Shareholder:
The Victory Funds' Prospectuses are being revised. Effective immediately, the
minimum investment for IRA accounts has been reduced from $250 to $100. This
information is important and is part of your Prospectus.
- --------------------------------------------------------------------------------
The Victory Portfolios
Financial Reserves Fund
Ohio Municipal Money Market Fund
Prime Obligations Fund
Tax-Free Money Market Fund
U.S. Government Obligations Fund
Lakefront Fund
Supplement Dated January 26, 1999
to the Prospectuses Dated March 1, 1998
LifeChoice Conservative Investor Fund
LifeChoice Moderate Investor Fund
LifeChoice Growth Investor Fund
Supplement Dated January 26, 1999
to the Prospectus Dated March 23, 1998
Convertible Securities Fund
Supplement Dated January 26, 1999
to the Prospectus Dated March 23, 1998
As supplemented July 23, 1998
The Prospectuses of the above Funds are supplemented as follows:
1. On page 3 under "Purchases" and any other sections in the Prospectuses that
refer to the minimum initial investment for Individual Retirement Accounts,
replace the amount to open an Individual Retirement Account with a minimum of
$100 rather than $250.
2. All references to Coopers & Lybrand L.L.P. are changed to
PricewaterhouseCoopers LLP.
3. On page 13 of the Convertible Securities Fund, page 13 of the Lakefront Fund
and page 22 of the Victory LifeChoice Funds Prospectuses, add the following
information under Item 4, "Sales Charge Reductions and Waivers for Class A
Shares -- Waivers for certain investors:"
f. Participants in tax-deferred retirement plans that meet at least one of the
following requirements: more than $1 million in plan assets; or 100 eligible
employees; or if all of the plan's transactions are executed through a single
financial institution or service organization which has an agreement to sell the
Victory Funds in connection with such accounts.
Please insert this Supplement in the front of your Prospectus. Investors wishing
to obtain more information should call the Funds at 800-539-FUND.
VF-PRO-SUP
<PAGE>
Dear Shareholder:
The Victory Funds' Prospectuses are being revised. This Supplement also provides
additional information related to the investment strategies of the Fund. This
information is important and is part of your Prospectus.
- --------------------------------------------------------------------------------
The Victory Portfolios
Federal Money Market Fund
Supplement Dated January 26 , 1999
to the Prospectus Dated March 23, 1998
The Prospectus of the Victory Federal Money Market Fund is supplemented as
follows:
1. All references to Coopers & Lybrand L.L.P. and Price Waterhouse LLP are
changed to PricewaterhouseCoopers LLP.
2. On page 6 under "Investment Policies and Strategy" in the second paragraph,
add "FAMC" to the second bullet point as follows:
o "Obligations of GNMA, FNMA, FHLMC, SLMA, FFCB, TVA, FHLB, and FAMC."
3. On page 20 under "Other Securities and Investment Practices" add "FAMC" to
the list of investments in the description of "U.S. Government Securities." In
addition add the following to the footnote designated by a "*" at the bottom of
page 20:
"Obligations of the Federal Agricultural Mortgage Corporation (FAMC) are
supported only by the credit of the federal agency."
Please insert this Supplement in the front of your Prospectus. Investors wishing
to obtain more information should call the Fund at 800-539-FUND.
VF-FMMF-SUP
