Rule 497(e)
Registration No. 33-8982
Dear Shareholder:
Effective March 29, 1999, as a result of the reorganization of Gradison Growth &
Income Fund and Gradison International Fund, Victory Diversified Stock Fund and
Victory International Growth Fund started offering Class G Shares. This
supplement provides Class G information and performance updates to be included
in the current Prospectus for these Victory Funds. 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 March 29, 1999
To the Prospectus dated March 1, 1999
1. On page 3, under "Fees and Expenses" delete the third paragraph and replace
it with the following:
On March 5, 1999, shareholders of Gradison Growth and Income
Fund and Gradison International Fund approved the
reorganization of their funds into Class G Shares of the
Victory Diversified Stock Fund and Victory International
Growth Fund. As a result, the Diversified Stock Fund and the
International Growth Fund began offering Class G Shares. The
Gradison Division of McDonald Investments Inc., an affiliate
of Key Asset Management Inc. (Gradison McDonald), will provide
services to the shareholders of the Class G Shares of these
funds. Fees and expenses associated with Class G Shares are
discussed below. Class G Shares are available only through
certain broker-dealers.
2. On pages 4, 6, 8, 10, 12, 14 and 16, in the Risk/Return Summary for each of
the Funds, add the following information at the end of the "Principal Risks"
section:
An investment in the Fund is not a deposit of KeyBank or any
of its affiliates and is not insured or guaranteed by the FDIC
or any other government agency.
3. On page 5, on the Investment Performance chart for the Value Fund, change
the S&P 500 Index Average Annual Total Return Since Inception number from
19.11% to 23.75%.
1
<PAGE>
4. On page 7, in the Risk/Return Summary for the Diversified Stock Fund, add
the following information under "Fund Expenses."
<TABLE>
<CAPTION>
<S> <C> <C>
Shareholder Transaction Expenses
(paid directly from your investment)* Class G
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) NONE
---------------------------------------------------------------------- -----------------
Maximum Sales Charge Imposed On Reinvested Dividends NONE
---------------------------------------------------------------------- -----------------
Deferred Sales Charge NONE
---------------------------------------------------------------------- -----------------
Redemption Fees NONE
---------------------------------------------------------------------- -----------------
Exchange Fees NONE
* You may be charged additional fees if you buy, exchange, or sell shares
through a broker or agent.
The Annual Fund Operating Expenses table below illustrates the
net operating expenses that you will incur as a shareholder in
Class G Shares of the Diversified Stock Fund. The Diversified
Stock Fund pays these expenses from its assets.
Annual Fund Operating Expenses Class G
Management Fees 0.65%
------------------------------------------------------------ -------------------------
Distribution (12b-1) Fees 0.50%
------------------------------------------------------------ -------------------------
Other Expenses 0.37%
------------------------------------------------------------ -------------------------
Total Fund Operating Expenses 1.52%
------------------------------------------------------------ -------------------------
Fee Waiver (0.08%)
------------------------------------------------------------ -------------------------
Net Expenses /1/ 1.44%
/1/ The expenses shown are based on historical expenses of the
Fund adjusted to reflect current expenses. The Adviser has
agreed to waive its management fee or to reimburse
expenses, as allowed by law, to the extent necessary to
maintain the net operating expenses at a maximum of 1.44%
until at least April 1, 2001.
EXAMPLE
The following Example is designed to help you compare the cost
of investing in Class G Shares of the Diversified Stock Fund
with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Diversified Stock 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
Diversified Stock Fund's operating expenses remain the same.*
Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class G $147 $464 $813 $1,799
* This Example assumes that Total Annual Fund Operating
Expenses will equal 1.44% until April 1, 2001 and will
equal 1.52% thereafter.
5. On page 11, on the Investment Performance chart for the Growth Fund,
change the S&P 500 Index Average Annual Total Return Past 5 Year number
from 24.12% to 24.06%.
6. On page 17, on the Investment Performance chart for the International
Growth Fund, change the Morgan Stanley All-Country World Free XUSA
Average Annual Total Return Since Inception from 6.25% to 6.30%.
7. On page 17, in the Risk/Return Summary for the International Growth
Fund, add the following information under "Fund Expenses."
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Shareholder Transaction Expenses
(paid directly from your investment)* Class G
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) NONE
---------------------------------------------------------------------- -----------------
Maximum Sales Charge Imposed On Reinvested Dividends NONE
---------------------------------------------------------------------- -----------------
Deferred Sales Charge NONE
---------------------------------------------------------------------- -----------------
Redemption Fees NONE
---------------------------------------------------------------------- -----------------
Exchange Fees NONE
* You may be charged additional fees if you buy, exchange,
or sell shares through a broker or agent.
The Annual Fund Operating Expenses table below illustrates the
net operating expenses that you will incur as a shareholder in
Class G Shares of the International Growth Fund. The
International Growth Fund pays these expenses from its assets.
Annual Fund Operating Expenses Class G
Management Fees 1.10%
------------------------------------------------------------ -------------------------
Distribution (12b-1) Fees 0.50%
------------------------------------------------------------ -------------------------
Other Expenses 0.47%
------------------------------------------------------------ -------------------------
Total Fund Operating Expenses 2.07%
------------------------------------------------------------ -------------------------
Fee Waiver (0.07%)
------------------------------------------------------------ -------------------------
Net Expenses /1/ 2.00%
/1/ The expenses shown are based on historical expenses of the
International Growth Fund adjusted to reflect current
expenses. The Adviser has agreed to waive its management
fee or to reimburse expenses, as allowed by law, to the
extent necessary to maintain the net operating expenses at
a maximum of 2.00% until at least April 1, 2001.
EXAMPLE
The following Example is designed to help you compare the cost
of investing in Class G Shares of the International Growth
Fund with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the International
Growth 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 International Growth Fund's operating expenses remain
the same.* Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class G $203 $635 $1,100 $2,389
* This Example assumes that Total Annual Fund Operating Expenses will equal
2.00% until April 1, 2001 and will equal 2.07% thereafter.
</TABLE>
3
<PAGE>
8. On page 22, under "Share Price," replace the second sentence in the first
paragraph with the following:
You may buy, exchange, and sell your shares on any business
day at the NAV that is calculated after you place your order.
9. On page 25, under "Choosing a Share Class," delete the second sentence in
the first paragraph and replace it with: "The Diversified Stock Fund and
International Growth Fund also offer Class G Shares which have no front-end
sales charge." Add the following information to facilitate the comparison of
Class G Shares of these Funds to their Class A and Class B 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 Lower annual expenses than Class B Shares.
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.
10. On page 35, under "Distribution Plan," please insert the following between
the first and second paragraphs:
Victory also has adopted a Rule 12b-1 Distribution and Service
Plan for Class G Shares of the Diversified Stock Fund and
International Growth Fund, under which these shares will pay to
the Distributor a monthly service fee at an annual rate of 0.25%
of the average daily net assets of each Fund. The service fee is
paid to securities broker-dealers or other financial
intermediaries for providing personal services to shareholders of
these Funds, including responding to inquiries, providing
information to shareholders about their Fund accounts,
establishing and maintaining accounts and records, processing
dividend and distribution payments, arranging for bank wires,
assisting in transactions, and changing account information. Each
Fund may enter into agreements with various shareholder servicing
agents, including KeyCorp and its affiliates, and with other
financial institutions that provide such services.
Under the Class G Rule 12b-1 Distribution and Service Plan, Class
G Shares of the Diversified Stock Fund and International Growth
Fund also annually pay the Distributor a monthly distribution fee
in an additional amount of up to 0.25% of each Fund's average
daily net assets. The distribution fee is paid to the Distributor
for general distribution services and for selling Class G Shares
of these Funds. The Distributor makes payments to agents who
provide these services.
11. On page 33, under "Portfolio Management," delete Barbara A. Myers' name and
biographical information from the paragraph regarding the portfolio managers
of the Special Value Fund.
12. Throughout the Prospectus add, to obtain additional information call
Gradison McDonald at 513-579-5999 or 800-869-5999 or write Gradison
McDonald, 580 Walnut Street, Cincinnati, OH 45202.
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-SUP
4
<PAGE>
Dear Shareholder:
Effective March 29, 1999, as a result of the reorganization of Gradison Ohio
Tax-Free Income Fund, Victory Ohio Municipal Bond Fund started offering Class G
Shares. This supplement provides Class G information to be included in the
current Prospectus for this Victory Fund. This information is important and is
part of your Prospectus.
- --------------------------------------------------------------------------------
The Victory Portfolios
National Municipal Bond Fund
New York Tax-Free Fund
Ohio Municipal Bond Fund
Supplement dated March 29, 1999
To the Prospectus dated March 1, 1999
1. On the cover of the Prospectus, delete the word "Bond" in the New York
Tax-Free Fund.
2. On page 3 under "Fees and Expenses" delete the third paragraph and replace
it with the following:
On March 5, 1999, shareholders of Gradison Ohio Tax-Free
Income Fund approved the reorganization of their funds into
Class G Shares of the Victory Ohio Municipal Bond Fund. As a
result, the Ohio Municipal Bond Fund began offering Class G
Shares. The Gradison Division of McDonald Investments Inc., an
affiliate of Key Asset Management Inc. (Gradison McDonald),
will provide services to the shareholders of the Class G
Shares of the fund. Fees and expenses associated with Class G
Shares are discussed below. Class G Shares are available only
through certain broker-dealers.
3. On pages 6, 8 and 10, in the Risk/Return Summary for each of the Funds, add
the following information at the end of the "Principal Risks" sections:
An investment in the Fund is not a deposit of KeyBank or any
of its affiliates and is not insured or guaranteed by the FDIC
or any other government agency.
4. On page 9, in the Risk/Return Summary for the Ohio Municipal Bond Fund, add
the following information under "Fund Expenses."
<TABLE>
<CAPTION>
<S> <C> <C>
Shareholder Transaction Expenses
(paid directly from your investment)* Class G
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) NONE
---------------------------------------------------------------------- -----------------
Maximum Sales Charge Imposed On Reinvested Dividends NONE
---------------------------------------------------------------------- -----------------
Deferred Sales Charge NONE
---------------------------------------------------------------------- -----------------
Redemption Fees NONE
---------------------------------------------------------------------- -----------------
Exchange Fees NONE
o You may be charged additional fees if you, exchange, or sell
shares through a broker or agent.
<PAGE>
The Annual Fund Operating Expenses table below illustrates the
net operating expenses that you will incur as a shareholder in
Class G Shares of the Ohio Municipal Bond Fund. The Ohio
Municipal Bond Fund pays these expenses from its assets.
Annual Fund Operating Expenses Class G
Management Fees 0.60%
------------------------------------------------------------ -------------------------
Distribution (12b-1) Fees 0.25%
------------------------------------------------------------ -------------------------
Other Expenses 0.27%
------------------------------------------------------------ -------------------------
Total Fund Operating Expenses 1.12%
------------------------------------------------------------ -------------------------
Fee Waiver (0.21%)
------------------------------------------------------------ -------------------------
Net Expenses /1/ 0.91%
/1/ The expenses shown are based on historical expenses of the
Ohio Municipal Bond Fund adjusted to reflect current
expenses. The Adviser has agreed to waive its management
fee or to reimburse expenses, as allowed by law, to the
extent necessary to maintain the net operating expenses at
a maximum of 0.91% until at least April 1, 2001.
EXAMPLE
The following Example is designed to help you compare the cost
of investing in Class G Shares of the Ohio Municipal Bond Fund
with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Ohio Municipal Bond
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
Ohio Municipal Bond Fund's operating expenses remain the
same.* Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class G $93 $313 $575 $1,324
* This Example assumes that Total Annual Fund Operating Expenses will equal 0.91%
until April 1, 2001 and will equal 1.12% thereafter.
</TABLE>
5. On page 12, under "Share Price," replace the second sentence in the first
paragraph with the following:
You may buy, exchange, and sell your shares on any business day at
the NAV that is calculated after you place your order.
2
<PAGE>
6. On page 15, under "Choosing a Share Class," delete the second sentence in
the first paragraph and replace it with: "The Ohio Municipal Bond Fund also
offers Class G Shares which have no front-end sales charge." Add the
following information to facilitate the comparison of Class G Shares of the
Ohio Municipal Bond 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 Lower 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.
7. On page 24, under "Distribution Plan," add the following after the second
paragraph:
Victory has also adopted a Rule 12b-1 Distribution and Service Plan for
Class G Shares of the Ohio Municipal Bond Fund, under which these
shares will pay to the Distributor a monthly service fee at an annual
rate of 0.25% of the average daily net assets of the Fund. The service
fee is paid to securities broker-dealers or other financial
intermediaries for providing personal services to shareholders of the
Ohio Municipal Bond Fund, including responding to inquiries, providing
information to shareholders about their Fund accounts, establishing and
maintaining accounts and records, processing dividend and distribution
payments, arranging for bank wires, assisting in transactions, and
changing account information. The Ohio Municipal Bond Fund may enter
into agreements with various shareholder servicing agents, including
KeyCorp and its affiliates, and with other financial institutions that
provide such services.
8. Throughout the Prospectus add: "To obtain additional information call
Gradison McDonald at 513-579-5999 or 800-869-5999 or write Gradison
McDonald, 580 Walnut Street, Cincinnati, OH 45202."
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-TEFI-SUP
<PAGE>
Dear Shareholder:
The Victory Lakefront Prospectus is being revised. This information is important
and is part of your Prospectus.
- --------------------------------------------------------------------------------
The Victory Portfolios
Lakefront Fund
Supplement dated March 29, 1999
To the Prospectus dated March 1, 1999
1. On page 2, in the Risk/Return Summary for the Fund, add the following
information at the end of the "Principal Risks" section:
An investment in the Fund is not a deposit of KeyBank or any
of its affiliates and is not insured or guaranteed by the FDIC
or any other government agency.
2. On page 3, in the Investment Performance chart, change the S&P 500 Index
Average Annual Total Return for the Past One Year from 25.58% to 28.58% and
Since Inception from 19.08% to 29.74%.
3. On page 5, under "Share Price," replace the second sentence in the first
paragraph with the following:
You may buy, exchange, and sell your shares on any business
day at the NAV that is calculated after you place your order.
4. On page 5, in the "Dividends, Distributions, and Taxes" section, replace the
first sentence of the last paragraph with the following information:
Ordinarily, the Fund declares and pays dividends quarterly.
Please insert this Supplement in the front of your Prospectus. If you want to
obtain more information, please call the Fund at 800-539-FUND.
VF-VLF-SUP
<PAGE>
Dear Shareholder:
The Victory LifeChoice Funds' Prospectus is being revised. This information is
important and is part of your Prospectus.
- --------------------------------------------------------------------------------
The Victory Portfolios
LifeChoice Conservative Investor Fund
LifeChoice Moderate Investor Fund
LifeChoice Growth Investor Fund
Supplement dated March 29, 1999
To the Prospectus dated March 1, 1999
1. On page 6, in the Risk/Return Summary for the LifeChoice Funds, add the
following information at the end of the "Principal Risks" section:
An investment in a LifeChoice Fund is not a deposit of KeyBank
or any of its affiliates and is not insured or guaranteed by
the FDIC or any other government agency.
2. On page 7, in the Investment Performance chart, change the S&P 500 Index
Average Annual Total Return for the Past One Year from 15.09% to 28.58% and
Since Inception from 16.32% to 30.90%.
3. On page 15, under "Share Price," replace the second sentence in the first
paragraph with the following:
You may buy, exchange, and sell your shares on any business
day at the NAV that is calculated after you place your order.
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.
VF-VLCF-SUP
<PAGE>
THE VICTORY PORTFOLIOS
<TABLE>
<CAPTION>
<S> <C> <C>
Balanced Fund International Growth Fund Ohio Municipal Money Market Fund
Convertible Securities Fund Investment Quality Bond Fund Ohio Regional Stock Fund
Diversified Stock Fund Lakefront Fund Prime Obligations Fund
Federal Money Market Fund LifeChoice Conservative Investor Fund Real Estate Investment Fund
Financial Reserves Fund LifeChoice Moderate Investor Fund Small Company Opportunity Fund
Fund for Income LifeChoice Growth Investor Fund Special Value Fund
Government Mortgage Fund Limited Term Income Fund Stock Index Fund
Growth Fund National Municipal Bond Fund Tax-Free Money Market Fund
Institutional Money Market Fund New York Tax-Free Fund U.S. Government Obligations Fund
Intermediate Income Fund Ohio Municipal Bond Fund Value Fund
Supplement dated March 29, 1999
To the Statement of Additional Information
dated March 1, 1999
On March 5, 1999, shareholders of mutual funds advised by the Gradison Division
of McDonald Investments Inc. ("Gradison McDonald") approved the reorganization
of their funds into Class G Shares of certain series of The Victory Portfolios,
as shown in the following table.
Gradison Fund: Victory Fund (Class G):
U.S. Government Reserves -> Gradison Government Reserves Fund*
Government Income Fund -> Fund for Income
Ohio Tax-Free Income Fund -> Ohio Municipal Bond Fund
Established Value Fund -> Established Value Fund*
Growth & Income Fund -> Diversified Stock Fund
Opportunity Value Fund -> Small Company Opportunity Fund
International Fund -> International Growth Fund
</TABLE>
- ---------------------
* Described in a separate statement of additional information.
As a result of the reorganization, which was completed on March 29, 1999, the
Victory Fund for Income and the Victory Small Company Opportunity Fund (formerly
known as the Special Growth Fund) assumed the performance and accounting history
of the Gradison Government Income Fund and the Gradison Opportunity Value Fund
(the "Predecessor Funds"), respectively. The following information reflects the
performance, investment advisory fees, brokerage commissions, portfolio turnover
rates, underwriting fees, miscellaneous fees and Rule 12b-1 payments of the
Predecessor Funds during the indicated periods.
In addition, the Special Value Fund is updating its portfolio manager
information.
1. 30-Day Standardized Yield. On page 74, add the following: The 30-day
standardized yield as of December 31, 1998 for Gradison Government
Income Fund is 5.24% and as of March 31, 1998 for Gradison Opportunity
Value Fund is N/A.
2. Dividend Yield and Distribution Return. On page 75, add the following
information. During these periods, the Predecessor Funds did not charge
a sales load.
<TABLE>
<CAPTION>
----------------------------------------- --------------------- -------------------------- --------------------------
Dividend Yield Distribution Return Fiscal Year Ended
----------------------------------------- --------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
5.68% 5.68% December 31, 1998
Gradison Government Income Fund
----------------------------------------- --------------------- -------------------------- --------------------------
Gradison Opportunity Value Fund 0.97% 13.73% March 31, 1998
----------------------------------------- --------------------- -------------------------- --------------------------
<PAGE>
3. Average Annual Total Return. On page 77, add the following information.
---------------------------------------- ----------------- --------------- --------------- --------------------
One-Year Five-Years Ten-Years Periods Ended
---------------------------------------- ----------------- --------------- --------------- --------------------
Gradison Government Income Fund 7.37% 6.33% 8.07% 12/31/98
---------------------------------------- ----------------- --------------- --------------- --------------------
Gradison Opportunity Value Fund 42.02% 17.44% 14.88% 3/31/98
---------------------------------------- ----------------- --------------- --------------- --------------------
4. Average Annual Total Return and Cumulative Total Return. On page 79, add the
following information.
---------------------------------------------- --------------------- ------------------- -------------------
Average Annual Cumulative Period from
Total Return Total Return inception to
---------------------------------------------- --------------------- ------------------- -------------------
Gradison Government Income Fund 8.26% 144.88% 12/31/98
---------------------------------------------- --------------------- ------------------- -------------------
Gradison Opportunity Value Fund 12.49% 459.43% 3/31/98
---------------------------------------------- --------------------- ------------------- -------------------
5. Portfolio Managers of the Proprietary Portfolios of the LifeChoice
Funds. On page 102, delete Barbara Myers' name and biographical
information relating to the Special Value Fund.
6. Investment Advisory Fees. On page 104, add the following information:
During the periods indicated in the following table, the Predecessor
Funds paid investment advisory fees to the Gradison Division of
McDonald & Company Securities, Inc. ("McDonald & Co."), as shown below.
---------------------------------------------- ----------------------- --------------------- --------------------
1998 1997 1996
---------------------------------------------- ----------------------- --------------------- --------------------
Gradison Government Income Fund $796,226 $773,094 $866,440
(fiscal years ended December 31)
---------------------------------------------- ----------------------- --------------------- --------------------
Gradison Opportunity Value Fund $881,658 $699,336 $631,571
(fiscal years ended March 31)
---------------------------------------------- ----------------------- --------------------- --------------------
7. Brokerage Commissions. On page 107, add the following information:
---------------------------------------------- ----------------------- --------------------- --------------------
1998 1997 1996
---------------------------------------------- ----------------------- --------------------- --------------------
Gradison Government Income Fund 0 0 0
(fiscal years ended December 31)
---------------------------------------------- ----------------------- --------------------- --------------------
Gradison Opportunity Value Fund $136,378 $92,853 $71,036
(fiscal years ended March 31)
---------------------------------------------- ----------------------- --------------------- --------------------
8. Portfolio Turnover Rate. On page 108, add the following information:
---------------------------------------------- ----------------------- ---------------------
1998 1997
---------------------------------------------- ----------------------- ---------------------
Gradison Government Income Fund 36% 12%
(fiscal years ended December 31)
---------------------------------------------- ----------------------- ---------------------
Gradison Opportunity Value Fund 42% 35%
(fiscal years ended March 31)
---------------------------------------------- ----------------------- ---------------------
2
<PAGE>
9. Underwriting Fees. On page 113, add the following information:
Pursuant to a Master Distribution Agreement with the Gradison
Government Income Fund, McDonald & Co. received underwriting sales
charges of $30,601 for the period from January 1, 1997 to July 7, 1997
and $110,078 for the fiscal year ended December 31, 1996. The Gradison
Government Income Fund eliminated its sales charge effective July 7,
1997.
10. Miscellaneous Service Fees. On page 113, add the following information
to reflect fees paid to McDonald & Co.
-------------------------------------------------- ---------------- ------------------ ---------------
1998 1997 1996
-------------------------------------------------- ---------------- ------------------ ---------------
Data Processing Services $39,970 $40,302 $45,119
Gradison Government Income Fund
(fiscal years ended December 31)
-------------------------------------------------- ---------------- ------------------ ---------------
Shareholder Servicing Personnel Costs $59,992 $53,667 $59,036
Gradison Government Income Fund
(fiscal years ended December 31)
-------------------------------------------------- ---------------- ------------------ ---------------
Transfer Agent and Accounting Services $384,111 $154,756 $140,112
Gradison Opportunity Value Fund (from 6/1/95)
(fiscal years ended March 31)
-------------------------------------------------- ---------------- ------------------ ---------------
11. Rule 12b-1 Payments. On page 115, add the following information to
reflect the payment of 12b-1 fees paid to McDonald & Co., the
distributor of the Predecessor Funds.
------------------------------------------- ----------------- ------------------- -----------------
1998 1997 1996
------------------------------------------- ----------------- ------------------- -----------------
Gradison Government Income Fund $390,404 $380,694 $427,632
(fiscal years ended December 31)
(for shareholder services only)
------------------------------------------- ----------------- ------------------- -----------------
Gradison Opportunity Value Fund $710,599 $544,851 $421,414
(fiscal years ended March 31)
(1/2 for distribution and 1/2 for
shareholder services)
------------------------------------------- ----------------- ------------------- -----------------
</TABLE>
If you would like more information about the Victory Funds call 800-539-FUND or
Gradison McDonald at 800-869-5999 or 513-579-5999.
VF-SAI-SUP
3
