THE VICTORY PORTFOLIOS
THE VICTORY VARIABLE INSURANCE FUNDS
CODE OF ETHICS
A. Legal Requirements.
Rule 17j-1(a) under the Investment Company Act of 1940, as amended (the
"1940 Act") makes it unlawful for any officer or Trustee (1) (as well as other
persons) of The Victory Portfolios and The Victory Variable Insurance Funds
(collectively, the "Funds"), in connection with the purchase or sale by such
person of a security "held or to be acquired" by any investment portfolio of the
Funds (each, a "Portfolio" and collectively, the "Portfolios"):
(1) To employ any device, scheme or artifice to defraud a Fund or
Portfolio;
(2) To make to a Fund or Portfolio any untrue statement of a material
fact or to omit to state to the Fund or Portfolio a material fact
necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
(3) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon a Fund or
Portfolio; or
(4) To engage in any manipulative practice with respect to a Fund or
Portfolio.
B. Certain Definitions.
(1) "Access Person" means
(a) all directors, officers and employees of the Funds and
Portfolios; and
(b) any other person designated by the Compliance Officer to
be an Access Person.
(2) "Beneficial Ownership" means
(a) the receipt of benefits substantially equivalent to
those of ownership through relationship, understanding,
agreement, contract or other arrangements; or
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(1) In this Code of Ethics, "trustees" also refers to "directors" and "Board of
Trustees" also refers to "Board of Directors."
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(b) the power to vest benefits substantially equivalent to
those of ownership in oneself at once or at some future
time.
Generally, a person will be regarded as having a direct or indirect
Beneficial Ownership in securities held in his/her name, as well as in the name
of a spouse, minor children who live with such person, any other relative
(parents, adult children, brothers, sisters, in-laws, etc.) whose investments
the person directs or controls, whether they live together or not. The
definition of "Beneficial Ownership" will be interpreted with reference to the
definition contained in the provisions of Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
thereunder, as such provisions may be interpreted by the Securities and Exchange
Commission, except that the determination of direct or indirect Beneficial
Ownership will apply to all securities which an Access Person has or acquires.
(3) "Compliance Officer" means the Compliance Officer of the Funds.
(4) "Covered Service Provider" means the investment adviser,
administrator and principal underwriter for each Fund.
(5) "Ethics Committee" means the Ethics Committee established by KAM.
(6) "Exempt Security" means: Government securities (as defined by
Section 2(a)(16) of the 1940 Act); shares of registered open-end investment
companies; securities that are not eligible for purchase or sale by any Fund;
and any other security that KAM's Ethics Committee from time to time may
designate as an Exempt Security.
(7) "KAM" means Key Asset Management Inc.
(8) "Reportable Securities" means all securities other than Exempt
Securities.
(9) "Security" shall have the meaning set forth in Section 2(a)(36) of
the 1940 Act, and shall include a related security.
(a) A security is "being considered for purchase or sale"
when a recommendation to purchase or sell such security has been made and
communicated and, with respect to the person making the recommendation, when
such person seriously considers making such a recommendation.
(b) A security is "held or to be acquired" if within the
most recent 15 days it is or has been held by a Portfolio, or is being or has
been considered by a Portfolio or KAM for purchase by the Portfolio.
(c) A purchase or sale includes the writing of an option to
purchase or sell.
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C. Fund Policies.
(1) No Access Person shall engage in any act, practice or course of
conduct that would violate the provisions of Rule 17j-1(a) set forth above.
(2) In keeping with the recommendations of the Board of Governors of
the Investment Company Institute, the following general policies shall govern
personal investment activities of Access Persons of a Fund or a Portfolio:
(a) it is the duty of all Access Persons to place the
interest of Fund shareholders first;
(b) all Access Persons shall conduct personal securities
transactions in a manner that is consistent with this Code of
Ethics and that avoids any actual or potential conflict of
interest or any abuse of a position of trust and responsibility;
and
(c) no Access Person of a Fund or of a Portfolio shall take
inappropriate advantage of his or her position with the Fund or
with a Portfolio.
D. Procedures.
(1) In order to enable the Funds to determine with reasonable
assurance whether the foregoing policies are being observed by its Access
Persons:
(a) Each Access Person, other than a Trustee who is not an
"interested person" of KAM (as defined in the 1940 Act), shall
submit reports in the form attached hereto as Exhibit A
("Securities Transaction Reports") to the Fund's Compliance
Officer showing all transactions in Reportable Securities in
which the person has, or by reason of such transaction acquires
Beneficial Ownership. Such reports shall be filed no later than
10 days after the end of each calendar quarter, but need not show
transactions over which such person had no direct or indirect
influence or control.
(b) Each Trustee who is not an "interested person" of KAM shall
submit the same quarterly report as required under paragraph (a),
for each transaction in a Reportable Security when the Trustee
knew at the time of the transaction or, in the ordinary course of
fulfilling official duties as a Trustee, should have known that
during the 15-day period immediately preceding or after the date
of the transaction, such security is or was purchased or sold, or
was considered for purchase or sale, by the Fund or Portfolio or
the investment adviser for the Fund or Portfolio. No report is
required if the Trustee has no direct or indirect influence or
control over the transaction.
(c) For purposes of this paragraph D.(1), a trustee who is an
employee of an affiliate of KAM, but who has no day-to-day
responsibilities to KAM or an
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affiliate, shall be deemed to be not an interested person of KAM.
Similarly, for purposes of this Paragraph D.(1), an assistant
officer of the Trust who is not an employee of KAM or its
affiliates shall not be considered an Access Person.
(2) The Compliance Officer shall notify each Access Person required to
submit reports pursuant to this Code of Ethics that such person is subject to
this reporting requirement and shall deliver a copy of this Code of Ethics to
such person.
(3) The Compliance Officer shall report to the Board of Trustees:
(a) at the next meeting following the receipt of any Securities
Transaction Report with respect to each reported transaction in a
security which was held or acquired by the Fund or a Portfolio
within 15 days before or after the date of the reported
transaction or at a time when, to the knowledge of the Compliance
Officer, the Fund, a Portfolio or the investment adviser for the
Fund or a Portfolio was considering the purchase or sale of such
security;
(b) any transaction not required to be reported to the Board by
operation of subparagraph (a) that the Compliance Officer
believes may nonetheless constitute a violation of this Code of
Ethics; and
(c) any apparent violation of any reporting requirement
hereunder.
(4) The Board of Trustees shall consider reports made to it hereunder
and shall determine whether the policies established in section B above have
been violated, and what sanctions, if any, should be imposed.
(5) The Board of Trustees, including a majority of the Trustees who
are not "interested persons" of the Fund, with advice of counsel to the Funds
and to the disinterested Trustees, shall determine, that each Access Person who
is an employee of a Covered Service Provider shall be subject to this Code of
Ethics or a Code of Ethics adopted by such Covered Service Provider, provided
that:
(a) the Covered Service Provider has adopted a Code of Ethics
that meets the requirements of Rule 17j-1 and substantially
conforms to generally accepted industry and regulatory standards;
and
(b) the Covered Service Provider has implemented adequate
procedures for monitoring compliance with its Code of Ethics.
(6) The Board of Trustees shall review the operation of this Code of
Ethics at least once a year. To that end, an appropriate officer of each Fund
shall prepare an annual report to the Board of Trustees that:
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(a) summarizes existing procedures of the Fund and its Covered
Service Providers concerning personal investing and any changes
in the procedures made during the past year;
(b) identifies any violations requiring significant remedial
action during the past year; and
(c) identifies any recommended changes in existing restrictions
or procedures of the Fund or its Covered Service Providers based
upon the experience of the Fund or its investment advisers,
evolving industry practices or developments in applicable laws or
regulations.
(7) This Code of Ethics, a copy of each Securities Transaction Report
by an Access Person, any written report submitted hereunder required by the
Ethics Committee, and lists of all persons required to make reports shall be
preserved with the Fund records for the period required by Rule 17j-1.
Adopted: February 23, 1999
The Board of Trustees of The Victory Portfolios
The Board of Trustees of The Victory Variable Insurance Funds
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EXHIBIT A
THE VICTORY PORTFOLIOS
THE VICTORY VARIABLE INSURANCE FUNDS
SECURITY TRANSACTION REPORT
For The Calendar Quarter Ended __________
Instructions:
1. List all transactions in Reportable Securities in any account in
which you have a Beneficial Ownership. Please write "none" if you have no
transactions in Reportable Securities during the quarter. If you submit copies
of monthly brokerage statements covering all transactions in Reportable
Securities, please write "see monthly statements."
2. If you are Trustee who is not an "interested person" of KAM, then you
need only report transactions in Reportable Securities when you knew at the time
of the transaction or, in the ordinary course of fulfilling your duties as a
Trustee, or you should have known, that during the 15-day period immediately
preceding or after the date of the transaction, such security is or was
purchased or sold, or was considered for purchase or sale, by the Funds. Please
write "none" if you have no transactions in Reportable Securities during the
quarter that meet the above conditions.
3. Use additional sheets if necessary.
<TABLE>
<CAPTION>
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No. of Shares Broker, Dealer or Other Party
Name of Date of Purchase or Principal Through Whom Transaction
Security Transaction /Sale Amount Price Was Made
-------- ----------- ----- ------ ----- --------
<S> <C> <C> <C> <C> <C>
___________ ___________ ________ ____________ ______ _____________________________
___________ ___________ ________ ____________ ______ _____________________________
___________ ___________ ________ ____________ ______ _____________________________
___________ ___________ ________ ____________ ______ _____________________________
___________ ___________ ________ ____________ ______ _____________________________
___________ ___________ ________ ____________ ______ _____________________________
=========================================================================================================
</TABLE>
I certify that the information provided above is correct.
Date:_____________ Signature:_____________________________
