April 30, 2000
Semi Annual Report
Institutional Money Market Fund
Federal Money Market Fund
Victory Funds
(LOGO)(R)
<PAGE>
Table of Contents
Shareholder Letter 2
Financial Statements
Schedules of Investments 3
Statements of Assets and Liabilities 7
Statements of Operations 8
Statements of Changes in Net Assets 9
Financial Highlights 10
Notes to Financial Statements 12
THE VICTORY PORTFOLIOS
Key Asset Management Inc. (KAM), a subsidiary of KeyCorp, is the investment
adviser to the Victory Funds. The Victory Funds are sponsored and distributed
by BISYS Fund Services, which is not affiliated with KeyCorp or its
subsidiaries. KAM receives fees for its services from the Victory Funds.
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus of the Victory
Institutional Money Market Fund and Federal Money Market Fund.
An investment in the Funds is not insured or guaranteed by the FDIC or any
other government agency. Although the Funds seek to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing
in the Funds.
NOT FDIC INSURED
Shares of the Victory Funds are not insured by the FDIC, are not deposits
Or other obligations of, or guaranteed by, any KeyCorp bank, Key Asset
Management Inc., or their affiliates, and are subject to investment risks,
including possible loss of the principal amount invested.
Victory Funds
(LOGO)(R)
Call Victory at:
800-539-FUND (800-539-3863)
Visit our web site at:
www.victoryfunds.com
1
<PAGE>
Letter to our Shareholders
On behalf of Victory Funds, thank you for your continued support and
confidence in using Victory Funds to help meet your investment goals! We
strive on a daily basis to make sure you have the appropriate information
you need to remain confident in your choice to invest in Victory Funds. To
that end, I am pleased to present the Victory Institutional Money Market and
Federal Money Market's Semi-Annual Report for the period ended April 30, 2000.
I hope you find this report useful, easy to read, and a valuable tool.
The past few months have been an exciting time for Victory Funds. Through the
combination of a new sales and marketing literature system, a new and
improved Internet presence, and the support of the many financial
intermediaries offering Victory Funds, we are now over 30 mutual funds strong
with more than $20 billion in assets under management.
Two of Victory Funds' core beliefs are guidance and education. We recognize
it can be a complex decision to invest in securities through mutual funds,
particularly when your hard-earned savings to fund a child's education, a new
home, or a comfortable retirement is on the line. That's why I feel it is
important for our shareholders to know "What Makes Victory Funds Different?"
I am confident that after you review the following points you will be
reassured of your investment in Victory Funds and in a better position to
share the Victory story with your family, friends, and business associates.
So, "What Makes Victory Funds Different?"
Truth in Labeling. Dependability is the essence of Victory Funds. When you
entrust your money to a Victory Fund, you can rest assured that the portfolio
managers of the Funds are known for adhering to a fund's stated management
style and investment objective.
Discipline. A highly rigorous and disciplined investment process, refined
over decades by the wisdom of experienced money managers, guides the selection
of securities for Victory Funds. Key Asset Management, Inc., an established
firm with a 100-year heritage, meticulously implements this proven process.
Teamwork. A knowledgeable team of investment professionals supports Victory
Fund portfolio managers, who have an average of 17 years of experience.
Guidance. Victory strives to make sure you have the information you need to
make the best investment decisions. The guidance available through investment
professionals, "www.victoryfunds.com," our educational materials, and Victory
Funds Service Center (1-800-539-FUND) all come together for one purpose --
our shareholders.
Performance. The ultimate measure of your investment success is performance
At Victory Funds, our long-term perspective leads us to pursue the optimal
return with a reasonable level of risk. We are committed to achieving
consistent, rewarding results over time.
Again, thank you for choosing the Victory Funds to help you realize your
financial goals and, as always, we welcome your comments on this report.
/s/ Leigh A. Wilson
Leigh A. Wilson
President
Victory Funds
2
<PAGE>
THE VICTORY PORTFOLIOS Schedules of Investments
Institutional Money Market Fund April 30, 2000
(Amounts in Thousands) (Unaudited)
Principal Amortized
Security Description Amount Cost
Bankers Acceptances (0.2%)
Toronto Dominion, 6.04%, 9/1/00 $ 7,649 $ 7,491
Total Bankers Acceptances
(Amortized Cost $7,491) 7,491
Certificates of Deposit (22.5%)
ABN-AMRO North American Bank,
6.72%, 3/2/01 30,000 29,997
American Express Centurion Bank,
6.05%, 5/17/00 100,000 100,000
American Express Centurion Bank,
6.05%, 5/17/00 100,000 100,000
Bank of America,
6.25%, 7/20/00 50,000 50,000
Bank One National Illinois,
6.18%, 6/23/00 20,000 20,000
Bayerische Landesbank New York,
6.60%, 3/7/01 30,000 29,990
Bayerische Landesbank New York,
6.35%, 3/26/01 6,600 6,584
Canadian Imperial Bank of Commerce,
6.13%, 6/16/00 47,000 46,998
Credit Suisse First Boston New York,
5.82%, 7/5/00 20,000 19,981
Deutsche Bank,
6.51%, 1/31/01 25,000 24,992
Deutsche Bank,
6.76%, 2/14/01 10,000 10,003
Dresdner Bank,
6.25%, 8/31/00 17,000 17,000
First National Bank of Chicago,
5.85%, 8/4/00 19,000 18,981
First Union National Bank,
5.25%, 5/15/00 20,000 19,993
First Union National Bank,
6.00%, 5/17/00 15,000 14,999
First Union National Bank,
6.05%, 6/30/00 25,000 25,000
National Westminster Bank,
6.93%, 4/27/01 50,000 49,988
Rabobank,
5.29%, 5/19/00 15,000 15,000
Rabobank,
6.36%, 9/25/00 15,000 14,996
Rabobank,
6.68%, 2/12/01 30,000 29,991
Rabobank,
6.62%, 2/16/01 20,000 19,992
Societe Generale,
6.18%, 6/26/00 50,000 50,003
Toronto Dominion,
5.15%, 5/10/00 15,000 14,996
Toronto Dominion,
6.08%, 6/26/00 40,000 40,000
Toronto Dominion,
6.69%, 12/27/00 50,000 50,001
UBS Finance,
5.91%, 5/31/00 10,000 9,998
UBS Finance,
6.22%, 12/11/00 30,000 29,936
Total Certificates of Deposit
(Amortized Cost $859,419) 859,419
Commercial Paper (53.8%)
Abbey National,
6.08%, 8/30/00 40,000 39,183
Akzo Nobel, Inc.,
6.17%, 8/21/00 25,730 25,236
Asset Securitization Capital Corp.,
6.07%, 5/19/00 (b) 25,000 24,924
Asset Securitization Capital Corp.,
6.10%, 6/29/00 (b) 50,000 49,500
Asset Securitization Capital Corp.,
6.08%, 9/11/00 (b) 25,000 24,438
Baker Hughes, Inc.,
6.06%, 5/1/00 (b) 150,000 150,000
Bell Atlantic Network Funding,
6.05%, 5/11/00 25,000 24,958
Bell Atlantic Network Funding,
6.05%, 5/18/00 45,000 44,871
Bell Atlantic Network Funding,
6.05%, 5/22/00 90,000 89,684
Clorox Co.,
6.02%, 6/15/00 17,000 16,872
Clorox Co.,
6.10%, 6/28/00 28,250 27,972
Coca-Cola Co.,
6.06%, 6/2/00 7,300 7,261
Delaware Funding Corp.,
6.03%, 5/4/00 (b) 50,238 50,212
Delaware Funding Corp.,
6.07%, 6/6/00 (b) 30,640 30,454
Delaware Funding Corp.,
6.12%, 6/16/00 19,036 18,887
Eastman Kodak Co.,
6.05%, 6/1/00 10,000 9,948
Eastman Kodak Co.,
6.05%, 6/13/00 10,000 9,928
Eastman Kodak Co.,
6.10%, 6/14/00 4,000 3,970
Eastman Kodak Co.,
6.10%, 6/16/00 30,000 29,766
Eastman Kodak Co.,
6.10%, 6/19/00 10,000 9,917
Edison Asset Securities,
6.07%, 5/17/00 (b) 95,000 94,745
Edison Asset Securities,
6.07%, 5/22/00 (b) 80,000 79,717
Exxon Mobil Corp.,
6.00%, 5/1/00 106,984 106,984
Fleet Funding Corp.,
6.05%, 5/18/00 58,219 58,052
See notes to financial statements.
3
<PAGE>
THE VICTORY PORTFOLIOS Schedules of Investments--continued
Institutional Money Market Fund April 30, 2000
(Amounts in Thousands) (Unaudited)
Principal Amortized
Security Description Amount Cost
Fleet Funding Corp.,
6.05%, 5/23/00 (b) $ 28,204 $ 28,100
Fountain Square Commercial
Funding Corp.,
6.08%, 5/3/00 (b) 43,626 43,611
Fountain Square Commercial
Funding Corp.,
6.07%, 5/19/00 (b) 11,746 11,710
General Mills, Inc.,
6.00%, 5/24/00 30,000 29,885
Great Lakes Chemical Corp.,
6.05%, 5/17/00 50,000 49,865
Household Finance,
6.10%, 5/1/00 50,000 50,000
Koch Industries,
6.04%, 5/1/00 (b) 150,000 150,000
Merck & Co., Inc.,
6.03%, 5/17/00 100,000 99,732
Mont Blanc Capital Corp.,
6.11%, 6/19/00 (b) 25,166 24,957
Monte Rosa Capital Corp.,
6.08%, 6/7/00 (b) 25,000 24,844
Monte Rosa Capital Corp.,
6.11%, 6/21/00 (b) 30,806 30,539
Redwood Receivables Corp.,
6.05%, 5/1/00 (b) 66,088 66,088
Redwood Receivables Corp.,
6.13%, 5/22/00 (b) 30,214 30,106
Salomon Smith Barney, Inc.,
6.07%, 6/12/00 100,000 99,292
SBC Communications, Inc.,
5.69%, 5/15/00 (b) 30,000 29,934
SBC Communications, Inc.,
6.05%, 5/22/00 (b) 50,000 49,823
SBC Communications, Inc.,
6.05%, 5/23/00 (b) 50,000 49,815
SBC Communications, Inc.,
6.05%, 5/24/00 (b) 35,000 34,865
Sheffield Receivables,
6.05%, 5/19/00 94,600 94,314
Southern California Edison,
5.90%, 5/3/00 (b) 10,000 9,997
Windmill Funding Corp.,
6.09%, 6/14/00 25,000 24,814
Total Commercial Paper
(Amortized Cost $2,059,770) 2,059,770
Corporate Bonds (16.0%)
American General Financial Corp.,
6.13%, 9/15/00 12,000 12,001
AT&T Capital Corp.,
7.59%*, 6/14/00 13,000 13,023
AT&T Capital Corp.,
6.59%, 8/4/00 9,650 9,658
AT&T Capital Corp.,
6.88%, 1/16/01,
Guaranteed by Newcourt
Credit Group, Inc. 7,000 7,008
AVCO Financial Services,
6.35%, 9/15/00 6,000 5,997
Beneficial Corp.,
6.26%*, 5/22/00** 25,000 25,033
Capital One Funding Corp.,
6.20%*, 5/4/00**,
LOC Bank One 19,069 19,069
Capital One Funding Corp.,
6.20%*, 5/4/00**,
LOC Bank One 5,200 5,200
Capital One Funding Corp.,
6.20%*, 5/4/00**,
LOC Bank One 4,862 4,862
Capital One Funding Corp.,
6.20%*, 5/4/00**,
LOC Bank One 18,100 18,100
Capital One Funding Corp.,
6.20%*, 5/4/00**,
LOC Bank One 21,197 21,197
First Union National Bank,
6.40%*, 5/1/00** 45,000 45,000
Ford Motor Credit Co.,
6.38%, 10/6/00 5,120 5,122
Ford Motor Credit Co.,
6.25%, 11/8/00 13,000 12,979
Ford Motor Credit Co.,
6.00%, 2/27/01, MTN 7,000 6,960
General Electric Capital Corp.,
6.66%, 5/1/00 7,200 7,200
General Electric Capital Corp.,
5.52%, 1/16/01 3,500 3,473
General Motors Acceptance Corp.,
9.63%, 5/15/00, MTN 7,500 7,511
General Motors Acceptance Corp.,
6.38%, 7/18/00, MTN 9,000 9,004
General Motors Acceptance Corp.,
6.09%*, 6/1/00**, MTN 5,000 4,998
General Motors Acceptance Corp.,
6.41%*, 5/22/00**, MTN 10,000 10,015
Goldman Sachs Group,
6.41%*, 7/14/00** (c) 25,000 25,009
Goldman Sachs Group,
6.49%*, 7/25/00** (c) 7,500 7,509
Household Finance,
6.00%, 5/8/00 13,000 13,000
Household Finance,
6.22%*, 5/1/00** 15,000 15,001
IBM Credit Corp.,
6.21%, 12/11/00 10,000 9,996
J.P. Morgan & Co.,
6.12%*, 5/16/00** 40,000 40,000
See notes to financial statements.
4
<PAGE>
THE VICTORY PORTFOLIOS Schedules of Investments--continued
Institutional Money Market Fund April 30, 2000
(Amounts in Thousands) (Unaudited)
Principal Amortized
Security Description Amount Cost
Jim M. & Melinda A. Schwerkoske Project,
Lucas County, Ohio,
6.30%*, 5/4/00**,
LOC Mid American National Bank $10,695 $ 10,695
John Deere Capital Corp.,
5.73%, 7/13/00 10,000 9,999
Lexington Financial Services,
6.20%*, 5/3/00**,
LOC LaSalle National Bank 5,295 5,295
Merrill Lynch & Co.,
6.55%*, 6/27/00**, MTN 19,000 19,006
Morgan Stanley Dean Witter,
6.21%*, 5/1/00** 50,000 50,000
Morgan Stanley Dean Witter,
6.25%*, 6/15/00**, MTN 13,000 13,000
Morgan Stanley Dean Witter,
6.18%*, 5/1/00**, MTN 50,000 50,001
PNC Bank,
6.08%*, 5/12/00** 8,500 8,498
Pomeroy Investments,
6.15%*, 5/4/00**,
LOC Societe Generale 3,350 3,350
Presrite Corp.,
6.27%*, 5/4/00**,
LOC National City Bank 4,000 4,000
Sara Lee Corp.,
5.75%, 7/14/00 7,500 7,500
Sea River Maritime, Inc.,
6.12%*, 5/1/00**,
Guaranteed by Exxon Mobil Corp. 32,500 32,500
Sigma Finance, Inc.,
6.28%*, 5/11/00** 20,000 20,000
Transamerica Financial Corp.,
6.21%*, 6/2/00**, MTN 15,000 15,000
Total Corporate Bonds
(Amortized Cost $612,769) 612,769
Municipal Bonds (0.3%)
Arkansas (0.3%):
Union County Industrial Development
Revenue, Del-Tin Fiber Project,
6.20%*, 5/3/00**,
LOC Bank One Chicago 12,000 12,000
Total Municipal Bonds
(Amortized Cost $12,000) 12,000
Repurchase Agreements (2.9%)
Lehman Brothers, Inc.,
5.73%, 5/1/00,
(Collateralized by $71,401
various U.S. Government Securities,
4.87%-6.00%, 3/31/01-7/31/02,
market value $70,826),
5.73%, 5/01/00 70,000 70,000
Paine Webber,
5.73%, 5/1/00,
(Collateralized by $40,881 various
U.S. Government Securities,
6.00%-7.87%, 8/15/09-11/15/22,
market value $40,714),
5.73%, 05/01/00 40,075 40,075
Total Repurchase Agreements
(Amortized Cost $110,075) 110,075
Time Deposits (3.7%)
Bank of Hawaii,
6.09%, 5/1/00 75,000 75,000
Wachovia Grand Cayman,
5.94%, 5/1/00 47,000 47,000
Wachovia Grand Cayman,
5.88%, 5/1/00 20,151 20,151
Total Time Deposits
(Amortized Cost $142,151) 142,151
U.S. Government Agencies (0.7%)
Federal Farm Credit Bank (0.3%):
6.10%, 9/26/00 10,277 10,019
Federal Home Loan Bank (0.4%):
5.97%, 12/1/00 15,000 14,975
Total U.S. Government Agencies
(Amortized Cost $24,994) 24,994
Total Investments
(Amortized Cost $3,828,669) (a) -- 100.1% 3,828,669
Liabilities in excess of other assets -- (0.1)% (3,429)
TOTAL NET ASSETS -- 100.0% $3,825,240
(a) Cost and value for federal income tax and financial reporting
purposes are the same.
(b) Section 4(2) commercial paper which is restricted as to resale.
(c) 144a security which is restricted as to resale to institutional
investors only.
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity agreements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect at April 30, 2000. The date reflects the next rate change
date.
** Put and demand features exist allowing the Fund to require the repurchase
of the investment within variable time periods less than one year.
LOC -- Letter of Credit
MTN -- Medium Term Note
See notes to financial statements.
5
<PAGE>
THE VICTORY PORTFOLIOS Schedules of Investments
Federal Money Market Fund April 30, 2000
(Amounts in Thousands) (Unaudited)
Principal Amortized
Security Description Amount Cost
U.S. Government Agencies (50.2%)
Federal Farm Credit Bank (4.5%):
6.18%, 8/1/00 $ 60,000 $ 60,000
Federal Home Loan Bank (28.8%):
5.88%, 5/1/00 140,000 140,001
6.17%*, 5/3/00** 25,000 25,007
5.10%, 5/11/00 19,175 19,175
5.21%, 5/24/00 14,000 14,000
5.26%, 5/26/00 8,000 7,995
5.51%, 6/22/00 10,000 10,000
5.66%, 6/23/00 4,860 4,857
5.48%, 7/13/00 6,000 5,990
5.59%, 9/15/00 10,000 9,787
6.00%, 9/28/00,
Callable 6/28/00 @ 100 10,000 10,000
6.04%, 10/25/00,
Callable 7/25/00 @ 100 20,000 20,000
6.05%, 10/25/00,
Callable 7/25/00 @ 100 8,800 8,800
6.13%, 10/27/00,
Callable 7/27/00 @ 100 24,000 23,928
6.05%, 11/3/00 25,000 24,967
6.09%, 11/3/00 28,000 27,959
6.25%, 11/17/00,
Callable 5/17/00 @ 100 10,000 10,000
6.60%, 2/2/01,
Callable 8/2/00 @ 100 16,900 16,900
379,366
Federal Home Loan Mortgage
Corp. (7.3%):
5.96%, 6/6/00 50,000 49,702
5.94%, 6/15/00 25,000 24,814
5.55%, 7/14/00 10,000 9,985
5.63%, 8/4/00 12,000 11,822
96,323
Federal National Mortgage Assoc. (8.9%):
5.00%, 5/4/00 7,000 7,000
5.75%, 5/4/00 25,000 24,988
5.10%, 5/19/00 10,000 9,995
5.88%, 6/8/00 25,000 24,845
5.33%, 6/9/00 10,000 9,998
5.49%, 8/18/00 5,300 5,293
5.10%, 9/25/00 15,000 14,941
6.55%, 3/20/01 20,000 19,998
117,058
Student Loan Marketing Assoc. (0.7%):
6.38%*, 5/2/00** 9,750 9,750
Total U.S. Government Agencies
(Amortized Cost $662,497) 662,497
Repurchase Agreements (54.1%)
Bear Stearns & Co., Inc.,
5.85%, 5/1/00,
(Collateralized by $314,286 various
U.S. Government Securities,
0.00%-8.50%, 4/1/01-2/1/38,
market value $312,565) 300,000 300,000
Deutsche Bank,
5.80%, 5/1/00,
(Collateralized by $50,000 various
U.S. Government Securities,
0.00%, 8/15/00-11/15/04,
market value $51,000) 50,000 50,000
Donaldson-Lufkin Jenrette
Securities Corp.,
5.84%, 5/1/00,
(Collateralized by $303,498 various
U.S. Government Securities,
0.00%-7.55%, 5/11/00-8/15/27,
market value $307,682) 303,498 303,498
Warburg Dillon Read,
5.85%, 5/1/00,
(Collateralized by $61,204
U.S. Treasury Note, 6.50%, 2/28/02,
market value $60,570) 60,000 60,000
Total Repurchase Agreements
(Amortized Cost $713,498) 713,498
Total Investments
(Amortized Cost $1,375,995) (a) -- 104.3% 1,375,995
Liabilities in excess of other assets -- (4.3)% (57,093)
TOTAL NET ASSETS -- 100.0% $1,318,902
(a) Cost and value for federal income tax and financial reporting
purposes are the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based upon an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect at April 30, 2000. The date reflects the next rate change
date.
** Put and demand features exist allowing the Fund to require the repurchase
of the investment within variable time periods less than one year.
See notes to financial statements.
6
<PAGE>
Statements of Assets and Liabilities
THE VICTORY PORTFOLIOS April 30, 2000
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
Institutional Federal
Money Market Money Market
Fund Fund
ASSETS:
Investments, at amortized cost $3,718,594 $ 662,497
Repurchase agreements, at amortized cost 110,075 713,498
Total 3,828,669 1,375,995
Cash -- 1
Interest receivable 17,129 8,521
Receivable for capital shares issued -- 22
Prepaid expenses and other assets 431 61
Total Assets 3,846,229 1,384,600
LIABILITIES:
Dividends payable 19,327 5,355
Payable to brokers for investments purchased -- 60,000
Accrued expenses and other payables:
Investment advisory fees 621 173
Administration fees 146 13
Custodian fees 64 20
Accounting fees 2 2
Transfer agent fees 33 17
Shareholder service fees -- Select Shares 721 54
Other 75 64
Total Liabilities 20,989 65,698
NET ASSETS:
Capital 3,825,094 1,318,952
Undistributed net investment income 160 14
Accumulated undistributed net realized
gains (losses) from investment transactions (14) (64)
Net Assets $3,825,240 $1,318,902
Net Assets
Investor Shares $1,519,236 $ 949,994
Select Shares 2,306,004 368,908
Total $3,825,240 $1,318,902
Outstanding units of beneficial interest (shares)
Investor Shares 1,519,225 950,026
Select Shares 2,306,004 368,924
Total 3,825,229 1,318,950
Net asset value
Offering and redemption price per share --
Investor Shares $ 1.00 $ 1.00
Offering and redemption price per share --
Select Shares $ 1.00 $ 1.00
See notes to financial statements.
7
<PAGE>
Statements of Operations
THE VICTORY PORTFOLIOS For the Six Months Ended April 30, 2000
(Amounts in Thousands) (Unaudited)
Institutional Federal
Money Market Money Market
Fund Fund
Investment Income:
Interest income $106,623 $33,314
Total Income 106,623 33,314
Expenses:
Investment advisory fees 3,759 1,457
Administration fees 1,894 687
Shareholder service fees -- Select Shares 2,442 415
Custodian fees 350 125
Accounting fees 72 61
Legal and audit fees 151 50
Trustees' fees and expenses 32 11
Transfer agent fees 276 24
Registration and filing fees 115 39
Printing fees 68 33
Other 22 25
Total Expenses 9,181 2,927
Expenses voluntarily reduced (1,478) (831)
Net Expenses 7,703 2,096
Net Investment Income 98,920 31,218
Change in net assets resulting from operations $ 98,920 $31,218
See notes to financial statements.
8
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
(Amounts in Thousands)
<TABLE>
<CAPTION>
Institutional Money Market Fund Federal Money Market Fund
Six Months Six Months
Ended Year Ended Ended Year Ended
April 30, October 31, April 30, October 31,
2000 1999 2000 1999
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 98,920 $ 102,489 $ 31,218 $ 47,494
Net realized gains
(losses) from
investment transactions -- (14) -- (64)
Change in net assets resulting
from operations 98,920 102,475 31,218 47,430
Distributions to Shareholders:
From net investment income
Investor Shares (45,925) (64,880) (22,621) (35,599)
Select Shares (52,995) (37,609) (8,597) (11,895)
Change in net assets
from distributions
to shareholders (98,920) (102,489) (31,218) (47,494)
Capital Transactions:
Proceeds from shares issued 11,380,040 9,707,193 2,112,670 4,573,820
Dividends reinvested 57,914 55,255 28,233 42,935
Cost of shares redeemed (10,042,296) (8,973,406) (1,939,681) (4,415,124)
Change in net assets from
capital transactions 1,395,658 789,042 201,222 201,631
Change in net assets 1,395,658 789,028 201,222 201,567
Net Assets:
Beginning of period 2,429,582 1,640,554 1,117,680 916,113
End of period $ 3,825,240 $ 2,429,582 $ 1,318,902 $ 1,117,680
Share Transactions:
Issued 11,380,040 9,707,193 2,112,670 4,573,820
Reinvested 57,914 55,255 28,233 42,935
Redeemed (10,042,296) (8,973,406) (1,939,681) (4,415,124)
Change in shares 1,395,658 789,042 201,222 201,631
</TABLE>
See notes to financial statements.
9
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
(For a Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Institutional Money Market Fund
Investor Shares
Six
Months Year Year Year Year Period
Ended Ended Ended Ended Ended Ended
April 30, October 31, October 31, October 31, October 31, October 31,
2000 1999 1998 1997 1996<F2> 1995<F3>
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.028 0.049 0.054 0.053 0.053 0.290
Distributions
Net investment income (0.028) (0.049) (0.054) (0.053) (0.053) (0.290)
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 2.84%<F5> 5.03% 5.53% 5.46% 5.41% 2.90%<F5>
Ratios/Supplemental Data:
Net Assets,
End of Period (000) $1,519,236 $1,313,571 $1,068,521 $585,663 $671,575 $504,536
Ratio of expenses to
average net assets 0.29%<F6> 0.27% 0.27% 0.28% 0.27% 0.26%<F6>
Ratio of net investment income
to average net assets 5.65%<F6> 4.91% 5.38% 5.32% 5.27% 5.69%<F6>
Ratio of expenses to
average net assets<F1> 0.37%<F6> 0.41% 0.42% 0.48% 0.48% 0.49%<F6>
Ratio of net investment income
to average net assets<F1> 5.57%<F6> 4.77% 5.23% 5.12% 5.06% 5.46%<F6>
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
<F2> Effective March 1, 1996, the Fund redesignated Institutional Shares as
Investor Shares and Service Shares as Select Shares.
<F3> Effective June 5, 1995, the Victory Institutional Money Market Portfolio
became the Institutional Money Market Fund, and the Fund designated the existing
shares as Institutional Shares and commenced offering Service Shares.
<F4> Period from commencement of operations.
<F5> Not Annualized
<F6> Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
Institutional Money Market Fund
Select Shares
Six
Months Year Year Year Year June 5, Year
Ended Ended Ended Ended Ended 1995 to Ended
April 30, October 31, October 31, October 31, October 31, October 31, April 30,
2000 1999 1998 1997 1996<F2> 1995<F3><F4> 1995
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.027 0.046 0.051 0.051 0.050 0.012 0.500
Distributions
Net investment income (0.027) (0.046) (0.051) (0.051) (0.050) (0.012) (0.500)
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 2.71%<F5> 4.72% 5.22% 5.17% 5.16% 1.23%<F5> 4.91%
Ratios/Supplemental Data:
Net Assets,
End of Period (000) $2,306,004 $1,116,011 $572,033 $488,639 $373,090 $11,479 $449,814
Ratio of expenses to
average net assets 0.55%<F6> 0.57% 0.56% 0.55% 0.52% 0.51%<F6> 0.27%
Ratio of net investment income
to average net assets 5.42%<F6> 4.63% 5.09% 5.06% 4.97% 5.33%<F6> 4.91%
Ratio of expenses to
average net assets<F1> 0.63%<F6> 0.71% 0.71% 0.75% 0.73% 1.00%<F6> 0.51%
Ratio of net investment income
to average net assets<F1> 5.34%<F6> 4.49% 4.94% 4.86% 4.77% 4.84%<F6> 4.67%
<FN>
<F1> During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
<F2> Effective March 1, 1996, the Fund redesignated Institutional Shares as
Investor Shares and Service Shares as Select Shares.
<F3> Effective June 5, 1995, the Victory Institutional Money Market Portfolio
became the Institutional Money Market Fund, and the Fund designated the existing
shares as Institutional Shares and commenced offering Service Shares.
<F4> Period from commencement of operations.
<F5> Not Annualized
<F6> Annualized
</FN>
</TABLE>
See notes to financial statements.
10
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
(For a Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Federal Money Market Fund
Investor Select
Shares Shares
Six Eleven Six
Months Year Months Months Year Period
Ended Ended Ended Ended Ended Ended
April 30, October 31, October 31, April 30, October 31, October 31,
2000 1999 1998<F2> 2000 1999 1998<F2>
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.027 0.047 0.048 0.026 0.045 0.031
Distributions
Net investment income (0.027) (0.047) (0.048) (0.026) (0.045) (0.031)
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 2.73%<F3> 4.82% 4.91%<F3> 2.60%<F3> 4.56% 3.14%<F3>
Ratios/Supplementary
Data:
Net Assets at end
of period (000) $949,994 $834,055 $717,972 $368,908 $283,625 $198,141
Ratio of expenses to
average net assets 0.29%<F4> 0.28% 0.27%<F4> 0.54%<F4> 0.53% 0.43%<F4>
Ratio of net investment
income to average
net assets 5.42%<F4> 4.72% 5.22%<F4> 5.18%<F4> 4.47% 5.06%<F4>
Ratio of expenses to
average net assets<F1> 0.43%<F4> 0.45% 0.48%<F4> 0.68%<F4> 0.71% 0.54%<F4>
Ratio of net investment
income to average
net assets<F1> 5.28%<F4> 4.55% 5.01%<F4> 5.04%<F4> 4.29% 4.95%<F4>
<FN>
<F1> During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not occurred,
the ratios would have been as indicated.
<F2> Effective March 23, 1998, the Key Money Market Fund became the Victory
Federal Money Market Fund, and the Fund designated the existing shares of
Key Money Market Fund as Investor Shares and commenced offering Select Shares.
Financial highlights prior to March 23, 1998 represent the Key Money Market Fund.
<F3> Not annualized.
<F4> Annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Federal Money Market Fund
Fiscal Year Ended November 30,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment Activities
Net investment income 0.048 0.047 0.051 0.034
Distributions
Net investment income (0.048) (0.047) (0.051) (0.034)
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 4.94% 4.65% 5.26% 3.37%
Ratios/Supplementary
Data:
Net Assets at end
of period (000) $243,499 $42,159 $21,848 $28,606
Ratio of expenses to
average net assets 0.53% 0.64% 0.63% 0.59%
Ratio of net investment
income to average
net assets 4.91% 4.59% 5.15% 3.35%
Ratio of expenses to
average net assets<F1> 0.90% 0.92% 0.91% 0.87%
Ratio of net investment
income to average
net assets<F1> 4.54% 4.31% 4.90% 3.10%
<FN>
<F1> During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not occurred,
the ratios would have been as indicated.
<F2> Effective March 23, 1998, the Key Money Market Fund became the Victory
Federal Money Market Fund, and the Fund designated the existing shares of
Key Money Market Fund as Investor Shares and commenced offering Select Shares.
Financial highlights prior to March 23, 1998 represent the Key Money Market Fund.
<F3> Not annualized.
<F4> Annualized.
</FN>
</TABLE>
See notes to financial statements.
11
<PAGE>
Notes to Financial Statements
THE VICTORY PORTFOLIOS April 30, 2000
(Unaudited)
1. Organization:
The Victory Portfolios (the "Trust") was organized on December 6, 1995 as a
successor to a company of the same name organized as a Massachusetts business
trust on February 5, 1986. The Trust is registered under the Investment
Company Act of 1940, as amended, (the "1940 Act") as an open-end investment
company established as a Delaware business trust. The Trust is authorized to
issue an unlimited number of shares which are units of beneficial interest
without a par value of $0.001. The Trust presently offers shares of 32 active
funds. The accompanying financial statements and financial highlights are
those of the Institutional Money Market Fund and the Federal Money Market
Fund (collectively, the "Funds").
The Institutional Money Market Fund and the Federal Money Market Fund are
authorized to issue two classes of shares: Investor Shares and Select Shares.
Each class of shares has identical rights and privileges except with respect
to fees paid under shareholders service plans, expenses allocable exclusively
to each class of shares, voting rights on matters affecting a single class of
shares, and the exchange privilege of each class of shares.
The Institutional Money Market Fund seeks to obtain a high level of current
income as is consistent with preserving capital and providing liquidity. The
Federal Money Market Fund seeks to provide high current income to the extent
consistent with the preservation of capital.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
Securities Valuation:
Investments of the Funds are valued at either amortized cost which
approximates market value, or at original cost which, combined with accrued
interest, approximates market value. Under the amortized cost valuation
method, discount or premium is amortized on a constant basis to the maturity
of the security. In addition, the Funds may not (a) purchase any instrument
with a remaining maturity greater than 397 days unless such instrument is
subject to a demand feature, or (b) maintain a dollar-weighted-average
portfolio maturity which exceeds 90 days.
Securities Transactions and Related Income:
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis and includes, where applicable, the pro rata amortization of premium or
accretion of discount. Dividend income is recorded on the ex-dividend date.
Gains or losses realized on sales of securities are determined by comparing
the identified cost of the security lot sold with the net sales proceeds.
Repurchase Agreements:
The Funds may acquire repurchase agreements from financial institutions such
as banks and broker-dealers which the Fund's investment adviser deems
creditworthy under guidelines approved by the Board of Trustees, subject to
the seller's agreement to repurchase such securities at a mutually
agreed-upon date and price. The repurchase price generally equals the price
paid by a Fund plus interest negotiated on the basis of current short-term
rates, which may be more or less than the rate on the underlying securities.
The seller, under a repurchase agreement, is required to maintain the value
of collateral held pursuant to the agreement at not less than the repurchase
price (including accrued interest). Securities subject to repurchase
agreements are held by the Fund's custodian or another qualified custodian or
in the Federal Reserve/Treasury book-entry system. Repurchase agreements are
considered to be loans by the Funds under the 1940 Act.
Securities Purchased on a When-Issued Basis:
The Funds may purchase securities on a "when-issued" basis. When-issued
securities are securities purchased for delivery beyond the normal settlement
date at a stated price and/or yield, thereby, involving the risk that the
price and/or yield obtained may be more or less than those available in the
market when delivery takes place. At the time the Funds make the commitment
to purchase a security on a when-issued basis, the Fund records the
transaction and reflects the value of the security in determining net asset
value. Normally, the settlement date occurs within one month of the purchase.
A segregated account is established and the Funds maintain cash and
marketable securities at least equal in value to commitments for when-issued
securities. Securities purchased on a when-issued basis do not earn income
until settlement date.
Securities Lending:
The Funds may, from time to time, lend securities from their portfolio to
broker-dealers, banks, financial institutions and institutional borrowers of
securities approved by the Board. The Fund will limit its securities lending
to 33 1/3% of total assets. Key Trust Company of Ohio, N.A. ("Key Trust"), an
affiliate of the Adviser, serves as the lending agent for the Fund pursuant
to a Securities Lending Agency Agreement (the "Lending Agreement"). Under
guidelines established by the Board of Trustees, Key Trust must maintain the
loan
Continued
12
<PAGE>
Notes to Financial Statements--continued
THE VICTORY PORTFOLIOS April 30, 2000
(Unaudited)
collateral at all times in an amount equal to at least 100% of the current
market value of the loaned securities in the form of cash or U.S. Government
obligations, to secure the return of the loaned securities. Key Trust, at the
direction of the Adviser, may invest the collateral in short-term debt
instruments that the Adviser has determined present minimal credit risks.
There is a risk of delay in receiving collateral or in receiving the
securities loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially. By lending its securities, a
Fund can increase its income by continuing to receive interest or dividends
on the loaned securities as well as investing the cash collateral in
short-term U.S. Government securities, repurchase agreements, or other
short-term securities. The cash or subsequent short-term investments are
recorded as assets of the Funds, offset by a corresponding liability to repay
the cash at the termination of the loan. In addition, the short-term
securities purchased with the cash collateral are included in the
accompanying Schedules of Investments. Fixed income securities received as
collateral are not recorded as an asset or liability of the Funds because the
Funds do not have effective control of such securities. Loans are subject to
termination by the Funds or the borrower at any time. There were no
securities on loan as of April 30, 2000.
Dividends to Shareholders:
Dividends from net investment income are declared daily and paid monthly by
the Funds. Distributable net realized capital gains, if any, are declared and
distributed at least annually.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the components of net assets based on their Federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment
income and realized capital gains for financial reporting purposes but not
for tax purposes are reported as dividends in excess of net investment income
or distributions in excess of net realized gains. To the extent they exceed
net investment income and net realized gains for tax purposes, they are
reported as distributions of capital.
Federal Income Taxes:
It is the policy of the Funds to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or substantially
all, Federal income taxes.
Other:
Expenses that are directly related to one of the Funds are charged directly
to that Fund. Other operating expenses of the Funds are prorated on the basis
of relative net assets or other appropriate basis. Fees paid under the Funds'
shareholder servicing or distribution plans are borne by the specific class
of shares to which they apply.
3. Related Party Transactions:
Investment advisory services are provided to the Fund by Key Asset Management
Inc. ("the Adviser), a wholly owned subsidiary of KeyCorp. Under the terms of
the investment advisory agreements, the Adviser is entitled to receive fees
based on a percentage of the average daily net assets of the Fund. KeyTrust
Company of Ohio, serving as custodian for the Funds, receives custodian fees
in addition to reimbursement of actual out-of-pocket expenses incurred.
Key and its affiliated brokerage and banking companies also serve as
Shareholder Servicing Agent for the Select Shares of each Fund. As such, Key
and its affiliates provide support services to their clients who are
shareholders, which may include establishing and maintaining accounts and
records, processing dividend and distribution payments, providing account
information, assisting in processing of purchase, exchange and redemption
requests, and assisting shareholders in changing dividend options, account
designations and addresses. For providing such services, Key and its
affiliates may receive a fee of up to 0.25% of the average daily net assets
of the Funds serviced.
BISYS Fund Services (the "Administrator"), an indirect, wholly-owned
subsidiary of The BISYS Group, Inc. ("BISYS") serves as the administrator and
distributor to the Funds. Certain officers of the Funds are affiliated with
BISYS. Such officers receive no direct payments or fees from the Fund for
serving as officers of the Funds.
Under the terms of the administration agreement, the Administrator's fee is
computed at the annual rate of 0.15% of the fund's average daily net assets
of $300 million and less, 0.12% of the fund's average daily net assets
between $300 million and $600 million and 0.10% of the fund's average daily
net assets greater than $600 million. Under a Sub-Administration agreement,
BISYS pays Key Asset Management Inc. a fee of up to 0.05% of the fund's
average daily net assets to perform some of the administrative duties for the
Funds.
In addition, an affiliate of BISYS serves the Trust as Mutual Fund
Accountant. The Trust pays a fee for these services based on a percentage of
average daily net assets under the terms of its Fund Accounting Agreement.
Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense ratios.
Continued
13
<PAGE>
Notes to Financial Statements--continued
THE VICTORY PORTFOLIOS April 30, 2000
(Unaudited)
Additional information regarding related party transactions is as follows for
the six months ended April 30, 2000:
Investment Advisory Fees Administration Fees
Maximum
Percentage
of Average Voluntary Voluntary
Daily Fee Fee
Net Assets Reductions Reductions
(000) (000)
Institutional Money Market Fund 0.20% $657 $821
Federal Money Market Fund 0.25% $831 --
The Trust and KeyCorp entered into an agreement (the "Put Agreement") dated
August 13, 1999 which provided the Trust the right to require KeyCorp to
purchase certain General American Life Insurance Company ("GALIC") securities
held by the Institutional Money Market Fund on or before October 15, 1999. On
August 23, 1999 and October 1, 1999, approximately $7 million and $63 million
par value of GALIC securities, respectively, were sold by the Institutional
Money Market Fund at par in connection with the terms of the acquisition of
GALIC by an unaffiliated external party. Accordingly, the Put Agreement
expired on October 15, 1999 without any transactions described therein having
been exercised.
4. Capital Share Transactions:
Transactions in capital shares were as follows (amounts in thousands):
Institutional Money Market Fund Federal Money Market Fund
Six Months Year Six Months Year
Ended Ended Ended Ended
April 30, October 31, April 30, October 31,
2000 1999 2000 1999
Capital Share Transactions:
Investor Shares:
Issued 2,631,370 4,336,459 1,305,197 3,339,377
Reinvested 12,138 19,944 20,128 31,417
Redeemed (2,437,844) (4,111,344) (1,209,386) (3,254,666)
Total 205,664 245,059 115,939 116,128
Select Shares:
Issued 8,748,670 5,370,734 807,473 1,234,442
Reinvested 45,776 35,311 8,104 11,518
Redeemed (7,604,452) (4,862,062) (730,294) (1,160,457)
Total 1,189,994 543,983 85,283 85,503
5. Federal Income Tax (unaudited):
As of October 31, 1999, for federal income tax purposes, the following funds
have capital loss carryforwards available to offset future capital gains, if
any (amounts in thousands):
Amount Expires
Institutional Money Market Fund $14 2007
Federal Money Market Fund 63 2007
Continued
14
<PAGE>
Notes to Financial Statements--continued
THE VICTORY PORTFOLIOS April 30, 2000
(Unaudited)
6. Voting Results of a Special Shareholder meeting (unaudited):
A Shareholder meeting was held on March 27, 2000. At the meeting,
shareholders voted on the following matters with the following results as
indicated below (amounts in thousands):
Proposal 1
For the Trust to elect the Board of Trustees of the Trust.
For Withheld Election Results
Theodore H. Emmerich 7,017,357 181,560 Passed
Dr. Harry Gazelle 7,014,923 183,994 Passed
Frankie D. Hughes 7,032,333 166,584 Passed
Roger Noall 6,959,362 239,556 Passed
Eugene J. McDonald 7,032,245 166,672 Passed
Dr. Thomas F. Morrissey 7,030,565 168,352 Passed
Patrick Swygert 7,029,446 169,471 Passed
Frank A. Weil 7,032,067 166,850 Passed
Donald E. Weston 6,965,594 233,324 Passed
Leigh A. Wilson 7,031,424 167,494 Passed
Proposal 2
For the Trust,(1) to approve an Amendment and Restatement of seven sections of
the Trust Instrument as follows: a) Reorganizations, b) voting powers, c)
required redemptions, d) record date, e) master/feeder structure, f)
derivative actions, and g) future amendments.
For Against Abstain Election Results
a) Reorganizations 5,263,551 215,415 304,093 Passed
b) Voting Powers 5,340,482 138,463 304,093 Passed
c) Required Redemptions 5,402,281 80,335 306,691 Passed
d) Record Date 5,406,116 68,996 306,119 Passed
e) Master/Feeder Structure 5,731,967 103,145 306,119 Passed
f) Derivative Actions 5,382,740 94,249 303,976 Passed
g) Future Amendments 5,195,718 193,193 304,216 Passed
1 This was Proposal 3 for Victory Government Mortgage Fund and Victory Ohio
Regional Fund shareholders.
Proposal 3
To approve an Amended and Restated Rule 12b-1 Distribution Plan.
<TABLE>
<CAPTION>
For Against Abstain Election Results
<S> <C> <C> <C> <C>
Institutional Money Market Fund -- Investor Class 992,330 12,847 17,140 Passed
Institutional Money Market Fund -- Select Class 1,566,304 1,828 17,167 Passed
Federal Money Market Fund -- Investor Class 288,926 887 19,846 Not Passed(1)
Federal Money Market Fund -- Select Class 117,704 519 10,615 Not Passed(1)
1 Although a majority of the votes cast were in favor of the proposal, it
failed to pass because the Investment Company of 1940, as amended (the "1940
Act"), requires that at least 50% of the Fund's outstanding shares be present
at the meeting.
</TABLE>
Continued
15
<PAGE>
Notes to Financial Statements--continued
THE VICTORY PORTFOLIOS April 30, 2000
(Unaudited)
Proposal 4
For the Trust to approve a series of proposals to change certain fundamental
investment restrictions applicable to each fund. The separate proposals
associated with the changes in the fundamental investment restrictions are as
follows:
a) The elimination of investment restrictions relating to diversification of
investments for each Fund.
For Against Abstain Election Results
Institutional Money Market Fund 1,146,835 2,060 48,188 Not Passed(1)
Federal Money Market Fund 406,476 -- 31,661 Not Passed(2)
b) To revise and update each Fund's policy regarding concentration of
investments in an industry to be consistent with the current legal
interpretations.
For Against Abstain Election Results
Institutional Money Market Fund 1,146,838 2,057 48,188 Not Passed(1)
Federal Money Market Fund 405,496 977 31,661 Not Passed(2)
d) To clarify and standardize the restriction on borrowing which will give
the Fund the flexibility to engage in certain security transactions for any
purpose that does not involve leveraging.
For Against Abstain Election Results
Institutional Money Market Fund 1,146,099 2,796 48,188 Not Passed(1)
Federal Money Market Fund 405,499 977 31,661 Not Passed(2)
e) To update the lending restriction to clarify that the Funds may lend their
portfolio securities and engage in certain types of security transactions
that might be construed as "lending" transactions.
For Against Abstain Election Results
Institutional Money Market Fund 1,145,634 3,262 48,188 Not Passed(1)
f) To clarify and modernize the language concerning senior securities to make
it consistent with permitted activities approved by the SEC.
For Against Abstain Election Results
Institutional Money Market Fund 1,146,486 2,409 48,188 Not Passed(1)
Federal Money Market Fund 406,476 -- 31,661 Not Passed(2)
g) To modernize the current language by allowing the Fund to invest in
certain newer financial instruments that were precluded under the prior
restriction
For Against Abstain Election Results
Institutional Money Market Fund 1,137,458 11,437 48,188 Not Passed(1)
Federal Money Market Fund 405,498 977 31,661 Not Passed(2)
h) To revise the restriction relating to underwriting
For Against Abstain Election Results
Institutional Money Market Fund 1,138,343 10,553 48,188 Not Passed(1)
Federal Money Market Fund 406,756 -- 31,661 Not Passed(2)
1 Although a majority of the votes cast were in favor of the proposal, it
failed to pass because the 1940 Act requires that at least 67% of the Fund
vote in favor of the proposal.
2 Although a majority of the votes cast were in favor of the proposal, it
failed to pass because the 1940 Act requires that at least 50% of the Fund's
outstanding shares be present at the meeting.
16
<PAGE>
The Victory Funds PRSRT STD
127 Public Square U.S. Postage
OH-01-27-1612 PAID
Cleveland, Ohio 44114 Cleveland, OH
Permit No. 1535
Victory Funds
(LOGO)(R)
Call Victory at: Visit our web site at:
800-539-FUND (800-539-3863) www.victoryfunds.com
1IMM-SEMI-AR 6/00
