N-CSR 1 tm2034819d1_ncsr.htm N-CSR

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number:             811-04852

 

Victory Portfolios

(Exact name of registrant as specified in charter)

 

4900 Tiedeman Road, 4th Floor, Brooklyn, Ohio 44144
(Address of principal executive offices) (Zip code)

 

Citi Fund Services Ohio, Inc., 4400 Easton Commons, Suite 200, Columbus, OH 43219

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: 800-539-3863

 

Date of fiscal year end: October 31

 

Date of reporting period: October 31, 2020

 

 

 

 

 

 

Item 1. Reports to Stockholders.

October 31, 2020

Annual Report

Victory Diversified Stock Fund

Victory NewBridge Large Cap Growth Fund

Victory Special Value Fund

Victory Strategic Allocation Fund

Victory INCORE Fund for Income

Victory INCORE Investment Grade Convertible Fund

Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Victory Funds' shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Victory Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on www.VictoryFunds.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change; and you need not take any action. You may elect to receive shareholder reports and other communications from the Victory Funds or your financial intermediary electronically by notifying your financial intermediary directly or, if you are a direct investor, by calling 800-539-3863 or by sending an e-mail request to TA.Processing@FISGlobal.com.

You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your reports. If you invest directly with the Victory Funds, you can call 800-539-3863 or send an e-mail request to TA.Processing@FISGlobal.com. Your election to receive reports in paper will apply to all Victory Funds you hold directly or through your financial intermediary.



www.vcm.com

News, Information And Education 24 Hours A Day, 7 Days A Week

The Victory Funds site gives fund shareholders, prospective shareholders, and investment professionals a convenient way to access fund information, get guidance, and track fund performance anywhere they can access the Internet. The site includes:

•  Detailed performance records

•  Daily share prices

•  The latest fund news

•  Investment resources to help you become a better investor

•  A section dedicated to investment professionals

Whether you're a potential investor searching for the fund that matches your investment philosophy, a seasoned investor interested in planning tools, or an investment professional, www.vcm.com has what you seek. Visit us anytime. We're always open.



Victory Portfolios

Table of Contents

Shareholder Letter (Unaudited)

   

4

   
Managers' Commentary and Investment Overview
(Unaudited)
   

6

   
Investment Objective and Portfolio Holdings
(Unaudited)
   

20

   

Financial Statements

 

Victory Diversified Stock Fund

 

Schedule of Portfolio Investments

   

26

   

Statement of Assets and Liabilities

   

40-41

   

Statement of Operations

   

44

   

Statements of Changes in Net Assets

   

46-48

   

Financial Highlights

   

52-53

   

Victory NewBridge Large Cap Growth Fund

 

Schedule of Portfolio Investments

   

29

   

Statement of Assets and Liabilities

   

40-41

   

Statement of Operations

   

44

   

Statements of Changes in Net Assets

   

46-48

   

Financial Highlights

   

54-55

   

Victory Special Value Fund

 

Schedule of Portfolio Investments

   

31

   

Statement of Assets and Liabilities

   

40-41

   

Statement of Operations

   

44

   

Statements of Changes in Net Assets

   

46-48

   

Financial Highlights

   

56-57

   

Victory Strategic Allocation Fund

 

Schedule of Portfolio Investments

   

34

   

Statement of Assets and Liabilities

   

42-43

   

Statement of Operations

   

45

   

Statements of Changes in Net Assets

   

49-51

   

Financial Highlights

   

58-59

   

Victory INCORE Fund for Income

 

Schedule of Portfolio Investments

   

35

   

Statement of Assets and Liabilities

   

42-43

   

Statement of Operations

   

45

   

Statements of Changes in Net Assets

   

49-51

   

Financial Highlights

   

60-61

   

Victory INCORE Investment Grade Convertible Fund

 

Schedule of Portfolio Investments

   

37

   

Statement of Assets and Liabilities

   

42-43

   

Statement of Operations

   

45

   

Statements of Changes in Net Assets

   

49-51

   

Financial Highlights

   

62-63

   

Notes to Financial Statements

   

64

   
Report of Independent
Registered Public Accounting Firm
   

78

   


1



Supplemental Information (Unaudited)

     

Trustee and Officer Information

    79    

Proxy Voting and Portfolio Holdings Information

    82    

Expense Examples

    82    

Additional Federal Income Tax Information

    84    

Liquidity Risk Management Program

    85    

Privacy Policy (inside back cover)

     

The Funds are distributed by Victory Capital Services, Inc. Victory Capital Management Inc. is the investment adviser to the Funds and receives fees from the Funds for performing services for the Funds.

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus of the Victory Funds.

For additional information about any Victory Fund, including fees, expenses, and risks, view our prospectus online at vcm.com or call 800-539-3863. Read it carefully before you invest or send money.

The information in this annual report is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections, or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Past investment performance of the Funds, markets or securities mentioned herein should not be considered to be indicative of future results.

• NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

Call Victory at:

800-539-FUND (800-539-3863)

Visit our website at:

www.vcm.com


2



This page is intentionally left blank.


3



Victory Funds Letter to Shareholders
(Unaudited)

Dear Shareholder,

It's safe to say that the fiscal year ended October 31, 2020, has been like no other. The range of emotions that investors have experienced touched both ends of the spectrum. The annual reporting period began with relatively calm markets and more mundane questions surrounding interest rates, global trade and earnings growth. Yet those concerns took a back seat in early 2020.

A novel coronavirus and the subsequent spread of the disease that it causes ("COVID-19") throughout Asia, Europe and eventually the United States became an unprecedented event. To combat the pandemic, governments everywhere issued austere shelter-in-place orders, and the global economy slowed markedly. Equity markets sold off sharply in March and April, and U.S. GDP shrunk by a whopping 31.4% during the second quarter.

It's no surprise that so many investors flocked to the perceived safety of U.S. Treasurys. Meanwhile, liquidity evaporated (for a short spell) in many other segments of the fixed income market, including higher-yielding credits and municipal bonds. The outlook was tenuous, and credit spreads widened while prices declined for any securities perceived to be higher risk.

The U.S. Federal Reserve (the "Fed") and other monetary authorities worldwide leapt into action — cutting interest rates, (re)starting quantitative easing and, in the case of the Fed, launching an array of programs to provide liquidity to stabilize fixed income markets. The U.S. government also stepped up to provide fiscal stimulus in the form of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

In retrospect, it's amazing how quickly those actions helped to end the stock market's freefall and restored order across much of the fixed income universe. The rebound was almost as robust as the drawdown. Through all the unprecedented events and extreme volatility, the S&P 500® Index registered an impressive annual return of 9.7% for the 12-month period ended October 31, 2020. Meanwhile, the yield on 10-year U.S. Treasurys declined 81 basis points over the same period, reflecting both the Fed's interest rate cuts and its pledge to keep rates low longer. The yield on 10-Year U.S. Treasurys was 0.88% as of October 31, 2020.

The good news is that over the summer and into the fall, the economy regained its footing, and GDP increased at an annual rate of 33.1% in the third quarter of 2020, according to the "advance" estimate released by the Bureau of Economic Analysis. Does this mean it's clear for investors now? Is it ever?

We must accept the fact that the economy and markets remain unpredictable even as we are cautiously optimistic on the reported progress toward a COVID-19 vaccine. Looking ahead, investors should expect continued bouts of volatility — both to the upside and downside — depending on the pandemic news. And let's not forget that there are other factors at play, including new political leadership and the potential for new policies and priorities.


4



Fortunately, we believe all of Victory Capital's autonomous Investment Franchises are in capable hands to withstand the ups and downs. The investment professionals who manage our funds have vetted investment philosophies and risk protocols, and market volatility can even create opportunities that benefit astute active managers.

On the following pages, you will find information relating to your Victory Funds investment. If you have any questions, we encourage you to contact your financial advisor. Or, if you invest with us directly, you may call (800) 539-3863, or visit our website at www.vcm.com.

My colleagues and I sincerely appreciate the confidence you have placed in the Victory Funds, and we value the opportunity to help meet your investment goals.

Christopher K. Dyer, CFA

President,

Victory Funds


5



Victory Equity Funds

Victory Diversified Stock Fund

Managers' Commentary
(Unaudited)

What were the market conditions during the reporting period?

For the 12 months ended October 31, 2020, the pandemic related to the novel coronavirus and the disease it causes ("COVID-19") created an extremely volatile trailing-twelve-months period for equities, with the S&P 500® Index (the "Index") selling off approximately 34% from its February 2020 highs before rebounding off the March lows to return approximately 48% over the next seven months to close out the period. All in, the Index managed a 9.71% total return over the entire 12-month period, though this was primarily driven by 1) large capitalization names, and 2) growth stocks. Large-cap names possess the necessary flexibility, brand awareness, scale and balance sheet strength to both endure and invest through theses turbulent times, suggesting improved competitive positioning both during and after the pandemic.

Growth stocks, on the other hand, rely more on product adoption and market share gains than overall economic growth, and fundamentals have proven more resilient. In addition, powerful secular drivers that underpin many of these names, are expected to accelerate post-COVID-19 (e.g., cloud computing and collaboration software and services). Finally, we believe lower interest rates benefit growth stocks disproportionately by reducing the discount rate applied to future profits, as these stocks inherently derive a larger portion of their intrinsic or net present value from future/expected earnings.

How did Victory Diversified Stock Fund (the "Fund") perform during the reporting period?

The Fund seeks to provide long-term capital appreciation. The Fund returned 5.47% (Class A Shares at net asset value) for the fiscal year ended October 31, 2020, underperforming the Index, which returned 9.71% for the period.

What strategies did you employ during the reporting period?

The Fund looks to invest in stocks with market capitalizations of $1 billion and above that we believe are of high quality with the potential for above-average earnings growth, as well as current earnings momentum. Using this framework, the Fund generated the strongest returns within the Technology, Consumer Discretionary, and Communication Services sectors over the trailing twelve months, while Materials and Energy were the most challenged. In Technology, the Fund's large-cap and cloud holdings drove performance, with both expected to be more resilient or even benefit during the pandemic. Apple was one of the strongest performers, benefiting from its fortress balance sheet, attractive growth/value profile, and potential for accelerating business momentum as we enter a new 5G handset supercycle. In Consumer Discretionary, retail and homebuilder exposures drove positive performance. Amazon was our top performer in the sector, as the company stands to benefit from an accelerated shift to e-commerce and cloud computing as a result of COVID-19. In Communication Services, strong returns were broad-based across the Fund's holdings, though positions in Facebook and Alphabet generated outsized strength. While both stocks experienced top-line pressure from reduced advertising budgets amidst the pandemic-induced recession, trends improved materially as economic conditions improved, validating the strategic value the platforms provide to advertisers. With regard to Materials and Energy, both sectors have experienced massive negative demand shocks due to the pandemic and equity prices have sold off in response.


6



Victory Equity Funds

Victory Diversified Stock Fund

Investment Overview
(Unaudited)

Average Annual Total Return

Year Ended October 31, 2020

 

Class A

 

Class C

 

Class I

 

Class R

 

Class R6

 

Class Y

 

 

INCEPTION DATE

 

10/28/89

 

3/1/02

 

8/31/07

 

3/26/99

 

3/3/14

 

1/28/13

 

 

  Net Asset
Value
  Maximum
Offering
Price
  Net Asset
Value
  Contingent
Deferred
Charges
  Net Asset
Value
  Net Asset
Value
  Net Asset
Value
  Net Asset
Value
  S&P 500®
Index1
 

One Year

   

5.47

%

   

–0.61

%

   

4.53

%

   

3.55

%

   

5.81

%

   

5.25

%

   

5.86

%

   

5.72

%

   

9.71

%

 

Five Year

   

7.16

%

   

5.90

%

   

6.24

%

   

6.24

%

   

7.45

%

   

6.86

%

   

7.50

%

   

7.40

%

   

11.71

%

 

Ten Year

   

9.56

%

   

8.92

%

   

8.65

%

   

8.65

%

   

9.86

%

   

9.26

%

   

N/A

     

N/A

     

13.01

%

 

Since Inception

   

N/A

     

N/A

     

N/A

     

N/A

     

N/A

     

N/A

     

7.66

%

   

9.57

%

   

N/A

   

Past performance is not indicative of future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. To obtain performance information current to the most recent month's end, please visit www.vcm.com.

 

The maximum offering price (MOP) reflects a maximum sales charge of 5.75% for Class A Shares. Class C Shares are not subject to an initial sales charge, but are subject to a deferred sales charge of 1.00% on shares redeemed within one year of purchase. NAV does not reflect sales charges.

Total return measures the price change in a share assuming the reinvestment of all net investment income and realized capital gain distributions, if any. The total returns quoted above may differ from the total returns shown in the Financial Highlights because they do not reflect adjustments made to the enclosed financial statements in accordance with U.S. generally accepted accounting principles or the deduction of taxes that a shareholder would pay on net investment income and realized capital gain distributions, including reinvested distributions, or redemptions of shares.

The total return figures set forth above include all waivers of fees for various periods since inception. Without such fee waivers, the total returns would

have been lower. Some fee waivers are voluntary and may be modified or terminated at any time.

Victory Diversified Stock Fund — Growth of $10,000

1The S&P 500® Index is an unmanaged index comprised of 500 domestically traded common stocks, is weighted according to the market value of each common stock in the index, and includes reinvestment of dividends. This index does not include the effect of sales charges, commissions, expenses or taxes, is not representative of the Fund, and it is not possible to invest directly in an index.

The graph reflects investment of growth of a hypothetical $10,000 investment in Class A Shares of the Fund. The performance of other classes of the Fund's shares will be greater than or less than the line shown based on the differences in loads and fees paid by shareholders investing in the different classes. Past performance is no guarantee of future results.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.


7



Victory Equity Funds

Victory NewBridge Large Cap Growth Fund

Managers' Commentary
(Unaudited)

What were the market conditions during the reporting period?

It took an outbreak of the novel coronavirus and the disease it causes ("COVID-19") to end the eleven-year bull market in U.S. stocks, the longest on record and almost the strongest. Prior to its official end on March 11, 2020, when the Dow Jones Industrial Average declined 20% from its peak and the World Health Organization officially declared the coronavirus outbreak a global pandemic, the turbulence of the third quarter of 2019 was offset by a rebound in equities in the last three months of the year that continued into February of 2020. With respect to 2020, one can essentially view the year as pre-COVID-19 and during COVID-19. The first period lasted until February 19th, when the portfolio's and benchmark's returns peaked. The portfolio outperformed its benchmark during this positive-return market environment. The second period began on February 20th, which was highlighted by the realization that the pandemic was well under way; followed by closing borders and significant portions of the economy. Both the portfolio and benchmark declined quickly and significantly amidst record-setting volatility before staging an equally incredible recovery fueled by immediate and enormous fiscal stimulus. The portfolio maintained its relative outperformance in both periods through October 31, 2020, primarily though stock selection.

As the U.S. economy went from full employment to recession in two weeks and the economy contended with widespread shutdowns and closures, several industries were acutely affected and experienced a disproportionately negative impact. Travel, Hospitality, Food, and Retail saw revenues plunge as doors, economies, and borders closed. Companies and consumers worked diligently to adapt their businesses to the limitations brought on by the pandemic as frontline workers responded courageously and tirelessly to contain the crisis and help those in need. With much of the economy closed for months, every component of the economy was faced with the historic challenge of operating in a fog of uncertainty. Technology and Communications proved to be enormously helpful as Wi-Fi connections, video conferencing, and the ability to order most anything from a smartphone or laptop allowed consumers and companies to communicate, adapt, and transact. Millions of employees worked from home and e-commerce companies became ever more indispensable. Although an undoubtedly difficult and tragic year, one can only imagine how much more devastating it would have been had the pandemic unfolded five years ago before the emergence of many critical technologies.

In such an environment, growth companies prevailed as a result of the dramatic increase in demand for products and services that enabled companies to continue to operate. Transcending the usual classifications of sectors, industries, and factors, most companies were further categorized as either stay-at-home or go-out stocks. Many stay-at-home stocks were found in, but not limited to, Technology, Communications, and Media. Providers of video conferencing for work and home schooling benefitted as did streaming and video gaming companies due to millions being quarantined with few entertainment activities. Retailers with an online presence and logistics companies that delivered goods to home-bound consumers also fared significantly better than those dependent on physical presence and traveling consumers. As the global army of researchers work at breakneck speed to develop a vaccine, investors increasingly look ahead with optimism and each step further tends to shift investment from the stay-at-home stocks to the beleaguered go-out group.

The pandemic may have taken most of the spotlight at a time in which one of the biggest risks highlighted by investors coming into the year was the U.S. Presidential election. Of


8



Victory Equity Funds

Victory NewBridge Large Cap Growth Fund (continued)

course, that didn't mean political risk was eliminated. It was just postponed. Heading into what many believed would be a very contentious contest, the combination of how the pandemic is managed as we approach the holiday season combined with the outcome of the election may reignite investor risk aversion for the balance of the year and into 2021. While we don't know precisely when, our view is that a globally concerted effort to defeat the virus fueled by ingenuity, commitment, collaboration, aided by technology, communication, and innovation will prevail. Adversity and challenges bring out the best in people. While the magnitude of the task at hand is truly historic, this time is no different.

How did Victory NewBridge Large Cap Growth Fund (the "Fund") perform during the reporting period?

The Fund seeks to deliver long-term capital appreciation by investing in high-quality, large-cap companies with the prospect of growth in excess of the overall market. The Fund returned 39.61% (Class A Shares at net asset value) for the fiscal year ended October 31, 2020, outperforming the Russell 1000® Growth Index (the "Index"), which returned 29.22% during the period.

What strategies did you employ during the reporting period?

As active managers assigned the responsibility of investing the Fund in large-capitalization U.S. growth companies, we continued to do so in the 12 months ended October 31, 2020. The volatile and unusual environment created by the COVID-19 pandemic did present both challenges and opportunities. Heading into the lockdown, the market had been reaching new highs against the backdrop of increasing valuations. As the harsh reality of what was unfolding sunk in, the Dow Jones Industrial Average shed more than 35%, while the Index declined 33%. The Fund outperformed at the beginning of the year, declined less than the Index in the turbulent downdraft and outperformed in the ensuing market rebound.

In both periods, pre-pandemic and during, we maintained our focus by investing in growth companies we believed were, and would continue to be, capable of performing well against peers and expectations due to well-positioned businesses with attractive profitability profiles, strong financials, and talented and responsible management teams. As we continually monitored the portfolio throughout the year using our traditional screens and risk analysis, we also included an additional view to incorporate the current environment and evaluate how the portfolio is positioned within the context of stay-at-home beneficiaries and go-out stocks.

Throughout our long tenure together, we have traversed many notable and precipitous market selloffs such as the technology bust of 2000, September 11, 2001, the Great Recession, the fourth quarter of 2018, and now a global pandemic. These events have trained us to not panic or act emotionally. Instead, our experience together has shown us that, while painful, broad market selloffs also present opportunities. Difficult as the months of March and April were, we stayed the course and took advantage of the volatility by making changes we believed would benefit the portfolio such as adding Uber, Shopify, Trade Desk, Adobe, Masimo Corp, Twilio, and Trane Technologies. The performance throughout the year supports those decisions overall. In our view, the portfolio remains well balanced among sectors and industries as well as companies that have managed to grow despite or because of the pandemic and those which will likely rebound sharply as the economy fully reopens and takes the next step towards recovery. It's been a long year marked by tremendous loss on all levels. Looking ahead, it's our contention that the path forward, while not necessarily smooth, will require the innovation, boundless energy, and strong leadership we look for in the companies in which we invest.


9



Victory Equity Funds

Victory NewBridge Large Cap Growth Fund

Investment Overview
(Unaudited)

Average Annual Total Return

Year Ended October 31, 2020

 

Class A

 

Class C

 

Class I

 

Class Y

 

 

INCEPTION DATE

 

12/31/03

 

12/31/03

 

3/1/11

 

1/28/13

 

 

  Net Asset
Value
  Maximum
Offering
Price
  Net Asset
Value
  Contingent
Deferred
Charges
  Net Asset
Value
  Net Asset
Value
  Russell 1000®
Growth Index1
 

One Year

   

39.61

%

   

31.51

%

   

37.97

%

   

37.16

%

   

39.95

%

   

39.72

%

   

29.22

%

 

Five Year

   

13.36

%

   

12.02

%

   

12.43

%

   

12.43

%

   

13.81

%

   

13.70

%

   

17.32

%

 

Ten Year

   

12.54

%

   

11.88

%

   

11.61

%

   

11.61

%

   

N/A

     

N/A

     

16.31

%

 

Since Inception

   

N/A

     

N/A

     

N/A

     

N/A

     

12.15

%

   

14.00

%

   

N/A

   

Past performance is not indicative of future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. To obtain performance information current to the most recent month's end, please visit www.vcm.com.

The maximum offering price (MOP) reflects a maximum sales charge of 5.75% for Class A Shares. Class C Shares are not subject to an initial sales charge, but are subject to a deferred sales charge of 1.00% on shares redeemed within one year of purchase. NAV does not reflect sales charges.

The total returns quoted above may differ from the total returns shown in the Financial Highlights because they do not reflect adjustments made to the enclosed financial statements in accordance with U.S. generally accepted accounting principles or the deduction of taxes that a shareholder would pay on net investment income and realized capital gain distributions, including reinvested distributions, or redemptions of shares.

The total return figures set forth above include all waivers of fees for various periods since inception. Without such fee waivers, the total returns would have been lower. Some fee waivers are voluntary and may be modified or terminated at any time.

Victory NewBridge Large Cap Growth Fund — Growth of $10,000

1The Russell 1000® Growth Index is an unmanaged index that measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. This index does not include the effect of sales charges, commissions, expenses or taxes, is not representative of the Fund and it is not possible to invest directly in an index.

The graph reflects investment growth of a hypothetical $10,000 investment in Class A Shares of the Fund. The performance of other classes of the Fund's shares will be greater than or less than the line shown based on the differences in loads and fees paid by shareholders investing in the different classes. Past performance is no guarantee of future results.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.


10



Victory Equity Funds

Victory Special Value Fund

Managers' Commentary
(Unaudited)

What were the market conditions during the reporting period?

For the 12 months ended October 31, 2020, the pandemic related to the novel coronavirus and the disease it causes ("COVID-19") created an extremely volatile trailing-twelve-months period for equities, with the S&P 500® Index (the "Index") selling off approximately 34% from its February 2020 highs before rebounding off the March lows to return approximately 48% over the next seven months to close out the period. All in, the Index managed a 9.71% total return over the entire 12-month period, though this was primarily driven by 1) large capitalization names, and 2) growth stocks. Large-cap names possess the necessary flexibility, brand awareness, scale and balance sheet strength to both endure and invest through theses turbulent times, suggesting improved competitive positioning both during and after the pandemic. Growth stocks, on the other hand, rely more on product adoption and market share gains than overall economic growth, and fundamentals have proven more resilient. In addition, powerful secular drivers that underpin many of these names, are expected to accelerate post-COVID-19 (e.g., cloud computing and collaboration software and services). Finally, we believe lower interest rates benefit growth stocks disproportionately by reducing the discount rate applied to future profits, as these stocks inherently derive a larger portion of their intrinsic or net-present-value from future/expected earnings.

How did Victory Special Value Fund (the "Fund") perform during the reporting period?

The Fund seeks to provide long-term capital appreciation. The Fund returned 5.15% (Class A Shares at net asset value) for the fiscal year ended October 31, 2020, underperforming the Index, which returned 9.71% for the period.

What strategies did you employ during the reporting period?

The Fund looks to invest in stocks with market capitalizations of $1 billion and above that we believe are of high quality with the potential for above-average earnings growth, as well as current earnings momentum. Using this framework, the Fund generated the strongest returns within the Technology, Consumer Discretionary and Communication Services sectors over the trailing-twelve-months, while Materials and Energy were the most challenged. In Technology, the Fund's large-cap and cloud holdings drove performance, with both expected to be more resilient or even benefit during the pandemic. Apple was one of the strongest performers, benefiting from its fortress balance sheet, attractive growth/value profile, and potential for accelerating business momentum as we enter a new 5G handset supercycle. In Consumer Discretionary, retail and homebuilder exposures drove positive performance. Amazon was our top performer in the sector, as the company stands to benefit from an accelerated shift to e-commerce and cloud computing as a result of COVID-19. In Communication Services, strong returns were broad-based across the Fund's holdings, though positions in Facebook and Alphabet generated outsized strength. While both stocks experienced top-line pressure from reduced advertising budgets amidst the pandemic-induced recession, trends improved materially as economic conditions improved, validating the strategic value the platforms provide to advertisers. With regards to Materials and Energy, both sectors have experienced massive negative demand shocks due to the pandemic and equity prices have sold off in response.


11



Victory Equity Funds

Victory Special Value Fund

Investment Overview
(Unaudited)

Average Annual Total Return

Year Ended October 31, 2020

 

Class A

 

Class C

 

Class I

 

Class R

 

Class Y

 

 

INCEPTION DATE

 

12/3/93

 

3/1/03

 

8/31/07

 

12/21/99

 

1/28/13

 

 

  Net Asset
Value
  Maximum
Offering
Price
  Net Asset
Value
  Contingent
Deferred
Charges
  Net Asset
Value
  Net Asset
Value
  Net Asset
Value
  S&P 500®
Index1
 

One Year

   

5.15

%

   

–0.89

%

   

4.26

%

   

3.26

%

   

5.35

%

   

4.82

%

   

5.40

%

   

9.71

%

 

Five Year

   

6.73

%

   

5.47

%

   

5.76

%

   

5.76

%

   

6.87

%

   

6.42

%

   

6.98

%

   

11.71

%

 

Ten Year

   

7.62

%

   

6.99

%

   

6.66

%

   

6.66

%

   

7.85

%

   

7.30

%

   

N/A

     

13.01

%

 

Since Inception

   

N/A

     

N/A

     

N/A

     

N/A

     

N/A

     

N/A

     

8.27

%

   

N/A

   

Past performance is not indicative of future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. To obtain performance information current to the most recent month's end, please visit www.vcm.com.

The maximum offering price (MOP) reflects a maximum sales charge of 5.75% for Class A Shares. Class C Shares are not subject to an initial sales charge, but are subject to a deferred sales charge of 1.00% on shares redeemed within one year of purchase. NAV does not reflect sales charges.

The total returns quoted above may differ from the total returns shown in the Financial Highlights because they do not reflect adjustments made to the enclosed financial statements in accordance with U.S. generally accepted accounting principles or the deduction of taxes that a shareholder would pay on net investment income and realized capital gain distributions, including reinvested distributions, or redemptions of shares.

The total return figures set forth above include all waivers of fees for various periods since inception. Without such fee waivers, the total returns would have been lower. Some fee waivers are voluntary and may be modified or terminated at any time.

Victory Special Value Fund — Growth of $10,000

1The S&P 500® Index, an unmanaged index comprised of 500 domestically traded common stocks, is weighted according to the market value of each common stock in the index, and includes reinvestment of dividends. This index does not include the effect of sales charges, commissions, expenses or taxes, is not representative of the Fund and it is not possible to invest directly in an index.

The graph reflects investment growth of a hypothetical $10,000 investment in Class A Shares of the Fund. The performance of other classes of the Fund's shares will be greater than or less than the line shown based on the differences in loads and fees paid by shareholders investing in the different classes.

Past performance is no guarantee of future results.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.


12



Victory Hybrid Funds

Victory Strategic Allocation Fund

Managers' Commentary
(Unaudited)

What were the market conditions during the reporting period?

Global equities (as measured by the MSCI All Country World Index) registered positive gains over the last 12 months. Though economic output and corporate earnings remain subdued from the impact of the novel coronavirus and the disease it causes ("COVID-19") earlier in the year, signs of a recovery across regions fueled market gains in July and August as COVID-19 restrictions eased and governmental (and, especially, central bank) support remained steadfast. September, however, ushered in a market pullback, with virus hot spots popping up in Europe and parts of Asia as well as a breakdown of stimulus talks in the United States. U.S. equities and Emerging Market equities (as measured by the S&P 500® Index and MSCI Emerging Markets Index, respectively) were the stronger-performing regions during the 12 months ended October 31, 2020, while the Non-U.S. Developed Market equities and World Commodity Producer equities (as measured by the MSCI EAFE Index and MSCI World Commodity Producers Index, respectively) were the laggards.

How did Victory Strategic Allocation Fund (the "Fund") perform during the reporting period?

The Fund seeks to provide income and long-term growth of capital. The Fund returned 3.99% (Class A Shares at net asset value) for the fiscal year ended October 31, 2020, underperforming the MSCI All Country World Index (the "Index") and the "Custom Index" (60% MSCI ACWI/40% Bloomberg Barclays U.S. Aggregate Bond Index), which returned 4.89% and 6.03%, respectively, during the period.

What strategies did you employ during the reporting period?

The Fund was positioned throughout the period to provide more diversification by more equally weighting the U.S. and foreign equity markets when compared to the Index, which detracted from Fund performance versus its Custom Index. The valuation of equity markets abroad appears more compelling and commensurate with the risks facing those markets, in our view. This detracted from the Fund's return as those exposures did not keep pace with the strong U.S. equity markets. The Fund also continued to be positioned to exhibit less interest rate risk associated with the U.S. Treasury market versus its Custom Index by partially substituting an equity income-oriented strategy. This negatively impacted Fund performance as interest rates on 30- Year and 10-Year U.S. Treasurys fell to near all-time historic lows.


13



Victory Hybrid Funds

Victory Strategic Allocation Fund

Investment Overview
(Unaudited)

Average Annual Total Return

Year Ended October 31, 2020

 

Class A

 

Class C

 

Class I

 

Class R

     

 

INCEPTION DATE

 

12/10/93

 

3/1/03

 

8/31/07

 

12/15/99

     

 

  Net Asset
Value
  Maximum
Offering
Price
  Net Asset
Value
  Contingent
Deferred
Charges
  Net Asset
Value
  Net Asset
Value
  MSCI All
Country
World
Index1
  60% MSCI
All Country
World
Index/40%
Barclays
U.S.
Aggregate
Bond
Index2
 

One Year

   

3.99

%

   

1.64

%

   

3.23

%

   

2.23

%

   

4.22

%

   

3.74

%

   

4.89

%

   

6.03

%

 

Five Year

   

4.74

%

   

4.26

%

   

3.98

%

   

3.98

%

   

4.99

%

   

4.47

%

   

8.11

%

   

6.75

%

 

Ten Year

   

6.83

%

   

6.59

%

   

6.06

%

   

6.06

%

   

7.17

%

   

6.53

%

   

7.90

%

   

6.40

%

 

Past performance is not indicative of future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. To obtain performance information current to the most recent month's end, please visit www.vcm.com.

The maximum offering price (MOP) reflects a maximum sales charge of 2.25% for Class A Shares. Class C Shares are not subject to an initial sales charge, but are subject to a deferred sales charge of 1.00% on shares redeemed within one year of purchase. NAV does not reflect sales charges.

The total returns quoted above may differ from the total returns shown in the Financial Highlights because they do not reflect adjustments made to the enclosed financial statements in accordance with U.S. generally accepted accounting principles or the deduction of taxes that a shareholder would pay on net investment income and realized capital gain distributions, including reinvested distributions, or redemptions of shares.

The total return figures set forth above include all waivers of fees for various periods since inception. Without such fee waivers, the total returns would have been lower. Some fee waivers are voluntary and may be modified or terminated at any time.

Victory Strategic Allocation Fund — Growth of $10,000

1The MSCI All Country World Index is a market capitalization weighted index designed to provide a broad measure of equity-market performance throughout the world. This index does not include the effect of sales charges, commissions, expenses or taxes, is not representative of the Fund and it is not possible to invest directly in an index.

2The Barclays U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes U.S. Treasurys, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and nonagency). This index does not include the effect of sales charges, commissions, expenses or taxes, is not representative of the Fund and it is not possible to invest directly in an index.

The graph reflects investment growth of a hypothetical $10,000 investment in Class A Shares of the Fund. The performance of other classes of the Fund's shares will be greater than or less than the line shown based on the differences in loads and fees paid by shareholders investing in the different classes. Past performance is no guarantee of future results.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.


14



Victory Taxable Fixed Income Fund

Victory INCORE Fund for Income

Managers' Commentary
(Unaudited)

What were the market conditions during the reporting period?

The novel coronavirus and the disease it causes (COVID-19) and the resulting pandemic dominated the last nine months of the 12-month period ended October 31, 2020. Despite these dire times, and due to aggressive measures to support the U.S. economy, all major indices were positive for the period, with the Dow Jones Industrial Average at 0.34%. The S&P 500® Index was up 9.71% and the NASDAQ Composite Index was up a whopping 32.94%; interesting times indeed. Due to safe-haven demand, interest rates fell for U.S. Treasury bonds and they fell more for shorter maturities than longer, steepening the U.S. Treasury yield curve. Prices move opposite yields. In the U.S. housing market, the pandemic spurred a flight from community living in large cities to single-family home ownership away from big cities. Due to this development, home sales and home prices increased year over year. As a result, the available supply of homes for sale fell as did affordability, despite lower borrowing costs. The rate for a 30-year fixed mortgage fell from 3.78% to 2.81% for conventional borrowers. The U.S. fixed income markets also had a good year despite the pandemic, as evidenced by the Bloomberg Barclays U.S. Aggregate Bond Index, which returned 6.19%. Within fixed income markets, U.S. Treasury bonds returned 6.95%, and relative to U.S. Treasury bonds, duration neutral, asset-backed securities outperformed most (+0.80%), while mortgage-backed securities outperformed slightly (+0.13%), followed closely by commercial mortgage-backed securities (-0.98%), while corporate and agency debt underperformed the most at (-1.02%) and (-3.45%), respectively. Drilling deeper still, within the mortgage market, Fannie Mae ("FNMA") led Freddie Mac ("FHLMC"), which in turn led Ginnie Mae ("GNMA"). Both FNMA and FHLMC (conventional mortgage providers) slightly outperformed duration-neutral U.S. Treasury bonds while GNMA slightly lagged.

How did Victory INCORE Fund for Income (the "Fund") perform during the reporting period?

The Fund's objective is to deliver high, reliable income via securities backed by the 100% full faith and credit of the U.S. government. The Fund returned 2.75% (Class A Shares at net asset value) for the fiscal year ended October 31, 2020, underperforming the Bloomberg Barclays U.S. Capital 1-5 Year U.S. Government Bond Index, which returned 4.22% during the period.

What strategies did you employ during the reporting period?

We continued to focus solely on our objective. As such, we continued to pursue GNMA borrowers making above-market payments, who have proven to be unable or unwilling to refinance efficiently. We also continued to selectively buy or create high-coupon GNMA platinum pools as opportunities arose. No matter the circumstances, the goal of our strategy remains to deliver high, reliable income consistent with preservation of capital.


15



Victory Taxable Fixed Income Fund

Victory INCORE Fund for Income

Investment Overview
(Unaudited)

Average Annual Total Return

Year Ended October 31, 2020

 

Class A

 

Class C

 

Class I

 

Class R

 

Class R6

 

Class Y

 

 

INCEPTION DATE

 

3/26/99

 

3/1/02

 

3/1/11

 

9/16/87

 

3/4/15

 

1/28/13

 

 
    Net Asset
Value
  Maximum
Offering
Price
  Net Asset
Value
  Contingent
Deferred
Charges
  Net Asset
Value
  Net Asset
Value
  Net Asset
Value
  Net Asset
Value
  Bloomberg
Barclays
Capital
1-5 Year U.S.
Gov't Bond
Index1
 

One Year

   

2.75

%

   

0.41

%

   

1.85

%

   

0.87

%

   

3.01

%

   

2.87

%

   

3.18

%

   

2.95

%

   

4.22

%

 

Five Year

   

1.66

%

   

1.20

%

   

0.84

%

   

0.84

%

   

1.92

%

   

1.66

%

   

1.95

%

   

1.86

%

   

2.23

%

 

Ten Year

   

1.65

%

   

1.42

%

   

0.85

%

   

0.85

%

   

N/A

     

1.64

%

   

N/A

     

N/A

     

1.26

%

 

Since Inception

   

N/A

     

N/A

     

N/A

     

N/A

     

2.02

%

   

N/A

     

1.84

%

   

1.61

%

   

N/A

   

Past performance is not indicative of future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. To obtain performance information current to the most recent month's end, please visit www.vcm.com.

The maximum offering price (MOP) figures reflect a maximum sales charge of 2.25% for Class A Shares. Class C Shares are not subject to an initial sales charge, but are subject to a deferred sales charge of 1.00% on shares redeemed within one year of purchase. NAV does not reflect sales charges.

The total returns quoted above may differ from the total returns shown in the Financial Highlights because they do not reflect adjustments made to the enclosed financial statements in accordance with U.S. generally accepted accounting principles or the deduction of taxes that a shareholder would pay on net investment income and realized capital gain distributions, including reinvested distributions, or redemptions of shares.

The total return figures set forth above include all waivers of fees for various periods since inception. Without such fee waivers, the total returns would have been lower. Some fee waivers are voluntary and may be modified or terminated at any time.

Victory INCORE Fund for Income — Growth of $10,000

1Bloomberg Barclays Capital 1-5 Year U.S. Government Bond Index is a market-weighted index measuring the performance of Treasury and Agency securities issued by the United States Government with maturities of one to five years. The index does not include the effect of sales charges, commissions, expenses or taxes is not representative of the Fund and it is not possible to invest directly in an index.

The graph reflects investment growth of a hypothetical $10,000 investment in Class A Shares of the Fund. The performance of other classes of the Fund's shares will be greater than or less than the line shown based on the differences in loads and fees paid by shareholders investing in the different classes. Past performance is no guarantee of future results.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.


16



Victory Hybrid Funds

Victory INCORE Investment Grade Convertible Fund

Managers' Commentary
(Unaudited)

What were the market conditions during the reporting period?

Equity and convertible markets began the fiscal year ended October 31, 2020 on a very strong note on the heels of a U.S. Federal Reserve (the "Fed") rate cut and signals that the Fed would likely leave rates on hold throughout 2020. Market strength continued into January and early February with the expectation of an accelerating economy looking to benefit from the completion of the NAFTA renegotiation (USMCA) and the China phase one trade deal. However, the social and economic trajectory of the United States changed abruptly in late February as consumers and broad financial markets came to the realization that the effects of the novel coronavirus and the disease it causes ("COVID-19") virus were no longer confined to international markets. The negative economic backdrop caused by reactions to COVID-19 had a very detrimental effect on U.S. equity performance. After reaching an all-time closing high of 3,386 on February 19th, the S&P 500® Index fell 430 points (-12.7%) over the next seven days to month-end. The last day of February was particularly wild, as the Dow Jones Industrial Average, at one point, was down over 1,000 points before rallying 600 points in the final minutes of the day. Stocks began March on an up note encouraged by presidential candidate Joe Biden's strong Super Tuesday results, coming on the heels of the Fed's emergency mid-meeting half-point rate cut. Markets, however, soon fell victim to increasingly bad news concerning the spread of COVID-19, which was exacerbated by tumbling oil prices. From the March 4th close to March 23rd, the S&P 500® Index fell an astonishing 28%. This period included three 9%-plus daily swings in the S&P 500® Index, and three days where the Dow Jones Industrial Average fell by over 2,000 points. Stocks began a strong rally post March 23rd, as passage of a $2 trillion U.S. government stimulus program blossomed into reality. The market rally continued into the second calendar quarter as investors seemed to overlook much of the dour economic news, including negative U.S. GDP, declining earnings, and spiking unemployment. More positive news later in the quarter, such as optimistic vaccine news and a stunning May jobs report led to the stock market's best quarterly return in 20 years. Stocks continued to advance in July and August despite a U.S. Commerce Department report of a 9.5% drop in second quarter U.S. GDP. The stock market finished August with five consecutive monthly gains before giving back some in the final two months of the fiscal year. Thanks to the strong start to the year, the S&P 500® Index managed a gain of 9.71% for the fiscal year. Bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, also produced good results with a 6.19% return. After outperforming both stocks and bonds during the previous fiscal year, investment-grade convertibles lagged behind both asset classes in the fiscal year ended October 31, 2020.

How did Victory INCORE Investment Grade Convertible Fund (the "Fund") perform during the reporting period?

The Fund seeks to provide a high level of current income together with long-term capital appreciation. The Fund returned 4.43% (Class A Shares at net asset value) for the fiscal year ended October 31, 2020, outperforming the ICE BofA Investment Grade U.S. Convertible 5% Constrained Index, which returned 1.20% during the period.


17



Victory Hybrid Funds

Victory INCORE Investment Grade Convertible Fund (continued)

What strategies did you employ during the reporting period?

In managing the Fund, we strive to invest in high-quality convertibles with attractive underlying common stocks. We structure the Fund by spreading out our holdings across the three types of convertibles: 1) equity-sensitive, high-delta convertibles; 2) total return, middle-of-the-road convertibles; and 3) defensive, fixed-income-oriented convertibles. With this structure, we seek to provide a favorable balance between upside potential and downside exposure to equities. As of October 31, 2020, the Fund is overweight compared to the benchmark in the Health Care, and Information Technology sectors. It is underweighted in the Industrials, Utilities, and Energy sectors. It is approximately equally weighted in the Financials and Consumer Discretionary sectors. The Fund is broadly diversified among individual issues, economic sectors, credits, and convertible types. Performance during the fiscal year was aided by overweights in the Health Care and Information Technology sectors, as well as positive security selection in the same sectors. Performance was negatively impacted by underweights in the Industrials and Utilities sectors.


18



Victory Hybrid Funds

Victory INCORE Investment Grade Convertible Fund

Investment Overview
(Unaudited)

Average Annual Total Return

Year Ending October 31, 2020

 

Class A

 

Class I

 

 

INCEPTION DATE

 

4/14/88

 

8/31/07

 

 

  Net Asset
Value
  Maximum
Offering Price
  Net Asset
Value
  ICE BofAML
Investment Grade
U.S. Convertible
5% Constrained
Index1,2
 

One Year

   

4.43

%

   

2.10

%

   

4.91

%

   

1.20

%

 

Five Year

   

8.19

%

   

7.70

%

   

8.67

%

   

9.74

%

 

Ten Year

   

7.97

%

   

7.73

%

   

8.44

%

   

9.18

%

 

Past performance is not indicative of future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. To obtain performance information current to the most recent month's end, please visit www.vcm.com.

The maximum offering price (MOP) figures reflect a maximum sales charge of 2.25% for Class A Shares. NAV does not reflect sales charges.

The total returns quoted above may differ from the total returns shown in the Financial Highlights because they do not reflect adjustments made to the enclosed financial statements in accordance with U.S. generally accepted accounting principles or the deduction of taxes that a shareholder would pay on net investment income and realized capital gain distributions, including reinvested distributions, or redemptions of shares.

The total return figures set forth above include all waivers of fees for various periods since inception. Without such fee waivers, the total returns would have been lower. Some fee waivers are voluntary and may be modified or terminated at any time.

Victory INCORE Investment Grade Convertible Fund — Growth of $10,000

1ICE BofAML Investment Grade U.S. Convertible 5% Constrained Index is a market capitalization-weighted index of domestic corporate convertible securities. Bonds and preferred stocks must be convertible only to common stock, ADR's or cash equivalent and have a market value of at least $50 million. Composed of Coupon, OID, or zero coupon convertible bonds rated by Moody's and/or S&P with an average rating of Baa3/BBB- or higher. This Index does not include the effect of sales charges, commissions, expenses or taxes, is not representative of the Fund and it is not possible to invest directly in an index.

The graph reflects investment growth of a hypothetical $10,000 investment in Class A Shares of the Fund. The performance of other classes of the Fund's shares will be greater than or less than the line shown based on the differences in loads and fees paid by shareholders investing in the different classes. Past performance is no guarantee of future results.

2The ICE BofAML Investment Grade U.S. Convertible 5% Constrained Index commenced on January 1, 2012. Performance from October 31, 2010 to December 31, 2011 reflects performance of ICE BofAML All Investment Grade U.S. Convertibles Index. Performance from January 1, 2012 to present reflects the ICE BofAML Investment Grade U.S. Convertible 5% Constrained Index.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.


19



Victory Portfolios
Victory Diversified Stock Fund
  October 31, 2020  

  (Unaudited)

Investment Objective & Portfolio Holdings:

Victory Diversified Stock Fund seeks to provide long-term growth of capital.

Sector Allocation*:

October 31, 2020

(% of Total Investments)

* Does not include futures, money market instruments, and short-term investments purchased with cash collateral from securities loaned.


20



Victory Portfolios
Victory NewBridge Large Cap Growth Fund
  October 31, 2020  

  (Unaudited)

Investment Objective & Portfolio Holdings:

Victory NewBridge Large Cap Growth Fund seeks to provide long-term capital appreciation.

Sector Allocation*:

October 31, 2020

(% of Total Investments)

* Does not include futures, money market instruments, and short-term investments purchased with cash collateral from securities loaned.


21



Victory Portfolios
Victory Special Value Fund
  October 31, 2020  

  (Unaudited)

Investment Objective & Portfolio Holdings:

Victory Special Value Fund seeks to provide long-term growth of capital and dividend income.

Sector Allocation*:

October 31, 2020

(% of Total Investments)

* Does not include futures, money market instruments, and short-term investments purchased with cash collateral from securities loaned.


22



Victory Portfolios
Victory Strategic Allocation Fund
  October 31, 2020  

  (Unaudited)

Investment Objective & Portfolio Holdings:

Victory Strategic Allocation Fund seeks to provide income and long-term growth of capital.

Portfolio Holdings:

October 31, 2020

(% of Total Investments)


23



Victory Portfolios
Victory INCORE Fund for Income
  October 31, 2020  

  (Unaudited)

Investment Objective & Portfolio Holdings:

Victory INCORE Fund for Income seeks to provide a high level of current income consistent with preservation of shareholders' capital.

Portfolio Holdings:

October 31, 2020

(% of Total Investments)


24



Victory Portfolios
Victory INCORE Investment Grade Convertible Fund
  October 31, 2020  

  (Unaudited)

Investment Objective & Portfolio Holdings:

Victory INCORE Investment Grade Convertible Fund seeks to provide a high level of current income together with long-term capital appreciation.

Sector Allocation*:

October 31, 2020

(% of Total Investments)

* Does not include futures, money market instruments, and short-term investments purchased with cash collateral from securities loaned.


25



Victory Portfolios
Victory Diversified Stock Fund
  Schedule of Portfolio Investments
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

 

Shares

 

Value

 

Common Stocks (96.1%)

 

Communication Services (10.1%):

 

Alphabet, Inc., Class C (a)

   

6,226

   

$

10,092

   

Charter Communications, Inc., Class A (a)

   

6,269

     

3,786

   

Facebook, Inc., Class A (a)

   

17,339

     

4,562

   

Nexstar Media Group, Inc., Class A

   

39,555

     

3,259

   

T-Mobile U.S., Inc. (a)

   

23,100

     

2,531

   

Zynga, Inc., Class A (a)

   

170,764

     

1,535

   
     

25,765

   

Communications Equipment (1.3%):

 

Lumentum Holdings, Inc. (a)

   

40,748

     

3,369

   

Consumer Discretionary (15.9%):

 

Amazon.com, Inc. (a)

   

3,373

     

10,241

   

Asbury Automotive Group, Inc. (a) (b)

   

26,288

     

2,707

   

Boyd Gaming Corp.

   

97,372

     

3,089

   

D.R. Horton, Inc.

   

33,356

     

2,229

   

Dollar General Corp.

   

17,171

     

3,584

   

Group 1 Automotive, Inc.

   

24,085

     

2,555

   

LCI Industries

   

13,819

     

1,515

   

LGI Homes, Inc. (a)

   

19,351

     

2,068

   

Lowe's Cos., Inc.

   

17,163

     

2,713

   

Meritage Homes Corp. (a)

   

22,959

     

1,999

   

Target Corp.

   

13,928

     

2,120

   

TopBuild Corp. (a)

   

12,480

     

1,912

   

Williams-Sonoma, Inc. (b)

   

41,101

     

3,750

   
     

40,482

   

Consumer Staples (5.9%):

 

Monster Beverage Corp. (a)

   

32,365

     

2,478

   

PepsiCo, Inc.

   

23,273

     

3,103

   

Philip Morris International, Inc.

   

29,292

     

2,080

   

The Kroger Co.

   

85,676

     

2,760

   

The Procter & Gamble Co.

   

18,901

     

2,591

   

Walmart, Inc.

   

14,913

     

2,069

   
     

15,081

   

Energy (1.0%):

 

Chevron Corp.

   

11,621

     

808

   

Phillips 66

   

17,470

     

815

   

Valero Energy Corp.

   

20,753

     

801

   
     

2,424

   

Financials (6.9%):

 

Ameriprise Financial, Inc.

   

16,010

     

2,576

   

Flagstar Bancorp, Inc.

   

66,386

     

1,948

   

JPMorgan Chase & Co.

   

36,454

     

3,574

   

Morgan Stanley

   

48,126

     

2,317

   

See notes to financial statements.


26



Victory Portfolios
Victory Diversified Stock Fund
  Schedule of Portfolio Investments — continued
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

 

Shares

 

Value

 

Primerica, Inc.

   

28,466

   

$

3,138

   

T. Rowe Price Group, Inc.

   

18,787

     

2,380

   

Western Alliance Bancorp

   

41,537

     

1,711

   
     

17,644

   

Health Care (17.6%):

 

AbbVie, Inc.

   

53,460

     

4,550

   

AmerisourceBergen Corp.

   

17,071

     

1,640

   

Amgen, Inc.

   

8,446

     

1,832

   

Bristol-Myers Squibb Co.

   

80,376

     

4,697

   

Charles River Laboratories International, Inc. (a)

   

14,177

     

3,227

   

Cigna Corp.

   

15,406

     

2,572

   

Hologic, Inc. (a)

   

39,628

     

2,727

   

ICON PLC (a)

   

17,635

     

3,180

   

Medtronic PLC

   

8,851

     

890

   

Merck & Co., Inc.

   

47,741

     

3,591

   

Pfizer, Inc.

   

62,984

     

2,235

   

Regeneron Pharmaceuticals, Inc. (a)

   

6,380

     

3,468

   

Stryker Corp.

   

13,939

     

2,816

   

Thermo Fisher Scientific, Inc.

   

3,626

     

1,716

   

UnitedHealth Group, Inc.

   

18,203

     

5,555

   
     

44,696

   

Industrials (9.0%):

 

Federal Signal Corp.

   

72,267

     

2,073

   

Kansas City Southern

   

21,941

     

3,865

   

L3Harris Technologies, Inc.

   

13,898

     

2,239

   

Lockheed Martin Corp.

   

7,971

     

2,791

   

Masco Corp.

   

66,909

     

3,586

   

Old Dominion Freight Line, Inc.

   

13,980

     

2,661

   

UFP Industries, Inc.

   

56,659

     

2,828

   

XPO Logistics, Inc. (a)

   

30,508

     

2,746

   
     

22,789

   

IT Services (5.4%):

 

Akamai Technologies, Inc. (a)

   

33,804

     

3,215

   

Booz Allen Hamilton Holdings Corp.

   

41,846

     

3,286

   

EPAM Systems, Inc. (a)

   

8,750

     

2,703

   

Fiserv, Inc. (a)

   

29,027

     

2,771

   

Visa, Inc., Class A

   

9,256

     

1,682

   
     

13,657

   

Materials (2.6%):

 

Berry Global Group, Inc. (a)

   

67,909

     

3,167

   

Silgan Holdings, Inc.

   

97,864

     

3,371

   
     

6,538

   

Real Estate (1.3%):

 

American Tower Corp.

   

14,475

     

3,324

   

See notes to financial statements.


27



Victory Portfolios
Victory Diversified Stock Fund
  Schedule of Portfolio Investments — continued
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

 

Shares

 

Value

 

Semiconductors & Semiconductor Equipment (4.4%):

 

Advanced Micro Devices, Inc. (a)

   

42,140

   

$

3,173

   

Broadcom, Inc.

   

9,386

     

3,282

   

NVIDIA Corp.

   

9,433

     

4,729

   
     

11,184

   

Software (9.3%):

 

Adobe, Inc. (a)

   

5,982

     

2,675

   

Cadence Design Systems, Inc. (a)

   

23,616

     

2,583

   

Microsoft Corp.

   

77,437

     

15,678

   

ServiceNow, Inc. (a)

   

6,062

     

3,015

   
     

23,951

   

Technology Hardware, Storage & Peripherals (5.4%):

 

Apple, Inc.

   

127,491

     

13,879

   

Total Common Stocks (Cost $185,847)

   

244,783

   

Exchange-Traded Funds (3.1%)

 

SPDR S&P 500 ETF Trust (b)

   

23,802

     

7,772

   

Total Exchange-Traded Funds (Cost $7,586)

   

7,772

   

Collateral for Securities Loaned^ (5.5%)

 

BlackRock Liquidity Funds TempFund, Institutional Class, 0.10% (c)

   

321,333

     

321

   
Fidelity Investments Money Market Government Portfolio,
Institutional Class, 0.02% (c)
   

4,288,131

     

4,288

   
Goldman Sachs Financial Square Prime Obligations Fund,
Institutional Class, 0.02% (c)
   

2,234,542

     

2,235

   

JPMorgan Prime Money Market Fund, Capital Class, 0.07% (c)

   

1,358,519

     

1,359

   
Morgan Stanley Institutional Liquidity Prime Portfolio,
Institutional Class, 0.11% (c)
   

5,749,144

     

5,749

   

Total Collateral for Securities Loaned (Cost $13,952)

   

13,952

   

Total Investments (Cost $207,385) — 104.7%

   

266,507

   

Liabilities in excess of other assets — (4.7)%

   

(11,901

)

 

NET ASSETS — 100.00%

 

$

254,606

   

^  Purchased with cash collateral from securities on loan.

(a)  Non-income producing security.

(b)  All or a portion of this security is on loan.

(c)  Rate disclosed is the daily yield on October 31, 2020.

ETF — Exchange-Traded Fund

PLC — Public Limited Company

See notes to financial statements.


28



Victory Portfolios
Victory NewBridge Large Cap Growth Fund
  Schedule of Portfolio Investments
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

 

Shares

 

Value

 

Common Stocks (99.1%)

 

Communication Services (12.4%):

 

Activision Blizzard, Inc.

   

6,431

   

$

487

   

Alphabet, Inc., Class C (a)

   

499

     

809

   

Facebook, Inc., Class A (a)

   

3,009

     

792

   
     

2,088

   

Consumer Discretionary (18.2%):

 

Alibaba Group Holding Ltd., ADR (a)

   

1,989

     

606

   

Amazon.com, Inc. (a)

   

454

     

1,378

   

Burlington Stores, Inc. (a)

   

2,529

     

490

   

Lululemon Athletica, Inc. (a)

   

1,845

     

589

   
     

3,063

   

Financials (2.6%):

 

MSCI, Inc.

   

1,270

     

444

   

Health Care (16.3%):

 

Edwards Lifesciences Corp. (a)

   

6,220

     

446

   

Masimo Corp. (a)

   

1,481

     

331

   

UnitedHealth Group, Inc.

   

1,599

     

488

   

Veeva Systems, Inc., Class A (a)

   

2,166

     

585

   

Vertex Pharmaceuticals, Inc. (a)

   

1,444

     

301

   

Zoetis, Inc.

   

3,672

     

582

   
     

2,733

   

Industrials (7.6%):

 

CoStar Group, Inc. (a)

   

659

     

543

   

Trane Technologies PLC

   

2,653

     

352

   

Uber Technologies, Inc. (a)

   

11,545

     

386

   
     

1,281

   

IT Services (16.2%):

 

EPAM Systems, Inc. (a)

   

1,737

     

537

   

PayPal Holdings, Inc. (a)

   

4,342

     

808

   

Shopify, Inc., Class A (a)

   

383

     

354

   

Twilio, Inc., Class A (a)

   

691

     

193

   

Visa, Inc., Class A

   

4,687

     

852

   
     

2,744

   

Real Estate (3.4%):

 

American Tower Corp.

   

2,462

     

565

   

Semiconductors & Semiconductor Equipment (5.3%):

 

NVIDIA Corp.

   

1,795

     

900

   

Software (17.1%):

 

Adobe, Inc. (a)

   

1,486

     

664

   

Cadence Design Systems, Inc. (a)

   

2,447

     

268

   

salesforce.com, Inc. (a)

   

2,742

     

637

   

See notes to financial statements.


29



Victory Portfolios
Victory NewBridge Large Cap Growth Fund
  Schedule of Portfolio Investments — continued
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

 

Shares

 

Value

 

ServiceNow, Inc. (a)

   

1,872

   

$

932

   

The Trade Desk, Inc., Class A (a) (b)

   

717

     

406

   
     

2,907

   

Total Common Stocks (Cost $7,647)

   

16,725

   

Collateral for Securities Loaned^ (2.7%)

 

BlackRock Liquidity Funds TempFund, Institutional Class, 0.10% (c)

   

10,306

     

10

   
Fidelity Investments Money Market Government Portfolio,
Institutional Class, 0.02% (c)
   

137,499

     

137

   
Goldman Sachs Financial Square Prime Obligations Fund,
Institutional Class, 0.02% (c)
   

71,693

     

72

   

JPMorgan Prime Money Market Fund, Capital Class, 0.07% (c)

   

43,570

     

44

   
Morgan Stanley Institutional Liquidity Prime Portfolio,
Institutional Class, 0.11% (c)
   

184,384

     

184

   

Total Collateral for Securities Loaned (Cost $447)

   

447

   

Total Investments (Cost $8,094) — 101.8%

   

17,172

   

Liabilities in excess of other assets — (1.8)%

   

(310

)

 

NET ASSETS — 100.00%

 

$

16,862

   

^  Purchased with cash collateral from securities on loan.

(a)  Non-income producing security.

(b)  All or a portion of this security is on loan.

(c)  Rate disclosed is the daily yield on October 31, 2020.

ADR — American Depositary Receipt

PLC — Public Limited Company

See notes to financial statements.


30



Victory Portfolios
Victory Special Value Fund
  Schedule of Portfolio Investments
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

 

Shares

 

Value

 

Common Stocks (97.8%)

 

Communication Services (10.3%):

 

Alphabet, Inc., Class C (a)

   

1,064

   

$

1,725

   

Charter Communications, Inc., Class A (a)

   

1,060

     

640

   

Facebook, Inc., Class A (a)

   

2,999

     

789

   

Nexstar Media Group, Inc., Class A

   

6,841

     

564

   

T-Mobile U.S., Inc. (a)

   

3,965

     

434

   

Zynga, Inc., Class A (a)

   

29,500

     

265

   
     

4,417

   

Communications Equipment (1.3%):

 

Lumentum Holdings, Inc. (a)

   

6,998

     

579

   

Consumer Discretionary (16.1%):

 

Amazon.com, Inc. (a)

   

567

     

1,721

   

Asbury Automotive Group, Inc. (a)

   

4,548

     

468

   

Boyd Gaming Corp.

   

16,638

     

528

   

D.R. Horton, Inc.

   

5,723

     

383

   

Dollar General Corp.

   

2,934

     

612

   

Group 1 Automotive, Inc.

   

4,132

     

438

   

LCI Industries

   

2,362

     

259

   

LGI Homes, Inc. (a)

   

3,332

     

356

   

Lowe's Cos., Inc.

   

2,947

     

466

   

Meritage Homes Corp. (a)

   

3,954

     

344

   

Target Corp.

   

2,404

     

366

   

TopBuild Corp. (a)

   

2,149

     

329

   

Williams-Sonoma, Inc.

   

7,100

     

649

   
     

6,919

   

Consumer Staples (6.1%):

 

Monster Beverage Corp. (a)

   

5,591

     

428

   

PepsiCo, Inc.

   

4,050

     

540

   

Philip Morris International, Inc.

   

5,044

     

358

   

The Kroger Co.

   

14,754

     

476

   

The Procter & Gamble Co.

   

3,255

     

446

   

Walmart, Inc.

   

2,568

     

356

   
     

2,604

   

Energy (1.0%):

 

Chevron Corp.

   

2,000

     

139

   

Phillips 66

   

3,008

     

140

   

Valero Energy Corp.

   

3,496

     

135

   
     

414

   

Financials (7.1%):

 

Ameriprise Financial, Inc.

   

2,708

     

436

   

Flagstar Bancorp, Inc.

   

11,431

     

335

   

JPMorgan Chase & Co.

   

6,258

     

613

   

Morgan Stanley

   

8,253

     

397

   

See notes to financial statements.


31



Victory Portfolios
Victory Special Value Fund
  Schedule of Portfolio Investments — continued
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

 

Shares

 

Value

 

Primerica, Inc.

   

4,903

   

$

541

   

T. Rowe Price Group, Inc.

   

3,246

     

411

   

Western Alliance Bancorp

   

7,154

     

295

   
     

3,028

   

Health Care (17.9%):

 

AbbVie, Inc.

   

9,210

     

784

   

AmerisourceBergen Corp.

   

2,935

     

282

   

Amgen, Inc.

   

1,454

     

315

   

Bristol-Myers Squibb Co.

   

13,902

     

813

   

Charles River Laboratories International, Inc. (a)

   

2,441

     

556

   

Cigna Corp.

   

2,653

     

443

   

Hologic, Inc. (a)

   

6,846

     

471

   

ICON PLC (a)

   

3,036

     

547

   

Medtronic PLC

   

1,523

     

153

   

Merck & Co., Inc.

   

8,223

     

618

   

Pfizer, Inc.

   

10,847

     

385

   

Regeneron Pharmaceuticals, Inc. (a)

   

1,087

     

591

   

Stryker Corp.

   

2,410

     

487

   

Thermo Fisher Scientific, Inc.

   

625

     

296

   

UnitedHealth Group, Inc.

   

3,135

     

957

   
     

7,698

   

Industrials (9.1%):

 

Federal Signal Corp.

   

12,444

     

357

   

Kansas City Southern

   

3,763

     

663

   

L3Harris Technologies, Inc.

   

2,394

     

386

   

Lockheed Martin Corp.

   

1,378

     

482

   

Masco Corp.

   

11,318

     

606

   

Old Dominion Freight Line, Inc.

   

2,415

     

460

   

UFP Industries, Inc.

   

9,690

     

484

   

XPO Logistics, Inc. (a)

   

5,276

     

475

   
     

3,913

   

IT Services (5.5%):

 

Akamai Technologies, Inc. (a)

   

5,813

     

553

   

Booz Allen Hamilton Holdings Corp.

   

7,231

     

567

   

EPAM Systems, Inc. (a)

   

1,507

     

466

   

Fiserv, Inc. (a)

   

4,999

     

477

   

Visa, Inc., Class A

   

1,595

     

290

   
     

2,353

   

Materials (2.6%):

 

Berry Global Group, Inc. (a)

   

11,649

     

543

   

Silgan Holdings, Inc.

   

16,926

     

583

   
     

1,126

   

Real Estate (1.3%):

 

American Tower Corp.

   

2,448

     

562

   

See notes to financial statements.


32



Victory Portfolios
Victory Special Value Fund
  Schedule of Portfolio Investments — continued
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

 

Shares

 

Value

 

Semiconductors & Semiconductor Equipment (4.5%):

 

Advanced Micro Devices, Inc. (a)

   

7,192

   

$

541

   

Broadcom, Inc.

   

1,623

     

567

   

NVIDIA Corp.

   

1,612

     

809

   
     

1,917

   

Software (9.5%):

 

Adobe, Inc. (a)

   

1,034

     

462

   

Cadence Design Systems, Inc. (a)

   

4,049

     

443

   

Microsoft Corp.

   

13,202

     

2,674

   

ServiceNow, Inc. (a)

   

1,025

     

510

   
     

4,089

   

Technology Hardware, Storage & Peripherals (5.5%):

 

Apple, Inc.

   

21,566

     

2,348

   

Total Common Stocks (Cost $32,441)

   

41,967

   

Exchange-Traded Funds (1.5%)

 

SPDR S&P 500 ETF Trust

   

1,995

     

651

   

Total Exchange-Traded Funds (Cost $702)

   

651

   

Total Investments (Cost $33,143) — 99.3%

   

42,618

   

Other assets in excess of liabilities — 0.7%

   

289

   

NET ASSETS — 100.00%

 

$

42,907

   

(a)  Non-income producing security.

ETF — Exchange-Traded Fund

PLC — Public Limited Company

See notes to financial statements.


33



Victory Portfolios
Victory Strategic Allocation Fund
  Schedule of Portfolio Investments
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

 

Shares

 

Value

 

Affiliated Exchange-Traded Funds (6.6%)

 

VictoryShares U.S. Multi-Factor Minimum Volatility ETF

   

53,070

   

$

1,629

   

Total Affiliated Exchange-Traded Funds (Cost $1,357)

   

1,629

   

Affiliated Mutual Funds (92.6%)

 

Victory INCORE Total Return Bond Fund, Class R6

   

310,252

     

3,081

   

Victory Integrity Discovery Fund, Class Y

   

28,829

     

820

   

Victory Market Neutral Income Fund, Class I

   

557,908

     

5,412

   

Victory RS Global Fund, Class Y (a)

   

476,267

     

7,049

   

Victory RS Partners Fund, Class Y

   

40,388

     

830

   

Victory Sophus Emerging Markets Small Cap Fund, Class Y

   

289,495

     

1,916

   

Victory Trivalent Emerging Markets Small-Cap Fund, Class Y

   

149,184

     

1,987

   

Victory Trivalent International Small-Cap Fund, Class I

   

122,564

     

1,710

   

Total Affiliated Mutual Funds (Cost $21,897)

   

22,805

   

Total Investments (Cost $23,254) — 99.2%

   

24,434

   

Other assets in excess of liabilities — 0.8%

   

204

   

NET ASSETS — 100.00%

 

$

24,638

   

(a)  Represents investments greater than 25% of the Fund's net assets. Performance of the Fund may be adversely impacted by concentrated investments in securities. The financial statements and portfolio holdings for these securities can be found at www.sec.gov.

ETF — Exchange-Traded Fund

See notes to financial statements.


34



Victory Portfolios
Victory INCORE Fund for Income
  Schedule of Portfolio Investments
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

  Principal
Amount
 

Value

 

Government National Mortgage Association (56.2%)

 

Multi-family (0.4%):

 

Collateralized Mortgage Obligations (0.2%):

 

Government National Mortgage Assoc.

 

Series 2012-33, Class AB, 7.00%, 3/16/46

 

$

2,204

   

$

2,346

   

Pass-throughs (0.2%):

 

Government National Mortgage Assoc.

 

7.50%, 8/15/21

   

4

     

4

   

7.92%, 7/1/23

   

194

     

194

   

8.00%, 1/15/31 – 11/15/33

   

1,103

     

1,104

   

7.75%, 9/15/33

   

398

     

399

   
     

1,701

   

Single Family (55.8%):

 

Collateralized Mortgage Obligations (2.0%):

 

Government National Mortgage Assoc.

 

Series 1999-4, Class ZB, 6.00%, 2/20/29

   

198

     

198

   

Series 2001-10, Class PE, 6.50%, 3/16/31

   

154

     

154

   

Series 2005-74, Class HB, 7.50%, 9/16/35

   

12

     

13

   

Series 2005-74, Class HC, 7.50%, 9/16/35

   

61

     

71

   

Series 2011-166, Class NT, 7.75%, 11/20/31 (a)

   

942

     

1,099

   

Series 2012-106, Class JM, 7.31%, 10/20/34 (a)

   

700

     

830

   

Series 2012-30, Class WB, 7.06%, 11/20/39 (a)

   

2,877

     

3,358

   

Series 2013-190, Class KT, 8.10%, 9/20/30 (a)

   

341

     

393

   

Series 2013-51, Class BL, 6.07%, 4/20/34 (a)

   

1,921

     

2,234

   

Series 2013-64, Class KY, 6.84%, 12/20/38 (a)

   

1,145

     

1,309

   

Series 2013-70, Class KP, 7.07%, 2/20/39 (a)

   

960

     

1,130

   

Series 2014-69, Class W, 7.20%, 11/20/34 (a)

   

145

     

170

   

Series 2014-74, Class PT, 7.77%, 5/16/44 (a)

   

231

     

261

   

Series 2015-77, Class PT, 7.65%, 6/20/39 (a)

   

525

     

600

   

Series 2019-22, Class PT, 7.92%, 2/20/49 (a)

   

8,071

     

9,254

   
     

21,074

   

Pass-throughs (53.8%):

 

Government National Mortgage Assoc.

 

9.00%, 12/15/20 – 12/15/30

   

2,763

     

3,072

   

9.50%, 2/15/21 – 9/15/27

   

152

     

164

   

6.00%, 1/15/22 – 9/20/50

   

65,712

     

77,894

   

7.95%, 9/15/22

   

6

     

6

   

7.50%, 1/15/23 – 5/15/49

   

76,872

     

89,383

   

7.13%, 3/15/23 – 7/15/25

   

423

     

433

   

7.00%, 6/15/23 – 9/20/50

   

101,241

     

119,541

   

5.50%, 7/15/23 – 11/15/45

   

12,257

     

14,534

   

6.50%, 8/20/23 – 2/20/41

   

146,059

     

171,343

   

8.00%, 6/20/24 – 5/15/49

   

44,391

     

52,680

   

10.00%, 4/15/25 – 2/15/26

   

8

     

8

   

6.13%, 6/20/28 – 9/20/29

   

401

     

427

   

6.28%, 10/20/28 – 10/20/29

   

734

     

797

   

6.10%, 5/20/29 – 7/20/31

   

568

     

621

   

7.30%, 4/20/30 – 2/20/31

   

215

     

226

   

See notes to financial statements.


35



Victory Portfolios
Victory INCORE Fund for Income
  Schedule of Portfolio Investments — continued
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

  Shares or
Principal
Amount
 

Value

 

6.49%, 5/20/31 – 3/20/32

 

$

1,022

   

$

1,133

   

8.50%, 6/15/31 – 7/15/32

   

7,518

     

8,709

   

4.50%, 12/15/33 – 5/15/41

   

5,122

     

5,798

   

5.00%, 1/20/34 – 1/15/40

   

11,385

     

13,343

   

4.00%, 8/15/41

   

899

     

994

   
     

561,106

   

Total Government National Mortgage Association (Cost $574,256)

   

586,227

   

U.S. Treasury Obligations (42.5%)

 

U.S. Treasury Bills, 0.10%, 3/4/21 (b)

   

25,831

     

25,822

   

U.S. Treasury Bonds

 

7.63%, 11/15/22

   

95,879

     

110,456

   

7.13%, 2/15/23

   

91,095

     

105,578

   

7.50%, 11/15/24

   

155,516

     

200,743

   

Total U.S. Treasury Obligations (Cost $443,324)

   

442,599

   

Investment Companies (0.0%) (c)

 

BlackRock Liquidity Fedfund, 0.04%

   

100,482

     

100

   

Total Investment Companies (Cost $100)

   

100

   

Total Investments (Cost $1,017,680) — 98.7%

   

1,028,926

   

Other assets in excess of liabilities — 1.3%

   

12,974

   

NET ASSETS — 100.00%

 

$

1,041,900

   

(a)  The rate for certain asset-backed and mortgage-backed securities may vary based on factors relating to the pool of assets underlying the security. The rate disclosed is the rate in effect at October 31, 2020.

(b)  Rate represents the effective yield at October 31, 2020.

(c)  Amount represents less than 0.05% of net assets.

See notes to financial statements.


36



Victory Portfolios
Victory INCORE Investment Grade Convertible Fund
  Schedule of Portfolio Investments
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

  Principal
Amount
 

Value

 

Convertible Corporate Bonds (65.2%)

 

Communication Services (1.0%):

 

Snap, Inc., 0.75%, 8/1/26

 

$

1,595

   

$

2,965

   

Consumer Discretionary (4.6%):

 

Booking Holdings, Inc.

 

0.90%, 9/15/21

   

2,722

     

2,844

   

0.75%, 5/1/25 (a) (b)

   

8,415

     

10,582

   
     

13,426

   

Energy (2.9%):

 

Pioneer Natural Resources Co., 0.25%, 5/15/25 (a)

   

8,015

     

8,539

   

Financials (16.4%):

 

Ares Capital Corp.

 

3.75%, 2/1/22

   

8,240

     

8,361

   

4.63%, 3/1/24

   

3,845

     

3,981

   

Barclays Bank PLC

 

0.00%, 2/4/25

   

3,025

     

3,647

   

0.00%, 2/18/25

   

1,595

     

1,654

   

BlackRock Capital Investment Corp., 5.00%, 6/15/22

   

3,712

     

3,640

   

Blackstone Mortgage Trust, Inc., 4.75%, 3/15/23

   

3,000

     

2,891

   

JPMorgan Chase Financial Co. LLC, 0.25%, 5/1/23 (a)

   

9,355

     

9,399

   

MGIC Investment Corp. Convertible Subordinated Notes, 9.00%, 4/1/63 (a)

   

4,127

     

5,339

   

Prospect Capital Corp., 4.95%, 7/15/22, Callable 4/15/22 @ 100

   

5,923

     

6,070

   

TPG Specialty Lending, Inc., 4.50%, 8/1/22

   

2,985

     

3,059

   
     

48,041

   

Health Care (14.6%):

 

Anthem, Inc., 2.75%, 10/15/42

   

3,549

     

13,621

   
Bristol-Myers Squibb Co., Convertible Subordinated Notes,
0.24% (LIBOR03M-50bps), 9/15/23, Callable 12/10/20 @ 100 (c) (d)
   

2,466

     

3,680

   
Danaher Corp., Convertible Subordinated Notes, 0.00%, 1/22/21,
Callable 11/25/20 @ 99.62 (e)
   

1,205

     

10,562

   

Illumina, Inc., 0.00%, 8/15/23 (b)

   

3,975

     

4,183

   

Illumina, Inc., Convertible Subordinated Notes, 0.50%, 6/15/21

   

6,987

     

8,627

   

Teladoc Health, Inc., 3.00%, 12/15/22

   

500

     

2,233

   
     

42,906

   

Industrials (7.7%):

 

Fortive Corp., 0.88%, 2/15/22

   

6,901

     

6,870

   

Macquarie Infrastructure, 2.00%, 10/1/23

   

5,966

     

5,468

   

Southwest Airlines Co., 1.25%, 5/1/25

   

7,690

     

10,231

   
     

22,569

   

Information Technology (15.8%):

 

Akamai Technologies, Inc., 0.13%, 5/1/25

   

1,922

     

2,249

   

Euronet Worldwide, Inc., 0.75%, 3/15/49, Callable 3/20/25 @ 100

   

7,300

     

7,017

   
Micron Technology, Inc., Convertible Subordinated Notes,
3.13%, 5/1/32, callable 5/4/2021 @ 100
   

1,462

     

7,369

   

Novellus Systems, Inc., Convertible Subordinated Notes, 2.63%, 5/15/41

   

1,256

     

13,467

   

See notes to financial statements.


37



Victory Portfolios
Victory INCORE Investment Grade Convertible Fund
  Schedule of Portfolio Investments — continued
October 31, 2020
 

(Amounts in Thousands, Except for Shares)

Security Description

  Shares or
Principal
Amount
 

Value

 
Nuance Communication, Inc. Convertible Subordinated Notes,
1.00%, 12/15/35, Callable 12/20/22 @ 100
 

$

1,410

   

$

1,993

   

ServiceNow, Inc., 0.00%, 6/1/22

   

520

     

1,901

   

Western Digital Corp., 1.50%, 2/1/24

   

13,000

     

12,431

   
     

46,427

   

Real Estate (2.2%):

 

Spirit Realty Capital, Inc., 3.75%, 5/15/21

   

6,255

     

6,342

   
     

6,342

   

Total Convertible Corporate Bonds (Cost $168,791)

   

191,215

   

Convertible Preferred Stocks (33.9%)

 

Financials (13.3%):

 

AMG Capital Trust II, 5.15%, 10/15/37

   

181,860

     

8,556

   

Bank of America Corp., Series L, 7.25% (f)

   

7,130

     

10,459

   

KKR & Co., Inc., Series C, 6.00%, 9/15/23

   

53,700

     

2,795

   

New York Community Capital Trust, 6.00%, 11/1/51

   

57,174

     

2,500

   

Wells Fargo & Co., Series L, 7.50% (f)

   

10,819

     

14,592

   
     

38,902

   

Industrials (4.3%):

 

Stanley Black & Decker, Inc., 5.25%, 11/15/22

   

119,525

     

12,476

   

Utilities (16.3%):

 

American Electric Power Co., Inc., 6.13%, 3/15/22

   

98,985

     

5,285

   

CenterPoint Energy, Inc. Convertible Subordinated Notes, 4.57%, 9/15/29 (d)

   

80,000

     

4,565

   

Dominion Energy, Inc., Series A, 7.25%, 6/1/22

   

100,003

     

10,387

   

DTE Energy Co., 6.25%, 11/1/22

   

152,215

     

7,242

   

NextEra Energy, Inc., 4.87%, 9/1/22

   

127,545

     

7,270

   

NextEra Energy, Inc., 5.28%, 3/1/23

   

75,000

     

3,709

   

Southern Co., 6.75%, 8/1/22

   

199,220

     

9,629

   
     

48,087

   

Total Convertible Preferred Stocks (Cost $96,922)

   

99,465

   

Collateral for Securities Loaned^ (4.6%)

 

BlackRock Liquidity Funds TempFund, Institutional Class, 0.10% (h)

   

314,223

     

314

   
Fidelity Investments Money Market Government Portfolio,
Institutional Shares, 0.02% (h)
   

4,193,209

     

4,193

   
Goldman Sachs Financial Square Prime Obligations Fund, Institutional
Class, 0.02% (h)
   

2,185,099

     

2,185

   

JPMorgan Prime Money Market Fund, Capital Class, 0.07% (h)

   

1,328,500

     

1,329

   
Morgan Stanley Institutional Liquidity Prime Portfolio, Institutional
Class, 0.11% (h)
   

5,621,935

     

5,622

   

Total Collateral for Securities Loaned (Cost $13,643)

   

13,643

   

Total Investments (Cost $279,356) — 103.7%

   

304,323

   

Liabilities in excess of other assets — (3.7)%

   

(10,829

)

 

NET ASSETS — 100.00%

 

$

293,494

   

See notes to financial statements.


38



Victory Portfolios
Victory INCORE Investment Grade Convertible Fund
  Schedule of Portfolio Investments — continued
October 31, 2020
 

^  Purchased with cash collateral from securities on loan.

(a)  Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid based upon procedures approved by the Board of Trustees. As of October 31, 2020, the fair value of these securities was $33,859 (thousands) and amounted to 11.5% of net assets.

(b)  All or a portion of this security is on loan.

(c)  Variable or Floating-Rate Security. Rate disclosed is as of October 31, 2020.

(d)  Continuously callable with 30 days' notice.

(e)  Continuously callable with 15 days' notice.

(f)  Security is perpetual and has no final maturity date but may be subject to calls at various dates in the future.

(g)  Non-income producing security.

(h)  Rate disclosed is the daily yield on October 31, 2020.

bps — Basis points

LIBOR — London InterBank Offered Rate

LIBOR03M — 3 Month US Dollar LIBOR, rate disclosed as of October 31, 2020, based on the last reset date of the security

LLC — Limited Liability Company

PLC — Public Limited Company

See notes to financial statements.


39



Victory Portfolios

  Statements of Assets and Liabilities
October 31, 2020
 

(Amounts in Thousands, Except Per Share Amounts)

    Victory
Diversified
Stock Fund
  Victory
NewBridge
Large Cap
Growth Fund
  Victory
Special
Value Fund
 

Assets:

 
Investments, at value (Cost $207,385, $8,094 and
$33,143)
 

$

266,507

(a)

 

$

17,172

(b)

 

$

42,618

   

Cash and cash equivalents

   

2,259

     

111

     

415

   

Receivables:

 

Interest and dividends

   

204

     

1

     

35

   

Capital shares issued

   

6

     

(c)

   

28

   

Investments sold

   

5,368

     

121

     

948

   

From Adviser

   

5

     

8

     

8

   

Prepaid expenses

   

14

     

4

     

26

   

Total Assets

   

274,363

     

17,417

     

44,078

   

Liabilities:

 

Payables:

 

Collateral received on loaned securities

   

13,952

     

447

     

   

Investments purchased

   

5,197

     

62

     

849

   

Capital shares redeemed

   

359

     

20

     

271

   

Accrued expenses and other payables:

 

Investment advisory fees

   

149

     

12

     

30

   

Administration fees

   

14

     

1

     

2

   

Custodian fees

   

2

     

(c)

   

1

   

Transfer agent fees

   

29

     

3

     

(c)

 

Compliance fees

   

(c)

   

(c)

   

(c)

 

Trustees' fees

   

(c)

   

(c)

   

(c)

 
12b-1 fees    

32

     

1

     

7

   

Other accrued expenses

   

23

     

9

     

11

   

Total Liabilities

   

19,757

     

555

     

1,171

   

Net Assets:

 

Capital

   

190,171

     

5,716

     

32,145

   

Total accumulated earnings/(loss)

   

64,435

     

11,146

     

10,762

   

Net Assets

 

$

254,606

   

$

16,862

   

$

42,907

   

Net Assets

 

Class A Shares

 

$

184,217

   

$

7,757

   

$

24,302

   

Class C Shares

   

3,046

     

1,190

     

863

   

Class I Shares

   

21,071

     

6,171

     

3,283

   

Class R Shares

   

39,432

     

     

13,875

   

Class R6 Shares

   

3,103

     

     

   

Class Y Shares

   

3,737

     

1,744

     

584

   

Total

 

$

254,606

   

$

16,862

   

$

42,907

   
Shares (unlimited number of shares authorized with
a par value of $0.001 per share):
 

Class A Shares

   

10,579

     

1,230

     

927

   

Class C Shares

   

190

     

603

     

38

   

Class I Shares

   

1,213

     

859

     

123

   

Class R Shares

   

2,318

     

     

557

   

Class R6 Shares

   

179

     

     

   

Class Y Shares

   

215

     

257

     

22

   

Total

   

14,694

     

2,949

     

1,667

   

(continues on next page)

See notes to financial statements.


40



Victory Portfolios

  Statements of Assets and Liabilities
October 31, 2020
 

(Amounts in Thousands, Except Per Share Amounts)  (continued)

    Victory
Diversified
Stock Fund
  Victory
NewBridge
Large Cap
Growth Fund
  Victory
Special
Value Fund
 
Net asset value, offering (except Class A Shares) and
redemption price per share: (d)
 

Class A Shares

 

$

17.41

   

$

6.31

   

$

26.23

   

Class C Shares (e)

   

16.05

     

1.97

     

22.72

   

Class I Shares

   

17.37

     

7.18

     

26.59

   

Class R Shares

   

17.01

     

     

24.93

   

Class R6 Shares

   

17.38

     

     

   

Class Y Shares

   

17.41

     

6.79

     

26.44

   

Maximum Sales Charge — Class A Shares

   

5.75

%

   

5.75

%

   

5.75

%

 
Maximum offering price
(100%/(100%-maximum sales charge) of net asset
value adjusted to the nearest cent) per share —
Class A Shares
 

$

18.47

   

$

6.69

   

$

27.83

   

(a)  Includes $13,419 of securities on loan.

(b)  Includes $402 of securities on loan.

(c)  Rounds to less than $1 thousand.

(d)  Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.

(e)  Redemption price per share varies by the length of time shares are held.

See notes to financial statements.


41



Victory Portfolios

  Statements of Assets and Liabilities
October 31, 2020
 

(Amounts in Thousands, Except Per Share Amounts)

    Victory
Strategic
Allocation
Fund
  Victory
INCORE
Fund for
Income
  Victory
INCORE
Investment
Grade
Convertible
Fund
 

Assets:

 
Affiliated Investments, at value (Cost $23,254,
$and $—)
 

$

24,434

   

$

   

$

   
Unaffiliated Investments, at value (Cost $—,
$1,017,680 and $279,356)
   

     

1,028,926

     

304,323

(a)

 

Cash and cash equivalents

   

     

     

2,233

   

Receivables:

 

Interest and dividends

   

(b)

   

12,984

     

1,043

   

Capital shares issued

   

134

     

1,375

     

131

   

Investments sold

   

147

     

     

   

From Adviser

   

17

     

51

     

   

Prepaid expenses

   

23

     

57

     

44

   

Total Assets

   

24,755

     

1,043,393

     

307,774

   

Liabilities:

 

Payables:

 

Collateral received on loaned securities

   

     

     

13,643

   

Payable to custodian

   

67

     

     

   

Capital shares redeemed

   

34

     

755

     

347

   

Accrued expenses and other payables:

 

Investment advisory fees

   

2

     

410

     

191

   

Administration fees

   

1

     

56

     

16

   

Custodian fees

   

(b)

   

9

     

2

   

Transfer agent fees

   

1

     

135

     

54

   

Compliance fees

   

(b)

   

1

     

(b)

 

Trustees' fees

   

(b)

   

2

     

1

   
12b-1 fees    

3

     

30

     

2

   

Other accrued expenses

   

9

     

95

     

24

   

Total Liabilities

   

117

     

1,493

     

14,280

   

Net Assets:

 

Capital

   

23,783

     

1,366,312

     

262,657

   

Total accumulated earnings/(loss)

   

855

     

(324,412

)

   

30,837

   

Net Assets

 

$

24,638

   

$

1,041,900

   

$

293,494

   

Net Assets

 

Class A Shares

 

$

14,364

   

$

151,236

   

$

16,571

   

Class C Shares

   

2,009

     

20,801

     

   

Class I Shares

   

7,006

     

590,749

     

276,923

   

Class R Shares

   

1,259

     

43,684

     

   

Class R6 Shares

   

     

49,009

     

   

Class Y Shares

   

     

186,421

     

   

Total

 

$

24,638

   

$

1,041,900

   

$

293,494

   

(continues on next page)

See notes to financial statements.


42



Victory Portfolios

  Statements of Assets and Liabilities
October 31, 2020
 

(Amounts in Thousands, Except Per Share Amounts)  (continued)

    Victory
Strategic
Allocation
Fund
  Victory
INCORE
Fund for
Income
  Victory
INCORE
Investment
Grade
Convertible
Fund
 
Shares (unlimited number of shares authorized with
a par value of $0.001 per share):
 

Class A Shares

   

871

     

18,010

     

957

   

Class C Shares

   

124

     

2,502

     

   

Class I Shares

   

423

     

70,383

     

15,992

   

Class R Shares

   

77

     

5,198

     

   

Class R6 Shares

   

     

5,846

     

   

Class Y Shares

   

     

22,201

     

   

Total

   

1,495

     

124,140

     

16,949

   
Net asset value, offering (except Class A Shares)
and redemption price per share: (c)
 

Class A Shares

 

$

16.48

   

$

8.40

   

$

17.31

   

Class C Shares (d)

   

16.19

     

8.31

     

   

Class I Shares

   

16.57

     

8.39

     

17.32

   

Class R Shares

   

16.44

     

8.40

     

   

Class R6 Shares

   

     

8.38

     

   

Class Y Shares