485BPOS 1 a15-2624_1485bpos.htm POST-EFFECTIVE AMENDMENT FILED PURSUANT TO SECURITIES ACT RULE 485(B)

 

As filed with the Securities and Exchange Commission on February 26, 2015 

 

File No. 33-8982

ICA No. 811-4852

 

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form N-1A

 

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

x

 

 

Pre-Effective Amendment No.

o

 

 

Post-Effective Amendment No. 123

x

 

 

And

 

 

 

 

 

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

x

 

 

Amendment No. 124

 

 

The Victory Portfolios

(Exact name of Registrant as Specified in Trust Instrument)

 

3435 Stelzer Road

Columbus, Ohio 43219

(Address of Principal Executive Office)

 

(800) 539-3863

(Area Code and Telephone Number)

 

Copy to:

 

Charles Booth

CITI Fund Services Ohio, Inc.

3435 Stelzer Road

Columbus, Ohio 43219

 

Christopher K. Dyer

The Victory Portfolios

4900 Tiedeman Road, 4th Floor

Brooklyn, Ohio 44144

 

Jay G. Baris

Morrison & Foerster LLP

250 West 55th Street

New York, New York 10019

(Name and Address of Agent for

Service)

 

 

 

 

 

Approximate Date of Proposed Public Offering: As soon as practicable after this registration statement becomes effective.

 

It is proposed that this filing will become effective:

 

o Immediately upon filing pursuant to paragraph (b) 

 

x on February 27, 2015 pursuant to paragraph (b)

 

o 60 days after filing pursuant to paragraph (a)(1)

 

o on (date) pursuant to paragraph (a)(1)

 

 

 

o 75 days after filing pursuant to paragraph (a)(2)

 

o on (date) pursuant to paragraph (a)(2) of rule 485.

 

If appropriate, check the following box:

 

o this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

 

 

 



  March 1, 2015

Prospectus

Victory Fund for Income

Class A   IPFIX

Class C   VFFCX

Class I   VFFIX

Class R   GGIFX

Class R6  VFFRX

Class Y   VFFYX

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Funds' securities or determined whether this Prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

VictoryFunds.com
800-539-FUND

(800-539-3863)




The Victory
Portfolios

Table of Contents

Fund Summary

 

Investment Objective

   

1

   

Fees and Expenses

    1

 

Principal Investment Strategy

    3

 

Principal Risks

    3

 

Investment Performance

    4

 

Management of the Fund

    5

 

Purchase and Sale of Fund Shares

    6

 

Tax Information

    6

 
Payments to Broker-Dealers and Other
Financial Intermediaries
    6    

Additional Fund Information

   

7

   

Investments

   

8

   

Risk Factors

   

9

   

Investing with Victory

   

11

   

Organization and Management of the Fund

   

12

   

Share Price

   

13

   

Choosing a Share Class

   

14

   

How to Buy Shares

   

20

   

How to Exchange Shares

   

24

   

How to Sell Shares

   

26

   

Distribution and Service Plans

   

28

   

Dividends, Distributions, and Taxes

   

29

   

Important Fund Policies

   

31

   

Other Service Providers

   

34

   

Financial Highlights

   

35

   

Fund for Income

   

36

   



Fund for Income Summary

Investment Objective

The Fund seeks to provide a high level of current income consistent with preservation of shareholders' capital.

Fund Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in the Victory Funds. More information about these and other discounts is available from your Investment Professional and in Investing with Victory on page 11 of the Fund's Prospectus and in Additional Purchase, Exchange and Redemption Information on page 42 of the Fund's Statement of Additional Information (SAI).

Shareholder Fees
(paid directly from your investment)
 

Class A

 

Class C

 

Class I

 

Class R

 

Class R61

 

Class Y

 
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price)
   

2.00

%

   

NONE

     

NONE

     

NONE

     

NONE

     

NONE

   
Maximum Deferred Sales Charge (load)
(as a percentage of the lower of purchase or sale price)
   

NONE2

     

1.00

%3

   

NONE

     

NONE

     

NONE

     

NONE

   
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
 

Management Fees

   

0.46

%

   

0.46

%

   

0.46

%

   

0.46

%

   

0.46

%

   

0.46

%

 

Distribution (12b-1) Fees

   

0.25

%

   

1.00

%

   

0.00

%

   

0.25

%

   

0.00

%

   

0.00

%

 

Other Expenses

   

0.25

%

   

0.26

%

   

0.21

%

   

0.25

%

   

0.55

%

   

0.36

%

 

Total Annual Fund Operating Expenses

   

0.96

%

   

1.72

%

   

0.67

%

   

0.96

%

   

1.01

%

   

0.82

%

 

Fee Waiver/Expense Reimbursement

   

0.00

%

   

0.00

%

   

0.00

%

   

0.00

%

   

(0.38

)%

   

(0.11

)%

 
Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement
   

0.96

%

   

1.72

%

   

0.67

%

   

0.96

%

   

0.63

%4

   

0.71

%4

 

1Expenses for Class R6 shares are estimated for the current fiscal year because Class R6 shares are new as of the date of this prospectus.

2A contingent deferred sales charge of 0.75% may be imposed on Class A shares with respect to purchases of $1,000,000 or more that are redeemed within 12 months of purchase. For additional information, see 'Choosing a Share Class' beginning on page 14 of the Fund's Prospectus.

3The Class C contingent deferred sales charge applies only to shares sold within 12 months of purchase.

4The Adviser has contractually agreed to waive its management fee and/or expenses so that the total annual operating expenses (excluding certain items such as interest taxes and brokerage commissions) of Class R6 and Class Y shares do not exceed 0.63% and 0.71% until at least February 28, 2018 and February 28, 2017, respectively. The Adviser is permitted to recoup advisory fees waived and expenses reimbursed for up to three years after the fiscal year in which the waiver or reimbursement took place, subject to any operating expense limits in effect at the time of the original waiver or expense reimbursement and at the time of recoupment or reimbursement.


1



Fund for Income Summary (continued)

Fund Fees and Expenses (continued)

Example:

The following example is designed to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods shown and then sell all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

   

1 Year

 

3 Years

 

5 Years

 

10 Years

 

Class A

 

$

296

   

$

500

   

$

720

   

$

1,354

   
Class C
(If you sell your shares at the end of the period.)
 

$

275

   

$

542

   

$

933

   

$

2,030

   

Class I

 

$

68

   

$

214

   

$

373

   

$

835

   

Class R

 

$

98

   

$

306

   

$

531

   

$

1,178

   

Class R6

 

$

64

   

$

202

   

$

441

   

$

1,126

   

Class Y

 

$

73

   

$

239

   

$

433

   

$

993

   

The following example makes the same assumptions as the example above, except that it assumes you do not sell your shares at the end of the period.

   

1 Year

 

3 Years

 

5 Years

 

10 Years

 
Class C
(If you do not sell your shares at the end of the period.)
 

$

175

   

$

542

   

$

933

   

$

2,030

   

Portfolio Turnover:

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 32% of the average value of its portfolio.


2



Fund for Income Summary (continued)

Principal Investment Strategy

The Fund pursues its investment objective by investing primarily in securities issued by the U.S. government and its agencies or instrumentalities.

Under normal circumstances, the Fund primarily invests in:

n  Mortgage-backed obligations and collateralized mortgage obligations (CMOs) issued by the Government National Mortgage Association (GNMA), with an average effective maturity ranging from 2 to 10 years.

n  Obligations issued or guaranteed by the U.S. government or by its agencies or instrumentalities with a dollar-weighted average maturity normally less than 5 years.

The goal of the Fund's strategy is to provide high, reliable income by investing in securities backed 100% by the full faith and credit of the U.S. government. Portfolio construction consists of three layers: top-down, macro-economic driven, mid-level, relative value driven and bottom up, borrower characteristics driven. The greatest emphasis will generally be on the bottom up factor, but the relative weightings of the three layers can and will vary over time, reflective of the broad economic environment. The Adviser's sell discipline is driven by actual borrower prepayments, where bonds that exhibit either erratic or consistently fast prepayment speeds are sold first.

The Fund may purchase or sell securities on a when-issued, to-be-announced or delayed delivery basis.

There is no limitation on the maturity of any specific security the Fund may purchase, and the Fund may sell any security before it matures.

Principal Risks

The Fund's investments are subject to the following principal risks:

n  The market values of the securities acquired by the Fund may decline.

n  The portfolio manager may not execute the Fund's principal investment strategy effectively.

n  Interest rates may rise or the rate of inflation may increase.

n  The Fund may reinvest at lower interest rates amounts that the Fund receives as interest, sale proceeds or amounts received as a result of prepayment of mortgage-related securities.

n  The average life of a mortgage-related security may be shortened or lengthened.

n  A U.S. government agency or instrumentality may default on its obligation and the U.S. government may not provide support.

n  The market value of the security issued on a when-issued, to-be-announced or delayed-delivery basis may change before the delivery date, which may adversely impact the Fund's NAV. There is also the risk that a party fails to deliver the security on time or at all.

You may lose money by investing in the Fund. The likelihood of loss may be greater if you invest for a shorter period of time.

By itself, the Fund does not constitute a complete investment plan and should be considered a long-term investment by investors who can afford to weather changes in the value of their investment.


3



Fund for Income Summary (continued)

Investment Performance

The bar chart and table that follow indicate the risks of investing in the Fund. We assume reinvestment of dividends and distributions.

The table shows how the average annual total returns for Class A, Class C, Class I, Class R and Class Y shares of the Fund, including applicable maximum sales charges, compare to those of the Barclays Capital 1-5 Year U.S. Gov't Bond Index. We calculate after-tax returns using the historical highest individual federal marginal income tax rates and we do not reflect the effect of state and local taxes. Actual after-tax returns depend on your tax situation and may differ from those shown. After-tax returns shown are not relevant if you own your Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for only one class and after-tax returns for other classes will vary. The Fund's past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future. Updated performance information is available on the Fund's website at VictoryFunds.com. Past performance information is not presented for Class R6 shares as the share class does not yet have a full calendar year of performance history.

Calendar Year Returns for Class R Shares

Highest/lowest quarterly results during this time period were:

Highest  2.81% (quarter ended March 31, 2008)

Lowest  -1.53% (quarter ended June 30, 2013)


4



Fund for Income Summary (continued)

Average Annual Total Returns
(For the Periods ended
December 31, 2014)
 

1 Year
  5 Years
(or Life
of Class)
 

10 Years
 

CLASS R

 

Before Taxes

   

2.34

%

   

2.72

%

   

3.63

%

 

After Taxes on Distributions

   

0.26

%

   

0.72

%

   

1.54

%

 

After Taxes on Distributions and Sale of Fund Shares

   

1.32

%

   

1.32

%

   

2.00

%

 

CLASS A

 

Before Taxes

   

0.32

%

   

2.33

%

   

3.45

%

 

CLASS C

 

Before Taxes

   

0.65

%

   

1.94

%

   

2.84

%

 

CLASS I

 

Before Taxes

   

2.64

%

   

2.01

%1

   

N/A

   

CLASS Y

 

Before Taxes

   

2.59

%

   

0.55

%1

   

N/A

   

INDEX

 
Barclays Capital 1-5 Year U.S. Gov't Bond Index
Index returns reflect no deduction for fees, expenses or taxes.
   

1.18

%

   

1.75

%

   

3.12

%

 

1Inception dates of Class I and Class Y shares are March 1, 2011 and January 29, 2013, respectively.

Management of the Fund:

Investment Adviser

Victory Capital Management Inc. serves as the Fund's investment adviser.

Portfolio Manager

Heidi L. Adelman is Chief Investment Officer (Mortgage Investments) of the Adviser, and is the Lead Portfolio Manager of the Fund. She has been a Portfolio Manager of the Fund since 2006.

Harriet R. Uhlir is a Portfolio Manager with the Adviser. She has been a Portfolio Manager of the Fund since 2013.


5



Fund for Income Summary (continued)

Purchase and Sale of Fund Shares

The minimum initial purchase is $2,500 for regular accounts and $1,000 for IRAs, gifts to minors, and purchases through an automatic investment plan. The minimum subsequent investment is $250. We may reduce or waive the minimums in some cases.

You may redeem your shares on any day the Fund is open for business. Redemption requests may be made by telephone (with prior appropriate approval) or by mail.

When you buy and redeem shares, the Fund will price your transaction at the next-determined net asset value (NAV) after the Fund receives your request in good order.

Tax Information

The Fund's distributions are taxable whether you receive them in cash, additional shares of the Fund or you reinvest them in shares of another Victory Fund, and will be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Taxes may be imposed on withdrawals from tax-deferred arrangements.

Payments to Broker-Dealers and Other Financial Intermediaries

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services for investments in all classes except Class R6. These payments may create a conflict of interest by influencing the financial intermediary and its salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.


6




Additional Fund Information

The Fund for Income (the "Fund") is a mutual fund and is part of The Victory Portfolios (the "Trust").

The Trust is comprised of different funds, each having distinct investment management objectives, strategies, risks and policies.

Together, the funds of the Trust are referred to in this Prospectus as the Victory Funds.

The following section describes additional information about the principal investment strategy that the Fund will use under normal market conditions to pursue its investment objective. Keep in mind that for cash management or for temporary defensive purposes in response to market conditions, the Fund may hold all or a portion of its assets in cash or short-term money market instruments. This may reduce the benefit from any upswing in the market and may cause the Fund to fail to meet its investment objective.

Investment Strategy of the Fund for Income

The goal of the Fund's strategy is to provide high, reliable income by investing in securities backed 100% by the full faith and credit of the U.S. government. Portfolio construction consists of three layers: top-down, macro-economic driven, mid-level, relative value driven and bottom up, borrower characteristics driven. The greatest emphasis will generally be on the bottom up factor, but the relative weightings of the three layers can and will vary over time, reflective of the broad economic environment.

Under normal circumstances, the Fund primarily invests in:

n  Mortgage-backed obligations and collateralized mortgage obligations (CMOs) issued by the Government National Mortgage Association (GNMA), with an average effective maturity ranging from 2 to 10 years.

n  Obligations issued or guaranteed by the U.S. government or by its agencies or instrumentalities with a dollar-weighted average maturity normally less than 5 years.

The Fund's average effective maturity is based on the value of a Fund's investments in securities with different maturity dates. This measures the sensitivity of the Fund to changes in interest rates. The value of a long-term debt security is more sensitive to interest rate changes than the value of a short-term security.

The Adviser's sell discipline is driven by actual borrower prepayments, where bonds that exhibit either erratic or consistently fast prepayment speeds are sold first.

There is no limitation on the maturity of any specific security the Fund may purchase, and the Fund may sell any security before it matures.

The Fund may invest in securities issued by certain U.S. government instrumentalities which are supported only by the credit of the federal instrumentality.

The Fund measurers its performance against the Barclays Capital 1-to-5 Year U.S. Government Bond Index. The 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. It is not possible to invest directly in an index.

Victory Capital Management Inc., which we refer to as the Adviser throughout this Prospectus, manages the Funds.

If you would like to receive additional copies of any materials, please call the Victory Funds at

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

or please visit www.VictoryFunds.com.


7



Investments

The following describes the types of securities the Fund may purchase under normal market conditions to achieve its principal investment strategy. A Fund will not necessarily buy all of the securities listed below.

U.S. Government Securities*

Notes and bonds issued or guaranteed by the U.S. government, its agencies or instrumentalities. Some are direct obligations of the U.S. Treasury; others are obligations only of the U.S. agency or instrumentality. There is no guarantee that the U.S. government will provide support to U.S. agencies or instrumentalities if they are unable to meet their obligations.

U.S. Government Instrumentalities*

Securities issued by U.S. government instrumentalities such as: the Student Loan Marketing Association ("SLMA" or Sallie Mae), The Federal Farm Credit Bank ("FFCB"), and Federal Home Loan Banks. Certain instrumentalities are "wholly-owned Government corporations," such as the Tennessee Valley Authority ("TVA").

Mortgage-Backed Securities

Instruments secured by a mortgage or pools of mortgages.

When-Issued, To-Be-Announced ("TBA") and Delayed-Delivery Securities

A security that is purchased or sold for delivery at a later time. In a TBA transaction, a seller generally agrees to deliver a mortgage-backed security meeting certain criteria at a future date.

The Adviser may use several types of investments in furtherance of the Fund's overall investment objective. The following describes the types of securities that may be purchased but the Adviser does not consider them to be a part of the Fund's principal investment strategy. Additional securities that the Fund may purchase are included in the Fund's SAI.

Investment Companies

The Fund may invest in securities of other investment companies, including unit investment trusts (UITs) and exchange traded funds (ETFs), if those companies invest in securities consistent with the Fund's investment objective and policies. ETFs are shares of investment companies that are bought and sold on a securities exchange.

*  Obligations of entities such as the GNMA are backed by the full faith and credit of the U.S. Treasury. Others, such as the FNMA, SLMA, FHLB, FHLMC, FMAC and TVA are supported by the right of the issuer to borrow from the U.S. Treasury. FFCB is supported only by the credit of the federal instrumentality. See the SAI for more information about investments in obligations of U.S. government instrumentalities and wholly-owned government corporations.


8



Risk Factors

The following describes the principal risks that you may assume as an investor in the Fund.

General risks

n  Market risk is the risk that the market value of a security may decline in response to developments affecting individual companies and/or general economic conditions. Market risk may affect a single issuer, an industry, a sector of the economy, or the entire market.

n  Manager risk is the risk that the Fund's portfolio manager may implement its investment strategy in a way that does not produce the intended result.

Debt security risks

n  Interest rate risk is the risk that the value of a security will decline if interest rates rise. When interest rates go up, the value of a debt security typically goes down. When interest rates go down, the value of a debt security typically goes up. Generally, the market values of securities with longer maturities are more sensitive to changes in interest rates. In addition, during periods of increased market volatility, the market values of fixed income securities may be more sensitive to changes in interest rates.

n  Inflation risk is the risk that inflation will erode the purchasing power of the cash flows generated by debt securities held by the Fund. Fixed-rate debt securities are more susceptible to this risk than floating-rate debt securities or equity securities that have a record of dividend growth.

n  Reinvestment risk is the risk that when interest rates are declining, the interest income and prepayments on a security the Fund receives will have to be reinvested at lower interest rates. Generally, interest rate risk and reinvestment risk tend to have offsetting effects, though not necessarily of the same magnitude.

n  Credit (or default) risk is the risk that the issuer of a debt security will be unable to make timely payments of interest or principal. Credit risk is measured by NRSROs such as Standard & Poor's (S&P), Fitch, Inc., and Moody's Investor Service (Moody's).

Mortgage-related risks

n  Prepayment risk is the risk that, because prepayments generally occur when interest rates are falling, the Fund may have to reinvest the proceeds from prepayments at lower interest rates. Interest rate levels and other factors may affect the frequency of mortgage prepayments, which in turn can affect the average life a pool of mortgage-related securities. In periods of rising interest rates, the prepayment rate tends to decrease, lengthening the average life of a pool of mortgage-related securities. In periods of falling interest rates, the prepayment rate tends to increase, shortening the average life of a pool of mortgage-related securities.

n  Extension risk is the risk that the rate of anticipated prepayments on principal may not occur, typically because of a rise in interest rates, and the expected maturity of the security will increase. During periods of rapidly rising interest rates, the effective average maturity of a security may be extended past what the Fund's portfolio manager anticipated that it would be. The market value of securities with longer maturities tends to be more volatile.

When-issued, TBA and delayed-delivery securities risk

n  When-issued, TBA and delayed-delivery securities risk is the risk that the market value of the security issued on a when-issued, TBA or delayed-delivery basis may change before the delivery date, which may adversely impact the Fund's NAV. There is also the risk that a party fails to deliver the security on time or at all.

By matching your investment objective with an acceptable level of risk, you can create your own customized investment plan.


9



Risk Factors (continued)

The Adviser may use several types of investments in furtherance of the Fund's overall investment objective. The following risks are those that the Adviser does not consider to be principal risks of the Fund. Additional risks are included in the Fund's SAI.

Investment company risk

n  Investment company risk is the risk that the Fund's ability to achieve its investment objective may be directly related to the ability of any underlying investment companies (including ETFs) held by the Fund to meet their investment objectives. In addition, shareholders of the Fund will indirectly bear the fees and expenses of the underlying investment companies. Lack of liquidity in an ETF could result in an ETF being more volatile than the underlying portfolio of securities.

An investment in the Fund is not a complete investment program.


10



INVESTING WITH VICTORY

If you are looking for a convenient way to open an account or to add money to an existing account, we can help. The sections that follow will serve as a guide to your investments with the Victory Funds. Choosing a Share Class will help you decide whether it would be more to your advantage to buy Class A, Class C, Class I, Class R, Class R6 or Class Y shares of the Fund. Class I, Class R, Class R6 and Class Y shares are available for purchase only by eligible shareholders. The following sections describe how to open an account, how to access information about your account, and how to buy, exchange, and sell shares of the Fund. Note, this information will vary if you invest through a third party such as a brokerage firm and will be dependent on that firm's policies and practices. Consult your Investment Professional for specific details.

We want to make it simple for you to do business with us. If you have questions about any of this information, please call your Investment Professional or one of our customer service representatives at 800-539-FUND. They will be happy to assist you.

All you need to do to get started is to fill out an application.

Important information about sales load breakpoints

The Fund charges a front-end sales load on purchases of Class A shares. The sales charge is lower for larger investments. The investment levels required to obtain a reduced sales load are commonly referred to as "breakpoints."

In order to obtain a breakpoint discount, you should inform your Investment Professional at the time you purchase shares of the existence of the other Victory accounts or purchases that are eligible to be linked for the purpose of calculating the initial sales charge. The Fund or your Investment Professional may ask you for records or other information about other Victory Funds held in your accounts and linked accounts, including accounts opened with a different Investment Professional.

You can find additional information regarding sales charges and their reductions on the Fund's website, VictoryFunds.com, by clicking on Victory Portfolios' Mutual Fund Pricing Policies. Information regarding sales charges is also included in the Fund's Statement of Additional Information.


11



Organization and

Management of the Fund

The Trust's Board of Trustees has the overall responsibility for overseeing the management of the Fund.

The Investment Adviser

The Trust has an Advisory Agreement with the Adviser. The Adviser is a New York corporation registered as an investment adviser with the SEC. The Adviser oversees the operations of the Fund according to investment policies and procedures adopted by the Board of Trustees. As of December 31, 2014, the Adviser managed or advised assets totaling in excess of $35.9 billion for individual and institutional clients. The Adviser's address is 4900 Tiedeman Road, 4th Floor, Brooklyn, Ohio 44144.

For the fiscal year ended October 31, 2014, the Adviser was paid advisory fees, before waivers, at an annual rate equal to 0.46% of the average daily net assets of the Fund. A discussion of the Board's most recent considerations in approving the Advisory Agreement is included in the Fund's annual report for the period ended October 31, 2013.

Portfolio Management

Heidi L. Adelman is the Lead Portfolio Manager and Harriet R. Uhlir is the Co-Portfolio Manager of the Fund for Income.

Ms. Adelman is a Chief Investment Officer (Mortgage Investments) of the Adviser and has been with the Adviser or an affiliate since 1995.

Ms. Uhlir is a Portfolio Manager with the Adviser and has been with the Adviser or an affiliate since 2001.

The Portfolio Managers listed for the Fund are primarily responsible for the day-to-day management of the Fund's portfolio.

The Fund's SAI provides additional information about the portfolio managers' method of compensation, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Fund.


12



Share Price

The Fund calculates its share price, called its NAV, each business day at the close of regular trading on the New York Stock Exchange ("NYSE"), which is normally 4:00 p.m. Eastern time, but may be earlier or later on some days. You may buy, exchange, and sell your shares on any business day at a price that is based on the NAV that is calculated after you place your order and it is accepted.

A business day is a day on which the NYSE and the bond market are open. If the Securities Industry and Financial Markets Association ("SIFMA") recommends that government securities dealers close before the close of regular trading on the NYSE (the Alternative Closing Time), the Fund reserves the right to refuse any purchase or redemption order received after the Alternative Closing Time. If the Fund closes at the Alternative Closing Time, its NAV will be calculated as of the Alternative Closing Time. You may not be able to buy or sell shares on Columbus Day and Veterans Day, holidays when the Federal Reserve Bank of Cleveland is closed, but the NYSE and other financial markets are open.

The Fund prices its investments based on market value when market quotations are readily available. When these quotations are not readily available, the Fund will price its investments at fair value according to procedures approved by the Board of Trustees. The Fund will fair value a security when:

n  Trading in the security has been halted;

n  The market quotation for the security is clearly erroneous due to a clerical error;

n  The security's liquidity decreases such that, in the Adviser's opinion, the market quotation has become stale; or

n  An event occurs after the close of the trading market (but before the Fund's NAV is calculated) that, in the Adviser's opinion, materially affects the value of the security.

The use of fair value pricing may minimize arbitrage opportunities that attempt to exploit the differences between a security's market quotation and its fair value. The use of fair value pricing may not, however, always reflect a security's actual market value in light of subsequent relevant information, and the security's opening price on the next trading day may be different from the fair value price assigned to the security.

Each class of shares of the Fund calculates its NAV by adding up the total value of the investments and other assets of that class, subtracting its liabilities, and then dividing that figure by the number of outstanding shares of the class. You may be able to find the Fund's NAV each day in The Wall Street Journal and other newspapers.

Newspapers do not normally publish fund information until the Fund reaches a specific number of shareholders or level of assets. You may also find the Fund's NAV by calling 800-539-3863 or by visiting the Fund's website at VictoryFunds.com.

The daily NAV is useful to you as a shareholder because the NAV,
multiplied by the number of Fund shares you own, gives you the value of your investment.


13



Choosing a Share Class

CLASS A

n  Front-end sales charge, as described in this section. There are several ways to reduce or eliminate this charge.

n  A deferred sales charge (CDSC) may be imposed if you sell your shares within twelve months of their purchase.

n  Class A shares also pay ongoing distribution and/or service (12b-1) fees.

n  Lower annual expenses than Class C or Class R shares.

CLASS C

n  No front-end sales charge. All your money goes to work for you right away.

n  A deferred sales charge (CDSC) if you sell your shares within twelve months of their purchase.

n  Class C shares also pay ongoing distribution and/or service (12b-1) fees.

n  Higher annual expenses than all other classes of shares.

CLASS I

n  No front-end sales charge or CDSC. All your money goes to work for you right away.

n  Class I shares do not pay any ongoing distribution and/or service (12b-1) fees.

n  Class I shares are only available to certain investors.

n  Lower annual expenses than all other classes of shares except Class R6 shares.

CLASS R

n  No front-end sales charge or CDSC. All your money goes to work for you right away.

n  Class R shares pay ongoing distribution and/or service (12b-1) fees.

n  Class R shares are only available to certain investors.

n  Higher annual expenses than all classes except Class C shares.

CLASS R6

n  No front-end sales charge or CDSC. All your money goes to work for you right away.

n  Class R6 shares do not pay any ongoing distribution and/or service (12b-1) fees.

n  Class R6 shares are only available to certain investors.

n  Lower annual expenses than all other classes of shares.


14



Choosing a Share Class (continued)

CLASS Y

n  No front-end sales charge or CDSC. All your money goes to work for you right away.

n  Class Y shares do not pay any ongoing distribution and/or service (12b-1) fees.

n  Class Y shares are only available to certain investors.

n  Lower annual expenses than all classes except Class I or Class R6 shares.

Share Classes

The Fund offers Class A, Class C, Class I, Class R, Class R6 and Class Y shares. Each share class represents investments in the same portfolio of securities, but each class has its own sales charge and expense structure, allowing you and your Investment Professional to choose the class that best suits your investment needs. When you purchase shares of the Fund, you must choose a share class.

Deciding which share class best suits your situation depends on a number of factors that you should discuss with your Investment Professional, including: how long you expect to hold your investment, how much you intend to invest, and the total expenses associated with each share class.

Also, not all Victory Funds offer all classes of shares, and some classes of shares are available for purchase only by eligible shareholders.

The Fund currently offer only the classes of shares described in this Prospectus. At some future date, the Fund may offer additional classes of shares.

The Fund reserves the right, without notice, to change the eligibility requirements of its share classes, including the types of clients who are eligible to purchase each share class. The Fund may also waive any applicable eligibility requirements or investment minimums at its discretion.

The Fund or any class may be terminated at any time for failure to achieve an economical level of assets or for other reasons.

Calculation of Sales Charges for Class A Shares

Class A shares are sold at their public offering price, which is the net asset value ("NAV") plus the applicable initial sales charge. The sales charge investment decreases as the amount that you invest increases. The current sales charge rates are listed below.

Your Investment in the Fund

  Sales Charge
as a % of
Offering Price
  Sales Charge
as a % of
Your Investment
 

Up to $49,999

   

2.00

%

   

2.04

%

 
$50,000 up to $99,999    

1.75

%

   

1.78

%

 
$100,000 up to $249,999    

1.50

%

   

1.52

%

 
$250,000 up to $499,999    

1.25

%

   

1.27

%

 
$500,000 up to $999,999    

1.00

%

   

1.01

%

 
$1,000,000 and above*    

0.00

%

   

0.00

%

 

*A contingent deferred sales charge ("CDSC") of 0.75% may be imposed on certain redemptions of Class A shares purchased without an initial sales charge if any of those shares are redeemed in the first year after purchase. This charge will be based on either the cost of the shares or net asset value at the time of redemption, whichever is lower. No CDSC is imposed on shares representing reinvested distributions. You may be eligible for a reduction or waiver of this CDSC under certain circumstances. See the SAI for details. The Fund makes available, free of charge, information relating to sales charges on their website at VictoryFunds.com.

An Investment Professional is an investment consultant, salesperson, financial planner, investment adviser, or trust officer who provides you with investment information. Your Investment Professional also can help you decide which share class is best for you. Investment Professionals and other intermediaries may charge fees for their services.

For historical expense information, see the "Financial Highlights" at the end of this Prospectus.


15



Choosing a Share Class (continued)

There are several ways you can combine multiple purchases of Class A shares of the Victory Funds to take advantage of reduced sales charges and, in some cases, eliminate the sales charges.

Sales Charge Reductions and Waivers for Class A Shares

In order to obtain a Class A sales charge reduction or waiver, you must provide your Investment Professional, financial intermediary or the Fund's transfer agent, at the time of purchase, current information regarding shares of any Victory Funds held in other accounts. Such information must include account statements or other records (including written representations from the intermediary holding the shares) that indicate that a sales charge was paid regarding shares of the Victory Funds held in:

(i) all accounts (e.g., retirement accounts) with the Victory Funds and your financial intermediary;

(ii) accounts with other financial intermediaries; and (iii) accounts in the name of immediate family household members (spouse or domestic partner and children under 21).

You may reduce or eliminate the sales charges in the following cases:

1.  Purchases sufficient to reach a breakpoint (see Investing with Victory — Important information about sales load breakpoints).

2.  A Letter of Intent allows you to buy Class A shares of a Fund over a 13-month period and receive the same sales charge as if all shares had been purchased at one time. You must start with a minimum initial investment of at least 5% of the total amount you intend to purchase. A portion of the shares purchased under the nonbinding Letter of Intent will be held in escrow until the total investment has been completed. In the event the Letter of Intent is not completed, sufficient escrowed shares will be redeemed to pay any applicable front-end sales charges.

3.  Rights of Accumulation allow you to add the value of any Class A shares you already own (excluding shares sold without a sales charge) to the amount of your next Class A investment to determine if your additional investment will qualify for a reduced sales charge. The value of the Class A shares you already own will be calculated by using the greater of the current value or the original investment amount.

4.  The Combination Privilege allows you to combine the value of Class A shares you own in accounts of multiple Victory Funds (subject to limitations applicable to certain Victory Funds and excluding shares sold without a sales charge) and in accounts of household members of your immediate family (spouse or domestic partner and children under 21) to achieve a reduced sales charge on your added investment.

5.  The Reinstatement Privilege permits an investor, within 90 days of a redemption of Class A shares of a Fund, to reinvest all or part of the redemption proceeds in the Class A shares of any Victory Fund at the NAV next computed after receipt by the transfer agent of the reinvestment order. No service charge is currently imposed on reinvestment in shares of the Victory Funds.

6.  The Victory Funds will completely waive the sales charge for Class A shares in the following cases:

a.  Purchases of $1,000,000 or more.

b.  Purchases by:

i.  current and retired Fund trustees or officers;


16



Choosing a Share Class (continued)

ii.  directors, trustees, employees, and family members of employees of the Adviser or "Affiliated Providers;"* and

iii.  registered broker-dealers, financial intermediaries or their agents or affiliates who have agreements with Victory Capital Advisers, Inc., (the "Distributor"), if the shares are purchased for their own account, purchased for retirement plans of their employees or sold to registered representatives or full-time employees (or their immediate families), provided that such purchase is for one of the foregoing types of accounts.

c.  Purchases for trust or other advisory accounts established with a financial institution and fee-based investment products or accounts.

d.  Reinvestment of proceeds from a liquidation distribution of Class A shares of a Victory Fund held in a deferred compensation plan, agency, trust, or custody account.

e.  Purchases by retirement plans, including Section 401 and 457 plans sponsored by a Section 501(c)(3) organization and certain non-qualified deferred compensation arrangements that operate in a similar manner to qualified plans. If the Distributor pays a concession to the dealer of record, a CDSC of up to 0.75% will be charged to the shareholder if any of those shares are redeemed in the first year after purchase. This charge will be based on either the cost of the shares or net asset value at the time of redemption, whichever is lower. There will be no CDSC on reinvested distributions. You may be eligible for reduction or waiver of this CDSC under certain circumstances. See the SAI for details.

f.  Purchases by participants in the Victory Investment Program.

g.  Purchases by participants in no transaction fee programs offered by certain broker-dealers (sometimes referred to as "supermarkets").

h.  Purchases by financial intermediaries who have entered into an agreement with the Distributor to offer shares to self-directed investment brokerage accounts that may or may not charge a transaction fee to its customers.

i.  Investors that have an investment account with the Adviser.

You should inform the Fund or your broker or other financial intermediary at the time of purchase of the sales charge waiver category which you believe applies.

Calculation of Sales Charges for Class C Shares

You will pay a 1.00% CDSC on any Class C shares you sell within 12 months of purchase. The CDSC is based on the current value of the shares being sold or their net asset value when purchased, whichever is less. There is no CDSC imposed on shares you acquire by reinvesting your dividends or capital gains distributions. You may be eligible for reduction or waiver of this CDSC under certain circumstances. There is no CDSC when you exchange your shares for Class C shares of another Victory Fund; however, your exchange is subject to the same CDSC schedule that applied to your original purchase.

An investor may, within 90 days of a redemption of Class C shares, reinvest all or part of the redemption proceeds in the Class C shares of any Victory Fund at the NAV next computed after receipt by the transfer agent of the reinvestment order. Class C share proceeds reinstated do not result in a refund of any CDSC paid by the shareholder, but the reinstated shares will be treated as CDSC exempt upon reinstatement. The shareholder must ask the Distributor for such privilege at the time of reinvestment.

*Affiliated Providers are affiliates and subsidiaries of the Adviser, and any organization that provides services to the Trust.


17



Choosing a Share Class (continued)

To keep your CDSC as low as possible, each time you sell shares we will first sell shares in your account that are not subject to CDSC. If there are not enough of these to meet your sale, we will sell the shares in the order they were purchased.

Individual purchases of $1,000,000 or more will automatically be made in Class A shares of the Fund.

Eligibility Requirements to Purchase Class I Shares

Only Eligible Investors may purchase or exchange into Class I shares of the Fund. Eligible Investors include the following:

n  Institutional and individual retail investors with a minimum initial investment in Class I shares of $2,000,000 who purchase through certain broker-dealers or directly from the Fund's transfer agent;

n  Retirement plans, including Section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3) organization and certain non-qualified deferred compensation arrangements that operate in a similar manner to qualified plans;

n  Investors in select fee based programs;

n  Current and retired Fund trustees or officers;

n  Directors, trustees, employees, and family members of employees of the Adviser or "Affiliated Providers;"**

n  Purchases by participants in the Victory Investment Program; and

n  Brokers (and their sales representatives) where those brokers have agreements with the Distributor to sell shares of a Fund.

The Fund may allow a lower initial investment if, in the opinion of the Distributor, the investor has the adequate intent and availability of assets to reach a future level of investment of $2,000,000. The Fund reserves the right to change the criteria for Eligible Investors and the investment minimums.

Eligibility Requirements to Purchase Class R Shares

Class R shares may only be purchased by:

n  Retirement plans, including Section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3) organization and certain non-qualified deferred compensation arrangements that operate in a similar manner to qualified plans.

n  Fee-based investment products or accounts.

Eligibility Requirements to Purchase Class R6 Shares

Class R6 shares may only be purchased by:

n  Retirement plans, including Section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3) organization and certain non-qualified deferred compensation arrangements that operate in a similar manner to qualified plans.

Eligibility Requirements to Purchase Class Y Shares

Only Eligible Investors may purchase or exchange into Class Y shares of the Fund. Eligible Investors include the following:

n  Institutional and individual retail investors with a minimum investment in Class Y shares of $1,000,000 who purchase through certain broker-dealers or directly from the transfer agent.

**Affiliated Providers are affiliates and subsidiaries of the Adviser, and any organization that provides services to the Trust.


18



Choosing a Share Class (continued)

n  Clients of state-registered or federally-registered investment advisors (RIAs), where such RIAs trade through institutional trading platforms approved by the Fund who invest at least $2,500.

n  Pension, profit sharing, employee benefit and other similar plans and trusts that invest in the Fund.

n  Investors who purchase through select fee-based advisory programs with an approved financial intermediary. In fee-based advisory programs, a financial intermediary typically charges each investor a fee based upon the value of the account. Such transactions may be subject to additional rules or requirements of the applicable financial intermediary's program.

n  Purchases by:

i.  current and retired Victory Fund trustees or officers (including the former trustees and officers of the Munder Series Trust).

ii.  directors, trustees, employees, and family members of employees of the Adviser (including those from Munder Capital Management) or "Affiliated Providers".**

iii.  investment advisory clients of the Adviser.

iv.  investment advisors, consultants, broker-dealers and other financial intermediaries investing for their own accounts or for the accounts of their immediate family members.

**Affiliated Providers are affiliates and subsidiaries of the Adviser, and any organization that provides services to the Trust.


19




How to Buy Shares

Opening an account

If you would like to open an account, you will first need to complete an Account Application.

You can obtain an Account Application by calling Victory Funds Customer Service at 1-800-539-3863. You can also download an Account Application by visiting the Fund's website, VictoryFunds.com, and clicking on the Victory Funds Account Application link. Send the completed Account Application, along with a check made payable to the Victory Funds, to the following address:

The Victory Funds
P.O. Box 182593
Columbus, OH 43218-2593.

You can also obtain an Account Application by contacting your Investment Professional. When you invest through an Investment Professional, the procedures for buying, selling, and exchanging shares and the account features and policies may differ. In addition to any limitations described in this Prospectus, an Investment Professional or other intermediary may also place other limits on your ability to use the services of the Fund. Sometimes an Investment Professional will charge you for their services. This fee will be in addition to, and unrelated to, the fees and expenses charged by the Fund.

Mutual funds must obtain and verify information that identifies investors opening new accounts. If the Fund is unable to collect the required information, you may not be able to open your account. Additional details about the Fund's Customer Identification Program are available in the section "Important Fund Policies."

If you investment order is accepted by the Fund, an Investment Professional or other intermediary, it will be priced at the NAV next computed as described in the section entitled "Share Price."

If you participate in a retirement plan that offers one of the Victory Funds as an option, please consult your employer for information on how to purchase shares of the Victory Funds through the plan, including any restrictions or limitations that may apply.

Paying for your initial purchase

Make your check payable to The Victory Funds. All checks must be drawn on U.S. banks. If your check is returned as uncollectible for any reason, you will be charged for any resulting fees and/or losses. The Fund does not accept cash, money orders, traveler's checks, credit card convenience checks, and third party checks. Additionally, bank starter checks are not accepted for the shareholder's initial investment into the Fund. All payments must be denominated in U.S. dollars.

Minimum investments

If you would like to buy Class A or Class C shares, the minimum investment required to open an account is $2,500 ($1,000 for IRA accounts), with additional investments of at least $250. If you would like to buy Class I, Class R, Class R6 or Class Y shares, you must first be an Eligible Investor, as discussed in the section Choosing a Share Class — Eligibility Requirements to Purchase. There are no minimum investment amounts required for Class I, Class R, Class R6 or Class Y shares except as set forth in the Eligibility Requirements to Purchase.

If your account falls below the minimum investment amount, we may ask you to reestablish the minimum investment. If you do not do so within 60 days, we may close your account and send you the value of your account.

The minimum investment required to open an account may be waived or lowered for employees, and immediate family members of the employee, of the Adviser and the


20



How to Buy Shares (continued)

Administrator, and their affiliates. In addition, the minimum investment required may be waived when the Fund is purchased in a managed account or within qualified retirement plans or in other similar circumstances. Although the Fund may sometimes waive the minimum investment, when it does so, it always reserves the right to reject initial investments under the minimum at its discretion.

There is no minimum investment required to open an account or for additional investments in Victory Simple IRAs.

Purchasing additional shares

Once you have an existing account, you can make additional investments at any time in any amount (subject to any minimums) in the following ways:

n  By Mail

To ensure that your additional investment is properly credited to your account, use the Investment Stub attached to your confirmation statement and send it with your check to the address indicated.

n  By Telephone

If you have an existing account that has been set up to receive electronic transfers, you can buy additional shares by calling Victory Funds Customer Service at 800-539-3863 between 8:00 a.m. and 6:00 p.m. (Eastern Time), Monday through Friday.

n  By Exchange

You may purchase shares of a Fund using the proceeds from the simultaneous redemption of shares of another Victory Fund if it is eligible for an exchange with your fund. You may initiate an exchange online (if you are a registered user of VictoryFunds.com), by telephone, or by mail. See the section "Exchanging Shares."

n  Via the Internet

If you are a registered user, you may request a purchase of shares through our website at VictoryFunds.com. Your account must be set up for Automated Clearing House ("ACH") payment in order to execute online purchases.

n  By ACH

Your account must be set up for ACH payment in order to execute purchases online or by telephone. It takes about 15 days to set up an ACH account and only domestic member banks may be used. After your account is set up, your purchase amount can be transferred by ACH. Currently, the Fund does not charge a fee for ACH transfers but it reserves the right to charge for this service in the future. Your originating bank may charge a fee for ACH transfers.

n  By Wire

You may buy Fund shares by bank wire transfer of same day funds. Please call Victory Funds Customer Service at 800-539-3863 between 8:00 a.m. and 6:00 p.m. (Eastern Time), Monday through Friday for wiring instructions. Any commercial bank can transfer same-day funds by wire.

Although the transfer agent does not currently charge you for receiving same-day funds, it reserves the right to charge for this service in the future. Your bank may charge you for wiring same-day funds. You cannot buy shares for tax-qualified retirement plans by wire transfer.


21



How to Buy Shares (continued)

n  By Systematic Investment Plan

To enroll in the Systematic Investment Plan, you should check this box on the Account Application or on the Account Maintenance Form. We will need your bank information and the amount ($250 or more) and frequency of your investment. You can select monthly, quarterly, semi-annual or annual investments. You should attach a voided personal check so the proper information can be obtained. You must first meet the minimum investment requirement before we will make automatic withdrawals from your bank account to invest in shares of the Fund.

Other purchase rules you should know

The Fund reserves the right to refuse a purchase order for any reason, including if it believes that doing so would be in the best interest of the Fund or its shareholders. The Fund also reserves the right, without notice, to increase or decrease the minimum amount required to open, convert shares to, or maintain a Fund account, or to add to an existing Fund account.

Keep these addresses handy for purchases, exchanges, or redemptions.

 

BY REGULAR U.S. MAIL

  The Victory Funds
P.O. Box 182593
Columbus, OH 43218-2593
 

 

BY OVERNIGHT MAIL

  Use the following address ONLY for overnight packages:
The Victory Funds
c/o Citi TA Operations
3435 Stelzer Road
Columbus, OH 43219
PHONE: 800-539-3863
 

 

BY WIRE

  Call 800-539-3863 BEFORE wiring money to notify the Fund that you intend to purchase shares by wire and to verify wire instructions.  

 

BY TELEPHONE

 

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

 

 

ON THE INTERNET

 

www.VictoryFunds.com

 

If you would like to make additional investments after your account is established, use the Investment Stub attached to your confirmation statement and send it with your check to the address indicated.

Statements and Reports

You will receive a periodic statement reflecting any transactions that affect the balance or registration of your account. You will receive a confirmation after any purchase, exchange, or redemption. If your account has been set up by an Investment Professional, Fund activity will be detailed in that account's statements. Share certificates are not issued. Twice a year, you will receive a financial report of the Fund. By February 15th of each year, you will be mailed an IRS form reporting distributions for the previous year, which also will be filed with the IRS.


22



How to Buy Shares (continued)

Retirement Plans

You can use the Fund as part of your retirement portfolio. Your Investment Professional can set up your new account under one of several tax-deferred retirement plans. Please contact your Investment Professional or the Fund for details regarding an IRA or other retirement plan that works best for your financial situation.


23



How to Exchange Shares

There may be limits on the ability to exchange between certain Victory Funds. You can obtain a list of funds available for exchange by calling 800-539-FUND or by visiting VictoryFunds.com

The shares of any class of the Fund may be exchanged for the shares of any other class offered by the Fund or the same class, or any other class, of any other Victory Fund, either through your Investment Professional or directly through the Fund, subject to the conditions described below:

n  Exchanges are subject to any CDSC, minimum investment limitation or eligibility requirements described in the applicable Prospectus and SAI. You may be required to provide sufficient information to establish eligibility to exchange to the new share class.

n  To exchange between Victory Funds, the other Victory Fund you wish to exchange into must be eligible for exchange with your Fund.

n  Shares of the Victory Fund selected for exchange must be available for sale in your state of residence.

If you have questions about these, or any of the Fund's other exchange policies, please consult Victory Customer Service or your Investment Professional before requesting an exchange.

Before exchanging, you should read the Prospectus of the Fund you wish to exchange into, which may be subject to different risks, fees and expenses.

C share conversion

You may be able to convert your Class C shares to a different share class of the same Fund that has a lower expense ratio provided certain conditions are met. This conversion feature is intended for shares held through a financial intermediary offering a fee-based or wrap fee program that has an agreement with the Adviser or the Distributor specific for this purpose. Generally, Class C shares are not eligible for conversion until the applicable CDSC period has expired. Please contact your financial intermediary for additional information.

Processing your exchange/conversion

If your exchange request is received and accepted by the Fund, an Investment Professional or other intermediary by the close of trading as described in the section entitled "Share Price" then your exchange will be processed the same day. Your exchange will be processed on the next business day if received after the close of trading. Exchanges will occur at the respective net asset values of the share classes next calculated after receipt and acceptance of your exchange request, plus any applicable sales charge described in the Prospectus.

If your Fund shares are converted to a different share class, the transaction will be based on the respective net asset value of each class as of the trade date of the conversion. Consequently, you may receive fewer shares or more shares than originally owned, depending on that day's net asset values. Please contact your financial intermediary regarding the tax consequences of any conversion.

Requesting an exchange

You can exchange shares of the Fund by telephone, by mail or via the Internet. You cannot exchange into an account with a different registration or tax identification number.

n  By Telephone

Unless you indicate otherwise on the account application, Victory Customer Service will be authorized to accept exchange instructions received by telephone.

n  By Mail

Send a letter of instruction signed by all registered owners or their legal representatives to the Victory Funds.


24



How to Exchange Shares (continued)

n  Via the Internet

You may also exchange shares via the Internet at VictoryFunds.com if you are a registered user.

Other exchange rules you should know

The Fund may refuse any exchange purchase request if the Adviser determines that the request is associated with a market timing strategy. The Fund may terminate or modify the exchange privilege at any time on 60 days' notice to shareholders.

An exchange of Fund shares for shares of another Victory Fund constitutes a sale for tax purposes unless the exchange is made within an IRA or other tax-deferred account.

For information on how to exchange shares of the Fund that were purchased through your employer's retirement plan, including any restrictions and charges that the plan may impose, please consult your employer.


25



There are a number of convenient ways to sell your shares.

How to Sell Shares

If your redemption request is received in good order by 4:00 p.m. Eastern Time, the Alternative Closing Time, (if applicable), or the close of regular trading on the NYSE (whichever time is earlier), your redemption will be processed the same day. Your redemption will be processed on the next business day if received after 4:00 p.m. Eastern Time, the Alternative Closing Time or the close of regular trading (whichever time is earlier). You cannot redeem your shares at www.VictoryFunds.com.

  BY TELEPHONE

The easiest way to redeem shares is by calling 800-539-FUND. When you fill out your original application, be sure to check the box marked "Telephone Authorization." Then when you are ready to sell, call and tell us which one of the following options you would like to use:

n  Mail a check to the address of record;

n  Wire funds to a previously designated domestic financial institution;

n  Mail a check to a previously designated alternate address; or

n  Electronically transfer your redemption via ACH to a previously designated domestic financial institution.

The transfer agent records all telephone calls for your protection and takes measures to verify the identity of the caller. If the transfer agent properly acts on telephone instructions and follows reasonable procedures to ensure against unauthorized transactions, none of the Trust, its servicing agents, the Adviser, or the transfer agent will be responsible for any losses. If the transfer agent does not follow these procedures, it may be liable to you for losses resulting from unauthorized instructions.

If there is an unusual amount of market activity and you cannot reach the transfer agent or your Investment Professional by telephone, consider placing your order by mail.

  BY MAIL

Use the regular U.S. mail or overnight mail address to redeem shares. Send us a letter of instruction indicating your Fund account number, amount of redemption, and where

to send the proceeds. A Medallion signature guarantee is required for the following redemption requests:

n  Your account registration has changed within the last 15 days;

n  The check is not being mailed to the address on your account;

n  The check is not being made payable to the owner of the account;

n  The redemption proceeds are being transferred to another Victory Fund account with a different registration; or

n  The check or wire is being sent to a different bank account than was previously designated.

You can get a Medallion signature guarantee from a financial institution — such as a commercial bank, broker dealer, credit union, clearing agency, or savings bank — that is a member of a Medallion signature guarantee program.

  BY WIRE

If you want to receive your proceeds by wire, you must establish a Fund account that will accommodate wire transactions. If you call before the close of trading on the NYSE or before the Alternative Closing Time (whichever time is earlier), your funds will be wired on the same business day.

  BY ACH

Normally, your redemption will be processed on the same day, but will be processed on the next day if received after the close of trading on the NYSE or after the Alternative Closing Time (whichever time is earlier). It will be transferred by ACH as long as the transfer is to a domestic bank.


26



How to Sell Shares (continued)

Systematic Withdrawal Plan

If you check this box on the Account Application or on the Account Maintenance Form, we will send monthly, quarterly, semi-annual, or annual payments to the person you designate. The minimum withdrawal is $25, and you must have a balance of $5,000 or more at the time you establish the Systematic Withdrawal Plan. If the payment is to be sent to an account of yours, we will need a voided check to activate this feature. If the payment is to be made to an address different from your account address, we will need a Medallion signature guaranteed letter of instruction. You should be aware that each withdrawal may be a taxable transaction. Also, each withdrawal reduces your account balance, and eventually your account balance may be depleted. However, you cannot automatically close your account using the Systematic Withdrawal Plan. If your balance falls below the initial purchase minimum, we may ask you to bring the account back to the minimum balance. If you decide not to increase your account to the minimum balance, your account may be closed and the proceeds mailed to you.

Additional Information about Redemptions

n  Redemption proceeds from the sale of shares purchased by a check or through ACH will be held until the purchase check or ACH has cleared, which may take up to 10 business days.

n  The Fund may postpone payment of redemption proceeds for up to seven calendar days at any time.

n  The Fund may suspend your right to redeem your shares in the following circumstances:

•  During non-routine closings of the NYSE;

•  When the SEC determines either that trading on the NYSE is restricted or that an emergency prevents the sale or valuation of a Fund's securities; or

•  When the SEC orders a suspension to protect the Fund's shareholders.

n  The Fund will pay redemptions by any one shareholder during any 90-day period in cash up to the lesser of $250,000 or 1.00% of the Fund's net assets. The Fund reserves the right to pay the remaining portion "in kind," that is, in portfolio securities rather than cash.

n  If you choose to have your redemption proceeds mailed to you and either the United States Postal Service is unable to deliver the redemption check to you or the check remains outstanding for at least six months, the Fund reserves the right to reinvest the check in shares of the Fund at its then current NAV until you give the Fund different instructions. No interest will accrue on amounts represented by uncashed redemption checks.


27



Distribution and Service Plans

Distribution Plans

In accordance with Rule 12b-1 of the Investment Company Act of 1940, Victory has adopted Distribution and Service Plans for Class A, Class C and Class R shares of the Fund.

Under the Class A Distribution and Service Plan, the Fund will pay to the Distributor a monthly fee at an annual rate of up to 0.25% of the Fund's average daily net assets of its Class A shares. Under the Class R Distribution and Service Plan, the Fund will pay to the Distributor a monthly fee at an annual rate of up to 0.25% of the Fund's average daily net assets of its Class R shares. The fee is paid for general distribution services, for selling Class A or Class R shares and as applicable, and for providing personal services to its shareholders. Distribution and selling services are provided by the Distributor or by agents of the Distributor and include those services intended to result in the sale of the Fund's shares. Personal services to shareholders are generally provided by broker-dealers or other intermediaries and consist of responding to inquiries, providing information to shareholders about their Fund accounts, establishing and maintaining accounts and records, providing dividend and distribution payments, arranging for bank wires, assisting in transactions and changing account information.

Under the Class C Distribution and Service Plan, the Fund will pay to the Distributor a monthly fee at an annual rate of 1.00% of the Fund's average daily net assets of its Class C shares. Of this amount, 0.75% of the Fund's Class C shares' average daily net assets will be paid for general distribution services and for selling Class C shares of the Fund. The Fund will pay 0.25% of its Class C shares' average daily net assets to compensate financial institutions that provide personal services to Class C shareholders of the Fund. Distribution and selling services are provided by the Distributor or by agents of the Distributor and include those services intended to result in the sale of the Fund's Class C shares. Personal services to shareholders are generally provided by broker-dealers or other financial intermediaries and consist of responding to inquiries, providing information to shareholders about their Fund accounts, establishing and maintaining accounts and records, providing dividend and distribution payments, arranging for bank wires, assisting in transactions and changing account information.

Because Rule 12b-1 fees are paid out of the Fund's assets and on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

Other Payments to Financial Intermediaries

Except with respect to Class R6 shares, the Adviser (and its affiliates) may make substantial payments to affiliated and unaffiliated dealers or other Investment Professionals and service providers, for distribution, administrative and/or shareholder servicing activities, out of its own resources, including the profits from the advisory fees the Adviser receives from the Fund. The Adviser also may reimburse the Distributor (or the Distributor's affiliates) for making these payments. Some of these distribution-related payments may be made to dealers or Investment Professionals for marketing, promotional or related expenses; these payments are often referred to as "revenue sharing." In some circumstances, those types of payments may create an incentive for a dealer or Investment Professional or its representatives to recommend or offer shares of the Fund or other Victory Funds to its customers. You should ask your dealer or Investment Professional for more details about any such payments it receives.

No compensation, administrative payments, sub-transfer agency payments or service payments are paid to broker-dealers or other financial intermediaries from Fund assets or the Adviser's or an affiliate's resources on sales of or investments in, Class R6 shares.


28




Dividends, Distributions, and Taxes

As a shareholder, you are entitled to your share of net income and capital gains on the Fund's investments. The Fund passes its earnings along to investors in the form of dividends. Dividends paid by the Fund represent the net income from dividends and interest earned on investments after expenses. The Fund will distribute short-term gains, as necessary, and if the Fund makes a long-term capital gain distribution, it is normally paid once a year.

Ordinarily, the Fund declares and pay dividends monthly. However, the Fund may not always pay a dividend or distribution for a given period. Each class of shares declares and pays dividends separately.

Distributions can be received in one of the following ways. Please check with your Investment Professional if you are unsure of which option is right for you.

REINVESTMENT OPTION

You can have distributions automatically reinvested in additional shares of the Fund. If you do not indicate another choice on your Account Application, you will be assigned this option automatically.

CASH OPTION

A check will be mailed to you no later than seven days after the dividend payment date. If you choose to have your distribution proceeds mailed to you and either the United States Postal Service is unable to deliver the distribution check to you or the check remains outstanding for at least six months, the distribution option on your account will default to the reinvestment option as described above. The Fund reserves the right to reinvest the check in shares of the Fund at its then current NAV until you give the Fund different instructions. No interest will accrue on amounts represented by uncashed distribution checks.

INCOME EARNED OPTION

You can automatically reinvest your dividends in additional shares of the Fund and have your capital gains paid in cash, or reinvest capital gains and have your dividends paid in cash.

DIRECTED DIVIDENDS OPTION

In most cases, you can automatically reinvest distributions in shares of another Victory Fund. If you reinvest your distributions in a different Victory Fund, you may pay a sales charge on the reinvested distributions.

DIRECTED BANK ACCOUNT OPTION

In most cases, you can automatically transfer distributions to your bank checking or savings account. Under normal circumstances, the transfer agent will transfer your distributions within seven days of the dividend payment date. The bank account must have a registration identical to that of your Fund account.

Buying a dividend. You should check a Fund's distribution schedule before you invest. If you buy shares of a Fund shortly before it makes a distribution, some of your investment may come back to you as a taxable distribution.

Your choice of distribution should be set up on the original Account Application. If you would like to change the option you selected, please call 800-539-FUND.


29



Dividends, Distributions, and Taxes (continued)

The tax information in this Prospectus is provided as general information. You should consult your own tax adviser about the tax consequences of an investment in the Fund.

Important Information about Taxes

The Fund expects to pay no federal income tax on the earnings and capital gains it distributes to shareholders.

n  Dividends from the Fund's net income and short-term capital gains are taxable as ordinary income; dividends from the Fund's long-term capital gains are taxable as long-term capital gain.

n  Dividends are treated in the same manner for federal income tax purposes whether you receive them in cash, additional shares of the Fund, or you reinvest them in shares of another Victory Fund.

n  Dividends from the Fund that are attributable to interest on certain U.S. government obligations may be exempt from certain state and local income taxes. The extent to which ordinary dividends are attributable to these U.S. government obligations will be provided on the tax statements you receive from the Fund.

n  An exchange of the Fund's shares for shares of another Fund will be treated as a sale. When you sell or exchange shares of a Fund, you must recognize any gain or loss.

n  An exchange of one class of a the Fund's shares for shares of another class of the same Fund generally constitutes a nontaxable exchange.

n  Distributions from the Fund and gains from the disposition of your shares may also be subject to state and local income tax.

n  An additional 3.8% Medicare tax will be imposed on certain net investment income (which includes ordinary dividends, capital gain distributions from the Fund, and gain recognized on a disposition of shares) of certain U.S. individuals, estates, and trusts.

n  Certain dividends paid to you in January will be taxable as if they had been paid to you the previous December.

n  Tax statements will be mailed from the Fund by mid-February showing the amounts and tax status of distributions made to you.

n  Because your tax treatment depends on your purchase price and tax position, you should keep your regular account statements for use in determining your tax.

n  The Fund is generally required by law to provide you and the Internal Revenue Service with certain cost basis information related to the sale or redemption of any of your shares in the Fund acquired on or after January 1, 2012 (including distributions that are reinvested in additional shares of the Fund).

n  The Fund may be required to withhold tax from taxable distributions if you fail to give your correct social security or taxpayer identification number, fail to make required certifications, or the Fund is notified by the Internal Revenue Service that backup withholding is required.

n  You should review the more detailed discussion of federal income tax considerations in the SAI and consult your tax adviser regarding the federal, state, local, or foreign tax consequences resulting from your investment in the Fund.

n  The Fund may provide estimated capital gain distribution information through its website at VictoryFunds.com.


30



Important Fund Policies

Customer Identification Program

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens a new account, and to determine whether such person's name appears on government lists of known or suspected terrorists and terrorist organizations.

As a result, the Victory Funds must obtain the following information for each person who opens a new account:

n  Name;

n  Date of birth (for individuals);

n  Residential or business street address (although post office boxes are still permitted for mailing); and

n  Social security number, taxpayer identification number, or other identifying number.

You may also be asked for a copy of your driver's license, passport or other identifying documents in order to verify your identity. In addition, it may be necessary to verify your identity by cross-referencing your identification information with a consumer report or other electronic database. Additional information may be required to open accounts for corporations and other entities. Federal law prohibits the Fund and other financial institutions from opening a new account unless they receive the minimum identifying information listed above. After an account is opened, the Fund may restrict your ability to purchase additional shares until your identity is verified. The Fund may close your account or take other appropriate action if it is unable to verify your identity within a reasonable time. If your account is closed for this reason, your shares will be redeemed at the NAV next calculated after the account is closed.

Account Maintenance Information

For the following non-financial transactions, the Victory Funds require proof that your signature authorizing a transaction is authentic. This verification can be provided by either a Signature Validation Program (SVP) stamp or a Medallion signature guarantee. As with the Medallion signature guarantee, a SVP stamp can also be obtained from a financial institution that is a member of the SVP program.

n  Change of name;

n  Add/change banking instructions;

n  Add/change beneficiaries;

n  Add/change authorized account traders;

n  Adding a Power of Attorney;

n  Add/change Trustee; and

n  Uniform Transfers to Minors Act/ Uniform Gifts to Minors Act custodian change.

Market Timing

The Victory Funds discourage frequent purchases and redemptions of Fund shares (market timing). Market timing allows investors to take advantage of market inefficiencies, sometimes to the disadvantage of other shareholders. Market timing increases Fund expenses to all shareholders by increasing portfolio turnover. In addition, market timing could potentially dilute share value for all other shareholders by requiring the Fund to hold more cash than it normally would.


31



Important Fund Policies (continued)

Your choice of distribution should be set up on the original Account Application. If you would like to change the option you selected, please call 800-539-FUND.

The Fund's Board of Trustees has adopted policies and procedures with respect to market timing. In order to prevent or minimize market timing, the Fund will:

n  Employ "fair value" pricing, as described in this prospectus under "Share Price," to minimize the discrepancies between a security's market quotation and its perceived market value, which often gives rise to market timing activity; and

n  Monitor for suspected market timing based on "short-term transaction" activity, that is, a purchase or redemption of a Fund and, as applicable, a subsequent redemption or purchase of the same Fund, or an exchange of all or part of that same Fund.

In monitoring for market timing activity, we consider, among other things, the frequency of your trades and whether you acquired your Fund shares directly through the transfer agent or whether you combined your trades with a group of shareholders in an omnibus account or otherwise placed your order through a securities dealer or other financial intermediary.

Frequent trading by a shareholder is generally a characteristic of market timing. Therefore, any account in which Fund shares are acquired directly through the transfer agent, or where the Fund can adequately identify the shareholder, with a history of three short-term transactions within 90 days or less is suspected of market timing and the shareholder's trading privileges (other than redemption of Fund shares) will be suspended.

We may make exceptions to the "short-term transaction" policy for certain types of transactions if, in the opinion of the Adviser, under oversight of the Board, the transactions do not represent short-term or excessive trading or are not abusive or harmful to the Fund, such as, but not limited to, systematic transactions, required minimum retirement distributions, transactions initiated by the Fund or administrator and transactions by certain qualified funds-of-funds.

If you acquired shares through an omnibus account or otherwise placed your order through a securities dealer or other financial intermediary (such as investment advisers, broker-dealers, third-party administrators or insurance companies), and market timing is suspected, different purchase and exchange limitations may apply. We may rely upon a financial intermediary's policy to deter short-term or excessive trading (i) if we believe that the financial intermediary's policy is reasonably designed to detect and deter transactions that are not in the best interests of the Fund, or (ii) if we receive an undertaking from the financial intermediary to enforce short-term or excessive trading policies on behalf of the Fund that provide a substantially similar level of protection for the Fund against such transactions. If you hold your Fund shares through a financial intermediary, you are advised to consult the intermediary to determine what purchase and exchange limitations apply to your account.

We reserve the right to reject or cancel a purchase or exchange order for any reason without prior notice. We will deny your request to purchase or exchange your shares if we believe that the transaction is part of a market timing strategy.

The Fund's market timing policies and procedures may be modified or terminated at any time under oversight of the Board.

Portfolio Holdings Disclosure

The Fund discloses its complete portfolio holdings in its annual and semiannual reports to shareholders, which are sent to shareholders no later than 60 days after the relevant fiscal period (October 31st and April 30th, respectively) and are available on the Fund's website, VictoryFunds.com. The Fund also files its complete portfolio holdings as of the end of its first and third fiscal quarters (January 31st and July 31st, respectively) with the SEC on Form N-Q no later than 60 days after the relevant fiscal period. You can find these filings on the SEC's website, www.sec.gov.


32



Important Fund Policies (continued)

In addition, the Fund discloses its complete portfolio holdings as of the quarter-end on the Fund's website no later than the 15th day following the end of the calendar quarter. The Fund may also publish other information on the Fund's website relating to its portfolio holdings (e.g., top ten holdings) on a monthly basis no later than the 15th day following the end of the month.

You can find a complete description of the Fund's policies and procedures with respect to disclosure of its portfolio securities in the Fund's SAI or on the Fund's website, VictoryFunds.com.

Performance

The Victory Funds may advertise the performance of the Fund by comparing it to other mutual funds with similar objectives and policies. Performance information also may appear in various publications. Any fees charged by Investment Professionals may not be reflected in these performance calculations.

Advertising information may include the average annual total return of the Fund calculated on a compounded basis for specified periods of time. Total return information will be calculated according to rules established by the SEC. Such information may include performance rankings and similar information from independent organizations and publications.

Shareholder Communications

In order to eliminate duplicate mailings to an address at which two or more shareholders with the same last name reside, the Victory Funds may send only one copy of any shareholder reports, proxy statements, prospectuses and their supplements, unless you have instructed us to the contrary. You may request that the Victory Funds send these documents to each shareholder individually by calling the Victory Funds at 800-539-FUND (800-539-3863), and they will be delivered promptly.


33



Other Service Providers

Victory Capital Advisers, Inc. (the Distributor), member FINRA and SIPC, 4900 Tiedeman Road, Brooklyn, Ohio 44144, serves as distributor for the continuous offering of the Fund's shares. The Distributor is an affiliate of the Adviser.

KeyBank National Association, 127 Public Square, Cleveland, Ohio 44114, serves as the custodian of the Fund's investments and cash and settles trades made by the Fund.

Victory Capital Management Inc., 4900 Tiedeman Road, 4th Floor, Brooklyn, Ohio 44144, serves as the Administrator and Fund Accountant for the Fund.

Citi Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219, serves as the sub-administrator, transfer agent, sub-fund accountant and dividend disbursing agent for the Fund. On or about April 30, 2015, SunGard Investor Services LLC will assume the role of the transfer agent for the Fund. SunGard Investor Services LLC will be located at 3435 Stelzer Road, Columbus, Ohio 43219.

Ernst & Young LLP, 1900 Scripps Center, 312 Walnut Street, Cincinnati, Ohio 45202, serves as the Independent Registered Public Accounting firm for the Fund.

Morrison & Foerster LLP, 250 West 55th Street, New York, New York 10019, serves as legal counsel to the Fund.


34




Financial Highlights

The following financial highlights tables reflect historical information about shares of the Fund and are intended to help you understand the Fund's financial performance for the past five years or, if shorter, the period of the Fund's operations.

Certain information shows the results of an investment in one share of the Fund. To the extent the Fund invests in other funds, the Total Annual Operating Expenses included in the Fund's Fees and Expenses table may not correlate to the ratio of expenses to average net assets in the financial highlights below. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).

As of October 31, 2014, the information for each period presented has been audited by Ernst & Young LLP, whose reports, along with the Fund's financial statements, are included in the Fund's annual report, which is available by calling the Fund at 800-539-FUND and at VictoryFunds.com.

Past performance information is not presented for Class R6 of the Fund as the share class is new as of the date of this Prospectus.


35



Financial Highlights

FUND FOR INCOME

   

Class A Shares

 
    Year
Ended
October 31,
2014
  Year
Ended
October 31,
2013
  Year
Ended
October 31,
2012
  Year
Ended
October 31,
2011
  Year
Ended
October 31,
2010
 

Net asset value, beginning of period

 

$

10.62

   

$

11.26

   

$

11.49

   

$

11.81

   

$

11.62

   

Investment activities:

 

Net investment income

   

0.11

     

0.03

     

0.22

     

0.34

     

0.44

   
Net realized and unrealized gains (losses)
on investments
   

0.06

     

(0.14

)

   

0.11

     

(0.03

)

   

0.42

   

Total from investment activities

   

0.17

     

(0.11

)

   

0.33

     

0.31

     

0.86

   

Distributions:

 

Net investment income

   

(0.52

)

   

(0.53

)

   

(0.56

)

   

(0.63

)

   

(0.67

)

 

Total distributions

   

(0.52

)

   

(0.53

)

   

(0.56

)

   

(0.63

)

   

(0.67

)

 

Net asset value, end of period

 

$

10.27

   

$

10.62

   

$

11.26

   

$

11.49

   

$

11.81

   

Total return (excludes sales charge)

   

1.69

%

   

(1.03

)%

   

2.92

%

   

2.73

%

   

7.66

%(a)

 

Ratios/supplemental data:

 

Net assets at end of period (000)

 

$

338,122

   

$

506,249

   

$

793,120

   

$

490,961

   

$

444,257

   

Ratio of net expenses to average net assets

   

0.96

%

   

0.93

%

   

0.94

%

   

0.96

%

   

0.97

%

 
Ratio of net investment income to average
net assets
   

1.57

%

   

1.11

%

   

1.60

%

   

2.55

%

   

3.11

%

 

Portfolio turnover (b)

   

32

%

   

62

%

   

90

%

   

43

%

   

49

%

 

(a)  During the year ended October 31, 2010, the Fund received monies relating to the BISYS Fair Fund distribution. The distribution related to certain expenditures that, among other things, supported distribution of Fund shares. Had this payment not been received, the total return would have been 0.02% lower.

(b)  Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.


36



Financial Highlights

FUND FOR INCOME (continued)

   

Class C Shares

 
    Year
Ended
October 31,
2014
  Year
Ended
October 31,
2013
  Year
Ended
October 31,
2012
  Year
Ended
October 31,
2011
  Year
Ended
October 31,
2010
 

Net asset value, beginning of period

 

$

10.55

   

$

11.19

   

$

11.43

   

$

11.76

   

$

11.59

   

Investment activities:

 

Net investment income

   

0.02

     

0.04

(a)

   

0.16

     

0.28

     

0.42

   
Net realized and unrealized gains (losses)
on investments
   

0.08

     

(0.24

)

   

0.08

     

(0.06

)

   

0.34

   

Total from investment activities

   

0.10

     

(0.20

)

   

0.24

     

0.22

     

0.76

   

Distributions:

 

Net investment income

   

(0.45

)

   

(0.44

)

   

(0.48

)

   

(0.55

)

   

(0.59

)

 

Total distributions

   

(0.45

)

   

(0.44

)

   

(0.48

)

   

(0.55

)

   

(0.59

)

 

Net asset value, end of period

 

$

10.20

   

$

10.55

   

$

11.19

   

$

11.43

   

$

11.76

   
Total return (excludes contingent
deferred sales charge)
   

0.96

%

   

(1.80

)%

   

2.11

%

   

1.93

%

   

6.77

%(b)

 

Ratios/supplemental data:

 

Net assets at end of period (000)

 

$

79,353

   

$

129,193

   

$

201,522

   

$

123,425

   

$

65,869

   

Ratio of net expenses to average net assets

   

1.72

%

   

1.69

%

   

1.69

%

   

1.72

%

   

1.76

%

 
Ratio of net investment income to average
net assets
   

0.80

%

   

0.35

%

   

0.84

%

   

1.76

%

   

2.24

%

 

Portfolio turnover (c)

   

32

%

   

62

%

   

90

%

   

43

%

   

49

%

 

(a)  Calculated using average shares method for the period.

(b)  During the year ended October 31, 2010, the Fund received monies relating to the BISYS Fair Fund distribution. The distribution related to certain expenditures that, among other things, supported distribution of Fund shares. Had this payment not been received, the total return would have been 0.02% lower.

(c)  Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.


37



Financial Highlights

FUND FOR INCOME (continued)

   

Class I Shares

 
    Year
Ended
October 31,
2014
  Year
Ended
October 31,
2013
  Year
Ended
October 31,
2012
  Period
Ended
October 31,
2011(a)
 

Net asset value, beginning of period

 

$

10.61

   

$

11.25

   

$

11.48

   

$

11.54

   

Investment activities:

 

Net investment income

   

0.21

     

0.07

     

0.30

     

0.22

   

Net realized and unrealized gains (losses) on investments

   

(0.01

)

   

(0.15

)

   

0.06

     

0.16

   

Total from investment activities

   

0.20

     

(0.08

)

   

0.36

     

0.38

   

Distributions:

 

Net investment income

   

(0.55

)

   

(0.56

)

   

(0.59

)

   

(0.44

)

 

Total distributions

   

(0.55

)

   

(0.56

)

   

(0.59

)

   

(0.44

)

 

Net asset value, end of period

 

$

10.26

   

$

10.61

   

$

11.25

   

$

11.48

   

Total return (b)

   

1.98

%

   

(0.75

)%

   

3.20

%

   

3.32

%

 

Ratios/supplemental data:

 

Net assets at end of period (000)

 

$

379,805

   

$

386,827

   

$

450,593

   

$

221,570

   

Ratio of net expenses to average net assets (c)

   

0.67

%

   

0.65

%

   

0.65

%

   

0.67

%

 

Ratio of net investment income to average net assets (c)

   

1.85

%

   

1.39

%

   

1.85

%

   

2.74

%

 

Portfolio turnover (d)

   

32

%

   

62

%

   

90

%

   

43

%

 

(a)  Class I Shares commenced operations on March 1, 2011.

(b)  Not annualized for periods less than one year.

(c)  Annualized for periods less than one year.

(d)  Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.


38



Financial Highlights

FUND FOR INCOME (continued)

   

Class R Shares

 
    Year
Ended
October 31,
2014
  Year
Ended
October 31,
2013
  Year
Ended
October 31,
2012
  Year
Ended
October 31,
2011
  Year
Ended
October 31,
2010
 

Net asset value, beginning of period

 

$

10.62

   

$

11.26

   

$

11.50

   

$

11.82

   

$

11.63

   

Investment activities:

 

Net investment income

   

0.15

     

0.06

     

0.21

     

0.36

     

0.38

   
Net realized and unrealized gains (losses)
on investments
   

0.03

     

(0.17

)

   

0.10

     

(0.05

)

   

0.48

   

Total from investment activities

   

0.18

     

(0.11

)

   

0.31

     

0.31

     

0.86

   

Distributions:

 

Net investment income

   

(0.52

)

   

(0.53

)

   

(0.55

)

   

(0.63

)

   

(0.67

)

 

Total distributions

   

(0.52

)

   

(0.53

)

   

(0.55

)

   

(0.63

)

   

(0.67

)

 

Net asset value, end of period

 

$

10.28

   

$

10.62

   

$

11.26

   

$

11.50

   

$

11.82

   

Total return

   

1.78

%

   

(1.05

)%

   

2.80

%

   

2.71

%

   

7.64

%(a)

 

Ratios/supplemental data:

 

Net assets at end of period (000)

 

$

84,368

   

$

99,302

   

$

135,313

   

$

115,459

   

$

89,223

   

Ratio of net expenses to average net assets

   

0.96

%

   

0.94

%

   

0.97

%

   

0.98

%

   

0.98

%

 
Ratio of net investment income to average
net assets
   

1.56

%

   

1.10

%

   

1.61

%

   

2.52

%

   

3.14

%

 

Portfolio turnover (b)

   

32

%

   

62

%

   

90

%

   

43

%

   

49

%

 

(a)  During the year ended October 31, 2010, the Fund received monies relating to the BISYS Fair Fund distribution. The distribution related to certain expenditures that, among other things, supported distribution of Fund shares. Had this payment not been received, the total return would have been 0.02% lower.

(b)  Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.


39



Financial Highlights

FUND FOR INCOME (continued)

   

Class Y Shares

 
    Year
Ended
October 31,
2014
  Period
Ended
October 31,
2013(a)
 

Net asset value, beginning of period

 

$

10.62

   

$

11.15

   

Investment activities:

 

Net investment income

   

0.12

     

0.11

(b)

 

Net realized and unrealized gains (losses) on investments

   

0.08

     

(0.20

)

 

Total from investment activities

   

0.20

     

(0.09

)

 

Distributions:

 

Net investment income

   

(0.55

)

   

(0.44

)

 

Total distributions

   

(0.55

)

   

(0.44

)

 

Net asset value, end of period

 

$

10.27

   

$

10.62

   

Total return (c)

   

1.94

%

   

(0.83

)%

 

Ratios/supplemental data:

 

Net assets at end of period (000)

 

$

7,491

   

$

10,393

   

Ratio of net expenses to average net assets (d)

   

0.71

%

   

0.71

%

 

Ratio of net investment income to average net assets (d)

   

1.81

%

   

1.35

%

 

Ratio of gross expenses to average net assets (d) (e)

   

0.82

%

   

0.81

%

 

Ratio of net investment income to average net assets (d) (e)

   

1.70

%

   

1.24

%

 

Portfolio turnover (f)

   

32

%

   

62

%

 

(a)  Class Y Shares commenced operations on January 28, 2013.

(b)  Calculated using average shares method for the period.

(c)  Not annualized for periods less than one year.

(d)  Annualized for periods less than one year.

(e)  During the period, certain fees were reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratios would have been as indicated.

(f)  Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.


40




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41



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42



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43




P.O. Box 182593

Columbus, OH 43218-2593

Statement of Additional Information (SAI): The SAI contains a more information about the Fund's operations, investment restrictions, policies and practices. The SAI is incorporated by reference into this Prospectus, which means that it is legally part of this Prospectus, even if you don't request a copy.

Annual and Semi-annual Reports: Annual and semi-annual reports contain more information about the Fund's investments and the market conditions and investment strategies that significantly affected the Fund's performance during the most recent fiscal period.

How to Obtain Information: You may obtain a free copy of the SAI or annual and semi-annual reports, and ask questions about the Fund or your accounts, online at VictoryFunds.com, by contacting the Victory Funds at the following address or telephone number, or by contacting your financial intermediary.

By telephone:
Call Victory Funds at
800-539-FUND
(800-539-3863).
  By mail:
The Victory Funds
P.O. Box 182593
Columbus, OH 43218-2593
 

 

 

You also can get information about the Fund (including the SAI and other reports) from the Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to provide copies of this information.

In person: SEC Public Reference Room
Washington, D.C.
Call 202-551-8090 for location and hours.
  By mail:
SEC Public Reference Section
Washington, D.C. 20549-1520
  On the Internet:
EDGAR database at sec.gov or by email request at
publicinfo@sec.gov
 

Investment Company Act File Number 811-4852

VF-FFI-PRO (3/15)




  March 1, 2015

Prospectus

Victory Balanced Fund

Class A   SBALX

Class C   VBFCX

Class I   VBFIX

Class R   VBFGX

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities or determined whether this Prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

VictoryFunds.com
800-539-FUND

(800-539-3863)




The Victory
Portfolios

Table of Contents

Fund Summary

 

Investment Objective

    1    

Fees and Expenses

    1    

Principal Investment Strategy

    3    

Principal Risks

    3    

Investment Performance

    4    

Management of the Fund

    5    

Purchase and Sale of Fund Shares

    6    

Tax Information

    6    
Payments to Broker-Dealers and Other
Financial Intermediaries
    6    

Additional Fund Information

    7    

Investments

    9    

Risk Factors

    10    

Investing with Victory

    12    

Organization and Management of the Fund

    13    

Share Price

    14    

Choosing a Share Class

    15    

How to Buy Shares

    20    

How to Exchange Shares

    24    

How to Sell Shares

    26    

Distribution and Service Plans

    28    

Important Fund Policies

    31    

Other Service Providers

    34    

Financial Highlights

    35    

Balanced Fund

    36    



Balanced Fund Summary

Investment Objective

The Fund seeks to provide income and long-term growth of capital.

Fund Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in the Victory Funds. More information about these and other discounts is available from your Investment Professional and in Investing with Victory on page 12 of the Fund's Prospectus and in Additional Purchase, Exchange and Redemption Information on page 42 of the Fund's Statement of Additional Information (SAI).

Shareholder Fees
(paid directly from your investment)
 

Class A

 

Class C

 

Class I

 

Class R

 
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price)
   

5.75

%

   

NONE

     

NONE

     

NONE

   

Maximum Deferred Sales Charge (load)

   

NONE1

     

1.00

%2

   

NONE

     

NONE

   

(as a percentage of the lower of purchase or sale price)

 
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
 

Management Fees

   

0.60

%

   

0.60

%

   

0.60

%

   

0.60

%

 

Distribution (12b-1) Fees

   

0.25

%

   

1.00

%

   

0.00

%

   

0.50

%

 

Other Expenses

   

0.49

%

   

0.54

%

   

4.20

%

   

0.62

%

 

Total Annual Fund Operating Expenses

   

1.34

%

   

2.14

%

   

4.80

%

   

1.72

%

 

Fee Waiver/Expense Reimbursement

   

(0.19

)%

   

(0.29

)%

   

(3.90

)%

   

(0.27

)%

 
Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement3
   

1.15

%

   

1.85

%

   

0.90

%

   

1.45

%

 

1A contingent deferred sales charge of 0.75% may be imposed on Class A shares with respect to purchases of $1,000,000 or more that are redeemed within 12 months of purchase. For additional information, see 'Choosing a Share Class' beginning on page 15 of the Fund's Prospectus.

2The Class C contingent deferred sales charge applies only to shares sold within 12 months of purchase.

3The Adviser has contractually agreed to waive its management fee and/or to reimburse expenses so that the total annual operating expenses (excluding certain items such as interest, taxes and brokerage commissions) of Class A, Class C, Class I and Class R shares do not exceed 1.15%, 1.85%, 0.90% and 1.45% until at least February 28, 2016.


1



Balanced Fund Summary (continued)

Fund Fees and Expenses (continued)

Example:

The following example is designed to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods shown and then sell all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

   

1 Year

 

3 Years

 

5 Years

 

10 Years

 

Class A

 

$

685

   

$

957

   

$

1,250

   

$

2,079

   
Class C
(If you sell your shares at the end of the period.)
 

$

288

   

$

642

   

$

1,123

   

$

2,450

   

Class I

 

$

92

   

$

1,093

   

$

2,099

   

$

4,630

   

Class R

 

$

148

   

$

516

   

$

908

   

$

2,008

   

The following example makes the same assumptions as the example above, except that it assumes you do not sell your shares at the end of the period.

   

1 Year

 

3 Years

 

5 Years

 

10 Years

 
Class C
(If you do not sell your shares at the end of the period.)
 

$

188

   

$

642

   

$

1,123

   

$

2,450

   

Portfolio Turnover:

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 66% of the average value of its portfolio.


2



Balanced Fund Summary (continued)

Principal Investment Strategies

The Fund pursues its investment objective by investing in equity securities, debt securities and cash equivalents. The Fund may invest in any type or class of security.

Under normal circumstances:

n  The Fund will invest 40% to 75% of its total assets in common stock, which includes securities convertible or exchangeable into common stock traded on U.S. exchanges. The Fund's investments include securities issued by established large-cap companies.

n  The Fund may invest up to 15% of its net assets in foreign issuers traded on U.S. exchanges, including American and Global Depositary Receipts (ADRs and GDRs).

n  The Fund will invest at least 25% of its total assets in a portfolio of debt securities and primarily securities issued by the U.S. government and its agencies or instrumentalities. These include:

n  Mortgage-backed obligations and collateralized mortgage obligations (CMOs) issued by the Government National Mortgage Association (GNMA), with an average effective maturity ranging from 2 to 10 years.

n  Obligations issued or guaranteed by the U.S. government or by its agencies or instrumentalities with a dollar-weighted average maturity normally less than 5 years.

With respect to the equity portion, the Adviser employs both a top-down and bottom-up methodology to construct a diversified portfolio that avoids excessive sector and security concentrations. The Adviser pursues investments that it believes are statistically cheap or intrinsically undervalued given growth prospects, while trying to identify the presence of a catalyst for future growth (e.g., acquisition, new products, economic cycle or management change). The Adviser may sell a security if it believes the price objective for the stock has been reached, if more attractive opportunities are identified, or if the fundamentals of the company deteriorate.

With respect to the debt portion, the goal of the Fund's strategy is to provide high, reliable income by investing in securities backed 100% by the full faith and credit of the U.S. government. Portfolio construction consists of three layers: top-down, macro-economic driven, mid-level, relative value driven and bottom up, borrower characteristics driven. The greatest emphasis will generally be on the bottom up factor, but the relative weightings of the three layers can and will vary over time, reflective of the broad economic environment. The Adviser's sell discipline is driven by actual borrower prepayments, where bonds that exhibit either erratic or consistently fast prepayment speeds are sold first.

The Fund may purchase or sell securities on a when-issued, to-be-announced or delayed delivery basis. There is no limitation on the maturity of any specific security the Fund may purchase, and the Fund may sell any security before it matures.

The Adviser may from time to time generate turnover in excess of 100%.

There is no guarantee that the Fund will achieve its objective.

Principal Risks

The Fund's investments are subject to the following principal risks:

n  The market values of the securities acquired by the Fund may decline.

n  The portfolio manager may not execute the Fund's principal investment strategies effectively.

n  A company's earnings may not increase as expected.

n  To the extent the Fund buys and sells securities actively, it could have higher expenses (which reduces returns to shareholders) and higher taxable distributions.

n  Interest rates may rise or the rate of inflation may increase.

n  A debt issuer's credit quality may be downgraded or an issuer may default.

n  The Fund reinvests at lower interest rates amounts that the Fund receives as interest, sale proceeds or amounts received as a result of prepayment of mortgage-related securities.

n  The average life of a mortgage-related security may be shortened or lengthened.

n  A U.S. government agency or instrumentality may default on its obligation and the U.S. government may not provide support.

n  Foreign securities (including ADRs and GDRs) could be affected by factors not present in the U.S., including expropriation, confiscation of property, and difficulties in enforcing contracts. Compared to U.S. companies, there generally is less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign companies. Foreign securities generally experience more volatility than their domestic counterparts.

You may lose money by investing in the Fund. The likelihood of loss may be greater if you invest for a shorter period of time.

By itself, the Fund does not constitute a complete investment plan and should be considered a long-term investment for investors who can afford to weather changes in the value of their investment.


3



Balanced Fund Summary (continued)

Investment Performance

The bar chart and table that follow indicate the risks of investing in the Fund. We assume reinvestment of dividends and distributions.

The table shows how the average annual total returns for Class A, Class C, Class I and Class R shares of the Fund, including applicable maximum sales charges, compare to those of the S&P 500 Index and the Balanced Fund (60/40) Index. We calculate after-tax returns using the historical highest individual federal marginal income tax rates and we do not reflect the effect of state and local taxes. Actual after-tax returns depend on your tax situation and may differ from those shown. After-tax returns shown are not relevant if you own your Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for only one class and after-tax returns for other classes will vary. The Fund's past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future. Updated performance information is available on the Fund's website at VictoryFunds.com.

Calendar Year Returns for Class A Shares

(Results do not include a sales charge. If one were included, results would be lower.)

Highest/lowest quarterly results during this time period were:

Highest  11.91% (quarter ended September 30, 2009)

Lowest  -15.51% (quarter ended December 31, 2008)


4



Balanced Fund Summary (continued)

Average Annual Total Returns
(For the Periods ended
December 31, 2014)
 

1 Year

 

5 Years

  10 Years
(or Life
of Class)
 

CLASS A

 

Before Taxes

   

1.35

%

   

8.27

%

   

5.44

%

 

After Taxes on Distributions

   

-0.78

%

   

7.34

%

   

4.43

%

 

After Taxes on Distributions and Sale of Fund Shares

   

2.27

%

   

6.44

%

   

4.15

%

 

CLASS C

 

Before Taxes

   

5.84

%

   

8.77

%

   

5.22

%

 

CLASS I

 

Before Taxes

   

7.86

%

   

10.00

%

   

5.52

%1

 

CLASS R

 

Before Taxes

   

7.25

%

   

9.19

%

   

5.66

%

 

INDICES

 
S&P 500 Index
Index returns reflect no deduction for fees, expenses, or taxes.
   

13.69

%

   

15.45

%

   

7.67

%

 
Balanced Fund (60/40) Index2
Index returns reflect no deduction for fees, expenses, or taxes.
   

9.17

%

   

11.38

%

   

6.51

%

 

1Inception date of the Class I shares is August 31, 2007.

2The Balanced Fund (60/40) Index currently consists of the following weights: 60% S&P 500 Index/40% Barclays Capital 1-5 Year U.S. Gov't Bond Index. Prior to May 1, 2013, the weightings were: 60% S&P 500 Index/40% Barclays Capital U.S. Aggregate Bond Index.

Management of the Fund:

Investment Adviser

Victory Capital Management Inc. serves as the Fund's investment adviser. The portfolio managers primarily responsible for day to day management of the equity portion of the Fund are members of the Adviser's Diversified Equity Management investment team (referred to as an investment franchise).

Portfolio Managers

Lawrence G. Babin is a Co-Chief Investment Officer (Diversified Equity) of the Adviser, and is the Lead Portfolio Manager of the equity investments for the Fund. He has been a Portfolio Manager of the Fund since 2003.

Heidi L. Adelman is a Chief Investment Officer (Mortgage Investments) of the Adviser, and is the Lead Portfolio Manager of the fixed income investments for the Fund. She has been a Portfolio Manager of the Fund since 2013.


5



Balanced Fund Summary (continued)

Purchase and Sale of Fund Shares

The minimum initial purchase is $2,500 for regular accounts and $1,000 for IRAs, gifts to minors, and purchases through an automatic investment plan. The minimum subsequent investment is $250. We may reduce or waive the minimums in some cases.

You may redeem your shares on any day the Fund is open for business. Redemption requests may be made by telephone (with prior appropriate approval) or by mail.

When you buy and redeem shares, the Fund will price your transaction at the next-determined net asset value (NAV) after the Fund receives your request in good order.

Tax Information

The Fund's distributions are taxable whether you receive them in cash, additional shares of the Fund or you reinvest them in shares of another Victory Fund, and will be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Taxes may be imposed on withdrawals from tax-deferred arrangements.

Payments to Broker-Dealers and Other Financial Intermediaries

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the financial intermediary and its salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.


6




Additional Fund Information

The Balanced Fund (the "Fund") is a mutual fund that is part of The Victory Portfolios (the "Trust").

The Trust is comprised of different funds, each having distinct investment management objectives, strategies, risks, and policies.

Together, the funds of the Trust are referred to in this Prospectus as the Victory Funds.

The following section describes additional information about the principal investment strategy that the Fund will use under normal market conditions to pursue its investment objective. Keep in mind that for cash management or for temporary defensive purposes in response to market conditions, the Fund may hold all or a portion of its assets in cash or short-term money market instruments. This may reduce the benefit from any upswing in the market and may cause the Fund to fail to meet its investment objective.

Investment Strategies of the Balanced Fund

With regard to the Equity Securities, the Adviser seeks to invest in both growth and value securities.

n  Growth stocks are stocks of companies that the Adviser believes will experience earnings growth; and

n  Value stocks are stocks that the Adviser believes are intrinsically worth more than their market value.

The Adviser employs both a top-down and bottom-up methodology to construct a diversified portfolio that avoids excessive sector and security concentrations. The Adviser pursues investments that it believes are statistically cheap or intrinsically undervalued given growth prospects, while trying to identify the presence of a catalyst for future growth (e.g., acquisition, new products, economic cycle or management change).

In making investment decisions, the Adviser may consider cash flow, book value, dividend yield, growth potential, quality of management, adequacy of revenues, earnings, capitalization, relation to historical earnings, the value of the issuer's underlying assets, and expected future relative earnings growth. The Adviser may sell a security when the underlying equity valuation changes due to a price change or change in fundamentals of the company, the underlying fixed income component has deteriorated or the convertible characteristics have changed.

With respect to the Fund's investment in Debt Securities:

The goal of the Fund's strategy is to provide high, reliable income by investing in securities backed 100% by the full faith and credit of the U.S. government. Portfolio construction consists of three layers: top-down, macro-economic driven, mid-level, relative value driven and bottom up, borrower characteristics driven. The greatest emphasis will generally be on the bottom up factor, but the relative weightings of the three layers can and will vary over time, reflective of the broad economic environment.

Under normal circumstances, the Fund primarily invests in:

n  Mortgage-backed obligations and collateralized mortgage obligations (CMOs) issued by the Government National Mortgage Association, with an average effective maturity ranging from 2 to 10 years; and

n  Obligations issued or guaranteed by the U.S. government or by its agencies or instrumentalities with a dollar-weighted average maturity normally less than 5 years.

The Fund's average effective maturity is based on the value of the Fund's investments in securities with different maturity dates. This measures the sensitivity of the Fund to changes in interest rates. The value of a long-term debt security is more sensitive to interest rate changes than the value of a short-term security.

Victory Capital Management Inc., which we refer to as the "Adviser" throughout this Prospectus, manages the Funds.


7



Additional Fund Information (continued)

There is no limitation on the maturity of any specific security the Fund may purchase, and the Fund may sell any security before it matures.

The Fund may invest in securities issued by certain U.S. government instrumentalities which are supported only by the credit of the federal instrumentality.

The Adviser's sell discipline is driven by actual borrower prepayments, where bonds that exhibit either erratic or consistently fast prepayment speeds are sold first.

The Adviser may from time to time generate turnover in excess of 100%.


8



Investments

The following describes the types of securities the Fund may purchase under normal market conditions to achieve its principal investment strategy. The Fund will not necessarily buy all of the securities listed below.

U.S. Equity Securities

Can include common stock, preferred stock, and securities that are convertible or exchangeable into common stock of U.S. corporations.

Equity Securities of Foreign Companies Traded on U.S. Exchanges

Can include common stock and convertible preferred stock of non-U.S. corporations. Also may include American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs), which are receipts issued by a bank or trust company and evidence ownership of underlying securities issued by a foreign corporation.

U.S. Government Securities*

Notes and bonds issued or guaranteed by the U.S. government, its agencies or instrumentalities. Some are direct obligations of the U.S. Treasury; others are obligations only of the U.S. agency or instrumentality. There is no guarantee that the U.S. government will provide support to U.S. agencies or instrumentalities if they are unable to meet their obligations.

U.S. Government Instrumentalities*

Securities issued by U.S. government instrumentalities such as: the Student Loan Marketing Association ("SLMA" or Sallie Mae), The Federal Farm Credit Bank ("FFCB"), and Federal Home Loan Banks ("FHLB"). Certain instrumentalities are "wholly-owned Government corporations," such as the Tennessee Valley Authority ("TVA").

Mortgage-Backed Securities

Instruments secured by mortgages or pools of mortgages.

When-Issued, To-Be-Announced ("TBA") and Delayed-Delivery Securities

A security that is purchased for delivery at a later time. In a TBA transaction, a seller generally agrees to deliver a mortgage-backed security meeting certain criteria at a future date.

The Adviser may use several types of investments in furtherance of the Fund's overall investment objective. The following describes the types of securities that may be purchased but the Adviser does not consider them to be a part of the Fund's principal investment strategy. Additional securities that the Fund may purchase are included in the Fund's SAI.

Asset-Backed Securities

Debt securities backed by loans or accounts receivable originated by banks, credit card companies, student loan issuers, or other providers of credit. These securities may be enhanced by a bank letter of credit or by insurance coverage provided by a third party.

Investment Companies

The Fund may invest in securities of other investment companies, including unit investment trusts (UITs) and exchange traded funds (ETFs), if those companies invest in securities consistent with the Fund's investment objective and policies. ETFs are shares of investment companies that are bought and sold on a securities exchange.

*  Obligations of entities such as the GNMA are backed by the full faith and credit of the U.S. Treasury. Others, such as the FNMA, SLMA, FHLB, FHLMC, FMAC and TVA are supported by the right of the issuer to borrow from the U.S. Treasury. FFCB is supported only by the credit of the federal instrumentality. See the SAI for more information about investments in obligations of U.S. government instrumentalities and wholly-owned Government corporations.


9



Risk Factors

By matching your investment objective with an acceptable level of risk, you can create your own customized investment plan.

The following describes the principal risks that you may assume as an investor in the Fund.

General risks

n  Market risk is the risk that the market value of a security may decline in response to developments affecting individual companies and/or general economic conditions. Market risk may affect a single issuer, an industry, a sector of the economy, or the entire market. Price changes may be temporary or last for extended periods. For example, stock prices have historically fluctuated in periodic cycles.

n  Manager risk is the risk that the Fund's portfolio manager may implement its investment strategy in a way that does not produce the intended result.

n  Stock selection risk is that risk that the value of the Fund's investments may decline if the particular companies in which the Fund invests do not perform well in the market.

Active trading risk

n  Active trading risk is the risk that, to the extent the Fund buys and sells securities actively, it could have higher expenses (which reduces returns to shareholders) and higher taxable distributions. While it is not an investment strategy to actively trade the Fund's portfolio, the Adviser may from time to time do so, generating portfolio turnover rates in excess of 100%.

Equity risk

n  Equity risk is the risk that the value of an equity security will fluctuate in response to changes in earnings or other conditions affecting the issuer's profitability or in general market conditions. Unlike debt securities, which have preference to a company's assets in case of liquidation, equity securities are entitled to the residual value after the company meets its other obligations.

Debt security risks

n  Interest rate risk is the risk that the value of a security will decline if interest rates rise. When interest rates go up, the value of a debt security typically goes down. When interest rates go down, the value of a debt security typically goes up. Generally, the market values of securities with longer maturities are more sensitive to changes in interest rates. In addition, during periods of increased market volatility, the market values of fixed income securities may be more sensitive to changes in interest rates.

n  Inflation risk is the risk that inflation will erode the purchasing power of the cash flows generated by debt securities held by the Fund. Fixed-rate debt securities are more susceptible to this risk than floating-rate debt securities or equity securities that have a record of dividend growth.

n  Reinvestment risk is the risk that when interest rates are declining, the interest income and prepayments on a security the Fund receives will have to be reinvested at lower interest rates. Generally, interest rate risk and reinvestment risk tend to have offsetting effects, though not necessarily of the same magnitude.

n  Credit (or default) risk is the risk that the issuer of a debt security will be unable to make timely payments of interest or principal. Credit risk is measured by NRSROs such as Standard & Poor's (S&P), Fitch, Inc., and Moody's Investors Service (Moody's).


10



Risk Factors (continued)

Mortgage-related securities risks:

n  Prepayment risk is the risk that, because prepayments generally occur when interest rates are falling, the Fund may have to reinvest the proceeds from prepayments at lower interest rates. Interest rate levels and other factors may affect the frequency of mortgage prepayments, which in turn can affect the average life of a pool of mortgage-related securities. In periods of rising interest rates, the prepayment rate tends to decrease, lengthening the average life of a pool of mortgage-related securities. In periods of falling interest rates, the prepayment rate tends to increase, shortening the average life of a pool of mortgage-related securities.

n  Extension risk is the risk that the rate of anticipated prepayments on principal may not occur, typically because of a rise in interest rates, and the expected maturity of the security will increase. During periods of rapidly rising interest rates, the effective average maturity of a security may be extended past what the Fund's portfolio manager anticipated that it would be. The market value of securities with longer maturities tend to be more volatile.

When-issued, TBA and delayed-delivery securities risk:

n  When-issued, TBA and delayed-delivery securities risk is the risk that the market value of the security issued on a when-issued, to-be-announced or delayed-delivery basis may change before the delivery date, which may adversely impact the Fund's NAV. There is also the risk that a party fails to deliver the security on time or at all.

ADRs, GDRs and U.S.-traded foreign investments risks:

n  Political and economic risks, along with other factors, could adversely affect the value of the Fund's investments in foreign companies traded on U.S. exchanges, such as ADRs and GDRs.

n  Foreign securities risk. Investing in foreign companies, including through ADRs and GDRs involves certain special risks. For example, compared to U.S. companies, there generally is less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign companies. Investments in foreign countries could be affected by factors not present in the U.S., including expropriation, confiscation of property, and difficulties in enforcing contracts. These factors can make foreign investments, especially those in developing countries, more volatile than U.S. investments.

Certain of these risks may also apply to some extent to U.S. investments that are denominated in foreign currencies and investments in U.S. companies that have significant foreign operations.

The Adviser may use several types of investments in furtherance of the Fund's overall investment objective. The following risks are those that the Adviser does not consider to be principal risks of the Fund. Additional risks are included in the Fund's SAI.

Asset-backed securities risk:

n  Asset-backed securities risk. Similar to mortgage-backed securities, asset-backed securities generally may be prepaid at any time, making them subject to prepayment risk and extension risk, either of which could adversely impact the value of such securities.

Investment company risk:

n  Investment company risk is the risk that the Fund's ability to achieve its investment objective may be directly related to the ability of any underlying investment companies (including ETFs and UITs) held by the Fund to meet their investment objectives. In addition, shareholders of the Fund will indirectly bear the fees and expenses of the underlying investment companies. Lack of liquidity in an ETF could result in an ETF being more volatile than the underlying portfolio of securities.

An investment in the Fund is not a complete investment program.


11



INVESTING WITH VICTORY

If you are looking for a convenient way to open an account or to add money to an existing account, we can help. The sections that follow will serve as a guide to your investments with Victory. Choosing a Share Class will help you decide whether it would be more to your advantage to buy Class A, Class C, Class I or Class R shares of the Fund. Class I and Class R shares are available for purchase only by eligible shareholders. The following sections describe how to open an account, how to access information about your account, and how to buy, exchange and sell shares of the Fund. Note, this information will vary if you invest through a third party such as a brokerage firm and will be dependent on that firm's policies and practices. Consult your Investment Professional for specific details.

We want to make it simple for you to do business with us. If you have questions about any of this information, please call your Investment Professional or one of our customer service representatives at 800-539-FUND. They will be happy to assist you.

All you need to do to get started is to fill out an application.

Important information about sales load breakpoints

The Fund charges a front-end sales load on purchases of Class A shares. The sales charge is lower for larger investments. The investment levels required to obtain a reduced sales load are commonly referred to as "breakpoints."

In order to obtain a breakpoint discount, you should inform your Investment Professional at the time you purchase shares of the existence of the other Victory accounts or purchases of Victory Funds that are eligible to be linked for the purpose of calculating the initial sales charge. The Fund or your Investment Professional may ask you for records or other information about other Victory Funds held in your accounts and linked accounts, including accounts opened with a different Investment Professional.

You can find additional information regarding sales charges and their reductions on the Fund's website, VictoryFunds.com, by clicking on Victory Portfolios' Mutual Fund Pricing Policies. Information regarding sales charges is also included in the Fund's Statement of Additional Information.


12



Organization and

Management of the Fund

The Trust's Board of Trustees has the overall responsibility for overseeing the management of the Fund.

The Investment Adviser

The Trust has an Advisory Agreement with the Adviser. The Adviser is a New York corporation registered as an investment adviser with the SEC. The Adviser oversees the operations of the Funds according to investment policies and procedures adopted by the Board of Trustees. As of December 31, 2014, the Adviser and its affiliates managed or advised assets totaling in excess of $35.9 billion for individual and institutional clients. The Adviser's address is 4900 Tiedeman Road, 4th Floor, Brooklyn, Ohio 44144.

The Adviser is a multi-boutique asset manager comprised of multiple investment teams, referred to as investment franchises, each of which utilizes an independent approach to investing. Diversified Equity Management is the investment franchise responsible for management of the equity portion of the Balanced Fund.

For the fiscal year ended October 31, 2014, the Adviser was paid advisory fees, before waivers, at an annual rate equal to 0.60% of the average daily net assets of the Fund.

A discussion of the Board's most recent considerations in approving the Advisory Agreement is included in the Fund's annual report for the period ended October 31, 2013.

Portfolio Management

Lawrence G. Babin is the Lead Portfolio Manager of the equity investments and Heidi L. Adelman is the Lead Portfolio Manager of the fixed-income investments of the Balanced Fund.

Mr. Babin is a Co-Chief Investment Officer (Diversified Equity) of the Adviser and has been associated with the Adviser or an affiliate since 1982. Mr. Babin is a CFA charterholder.

Ms. Adelman is a Chief Investment Officer (Mortgage Investments) of the Adviser and has been associated with the Adviser since 1995.

Portfolio Managers listed for the Fund are, together, primarily responsible for the day-to-day management of the Fund's portfolio.

The Fund's SAI provides additional information about the portfolio managers' method of compensation, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Fund.


13



Share Price

The Fund calculates its share price, called its NAV, each business day at the close of regular trading on the New York Stock Exchange ("NYSE"), which is normally 4:00 p.m. Eastern time, but may be earlier or later on some days. You may buy, exchange, and sell your shares on any business day at a price that is based on the NAV that is calculated after you place your order and it is accepted. A business day is a day on which the NYSE is open.

To the extent the Fund's investments include securities that are primarily traded in foreign markets, the value of those securities may change on days when shareholders are unable to purchase and redeem the Fund's shares such as on weekends or other days when the Fund does not price its shares.

The Fund prices its investments based on market value when market quotations are readily available. When these quotations are not readily available, the Fund will price its investments at fair value according to procedures approved by the Board of Trustees. The Fund will fair value a security when:

n  Trading in the security has been halted;

n  The market quotation for the security is clearly erroneous due to a clerical error;

n  The security's liquidity decreases such that, in the Adviser's opinion, the market quotation has become stale; or

n  An event occurs after the close of the trading market (but before the Fund's NAV is calculated) that, in the Adviser's opinion, materially affects the value of the security.

The use of fair value pricing may minimize arbitrage opportunities that attempt to exploit the differences between a security's market quotation and its fair value. The use of fair value pricing may not, however, always reflect a security's actual market value in light of subsequent relevant information, and the security's opening price on the next trading day may be different from the fair value price assigned to the security.

Each class of shares of the Fund calculates its NAV by adding up the total value of the investments and other assets of that class, subtracting its liabilities, and then dividing that figure by the number of outstanding shares of the class.

You may be able to find the Fund's NAV each day in The Wall Street Journal and other newspapers. Newspapers do not normally publish fund information until a fund reaches a specific number of shareholders or level of assets. You may also find the Fund's NAV by calling 800-539-3863 or by visiting the Fund's website at VictoryFunds.com.

The daily NAV is useful to you as a shareholder because the NAV,
multiplied by the number of Fund shares you own, gives you the value of your investment.


14



Choosing a Share Class

CLASS A

n  Front-end sales charge, as described in this section. There are several ways to reduce or eliminate this charge.

n  A deferred sales charge (CDSC) may be imposed if you sell your shares within twelve months of their purchase.

n  Class A shares also pay ongoing distribution and/or service (12b-1) fees.

n  Lower annual expenses than Class C or Class R shares.

CLASS C

n  No front-end sales charge. All your money goes to work for you right away.

n  A deferred sales charge (CDSC) if you sell your shares within twelve months of their purchase.

n  Class C shares also pay ongoing distribution and/or service (12b-1) fees.

n  Higher annual expenses than all other classes of shares.

CLASS I

n  No front-end sales charge. All your money goes to work for you right away.

n  Class I shares do not pay ongoing distribution and/or service (12b-1) fees.

n  Class I shares are only available to certain investors.

n  Lower annual expenses than all other classes of shares.

CLASS R

n  No front-end sales charge or CDSC. All your money goes to work for you right away.

n  Class R shares pay ongoing distribution and/or service (12b-1) fees.

n  Class R shares are only available to certain investors.

n  Higher annual expenses than Class A or Class I shares.

Share Classes

The Fund offers Class A, Class C, Class I and Class R shares. Each share class represents investments in the same portfolio of securities, but each class has its own sales charge and expense structure, allowing you and your Investment Professional to choose the class that best suits your investment needs. When you purchase shares of the Fund, you must choose a share class.

Deciding which share class best suits your situation depends on a number of factors that you should discuss with your Investment Professional, including: how long you expect to hold your investment, how much you intend to invest, and the total expenses associated with each share class.

Also, not all Victory Funds offer all classes of shares, and some classes of shares are available for purchase only by eligible shareholders.

An Investment Professional is an investment consultant, salesperson, financial planner, investment adviser, or trust officer who provides you with investment information. Your Investment Professional also can help you decide which share class is best for you. Investment Professionals and other intermediaries may charge fees for their services.


15



Choosing a Share Class (continued)

For historical expense information, see the "Financial Highlights" at the end of this Prospectus.

There are several ways you can combine multiple purchases of Class A shares of the Victory Funds to take advantage of reduced sales charges and, in some cases, eliminate the sales charges.

The Fund currently offers only the classes of shares described in this Prospectus. At some future date, the Fund may offer additional classes of shares.

The Fund reserves the right, without notice, to change the eligibility requirements of its share classes, including the types of clients who are eligible to purchase each share class. The Fund may also waive any applicable eligibility requirements or investment minimums at its discretion.

The Fund or any class may be terminated at any time for failure to achieve an economical level of assets or for other reasons.

Calculation of Sales Charges for Balanced Fund for Class A Shares

Class A shares are sold at their public offering price, which is the net asset value ("NAV") plus the applicable initial sales charge. The sales charge percentage decreases as the amount that you invest increases. The current sales charge rates are listed below:

Your Investment in the Fund

  Sales Charge
as a % of
Offering Price
  Sales Charge
as a % of
Your Investment
 

Up to $49,999

   

5.75

%

   

6.10

%

 
$50,000 up to $99,999    

4.50

%

   

4.71

%

 
$100,000 up to $249,999    

3.50

%

   

3.63

%

 
$250,000 up to $499,999    

2.50

%

   

2.56

%

 
$500,000 up to $999,999    

2.00

%

   

2.04

%

 
$1,000,000 and above*    

0.00

%

   

0.00

%

 

*A contingent deferred sales charge ("CDSC") of 0.75% may be imposed on certain redemptions of Class A shares purchased without an initial sales charge if any of those shares are redeemed in the first year after purchase. This charge will be based on either the cost of the shares or net asset value at the time of redemption, whichever is lower. No CDSC is imposed on shares representing reinvested distributions. You may be eligible for a reduction or waiver of this CDSC under certain circumstances. See the SAI for details. The Fund makes available, free of charge, information relating to sales charges on its website at VictoryFunds.com.

Sales Charge Reductions and Waivers for Class A Shares

In order to obtain a Class A sales charge reduction or waiver, you must provide your Investment Professional, financial intermediary or the Fund's transfer agent, at the time of purchase, current information regarding shares of any Victory Funds held in other accounts. Such information must include account statements or other records (including written representations from the intermediary holding the shares) that indicate that a sales charge was paid regarding shares of the Victory Funds held in: (i) all accounts (e.g., retirement accounts) with the Victory Funds and your financial intermediary; (ii) accounts with other financial intermediaries; and (iii) accounts in the name of immediate family household members (spouse or domestic partner and children under 21).

You may reduce or eliminate the sales charge in the following cases:

1.  Purchases sufficient to reach a breakpoint (see Investing with Victory — Important information about sales load breakpoints).

2.  A Letter of Intent allows you to buy Class A shares of the Fund over a 13-month period and receive the same sales charge as if all shares had been purchased at one time. You must start with a minimum initial investment of at least 5% of the total amount you intend to purchase. A portion of the shares purchased under the nonbinding Letter of Intent will be held in escrow until the total investment has


16



Choosing a Share Class (continued)

been completed. In the event the Letter of Intent is not completed, sufficient escrowed shares will be redeemed to pay any applicable front-end sales charges.

3.  Rights of Accumulation allow you to add the value of any Class A shares you already own (excluding shares sold without a sales charge) to the amount of your next Class A investment to determine if your additional investment will qualify for a reduced sales charge. The value of the Class A shares you already own will be calculated by using the greater of the current value or the original investment amount.

4.  The Combination Privilege allows you to combine the value of Class A shares you own in accounts of multiple Victory Funds (subject to limitations applicable to certain Victory Funds and excluding shares sold without a sales charge) and in accounts of household members of your immediate family (spouse or domestic partner and children under 21) to achieve a reduced sales charge on your added investment.

5.  The Reinstatement Privilege permits an investor, within 90 days of a redemption of Class A shares of the Fund, to reinvest all or part of the redemption proceeds in the Class A shares of any Victory Fund at the NAV next computed after receipt by the Transfer Agent of the reinvestment order. No service charge is currently imposed on reinvestment in shares of the Fund.

6.  The Victory Funds will completely waive the sales charge for Class A shares in the following cases:

a.  Purchases of $1,000,000 or more.

b.  Purchases by:

i.  current and retired Fund trustees or officers;

ii.  directors, trustees, employees, and family members of employees of the Adviser or "Affiliated Providers;"* and

iii.  registered broker-dealers, financial intermediaries or their agents or affiliates who have agreements with Victory Capital Advisers, Inc., (the "Distributor"), if the shares are purchased for their own account, purchased for retirement plans of their employees or sold to registered representatives or full-time employees (or their immediate families), provided that such purchase is for one of the foregoing types of accounts.

c.  Purchases for trust or other advisory accounts established with a financial institution and fee-based investment products or accounts

d.  Reinvestment of proceeds from a liquidation distribution of Class A shares of a Victory Fund held in a deferred compensation plan, agency, trust, or custody account.

e.  Purchases by retirement plans, including Section 401 and 457 plans sponsored by a Section 501(c)(3) organization and certain non-qualified deferred compensation arrangements that operate in a similar manner to qualified plans. If the Distributor pays a concession to the dealer of record, a CDSC of up to 0.75% will be charged to the shareholder if any of those shares are redeemed in the first year after purchase.

*Affiliated Providers are affiliates and subsidiaries of the Adviser, and any organization that provides services to the Trust.


17



Choosing a Share Class (continued)

This charge will be based on either the cost of the shares or net asset value at the time of redemption, whichever is lower. There will be no CDSC on reinvested distributions. You may be eligible for reduction or waiver of this CDSC under certain circumstances. See the SAI for details.

f.  Purchases by participants in the Victory Investment Program.

g.  Purchases by participants in no transaction fee programs offered by certain broker-dealers (sometimes referred to as "supermarkets").

h.  Purchases by financial intermediaries who have entered into an agreement with the Distributor to offer shares to self-directed investment brokerage accounts that may or may not charge a transaction fee to its customers.

i.  Investors that have an investment account with the Adviser.

You should inform the Fund or your broker or other financial intermediary at the time of purchase of the sales charge waiver category which you believe applies.

Calculation of Sales Charges for Class C Shares

You will pay a 1.00% CDSC on any Class C shares you sell within 12 months of purchase. The CDSC is based on the current value of the shares being sold or their net asset value when purchased, whichever is less. There is no CDSC on shares you acquire by reinvesting your dividends or capital gains distributions. You may be eligible for reduction or waiver of this CDSC under certain circumstances. There is no CDSC imposed when you exchange your shares for Class C shares of another Victory Fund; however, your exchange is subject to the same CDSC schedule that applied to your original purchase.

An investor may, within 90 days of a redemption of Class C shares, reinvest all or part of the redemption proceeds in the Class C shares of any Victory Fund at the NAV next computed after receipt by the transfer agent of the reinvestment order. Class C share proceeds reinstated do not result in a refund of any CDSC paid by the shareholder, but the reinstated shares will be treated as CDSC exempt upon reinstatement. The shareholder must ask the Distributor for such privilege at the time of reinvestment.

To keep your CDSC as low as possible, each time you sell shares we will first sell shares in your account that are not subject to CDSC. If there are not enough of these to meet your sale, we will sell the shares in the order they were purchased.

Purchases of $1,000,000 and above will automatically be made in Class A shares of the Fund.

Eligibility Requirements to Purchase Class I Shares

Only Eligible Investors may purchase Class I shares of the Fund, directly or by exchange. Eligible Investors include the following:

n  Institutional and individual retail investors with a minimum initial investment in Class I shares of $2,000,000 who purchase through certain broker-dealers or directly from the transfer agent;

n  Retirement plans, including Section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3) organization and certain non-qualified deferred compensation arrangements that operate in a similar manner to qualified plans;

n  Investors in selected fee-based programs;

n  Current and retired Fund trustees or officers;


18



Choosing a Share Class (continued)

n  Directors, trustees, employees, and family members of employees, of the Adviser or "Affiliated Providers;"**

n  Purchases by participants in the Victory Investment Program; and

n  Brokers (and their sales representatives) where those brokers have agreements with the Distributor to sell shares of the Fund.

The Fund may allow a lower initial investment if, in the opinion of the Distributor, the investor has the adequate intent and availability of assets to reach a future level of investment of $2,000,000. The Fund reserves the right to change the criteria for Eligible Investors and the investment minimums.

Eligibility Requirements to Purchase Class R Shares

Class R shares may only be purchased by:

n  Retirement plans, including Section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3) organization and certain non-qualified deferred compensation arrangements that operate in a similar manner to qualified plans.

n  Fee-based investment products or accounts.

**Affiliated Providers are affiliates and subsidiaries of the Adviser and any organization that provides services to the Trust.


19




How to Buy Shares

Opening an account

If you would like to open an account, you will first need to complete an Account Application.

You can obtain an Account Application by calling Victory Funds Customer Service at 1-800-539-3863. You can also download an Account Application by visiting the Fund's website, VictoryFunds.com, and clicking on the Victory Funds Account Application link. Send the completed Account Application, along with a check made payable to the Victory Funds at the following address:

The Victory Funds
P.O. Box 182593
Columbus, OH 43218-2593.

You can also obtain an Account Application by contacting your Investment Professional. When you invest through an Investment Professional, the procedures for buying, selling, and exchanging shares and the account features and policies may differ. In addition to any limitations described in this Prospectus, an Investment Professional or other intermediary may also place other limits on your ability to use the services of the Fund. Sometimes an Investment Professional will charge you for their services. This fee will be in addition to, and unrelated to, the fees and expenses charged by the Fund.

Mutual funds must obtain and verify information that identifies investors opening new accounts. If the Fund is unable to collect the required information, you may not be able to open your account. Additional details about the Fund's Customer Identification Program are available in the section "Important Fund Policies."

If your investment order is accepted by the Fund, an Investment Professional or other intermediary, it will be priced at the NAV next computed as described in the section entitled "Share Price."

If you participate in a retirement plan that offers one of the Victory Funds as an option, please consult your employer for information on how to purchase shares of the Victory Funds through the plan, including any restrictions or limitations that may apply.

Paying for your initial purchase

Make your check payable to The Victory Funds. All checks must be drawn on U.S. banks. If your check is returned as uncollectible for any reason, you will be charged for any resulting fees and/or losses. The Fund does not accept cash, money orders, traveler's checks, credit card convenience checks, or third party checks. Additionally, bank starter checks are not accepted for the shareholder's initial investment into the Fund. All payments must be denominated in U.S. dollars.

Minimum investments

If you would like to buy Class A or Class C shares, the minimum investment required to open an account is $2,500 ($1,000 for IRA accounts), with additional investments of at least $250. If you would like to buy Class I or Class R shares, you must first be an Eligible Investor, as discussed in the section Choosing a Share Class — Eligibility Requirements to Purchase. There are no minimum investment amounts required for Class I or Class R shares except as set forth in the Eligibility Requirements to Purchase.

If your account falls below the minimum investment amount, we may ask you to reestablish the minimum investment. If you do not do so within 60 days, we may close your account and send you the value of your account.

The minimum investment required to open an account may be waived or lowered for employees, and immediate family members of the employee, of the Adviser and the


20



How to Buy Shares (continued)

Administrator, and their affiliates. In addition, the minimum investment required may be waived when the Fund is purchased in a managed account or within qualified retirement plans or in other similar circumstances. Although the Fund may sometimes waive the minimum investment, when it does so, it always reserves the right to reject initial investments under the minimum at its discretion.

There is no minimum investment required to open an account or for additional investments in Victory Simple IRAs.

Purchasing additional shares

Once you have an existing account, you can make additional investments at any time in any amount (subject to any minimums) in the following ways:

n  By Mail

To ensure that your additional investment is properly credited to your account, use the Investment Stub attached to your confirmation statement and send it with your check to the address indicated.

n  By Telephone

If you have an existing account that has been set up to receive electronic transfers, you can buy additional shares by calling Victory Funds Customer Service at 800-539-3863 between 8:00 a.m. and 6:00 p.m. (Eastern Time), Monday through Friday.

n  By Exchange

You may purchase shares of the Fund using the proceeds from the simultaneous redemption of shares of another Victory Fund if it is eligible for an exchange with your fund. You may initiate an exchange online (if you are a registered user of VictoryFunds.com), by telephone, or by mail. See the section "Exchanging Shares."

n  Via the Internet

If you are a registered user, you may request a purchase of shares through our website at VictoryFunds.com. Your account must be set up for Automated Clearing House ("ACH") payment in order to execute online purchases.

n  By ACH

Your account must be set up for ACH payment in order to execute purchases online or by telephone. It takes about 15 days to set up an ACH account and only domestic member banks may be used. After your account is set up, your purchase amount can be transferred by ACH. Currently, the Funds does not charge a fee for ACH transfers but it reserves the right to charge for this service in the future. Your originating bank may charge a fee for ACH transfers.

n  By Wire

You may buy Fund shares by bank wire transfer of same day funds. Please call Victory Funds Customer Service at 800-539-3863 between 8:00 a.m. and 6:00 p.m. (Eastern Time), Monday through Friday for wiring instructions. Any commercial bank can transfer same-day funds by wire.

Although the Transfer Agent does not currently charge you for receiving same-day funds, it reserves the right to charge for this service in the future. Your bank may charge you for wiring same-day funds. You cannot buy shares for tax-qualified retirement plans by wire transfer.


21



How to Buy Shares (continued)

n  By Systematic Investment Plan

To enroll in the Systematic Investment Plan, you should check this box on the Account Application or on the Account Maintenance Form. We will need your bank information and the amount ($250 or more) and frequency of your investment. You can select monthly, quarterly, semi-annual or annual investments. You should attach a voided personal check so the proper information can be obtained. You must first meet the minimum investment requirement before we will make automatic withdrawals from your bank account to invest in shares of the Fund.

Other purchase rules you should know

The Fund reserves the right to refuse a purchase order for any reason, including if it believes that doing so would be in the best interest of the Fund or its shareholders. The Fund also reserves the right, without notice, to increase or decrease the minimum amount required to open, convert shares to, or maintain a Fund account, or to add to an existing Fund account.

Keep these addresses handy for purchases, exchanges, or redemptions.

If you would like to make additional investments after your account is established, use the Investment Stub attached to your confirmation statement and send it with you check to the address indicated.

 

BY REGULAR U.S. MAIL

  The Victory Funds
P.O. Box 182593
Columbus, OH 43218-2593
 

 

BY OVERNIGHT MAIL

  Use the following address ONLY for overnight packages:
The Victory Funds
c/o Citi TA Operations
3435 Stelzer Road
Columbus, OH 43219
PHONE: 800-539-3863
 

 

BY WIRE

  Call 800-539-3863 BEFORE wiring money to notify the Fund that you intend to purchase shares by wire and to verify wire instructions.  

 

BY TELEPHONE

 

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

 

 

ON THE INTERNET

 

www.VictoryFunds.com

 

Statements and Reports

You will receive a periodic statement reflecting any transactions that affect the balance or registration of your account. You will receive a confirmation after any purchase, exchange, or redemption. If your account has been set up by an Investment Professional, Fund activity will be detailed in that account's statements. Share certificates are not issued. Twice a year, you will receive a financial report of the Fund. By February 15th of each year, you will be mailed an IRS form reporting distributions for the previous year, which also will be filed with the IRS.


22



How to Buy Shares (continued)

Retirement Plans

You can use the Fund as part of your retirement portfolio. Your Investment Professional can set up your new account under one of several tax-deferred retirement plans. Please contact your Investment Professional or the Fund for details regarding an IRA or other retirement plan that works best for your financial situation.


23



How to Exchange Shares

There may be limits on the ability to exchange between certain Victory Funds. You can obtain a list of funds available for exchange by calling 800-539-FUND or or by visiting VictoryFunds.com

The shares of any class of the Fund may be exchanged for the shares of any other class offered by the Fund or the same class, or any other class, of any other Victory Fund, either through your Investment Professional or directly through the Fund, subject to the conditions described below.

n  Exchanges are subject to any CDSC, minimum investment limitation or eligibility requirements described in the applicable Prospectus and SAI. You may be required to provide sufficient information to establish eligibility to exchange to the new share class.

n  To exchange between Victory Funds, the other Victory Fund you wish to exchange into must be eligible for exchange with your Fund.

n  Shares of the Victory Fund selected for exchange must be available for sale in your state of residence.

If you have questions about these, or any of the Fund's other exchange policies, please consult Victory Customer Service or your Investment Professional before requesting an exchange.

Before exchanging, you should read the Prospectus of the Fund you wish to exchange into, which may be subject to different risks, fees and expenses.

C share conversion

You may be able to convert your Class C shares to a different share class of the same Fund that has a lower expense ratio provided certain conditions are met. This conversion feature is intended for shares held through a financial intermediary offering a fee-based or wrap fee program that has an agreement with the Adviser or the Distributor specific for this purpose. Generally, Class C shares are not eligible for conversion until the applicable CDSC period has expired. Please contact your financial intermediary for additional information.

Processing your exchange/conversion

If your exchange request is received and accepted by the Fund, an Investment Professional or other intermediary by the close of trading as described in the section entitled "Share Price" then your exchange will be processed the same day. Your exchange will be processed on the next business day if received after the close of trading. Exchanges will occur at the respective net asset values of the share classes next calculated after receipt and acceptance of your exchange request, plus any applicable sales charge described in the Prospectus.

If your Fund shares are converted to a different share class, the transaction will be based on the respective net asset value of each class as of the trade date of the conversion. Consequently, you may receive fewer shares or more shares than originally owned, depending on that day's net asset values. Please contact your financial intermediary regarding the tax consequences of any conversion.

Requesting an exchange

You can exchange shares of the Fund by telephone, by mail or via the Internet. You cannot exchange into an account with a different registration or tax identification number.

n  By Telephone

Unless you indicate otherwise on the account application, Victory Customer Service will be authorized to accept exchange instructions received by telephone.

n  By Mail

Send a letter of instruction signed by all registered owners or their legal representatives to the Victory Funds.

n  Via the Internet

You may also exchange shares via the Internet at VictoryFunds.com if you are a registered user.


24



How to Exchange Shares (continued)

Other exchange rules you should know

The Fund may refuse any exchange purchase request if the Adviser determines that the request is associated with a market timing strategy. The Fund may terminate or modify the exchange privilege at any time on 60 days' notice to shareholders.

An exchange of Fund shares for shares of another Victory Fund constitutes a sale for tax purposes unless the exchange is made within an IRA or other tax-deferred account.

For information on how to exchange shares of the Fund that were purchased through your employer's retirement plan, including any restrictions and charges that the plan may impose, please consult your employer.


25



There are a number of convenient ways to sell your shares. You can use the same mailing addresses listed for purchases.

How to Sell Shares

If your redemption request is received in good order by the close of regular trading on the NYSE, your redemption will be processed the same day. Your redemption will be processed on the next business day if received after the close of regular trading on the NYSE. You cannot redeem your shares at www.VictoryFunds.com.

  BY TELEPHONE

The easiest way to redeem shares is by calling 800-539-FUND. When you fill out your original application, be sure to check the box marked "Telephone Authorization." Then when you are ready to sell, call and tell us which one of the following options you would like to use:

n  Mail a check to the address of record;

n  Wire funds to a previously designated domestic financial institution;

n  Mail a check to a previously designated alternate address; or

n  Electronically transfer your redemption via ACH to a previously designated domestic financial institution.

The transfer agent records all telephone calls for your protection and takes measures to verify the identity of the caller. If the transfer agent properly acts on telephone instructions and follows reasonable procedures to ensure against unauthorized transactions, none of the Trust, its servicing agents, the Adviser, or the transfer agent will be responsible for any losses. If the transfer agent does not follow these procedures, it may be liable to you for losses resulting from unauthorized instructions.

If there is an unusual amount of market activity and you cannot reach the transfer agent or your Investment Professional by telephone, consider placing your order by mail.

  BY MAIL

Use the regular U.S. mail or overnight mail address to redeem shares. Send us a letter of instruction indicating your Fund account

number, amount of redemption, and where to send the proceeds. A Medallion signature guarantee is required for the following redemption requests:

n  Your account registration has changed within the last 15 days;

n  The check is not being mailed to the address on your account;

n  The check is not being made payable to the owner of the account;

n  The redemption proceeds are being transferred to another Victory Fund account with a different registration; or

n  The check or wire is being sent to a different bank account than was previously designated.

You can get a Medallion signature guarantee from a financial institution — such as a commercial bank, broker dealer, credit union, clearing agency, or savings bank — that is a member of a Medallion signature guarantee program.

  BY WIRE

If you want to receive your proceeds by wire, you must establish a Fund account that will accommodate wire transactions. If you call before the close of trading on the NYSE, your funds will be wired on the same business day.

  BY ACH

Normally, your redemption will be processed on the same day, but will be processed on the next day if received after the close of trading on the NYSE. It will be transferred by ACH as long as the transfer is to a domestic bank.


26



How to Sell Shares (continued)

Systematic Withdrawal Plan

If you check this box on the Account Application or on the Account Maintenance Form, we will send monthly, quarterly, semi-annual, or annual payments to the person you designate. The minimum withdrawal is $25, and you must have a balance of $5,000 or more at the time you establish the Systematic Withdrawal Plan. If the payment is to be sent to an account of yours, we will need a voided check to activate this feature. If the payment is to be made to an address different from your account address, we will need a Medallion signature guaranteed letter of instruction. You should be aware that each withdrawal may be a taxable transaction. Also, each withdrawal reduces your account balance, and eventually your account balance may be depleted. However, you cannot automatically close your account using the Systematic Withdrawal Plan. If your balance falls below the initial purchase minimum, we may ask you to bring the account back to the minimum balance. If you decide not to increase your account to the minimum balance, your account may be closed and the proceeds mailed to you.

Additional Information about Redemptions

n  Redemption proceeds from the sale of shares purchased by a check or through ACH will be held until the purchase check or ACH has cleared, which may take up to 10 business days.

n  The Fund may postpone payment of redemption proceeds for up to seven calendar days at any time.

n  The Fund may suspend your right to redeem your shares in the following circumstances:

•  During non-routine closings of the NYSE;

•  When the SEC determines either that trading on the NYSE is restricted or that an emergency prevents the sale or valuation of the Fund's securities; or

•  When the SEC orders a suspension to protect the Fund's shareholders.

n  The Fund will pay redemptions by any one shareholder during any 90-day period in cash up to the lesser of $250,000 or 1.00% of the Fund's net assets. The Fund reserves the right to pay the remaining portion "in kind," that is, in portfolio securities rather than cash.

n  If you choose to have your redemption proceeds mailed to you and either the United States Postal Service is unable to deliver the redemption check to you or the check remains outstanding for at least six months, the Fund reserves the right to reinvest the check in shares of the Fund at its then current NAV until you give the Fund different instructions. No interest will accrue on amounts represented by uncashed redemption checks.


27



Distribution and Service Plans

Distribution Plans

In accordance with Rule 12b-1 of the Investment Company Act of 1940, Victory has adopted Distribution and Service Plans for Class A, Class C and Class R shares of the Fund.

Under the Class A Distribution and Service Plan, the Fund will pay to the Distributor a monthly fee at an annual rate of up to 0.25% of its average daily net assets. Under the Class R Distribution and Service Plan, the Fund will pay to the Distributor a monthly fee at an annual rate of up to 0.50% of its average daily net assets. The fee is paid for general distribution services, for selling Class A shares or Class R shares of the Fund and, as applicable, and for providing personal services to shareholders of the Fund. Distribution and selling services are provided by the Distributor or by agents of the Distributor and include those services intended to result in the sale of the Fund's shares.

Personal services to shareholders are generally provided by broker-dealers or other intermediaries and consist of responding to inquiries, providing information to shareholders about their Fund accounts, establishing and maintaining accounts and records, providing dividend and distribution payments, arranging for bank wires, assisting in transactions and changing account information.

Under the Class C Distribution and Service Plan, the Fund will pay to the Distributor a monthly fee at an annual rate of 1.00% of the Fund's average daily net assets. Of this amount, 0.75% of the Fund's average daily net assets will be paid for general distribution services and for selling Class C shares of the Fund. The Fund will pay 0.25% of its average daily net assets to compensate financial institutions that provide personal services to their shareholders. Distribution and selling services are provided by the Distributor or by agents of the Distributor and include those services intended to result in the sale of the Fund's shares. Personal services to shareholders are generally provided by broker-dealers or other financial intermediaries and consist of responding to inquiries, providing information to shareholders about their Fund accounts, establishing and maintaining accounts and records, providing dividend and distribution payments, arranging for bank wires, assisting in transactions and changing account information.

Because Rule 12b-1 fees are paid out of the Fund's assets and on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

Other Distribution Related Payments

The Adviser (and its affiliates) may make substantial payments to affiliated and unaffiliated dealers or other Investment Professionals and service providers, for distribution, administrative and/or shareholder servicing activities, out of its own resources, including the profits from the advisory fees the Adviser receives from the Funds. The Adviser also may reimburse the Distributor (or the Distributor's affiliates) for making these payments. Some of these distribution-related payments may be made to dealers or Investment Professional for marketing, promotional or related expenses; these payments are often referred to as "revenue sharing." In some circumstances, those types of payments may create an incentive for a dealer or Investment Professional or its representatives to recommend or offer shares of the Fund or other Victory Funds to its customers. You should ask your dealer or Investment Professional for more details about any such payments it receives.


28




Dividends, Distributions, and Taxes

As a shareholder, you are entitled to your share of net income and capital gains on the Fund's investments. The Fund passes its earnings along to investors in the form of dividends. Dividends paid by the Fund represent the net income from dividends and interest earned on investments after expenses. The Fund will distribute short-term gains, as necessary, and if the Fund makes a long-term capital gain distribution, it is normally paid once a year.

Ordinarily, the Fund declares and pays dividends monthly. However, the Fund may not always pay a dividend or distribution for a given period. Each class of shares declares and pays dividends separately.

Distributions can be received in one of the following ways. Please check with your Investment Professional if you are unsure of which option is right for you.

REINVESTMENT OPTION

You can have distributions automatically reinvested in additional shares of the Fund. If you do not indicate another choice on your Account Application, you will be assigned this option automatically.

CASH OPTION

A check will be mailed to you no later than seven days after the dividend payment date. If you choose to have your distribution proceeds mailed to you and either the United States Postal Service is unable to deliver the distribution check to you or the check remains outstanding for at least six months, the distribution option on your account will default to the reinvestment option as described above. The Funds reserves the right to reinvest the check in shares of the Fund at its then current NAV until you give the Fund different instructions. No interest will accrue on amounts represented by uncashed distribution checks.

INCOME EARNED OPTION

You can automatically reinvest your dividends in additional shares of the Fund and have your capital gains paid in cash, or reinvest capital gains and have your dividends paid in cash.

DIRECTED DIVIDENDS OPTION

In most cases, you can automatically reinvest distributions in shares of another Victory Fund. If you reinvest your distributions in a different Victory Fund, you may pay a sales charge on the reinvested distributions.

DIRECTED BANK ACCOUNT OPTION

In most cases, you can automatically transfer distributions to your bank checking or savings account. Under normal circumstances, the Transfer Agent will transfer your distributions within seven days of the dividend payment date. The bank account must have a registration identical to that of your Fund account.

Buying a dividend. You should check the Fund's distribution schedule before you invest. If you buy shares of the Fund shortly before it makes a distribution, some of your investment may come back to you as a taxable distribution.

Your choice of distribution should be set up on the original Account Application. If you would like to change the option you selected, please call 800-539-FUND.


29



Dividends, Distributions, and Taxes (continued)

The tax information in this Prospectus is provided as general information. You should consult your own tax adviser about the tax consequences of an investment in the Fund.

Important Information about Taxes

The Fund expects to pay no federal income tax on the earnings and capital gains it distributes to shareholders.

n  Qualified dividends received from the Fund by noncorporate shareholders will be taxed at long-term capital gain rates to the extent attributable to qualified dividends received by the Fund. Nonqualified dividends, dividends received by corporate shareholders and dividends from the Fund's short-term capital gains are taxable as ordinary income. Dividends from the Fund's long-term capital gains are taxable as long-term capital gains.

n  Dividends are treated in the same manner for U.S. federal income tax purposes whether you receive them in cash, additional shares of the Fund, or you reinvest them in shares of another Victory Fund.

n  Dividends from the Fund that are attributable to interest on certain U.S. government obligations may be exempt from certain state and local income taxes. The extent to which dividends are attributable to these U.S. government obligations will be provided on the tax statements you receive from the Fund.

n  An exchange of the Fund's shares for shares of another Victory Fund will be treated as a sale. When you sell or exchange shares of the Fund, you must recognize any gain or loss.

n  An exchange of one class of the Fund's shares for shares of another class of the same Fund generally constitutes a nontaxable exchange.

n  Distributions from the Fund and gains from the disposition of your shares may also be subject to state and local income tax.

n  An additional 3.8% Medicare tax will be imposed on certain net investment income (which includes ordinary dividends, capital gain distributions from the Fund, and gain recognized on a disposition of shares) of certain U.S. individuals, estates, and trusts.

n  Certain dividends paid to you in January will be taxable as if they had been paid to you the previous December.

n  Tax statements will be mailed from the Fund by mid-February showing the amounts and tax status of distributions made to you.

n  Because your tax treatment depends on your purchase price and tax position, you should keep your regular account statements for use in determining your tax.

n  The Fund is generally required by law to provide you and the Internal Revenue Service with certain cost basis information related to the sale or redemption of any of your shares in the Fund acquired on or after January 1, 2012 (including distributions that are reinvested in additional shares of the Fund).

n  The Fund may be required to withhold tax from taxable distributions if you fail to give your correct social security or taxpayer identification number, fail to make required certifications, or the Fund is notified by the Internal Revenue Service that backup withholding is required.

n  You should review the more detailed discussion of federal income tax considerations in the SAI and consult your tax adviser regarding the federal, state, local, or foreign tax consequences resulting from your investment in the Fund.

n  The Fund may provide estimated capital gain distribution information through its website at VictoryFunds.com.


30



Important Fund Policies

Customer Identification Program

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens a new account, and to determine whether such person's name appears on government lists of known or suspected terrorists and terrorist organizations.

As a result, the Victory Funds must obtain the following information for each person who opens a new account:

n  Name;

n  Date of birth (for individuals);

n  Residential or business street address (although post office boxes are still permitted for mailing); and

n  Social security number, taxpayer identification number, or other identifying number.

You may also be asked for a copy of your driver's license, passport or other identifying document in order to verify your identity. In addition, it may be necessary to verify your identity by cross-referencing your identification information with a consumer report or other electronic database. Additional information may be required to open accounts for corporations and other entities. Federal law prohibits the Fund and other financial institutions from opening a new account unless they receive the minimum identifying information listed above. After an account is opened, the Fund may restrict your ability to purchase additional shares until your identity is verified. The Fund may close your account or take other appropriate action if it is unable to verify your identity within a reasonable time. If your account is closed for this reason, your shares will be redeemed at the NAV next calculated after the account is closed.

Account Maintenance Information

For the following non-financial transactions, the Victory Funds require proof that your signature authorizing a transaction is authentic. This verification can be provided by either a Signature Validation Program (SVP) stamp or a Medallion signature guarantee. As with the Medallion signature guarantee, a SVP stamp can also be obtained from a financial institution that is a member of the SVP program.

n  Change of name;

n  Add/change banking instructions;

n  Add/change beneficiaries;

n  Add/change authorized account traders;

n  Adding a Power of Attorney;

n  Add/change Trustee; and

n  Uniform Transfers to Minors Act/Uniform Gifts to Minors Act custodian change.

Market Timing

The Victory Funds discourage frequent purchases and redemptions of Fund shares (market timing). Market timing allows investors to take advantage of market inefficiencies, sometimes to the disadvantage of other shareholders. Market timing increases Fund expenses to all shareholders by increasing portfolio turnover. In addition, market timing could potentially dilute share value for all other shareholders by requiring the Fund to hold more cash than it normally would.


31



Important Fund Policies (continued)

The Fund's Board of Trustees has adopted policies and procedures with respect to market timing. In order to prevent or minimize market timing, the Fund will:

n  Employ "fair value" pricing, as described in this prospectus under "Share Price," to minimize the discrepancies between a security's market quotation and its perceived market value, which often gives rise to market timing activity; and

n  Monitor for suspected market timing based on "short-term transaction" activity, that is, a purchase or redemption of the Fund and, as applicable, a subsequent redemption or purchase of the same Fund, or an exchange of all or part of that same Fund.

In monitoring for market timing activity, we consider, among other things, the frequency of your trades and whether you acquired your Fund shares directly through the Transfer Agent or whether you combined your trades with a group of shareholders in an omnibus account or otherwise placed your order through a securities dealer or other financial intermediary.

Frequent trading by a shareholder is generally a characteristic of market timing. Therefore, any account in which Fund shares are acquired directly through the transfer agent, or where the Fund can adequately identify the shareholder, with a history of three short-term transactions within 90 days or less is suspected of market timing and the shareholder's trading privileges (other than redemption of Fund shares) will be suspended.

We may make exceptions to the "short-term transaction" policy for certain types of transactions if, in the opinion of the Adviser, under the oversight of the Board, the transactions do not represent short-term or excessive trading or are not abusive or harmful to the Fund, such as, but not limited to, systematic transactions, required minimum retirement distributions, transactions initiated by the Fund or administrator and transactions by certain qualified funds-of-funds.

If you acquired shares through an omnibus account or otherwise placed your order through a securities dealer or other financial intermediary (such as investment advisers, broker-dealers, third-party administrators or insurance companies), and market timing is suspected, different purchase and exchange limitations may apply. We may rely upon a financial intermediary's policy to deter short-term or excessive trading (i) if we believe that the financial intermediary's policy is reasonably designed to detect and deter transactions that are not in the best interests of the Fund, or (ii) if we receive an undertaking from the financial intermediary to enforce short-term or excessive trading policies on behalf of the Fund that provide a substantially similar level of protection for the Fund against such transactions. If you hold your Fund shares through a financial intermediary, you are advised to consult the intermediary to determine what purchase and exchange limitations apply to your account.

We reserve the right to reject or cancel a purchase or exchange order for any reason without prior notice. We will deny your request to purchase or exchange your shares if we believe that the transaction is part of a market timing strategy.

The Fund's market timing policies and procedures may be modified or terminated at any time under the oversight of the Board.

Portfolio Holdings Disclosure

The Fund discloses its complete portfolio holdings in its annual and semiannual reports to shareholders, which are sent to shareholders no later than 60 days after the relevant fiscal period (October 31st and April 30th, respectively) and are available on the Fund's website, VictoryFunds.com. The Fund also files its complete portfolio holdings as of the end of its first and third fiscal quarters (January 31st and July 31st, respectively) with the SEC on Form N-Q no later than 60 days after the relevant fiscal period. You can find these filings on the SEC's website, www.sec.gov.


32



Important Fund Policies (continued)

In addition, the Fund discloses its complete portfolio holdings as of the quarter-end on the Fund's website no later than the 15th day following the end of the calendar quarter. The Fund may also publish other information on the Fund's website relating to its portfolio holdings (e.g., top ten holdings) on a monthly basis no later than the 15th day following the end of the month.

You can find a complete description of the Fund's policies and procedures with respect to disclosure of its portfolio securities in the Fund's SAI or on the Fund's website, VictoryFunds.com.

Performance

The Victory Funds may advertise the performance of the Fund by comparing it to other mutual funds with similar objectives and policies. Performance information also may appear in various publications. Any fees charged by Investment Professionals may not be reflected in these performance calculations. Advertising information may include the yield, tax-effective yield, and the average annual total return of the Fund calculated on a compounded basis for specified periods of time. Yield and total return information will be calculated according to rules established by the SEC. Such information may include performance rankings and similar information from independent organizations and publications.

Shareholder Communications

In order to eliminate duplicate mailings to an address at which two or more shareholders with the same last name reside, the Victory Funds may send only one copy of any shareholder reports, proxy statements, prospectuses, and their supplements, unless you have instructed us to the contrary. You may request that the Victory Funds send these documents to each shareholder individually by calling the Victory Funds at 800-539-FUND (800-539-3863), and they will be delivered promptly.


33



Other Service Providers

Victory Capital Advisers, Inc. (the Distributor), member FINRA and SIPC, 4900 Tiedeman Road, 4th Floor, Brooklyn, Ohio 44144, serves as distributor for the continuous offering of the Fund's shares. The Distributor is an affiliate of the Adviser.

KeyBank National Association, 127 Public Square, Cleveland, Ohio 44114, serves as the custodian of the Fund's investments and cash and settles trades made by the Fund.

Victory Capital Management Inc., 4900 Tiedeman Road, 4th Floor, Brooklyn, Ohio 44144, serves as the Administrator and Fund Accountant for the Fund.

Citi Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219, serves as the sub-administrator, transfer agent, sub-fund accountant and dividend disbursing agent for the Fund. On or about April 30, 2015, SunGard Investor Services LLC will assume the role of the transfer agent for the Fund. SunGard Investor Services LLC will be located at 3435 Stelzer Road, Columbus, Ohio 43219.

Ernst & Young LLP, 1900 Scripps Center, 312 Walnut Street, Cincinnati, Ohio 45202, serves as the Independent Registered Public Accounting firm for the Fund.

Morrison & Foerster LLP, 250 West 55th Street, New York, New York 10019, serves as legal counsel to the Fund.


34




Financial Highlights

The following financial highlights tables reflect historical information about shares of the Fund and are intended to help you understand the Fund's financial performance for the past five years.

Certain information shows the results of an investment in one share of the Fund. To the extent the Fund invests in other funds, the Total Annual Operating Expenses included in the Fund's Fees and Expenses table may not correlate to the ratio of expenses to average net assets in the financial highlights below. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).

As of October 31, 2014, the information for each period presented has been audited by Ernst & Young LLP, whose reports, along with the Fund's financial statements, are included in the Fund's annual report, which is available by calling the Fund at 800-539-FUND and at VictoryFunds.com.


35



Financial Highlights

BALANCED FUND

   

Class A Shares

 
    Year
Ended
October 31,
2014
  Year
Ended
October 31,
2013
  Year
Ended
October 31,
2012
  Year
Ended
October 31,
2011
  Year
Ended
October 31,
2010
 

Net asset value, beginning of period

 

$

14.92

   

$

12.65

   

$

11.93

   

$

11.89

   

$

10.97

   

Investment activities:

 

Net investment income

   

0.13

     

0.12

     

0.11

     

0.11

     

0.19

   
Net realized and unrealized gains
on investments
   

1.18

     

2.36

     

1.12

     

0.09

     

0.97

   

Total from investment activities

   

1.31

     

2.48

     

1.23

     

0.20

     

1.16

   

Distributions:

 

Net investment income

   

(0.32

)

   

(0.21

)

   

(0.16

)

   

(0.16

)

   

(0.24

)

 

Net realized gains from investments

   

(0.22

)

   

     

(0.35

)

   

     

   

Total distributions

   

(0.54

)

   

(0.21

)

   

(0.51

)

   

(0.16

)

   

(0.24

)

 

Net asset value, end of period

 

$

15.69

   

$

14.92

   

$

12.65

   

$

11.93

   

$

11.89

   

Total return (excludes sales charge)

   

8.97

%

   

19.77

%

   

10.58

%

   

1.64

%

   

10.67

%(a)

 

Ratios/supplemental data:

 

Net assets at end of period (000)

 

$

10,293

   

$

12,296

   

$

11,650

   

$

16,572

   

$

27,560

   

Ratio of net expenses to average net assets

   

1.15

%

   

1.15

%

   

1.12

%

   

1.11

%

   

1.15

%

 
Ratio of net investment income to average
net assets
   

0.92

%

   

0.86

%

   

1.00

%

   

1.00

%

   

1.69

%

 

Ratio of gross expenses to average net assets (b)

   

1.34

%

   

1.44

%

   

1.48

%

   

1.29

%

   

1.15

%

 
Ratio of net investment income to average
net assets (b)
   

0.73

%

   

0.57

%

   

0.64

%

   

0.82

%

   

1.69

%

 

Portfolio turnover (c)

   

66

%

   

142

%

   

106

%

   

130

%

   

238

%

 

(a)  During the year ended October 31, 2010, the Fund received monies relating to the BISYS Fair Fund distribution. The distribution related to certain expenditures that, among other things, supported distribution of Fund shares. Had this payment not been received, the total return would have been 0.10% lower.

(b)  During the period, certain fees were reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratios would have been as indicated.

(c)  Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.


36



Financial Highlights

BALANCED FUND (continued)

   

Class C Shares

 
    Year
Ended
October 31,
2014
  Year
Ended
October 31,
2013
  Year
Ended
October 31,
2012
  Year
Ended
October 31,
2011
  Year
Ended
October 31,
2010
 

Net asset value, beginning of period

 

$

14.82

   

$

12.57

   

$

11.86

   

$

11.83

   

$

10.91

   

Investment activities:

 

Net investment income

   

0.02

     

0.04

     

0.02

     

0.03

     

0.09

   
Net realized and unrealized gains
on investments
   

1.17

     

2.33

     

1.11

     

0.08

     

0.97

   

Total from investment activities

   

1.19

     

2.37

     

1.13

     

0.11

     

1.06

   

Distributions:

 

Net investment income

   

(0.22

)

   

(0.12

)

   

(0.07

)

   

(0.08

)

   

(0.14

)

 

Net realized gains from investments

   

(0.22

)

   

     

(0.35

)

   

     

   

Total distributions

   

(0.44

)

   

(0.12

)

   

(0.42

)

   

(0.08

)

   

(0.14

)

 

Net asset value, end of period

 

$

15.57

   

$

14.82

   

$

12.57

   

$

11.86

   

$

11.83

   
Total return (excludes contingent
deferred sales charge)
   

8.16

%

   

18.95

%

   

9.81

%

   

0.90

%

   

9.83

%(a)

 

Ratios/supplemental data:

 

Net assets at end of period (000)

 

$

2,778

   

$

2,780

   

$

1,214

   

$

1,330

   

$

1,014

   

Ratio of net expenses to average net assets

   

1.85

%

   

1.85

%

   

1.84

%

   

1.80

%

   

2.00

%

 
Ratio of net investment income to average
net assets
   

0.23

%

   

0.05

%

   

0.27

%

   

0.28

%

   

0.85

%

 

Ratio of gross expenses to average net assets (b)

   

2.14

%

   

2.66

%

   

3.01

%

   

2.82

%

   

3.00

%

 
Ratio of net investment loss to average
net assets (b)
   

(0.06

)%

   

(0.77

)%

   

(0.90

)%

   

(0.74

)%

   

(0.15

)%

 

Portfolio turnover (c)

   

66

%

   

142

%

   

106

%

   

130

%

   

238

%

 

(a)  During the year ended October 31, 2010, the Fund received monies relating to the BISYS Fair Fund distribution. The distribution related to certain expenditures that, among other things, supported distribution of Fund shares. Had this payment not been received, the total return would have been 0.10% lower.

(b)  During the period, certain fees were reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratios would have been as indicated.

(c)  Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.


37



Financial Highlights

BALANCED FUND (continued)

   

Class I Shares

 
    Year
Ended
October 31,
2014
  Year
Ended
October 31,
2013
  Year
Ended
October 31,
2012
  Year
Ended
October 31,
2011
  Year
Ended
October 31,
2010
 

Net asset value, beginning of period

 

$

14.97

   

$

12.69

   

$

11.97

   

$

11.87

   

$

10.95

   

Investment activities:

 

Net investment income

   

0.19

     

0.14

     

0.18

     

0.19

(a)

   

0.24

   
Net realized and unrealized gains
on investments
   

1.16

     

2.38

     

1.08

     

0.13

     

0.96

   

Total from investment activities

   

1.35

     

2.52

     

1.26

     

0.32

     

1.20

   

Distributions:

 

Net investment income

   

(0.36

)

   

(0.24

)

   

(0.19

)

   

(0.22

)

   

(0.28

)

 

Net realized gains from investments

   

(0.22

)

   

     

(0.35

)

   

     

   

Total distributions

   

(0.58

)

   

(0.24

)

   

(0.54

)

   

(0.22

)

   

(0.28

)

 

Net asset value, end of period

 

$

15.74

   

$

14.97

   

$

12.69

   

$

11.97

   

$

11.87

   

Total return

   

9.20

%

   

20.06

%

   

10.88

%

   

2.64

%

   

11.05

%(b)

 

Ratios/supplemental data:

 

Net assets at end of period (000)

 

$

318

   

$

278

   

$

311

   

$

26

   

$

63,961

   

Ratio of net expenses to average net assets

   

0.90

%

   

0.90

%

   

0.85

%

   

0.66

%

   

0.80

%

 
Ratio of net investment income to average
net assets
   

1.16

%

   

1.12

%

   

1.02

%

   

1.52

%

   

2.04

%

 

Ratio of gross expenses to average net assets (c)

   

4.80

%

   

4.46

%

   

19.77

%

   

0.90

%

   

0.84

%

 
Ratio of net investment income (loss) to average
net assets (c)
   

(2.74

)%

   

(2.44

)%

   

(17.90

)%

   

1.28

%

   

2.00

%

 

Portfolio turnover (d)

   

66

%

   

142

%

   

106

%

   

130

%

   

238

%

 

(a)  Calculated using average shares method for the period.

(b)  During the year ended October 31, 2010, the Fund received monies relating to the BISYS Fair Fund distribution. The distribution related to certain expenditures that, among other things, supported distribution of Fund shares. Had this payment not been received, the total return would have been 0.10% lower.

(c)  During the period, certain fees were reduced and/or reimbursed. If such fee reductions and/or reimbursements had not occurred, the ratios would have been as indicated.

(d)  Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.


38



Financial Highlights

BALANCED FUND (continued)

   

Class R Shares

 
    Year
Ended
October 31,
2014
  Year
Ended
October 31,
2013
  Year
Ended
October 31,
2012
  Year
Ended
October 31,
2011
  Year
Ended
October 31,
2010
 

Net asset value, beginning of period

 

$

14.90

   

$

12.64

   

$

11.92

   

$

11.88

   

$

10.96

   

Investment activities:

 

Net investment income (loss)

   

(0.21

)

   

0.08