September
1, 2023
Prospectus
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Victory
Ultra Short-Term Bond Fund
(Formerly
USAA®
Ultra Short-Term Bond Fund) | |||||
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Fund
Shares |
Institutional
Shares |
Class
A |
Class
C |
Class
R6 |
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UUSTX |
UUSIX |
USBAX |
— |
URUSX |
Victory Capital
Management Inc. and its affiliates are not affiliated with United Services
Automobile Association or its affiliates (USAA). USAA and the USAA logo are
registered trademarks of USAA.
The Securities and
Exchange Commission has not approved or disapproved these securities or
determined whether this Prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.
vcm.com
(800) 235-8396
(800) 235-8396
(paid directly from your investment)
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Fund
Shares |
Institutional
Shares |
Class
A |
Class
R6 |
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Maximum
Sales Charge (Load) Imposed on Purchases
(as
a percentage of offering price) |
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Maximum
Deferred Sales Charge (Load)
(as
a percentage of the lower of purchase or sale price) |
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(expenses that you pay each year as a percentage of the value of your investment)
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Management
Fees1
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Distribution
and/or Service (12b-1) Fees |
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Other
Expenses |
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Total
Annual Fund Operating Expenses2
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Fee
Waiver/Expense Reimbursement3
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( |
( |
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Total
Annual Fund Operating Expenses After Fee Waiver
and/or
Expense Reimbursement3
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1
2
3
1
Victory Ultra
Short-Term Bond Fund Summary
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1
Year |
3
Years |
5
Years |
10
Years |
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Fund
Shares |
$ |
$ |
$ |
$ |
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Institutional
Shares |
$ |
$ |
$ |
$ |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
2
Victory Ultra
Short-Term Bond Fund Summary
3
Victory Ultra
Short-Term Bond Fund Summary
4
Victory Ultra
Short-Term Bond Fund Summary
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1
Year |
5
Years
(or
Life
of
Class) |
10
Years
(or
Life
of
Class) |
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FUND
SHARES Before Taxes |
- |
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FUND
SHARES After Taxes on Distributions |
- |
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FUND
SHARES After Taxes on Distributions and Sale of Fund
Shares |
- |
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INSTITUTIONAL
SHARES Before Taxes |
- |
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CLASS
A Before Taxes |
- |
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CLASS
R6 Before Taxes |
- |
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Indices | |||
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Bloomberg
U.S. Treasury Bellwethers 3 Month Index
reflects
no deduction for fees, expenses, or taxes |
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Lipper
Ultra Short Obligations Funds Index
reflects
no deduction for taxes |
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1
2
3
5
Victory Ultra
Short-Term Bond Fund Summary
Management
of the Fund
Investment
Adviser
Victory
Capital Management Inc. (the “Adviser”) serves as the Fund’s investment
adviser.
The
Adviser is a diversified global asset manager comprised of multiple investment
teams, referred to as investment franchises, each of which utilizes an
independent approach to investing. The portfolio managers primarily responsible
for the day-to-day management of the Fund are members of the Adviser’s Victory
Income Investors investment franchise.
Portfolio
Management
|
|
Title |
Tenure
with the Fund |
|
Douglas
J. Rollwitz, CFA, CPA |
Portfolio
Manager |
Since
2018 |
|
Brian
W. Smith, CFA, CPA |
Senior
Portfolio Manager |
Since
2018 |
|
James
F. Jackson Jr. |
Co-Chief
Investment Officer,
Head of Fixed
Income Portfolio
Management,
and Senior
Portfolio
Manager |
Since
2019 |
|
R.
Neal Graves |
Senior
Portfolio Manager |
Since
2019 |
Purchase
and Sale of Fund Shares
|
Investment
Minimums |
Fund
Shares |
Institutional
Shares |
Class
A |
Class
R6 |
|
Minimum
Initial Investment |
$3,000 |
$1,000,000 |
$2,500 |
None |
|
Minimum
Subsequent Investments |
$50 |
None |
$50 |
None |
You may
purchase or sell Fund Shares on any business day through vcm.com or by telephone
at (800) 235-8396. You also may purchase or sell Fund Shares through certain
other financial intermediaries. If you have opened an account directly with the
Fund, you also may purchase and sell Fund Shares by mail at P.O. Box 182593,
Columbus, OH 43218-2593. The Fund reserves the right to waive or lower purchase
minimums in certain circumstances.
Institutional
Shares are not offered for sale directly to the general public. The Fund
reserves the right to waive or lower purchase minimums in certain
circumstances.
For Class
A shares, a $1,000 minimum initial purchase amount and a $50 minimum subsequent
purchase amount apply for Individual Retirement Accounts (“IRAs”), gift/transfer
to minor accounts, and purchases through automatic
investment plans.
Certain
broker-dealers and other financial intermediaries (such as a bank) may establish
higher or lower minimum initial and subsequent investment amounts to which you
may be subject if you invest through them.
Class R6
shares are available through employer-sponsored retirement plans where
a financial intermediary provides retirement recordkeeping services to plan
participants. Class R6 shares also are available to eligible investors as
described in the prospectus. Please contact your plan administrator or
recordkeeper to purchase or sell (redeem) shares from your retirement
plan.
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, which means that your request contains all the required
documentation, and that all documents contain required signatures or signature
guarantees from a financial institution.
6
Victory Ultra
Short-Term Bond Fund Summary
Tax
Information
The Fund
intends to make distributions that generally will be taxed to you as ordinary
income or long-term capital gains, unless you are a tax-exempt investor or you
invest through an IRA, 401(k) plan, or other tax-deferred account (in which case
you may be taxed later, upon withdrawal of your investment from such
account).
Payments
to Broker-Dealers and Other Financial Intermediaries
If you
purchase shares of 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 such shares and certain servicing and
administrative functions for investments in all share classes except the
Class R6 shares. These payments may create a conflict of interest by influencing
the broker-dealer or other intermediary and your financial adviser to recommend
the Fund over another investment. Ask your financial adviser or visit your
financial intermediary’s website for more information.
7
Additional Fund
Information
|
Victory
Capital Management Inc., which we refer to as the “Adviser”
throughout
the Prospectus, manages the
Fund. |
The Fund
is managed by the Adviser, who also manages other funds, each having distinct
investment management objectives, strategies, risks, and policies. Together,
these funds are referred to in this Prospectus as the “Victory Funds” or, more
simply, the “Funds.”
The Fund
seeks to provide high current income consistent with preservation of principal.
The Fund’s Board of Trustees (the “Board”) may change the investment objective
without shareholder approval. The Fund will provide shareholders notice of any
such change.
Under
normal market conditions the Fund invests at least 80% of its assets in
investment-grade debt securities that have a dollar-weighted average portfolio
maturity of 18 months (one and a half years) or less. This 80% policy may be
changed upon at least 60 days’ prior written notice to shareholders. In
addition, the Fund may invest up to 10% of its net assets in securities that at
the time of purchase are below-investment-grade securities, which are sometimes
referred to as high-yield or “junk” bonds.
The Fund
invests primarily in U.S. dollar-denominated debt securities and other
securities believed to have debt-like characteristics. We independently assess
credit risk and its impact on the Fund’s portfolio when evaluating potential
investments for the Fund.
By
diversifying the Fund’s portfolio through investing in securities of a large
number of unrelated issuers, we attempt to reduce the Fund’s exposure to the
risks of an investment in the securities of any one issuer or group of
issuers.
The Fund
is limited to 20% of its net assets invested in preferred, hybrid, and
convertible securities.
The Fund
invests in investment-grade securities, which include securities issued or
guaranteed by the U.S. government, its agencies and instrumentalities, as well
as securities rated or subject to a guarantee that is rated within the
categories listed by at least one of the Nationally Recognized Statistical
Rating Organizations (“NRSROs”) approved by the SEC, or unrated securities
determined by the Adviser to be of comparable investment quality at the time of
purchase. Below are the investment-grade credit ratings for two of the
NRSROs:
|
Rating
Agency |
Long-Term
Debt Securities |
Short-Term
Debt Securities |
|
Moody’s
Investors Service, Inc. |
At least
Baa3 |
At least
Prime–3 or MIG 3/VMIG 3 |
|
S&P
Global Ratings |
At least BBB
– |
At least A–3
or SP–2 |
You will
find more information about the above debt ratings in the Fund’s
SAI.
The Fund
may, from time to time, take temporary defensive positions that are inconsistent
with the Fund's principal investment strategies in attempting to respond to
adverse market, economic, political, or other conditions. The effect of taking
such a temporary defensive position is that the Fund may not achieve its
investment objective.
Victory
Income Investors
We search
for securities that represent value at the time of purchase given current market
conditions. Value takes into consideration a combination of factors, including
yield, credit quality, structure (maturity, coupon, and redemption features),
and liquidity. We recognize value by simultaneously analyzing the interaction of
these factors among the securities available in the market. We will sell a
security if we become concerned about its credit risk, we are forced by market
factors to raise money, or an attractive replacement is
available.
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 may not
necessarily buy all of the securities listed below.
Bonds
A debt
instrument representing the contractual obligation of an issuer to pay interest
at a stated rate on specific dates and to repay principal (the bond’s face
value) on a specified date. Bonds may be issued in a variety of forms and by
different types of issuers, such as:
◼
Corporate
debt securities – Bonds
and other debt instruments issued by corporations and similar
entities.
◼
Obligations
of U.S., state, and local governments, their agencies and
instrumentalities – In
general, the debt obligations (of which some, but not all, are supported by the
taxing power of the government) of certain governmental entities.
◼
Mortgage-
and asset-backed securities –
Generally, securities representing a pool of mortgages or other expected streams
of payments, such as credit card receivables or automobile loans, which are
packaged together and sold to investors who then are entitled to the payments of
interest and principal. Types of mortgage-backed securities in which the Fund
may invest include, but are not limited to, collateralized mortgage obligations
(“CMO”), commercial mortgage-backed securities (“CMBS”), and interest-only
CMBS.
Convertible
Securities
Bonds,
preferred stocks, and other securities that pay interest or dividends and offer
the buyer the ability to convert the security into common stock. The value of
convertible securities depends partially on interest rate changes, the credit
quality of the issuer, and the price of the underlying common
stock.
Debt
Securities of Real Estate Investment Trusts (REITs)
Debt REITs
own no physical property, but instead invest in property mortgages. These REITs
loan money for mortgages to owners of real estate or purchase existing mortgages
or mortgaged-backed securities. Their revenues are generated primarily by the
interest that they earn on the mortgage loans.
Derivatives
The Fund
is permitted, but not required, to use various types of derivatives (contracts
whose value is based on, for example, indexes, currencies, or securities),
including futures contracts, options contracts, and swaps, to manage its
exposure to changes in securities prices and foreign currencies, in an effort to
enhance income, and to protect the value of portfolio securities. The Fund also
may use derivatives in circumstances where the portfolio managers believe they
offer an economical means of gaining exposure to a particular asset class or to
keep cash on hand to meet shareholder redemptions or other needs while
maintaining exposure to the market.
Eurodollar
and Yankee Obligations
Eurodollar
and Yankee Obligations are dollar-denominated instruments that have been issued
by foreign corporations and financial institutions and by foreign branches of
U.S. corporations and financial institutions. Eurodollar Obligations are issued
outside the U.S. capital markets and Yankee Obligations are issued in the U.S.
capital markets.
Hybrid
Securities
A hybrid
security is a single financial security that combines two or more different
financial instruments. Hybrid securities, often referred to as “hybrids,”
generally combine both debt and equity
9
Investments
characteristics.
The most common type of hybrid security is a convertible bond that has features
of an ordinary bond but is heavily influenced by the price movements of the
stock into which it is convertible.
Investment
Companies
The Fund
may invest in securities of other investment companies, including
exchange-traded funds (“ETFs”), if those companies invest in securities
consistent with the Fund's investment objective and policies. ETFs are
investment companies the shares of which are bought and sold on a securities
exchange.
Loan
Interests and Direct Debt Instruments
Interests
in amounts owed by a corporate, governmental, or other borrower to lenders or
lending syndicates (in the case of loans and loan participations), to suppliers
of goods or services (in the case of trade claims or other receivables), or to
other parties. Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of interest and
repayment of principal.
Money
Market Instruments
Are
short-term financing instruments, which can be converted easily to cash.
Interbank loans (loans between banks), money market mutual funds, commercial
paper, Treasury bills and securities lending and repurchase agreements, are all
examples of money markets instruments.
Periodic
Auction Reset Bonds
Bonds
whose interest rates are reset periodically through an auction mechanism.
Periodic auction reset bonds generally are subject to less interest rate risk
than long-term fixed-rate debt instruments because the interest rate will be
periodically reset in a market auction.
Preferred
Stocks
An equity
security of a company with a specified dividend that may or may not fluctuate.
Preferred stocks rank after bonds and before common stocks in claims on income
for dividend payments and on assets should the company be
liquidated.
Repurchase
Agreements
A
transaction in which a security is purchased with a simultaneous commitment to
sell it back to the seller at an agreed upon price on an agreed upon date, the
resale price of which reflects the purchase price plus an agreed upon market
rate of interest.
Synthetic
Securities
A security
created by combining an intermediate or long-term municipal bond with a right to
sell the instrument back to the remarketer or liquidity provider for repurchase
on short notice.
10
Investments
Additional
Fund Strategies.
The Adviser may use other types of investment strategies in pursuing the Fund's
overall investment objective. The following describes the types of securities or
techniques that the Adviser may purchase or investment techniques the Adviser
may employ that are not considered to be a part of the Fund's principal
investment strategies. Additional securities and techniques are described in the
Fund's SAI.
Securities
Lending
To enhance
the return on its portfolio, the Fund may lend portfolio securities to brokers,
dealers and financial institutions to realize additional income under guidelines
adopted by the Board. Each loan will be secured continuously by collateral in
the form of cash, securities issued by the U.S. government or its agencies or
instrumentalities.
11
Risk
Factors
The
following provides additional information about the Fund's principal risks and
supplements those risks discussed in the Fund's Summary section of this
prospectus.
Credit
Risk: Credit
risk is the possibility that an issuer of a fixed-income security will fail to
make timely interest and/or principal payments on its securities or that
negative market perceptions of the issuer’s ability to make such payments will
cause the price of that security to decline. All fixed-income securities,
varying from the highest quality to the very speculative, have some degree of
credit risk and may apply to certain other securities in which the Fund may
invest. The Fund accepts some credit risk as a recognized means to enhance
investors’ return. Market events may affect the creditworthiness of the issuer
of a fixed-income security and may impair an issuer’s ability to timely meet its
debt obligations as they come due.
When
evaluating potential investments for the Fund, our analysts independently assess
credit risk and its potential impact on the Fund’s portfolio. In addition,
credit rating agencies may provide estimates of the credit quality of the
potential investment. The ratings may not take into account every risk that
interest and/or principal will be repaid on a timely basis. Lower credit ratings
typically correspond to higher perceived credit risk and higher credit ratings
typically correspond to lower perceived credit risk. Securities in the
lowest-rated investment-grade category have speculative characteristics. Credit
ratings do not provide assurance against default or other loss of money. We
attempt to minimize the Fund’s overall credit risk by primarily investing in
fixed-income securities considered at least investment grade at the time of
purchase. Nevertheless, even investment-grade securities typically are subject
to some credit risk. We also attempt to minimize the Fund’s overall credit risk
by diversifying the Fund’s investments across many securities with slightly
different risk characteristics and across different economic sectors and
geographic regions. Thus, if a random credit event should occur, such as a
default, the Fund generally would suffer a smaller loss than if the Fund were
concentrated in relatively large holdings with highly correlated risks. If a
security has not received a rating, the Fund must rely entirely upon the
Adviser’s credit assessment.
High-Yield/Junk
Bond Risk: Fixed-income
securities rated below investment grade (“junk” or high-yield bonds) should be
regarded as speculative because their issuers are more susceptible to financial
setbacks and recession than more creditworthy companies. High-yield bond issuers
include small companies lacking the history or capital to merit investment-grade
status, former blue chip companies downgraded because of financial problems, and
firms with heavy debt loads. Many issuers of high-yield securities have
characteristics (including, but not limited to, high levels of debt, an untested
business plan, significant competitive and technological challenges, legal, and
political risks) which cast doubt on their ability to honor their financial
obligations. They may be unable to pay interest when due or return all the
principal amount of their debt obligations at maturity. If the Fund invests in
securities whose issuers develop unexpected credit problems, the Fund’s NAV
could decline. Changes in economic conditions or other circumstances are more
likely to lead to a weakened capability to make principal and interest payments
on these securities than is the case for higher-rated securities.
Interest
Rate Risk: The Fund
is subject to the risk that the market value of the bonds in its portfolio will
fluctuate because of changes in interest rates, changes in supply of and demand
for investment securities, or other market factors. Bond prices generally are
linked to the prevailing market interest rates. In general, when interest rates
rise, bond prices fall; and conversely, when interest rates fall, bond prices
rise. The price volatility of a bond also depends on its duration. Duration is a
measure that relates the expected price volatility of a bond to changes in
interest rates. The duration of a bond may be shorter than or equal to the full
maturity of a bond. Generally, the longer the duration of a bond, the greater is
its sensitivity to interest rates. Bonds with longer durations have more risk
and will decrease in price as interest rates rise. For example, a bond with a
duration of three years will
12
Risk
Factors
decrease
in value by approximately 3% if interest rates increase by 1%. To compensate
investors for this higher interest rate risk, bonds with longer durations
generally offer higher yields than bonds with shorter durations.
◼
If
interest rates increase, the
yield of the Fund may increase and the market value of the Fund’s securities may
decline, adversely affecting the Fund’s NAV and total return.
◼
If
interest rates decrease, the yield
of the Fund may decrease and the market value of the Fund’s securities may
increase, which may increase the Fund’s NAV and total return.
Changes in
government monetary policy, including changes in a central bank’s (e.g., the
U.S. Federal Reserve (the “Fed”)) implementation of specific policy goals, may
have a substantial impact on interest rates, which in turn can significantly
impact the value of the Fund’s investments. There can be no assurance that a
central bank’s policy will be continued, discontinued or changed, or that any
such policy will have the desired effect. A central bank’s policy changes and
related market speculation as to the timing of potential interest rate changes
may expose fixed-income markets to heightened volatility and may reduce
liquidity for certain Fund investments, causing the value of the Fund’s
investments and share price to decline. For example, market developments and
other factors, including a general rise in interest rates, have the potential to
cause investors to move out of fixed-income securities on a large scale, which
may increase redemptions from funds that hold large amounts of fixed-income
securities. Such a move, coupled with a reduction in the ability or willingness
of dealers and other institutional investors to buy or hold fixed-income
securities, may result in decreased liquidity and increased volatility in the
fixed-income markets. Heavy redemptions of fixed-income mutual funds and
decreased liquidity of fixed-income securities could hurt the Fund’s
performance.
Decisions
by the Fed regarding interest rate and monetary policy can have a significant
effect on the value of debt securities as well as the overall strength of the
U.S. economy. Precise interest rate predictions are difficult to make, and
interest rates may change unexpectedly and dramatically in response to extreme
changes in market or economic conditions. Until recently, interest rates had
been unusually low in recent years in the United States and abroad, and central
banks had reduced rates further in an effort to combat the economic effects of
the COVID-19 pandemic. In light of current market conditions the Fed has raised
interest rates from historically low levels in a short time period. Changes to
interest rates may not work as intended, and the impact on various markets that
interest rate or other significant policy changes may have is
unknown.
Yankee
Bonds Risk: Yankee
obligations are dollar-denominated instruments that have been issued by foreign
issuers in the U.S. capital markets and are subject to the same risks that
pertain to domestic issues, notably credit risk, market risk, and liquidity
risk. To a limited extent, Yankee obligations are subject to certain sovereign
risks. One such risk is the possibility that a sovereign country might prevent
capital, in the form of dollars, from leaving the country. Other risks include:
adverse political and economic developments; the extent and quality of
government regulation of financial markets and institutions; the imposition of
foreign withholding taxes; and expropriation or nationalization of foreign
issuers.
Liquidity
Risk: Certain
securities held by the Fund may be difficult (or impossible) to sell at the time
and at the price the Fund would like due to a variety of factors, including
general market conditions, the perceived financial strength of the issuer, or
specific restrictions on resale of the securities. Consequently, the Fund may
have to hold these securities longer than it would like and may forgo other
investment opportunities. It also is possible that the Fund could be prevented
from realizing capital gains or could be forced to incur capital losses if the
Adviser is unable to sell a position at the time or price of the Adviser’s
choosing. Lack of liquidity may impact valuation of such securities and the
Fund’s NAV adversely, especially during times of financial distress. In
addition, the Fund may not be able to raise cash when needed or may be forced to
sell other investments to raise cash, which could impact the Fund’s performance
negatively. Infrequent trading of securities also may lead to an
13
Risk
Factors
increase
in price volatility. Liquidity is a general investment risk that potentially
could impact any security, but funds that invest in privately placed securities,
certain small-company securities, high-yield bonds, mortgage-backed or
asset-backed securities, foreign or emerging-market securities, derivatives, or
other structured investments, which all have experienced periods of illiquidity,
generally are subject to greater liquidity risk than funds that do not invest in
these types of securities.
Legislative
Risk: The Fund
is subject to legislative risk, which is the risk that new government policies
may affect the value of the investments held by the Fund in ways we cannot
anticipate and that such policies will have an adverse impact on the value of
the Fund’s investments and the Fund’s NAV.
Prepayment
and Extension Risk: As a
mutual fund investing in mortgage-backed securities, the Fund is subject to
prepayment risk for these securities, which is the possibility that prepayments
of mortgage-backed securities in the Fund’s portfolio will require reinvestment
at lower interest rates, resulting in less interest income to the Fund.
Mortgage-backed securities pay regularly scheduled payments of principal along
with interest payments. In addition, mortgagors generally have the option of
paying off their mortgages without penalty at any time. For example, when a
mortgaged property is sold, the old mortgage is usually prepaid. Also, when
interest rates fall, the mortgagor may refinance the mortgage and prepay the old
mortgage. A homeowner’s default on the mortgage also may cause a prepayment of
the mortgage. This unpredictability of the mortgage’s cash flow is called
prepayment risk. For the investor, prepayment risk usually means that principal
is received at the least opportune time. For example, when interest rates fall,
homeowners will find it advantageous to refinance their mortgages and prepay
principal. In this case, the investor is forced to reinvest the principal at the
current, lower rates.
Reinvestment
at lower rates tends to reduce the interest payments received by the Fund and,
therefore, the size of the dividend payments available to shareholders. On the
other hand, when interest rates rise, homeowners generally will not refinance
their mortgages and prepayments will fall. This causes the average life of the
mortgage to extend and be more sensitive to interest rates, which is sometimes
called extension risk. In addition, the amount of principal the investor has to
invest in these higher interest rates is reduced.
Large
Shareholder Risk: The Fund,
like all mutual funds, pools the investments of many investors. Actions by one
shareholder or multiple shareholders may have an impact on the Fund and,
therefore, indirectly on other shareholders. For example, significant levels of
new investments in the Fund by shareholders may cause the Fund to have more cash
than would otherwise be the case, which might have a positive or negative impact
on Fund performance. Similarly, redemption activity might cause the Fund to sell
portfolio securities, which may increase transaction costs and might generate a
capital gain or loss, or cause it to borrow funds on a short-term basis to cover
redemptions, which would cause the Fund to incur costs that, in effect, would be
borne by all shareholders, not just the redeeming shareholders. Shareholder
purchase and redemption activity also may affect the per share amount of the
Fund’s distributions of its net investment income and net realized capital
gains, if any, thereby affecting the tax burden on the Fund’s shareholders
subject to federal income tax. To the extent a larger shareholder (including,
for example, an affiliated fund that operates as a fund-of-funds or 529
education savings plan) is permitted to invest in the Fund, the Fund may
experience large inflows or outflows of cash from time to time. This activity
could magnify these adverse effects on the Fund.
Asset-Backed
and Mortgage-Backed Securities Risk:
Asset-backed securities (“ABS”) represent interests in pools of mortgages,
loans, receivables, or other assets such as motor vehicle installment sales or
installment loan contracts, leases of various types of real and personal
property, and receivables from credit card agreements. Mortgage-backed
securities (“MBS”) are a type of asset-backed security that represent direct or
indirect participations in, or are collateralized by and payable from, mortgage
loans secured by real property. Payment of interest and repayment of
14
Risk
Factors
principal
may be largely dependent upon the cash flows generated by the assets backing the
securities and, in certain cases, supported by letters of credit, surety bonds,
or other credit enhancements.
During
periods of falling interest rates, mortgage- and asset-backed securities, which
typically provide the issuer with the right to call or prepay the security prior
to maturity, may be called or prepaid, which may result in the Fund having to
reinvest the proceeds in other investments at a lower interest rate. During
periods of rising interest rates, the average life of mortgage- and asset-backed
securities may extend because of slower than expected principal payments. This
may lock in a below-market interest rate, increase the security’s duration, and
reduce the value of the security. As a result, mortgage-backed and asset-backed
securities may have less potential for capital appreciation during periods of
declining interest rates than other securities of comparable maturities,
although they may have a similar risk of decline in market values during periods
of rising interest rates. Prepayment rates are difficult to predict and the
potential impact of prepayments on the value of a mortgage- or asset-backed
security depends on the terms of the instrument and can result in significant
volatility. The price of a mortgage-backed or asset-backed security also depends
on the credit quality and adequacy of the underlying assets or collateral.
Enforcing rights against the underlying assets or collateral may be difficult,
or the underlying assets or collateral may be insufficient if the issuer
defaults. Subprime mortgage loans, which typically are made to less creditworthy
borrowers, have a higher risk of default than conventional mortgage loans.
Therefore, mortgage-backed securities backed by subprime mortgage loans may
suffer significantly greater declines in value due to defaults. Some
mortgage-backed securities are backed by the full faith and credit of the U.S.
government (e.g., mortgage-backed securities issued by the Government National
Mortgage Association, commonly known as “Ginnie Mae”), while other
mortgage-backed securities (e.g., mortgage-backed securities issued by the
Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation, commonly known as “Fannie Mae” and “Freddie Mac”), are backed only
by the credit of the government entity issuing them. In addition, some
mortgage-backed securities are issued by private entities and are not guaranteed
by the U.S. government or any agency or instrumentality of the U.S.
government.
Derivatives
Risk: The Fund
may invest in futures, options, swaps, and other types of derivatives. Risks
associated with derivatives include the risk that the derivative is not
well-correlated with the security, index, ETFs, or currency to which it relates;
the risk that derivatives used for risk management may not have the intended
effects and may result in losses, underperformance, or missed opportunities; the
risk that the Fund will be unable to sell the derivative because of an illiquid
secondary market; the risk that a counterparty is unwilling or unable to meet
its obligation; the risk of interest rate movements; and the risk that the
derivatives transaction could expose the Fund to the effects of leverage, which
could increase the Fund’s market exposure, magnify investment risks and losses,
and cause losses to be realized more quickly. In addition, current regulation
may limit the Fund’s ability to invest in derivatives. There is no guarantee
that derivative techniques will be employed or that they will work as intended,
and their use could lower returns or even result in losses to the
Fund.
ETF
Risk: ETFs,
which generally are registered investment companies, incur their own management
fees and other expenses, such as trustees’ fees, operating expenses,
registration fees, and marketing expenses, a proportionate share of which would
be borne by the Fund. As a result, an investment by the Fund in an ETF could
cause the Fund’s operating expenses to be higher and, in turn, its performance
to be lower than if it were to invest directly in the securities held by the
ETF. In addition, the Fund will be exposed indirectly to all of the risks of the
securities held by the ETFs.
Passive
ETFs that invest in the securities and sectors contained in the indexes they
seek to track do not attempt to take defensive positions in volatile or
declining markets or under other conditions. Furthermore, such ETFs will be
unable to duplicate exactly the performance of the underlying indexes they
track.
15
Risk
Factors
The price
of an ETF is determined by supply and demand. Thus, ETFs do not necessarily
trade at their NAV, which means their shares may trade at a premium or
discount.
In
addition, although ETFs generally are listed on securities exchanges, there can
be no assurances that an ETF will continue to satisfy the listing qualifications
or that an active trading market for such ETFs will be maintained. Secondary
market trading in ETFs also may be halted by a national securities exchange
because of market conditions or for other reasons.
Geopolitical/Natural
Disaster Risk: Political
and diplomatic events within the United States, including a contentious domestic
political environment, changes in political party control of one or more
branches of the U.S. government, the U.S. government’s inability at times to
agree on a long-term budget and deficit reduction plan, the threat of a U.S.
government shutdown, and disagreements over, or threats not to increase, the
U.S. government’s borrowing limit (or “debt ceiling”), as well as political and
diplomatic events abroad, may affect investor and consumer confidence and may
adversely impact financial markets and the broader economy, perhaps suddenly and
to a significant degree. A downgrade of the ratings of U.S. government debt
obligations, or concerns about the U.S. government’s credit quality in general,
could have a substantial negative effect on the U.S. and global economies.
Moreover, although the U.S. government has honored its credit obligations, there
remains a possibility that the United States could default on its obligations.
The consequences of such an unprecedented event are impossible to predict, but
it is likely that a default by the United States would be highly disruptive to
the U.S. and global securities markets and could significantly impair the value
of the Fund’s investments.
Information
Technology and Operations Risk: Markets
and market participants are increasingly reliant upon both publicly available
and proprietary information data systems. Data imprecision, software or other
technology malfunctions, programming inaccuracies, unauthorized use or access,
and similar circumstances may impair the performance of these systems and may
have an adverse impact upon a single issuer, a group of issuers, or the market
at large. The information technology and other operational systems upon which a
Fund’s service providers rely may be subject to cyber attack or other
technological disruptions, and could otherwise disrupt the ability of these
service providers to perform essential tasks for the Fund. In certain cases, an
exchange or market may close or issue trading halts on either specific
securities or even the entire market, which may result in the Fund being, among
other things, unable to buy or sell certain securities or financial instruments
or accurately price its investments.
Market
Risk: The Fund
is subject to market risk, which is the possibility that the value of the Fund’s
investments will decline regardless of the success or failure of a company’s
operations. A company’s stock and bond prices in general may decline over short
or even extended periods, regardless of the success or failure of a company’s
operations. Markets tend to run in cycles, with periods when prices generally go
up and periods when prices generally go down. Equity securities tend to be more
volatile than debt securities.
Real
Estate Investment Trusts (“REITs”) Investment Risk: There is a
risk that the Fund’s investment in REITs will decrease because of a decline in
real estate values. Investing in REITs may subject the Fund to many of the same
risks associated with the direct ownership of real estate. Additionally, REITs
are dependent upon the capabilities of the REIT manager(s), have limited
diversification, may be particularly sensitive to economic downturns or changes
in interest rates, real estate values, cash flows of underlying real estate
assets, occupancy rates, zoning laws, and tax laws. Because REITs are pooled
investment vehicles that have expenses of their own, the Fund will indirectly
bear its proportionate share of those expenses.
Redemption
Risk: The Fund
may experience periods of heavy redemptions that could cause the Fund to sell
assets at inopportune times or at a loss or depressed value. Redemption risk is
heightened during periods of declining or illiquid markets. Heavy redemptions
could hurt the Fund's performance. Market developments and other factors,
including a general rise in interest rates, have the potential to
16
Risk
Factors
cause
investors to move out of fixed-income securities on a large scale, which may
increase redemptions from mutual funds that hold large amounts of fixed-income
securities. The market making capacity of dealers has been reduced in recent
years, in part as a result of structural changes, such as fewer proprietary
trading desks at broker-dealers and increased regulatory capital requirements.
In addition, significant securities market disruptions related to outbreaks and
subsequent spikes of infection rates of COVID-19 have led to dislocation in the
market for a variety of fixed-income securities (including, without limitation,
commercial paper, corporate debt securities, certificates of deposit,
asset-backed debt securities, and municipal obligations), which has decreased
liquidity and sharply reduced returns. Increased redemptions from mutual funds
that hold large amounts of fixed-income securities, coupled with a reduction in
the ability or willingness of dealers and other institutional investors to buy
or hold fixed-income securities, may result in decreased liquidity and increased
volatility in the fixed-income markets.
Repurchase
Agreement Risk: Repurchase
agreements carry several risks. Although transactions must be fully
collateralized at all times, they generally create leverage and involve some
counterparty risk to the Fund, in that a defaulting counterparty could delay or
prevent the Fund’s recovery of collateral. For example, if the other party to a
repurchase agreement defaults on its obligation under the agreement, the Fund
may suffer delays and incur costs or lose money in exercising its rights under
the agreement. If the seller fails to repurchase the security and the market
value of the security declines, the Fund may suffer a loss to the extent that
the proceeds from the sale of the underlying securities and other collateral
held by the Fund are less than the repurchase price.
U.S.
Government Sponsored Enterprises (“GSEs”) Risk: Securities
issued by certain GSEs, such as MBS issued by the Government National Mortgage
Association (“Ginnie Mae”), are backed by the full faith and credit of the U.S.
government. Securities issued by other GSEs, such as the Federal Home Loan
Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage
Association (“Fannie Mae”), are neither issued nor guaranteed by the U.S.
Treasury. Rather, they are supported by the credit of the issuing agency,
instrumentality or corporation. However, these securities typically have
indirect support from the U.S. government through an ability to borrow from the
U.S. Treasury, and the U.S. government is authorized to purchase the GSE's
obligations. If a GSE defaults on its obligations, the Fund might not be able to
recover its investment. While these arrangements are intended to ensure that
Fannie Mae and Freddie Mac can continue to meet their obligations, it is
possible that actions by the U.S. Treasury or others could adversely impact the
value of a Fund’s investments in securities issued by Fannie Mae and Freddie
Mac. In September of 2008, the U.S. Treasury placed Freddie Mac and Fannie
Mae under conservatorship and appointed the Federal Housing Finance Agency
(“FHFA”) as their regulator. Freddie Mac and Fannie Mae currently remain under
conservatorship. In addition, the U.S. Treasury entered into purchase agreements
with Freddie Mac and Fannie Mae to provide them with capital in exchange for
senior preferred stock. While these arrangements are intended to ensure that
Fannie Mae and Freddie Mac can continue to meet their obligations, it is
possible that actions by the U.S. Treasury, FHFA, or others could adversely
impact the
value of
the Fund’s investments in securities issued by Fannie Mae and Freddie
Mac.
17
Risk
Factors
Additional
Risk Factors.
The Adviser may use several types of investment strategies in pursuing the
Fund's overall investment objective. The following risks are those that the
Adviser does not consider to be principal risks of the Fund. The SAI provides
more detail about these risks and other risks that a Fund may be subject to that
are not considered to be principal risks. You may request a copy of the Fund's
SAI for more information.
Securities
Lending Risk: The Fund
may lend portfolio securities to broker-dealers or other institutions on a fully
collateralized basis. There is a risk of delay in recovering a loaned security
and/or risk of loss in collateral if the borrower becomes insolvent. There also
is risk of loss if the borrower defaults and fails to return the loaned
securities. The Fund could incur losses on the reinvestment of cash collateral
from the loan, if the value of the short-term investments acquired with the cash
collateral is less than the amount of cash collateral required to be returned to
the borrower.
18
Organization and
Management of the Fund
The Fund's
Board has the overall responsibility for overseeing the management of the
Fund.
The
Investment Adviser
The
Adviser serves as the investment adviser to each of the Victory Funds pursuant
to an investment advisory agreement. The Adviser oversees the operations of the
Fund according to investment policies and procedures adopted by the Board of
Trustees. The Adviser is a New York corporation that is registered as an
investment adviser with the Securities and Exchange Commission (“SEC”). As of
July 31, 2023 the Adviser managed and advised assets totaling in excess of
$165.9 billion for individual and institutional clients. The Adviser’s principal
address is 15935 La Cantera Parkway, San Antonio, TX 78256.
A
discussion regarding the basis of the Board’s approval of the Fund's Advisory
Agreement is available in the Fund's most recent annual report to shareholders
for the period ended April 30.
The
Adviser is a diversified global asset manager comprised of multiple investment
teams, referred to as investment franchises, each of which utilizes an
independent approach to investment. Victory Income Investors, a Victory Capital
investment franchise, is responsible for the day-to-day investment
management of the Fund.
The Fund’s
investment management fee is comprised of a base investment management fee and a
performance adjustment. The base investment management fee, which is accrued
daily and paid monthly, is equal to an annualized rate of 0.24% of the Fund’s
average daily net assets.
The
performance adjustment is calculated separately for each share class on a
monthly basis and will be added to or subtracted from the base investment
management fee depending upon the performance of the respective share class
relative to the performance of a Lipper Index over the performance period. The
performance adjustment for each class is calculated monthly by comparing the
Fund’s performance to that of the Lipper Ultra Short Obligations Funds Index,
which measures the performance of funds tracked by Lipper that invest at least
65% of their assets in investment-grade debt issues, or better, and maintain a
portfolio dollar-weighted average maturity between 91 days and 365 days. The
performance period for each share class consists of the current month plus the
previous 35 months. The adjustment rate is determined as referenced in the
following chart:
|
Over/Under
Performance
Relative
to Index
(in
basis points)1
|
Annual
Adjustment Rate
(in
basis points as a percentage
of
the Fund’s average daily net assets) |
|
+/–
20 to 50 |
+/–
4 |
|
+/–
51 to 100 |
+/–
5 |
|
+/–
101 and greater |
+/–
6 |
1 Based on the
difference between the average annual performance of the relevant share class of
the Fund and its relevant Lipper index, rounded to the nearest basis
point.
To
determine the amount of the performance adjustment, the annual performance
adjustment rate is multiplied by the average daily net assets of each respective
share class over the entire performance period, which then is multiplied by a
fraction, the numerator of which is the number of days in the month and the
denominator of which is 365 (366 in leap years). The resulting amount then is
added to (in the case of overperformance) or subtracted from (in the case of
underperformance) the base investment management fee.
19
Organization and
Management of the Fund
For the
fiscal period ended April 30, 2023, performance adjustments were 0.06%,
0.03%, 0.07%, and 0.05% for Fund Shares, Institutional Shares, Class A, and
Class R6, respectively. The performance adjustment rate included in the
investment advisory fee may differ from the maximum over/under Annual Adjustment
Rate due to differences in average net assets for the reporting period and
rolling 36-month performance period.
Under the
performance fee arrangement, each share class of the Fund will pay a positive
performance fee adjustment for a performance period whenever the class
outperforms the Lipper Ultra Short Obligations Funds Index over that period,
even if the class had overall negative returns during the performance period. A
performance adjustment may have a disproportionate impact on the performance of
a share class with a smaller level of assets compared to a Fund’s other share
classes with larger asset levels.
See
Fund
Fees and Expenses in this
prospectus for information about any contractual agreement agreed to by the
Adviser to waive fees and/or reimburse expenses with respect to the Fund. From
time to time, the Adviser also may voluntarily waive fees and/or reimburse
expenses in amounts exceeding those required to be waived or reimbursed under
any contractual agreement that may be in place with respect to the
Fund.
The Fund
is authorized, although the Adviser has no present intention of using such
authority, to use a “manager-of-managers” structure. The Adviser could select
(with approval of the Board and without shareholder approval) one or more
subadvisers to manage the day-to-day investment of the Fund's assets. The
Adviser would monitor each subadviser’s performance through quantitative and
qualitative analysis and periodically report to the Board as to whether a
subadviser’s agreement should be renewed, terminated, or modified. The Adviser
also would be responsible for determining how the Fund's assets should be
allocated to the subadvisers. The allocation for a subadviser could range from
0% to 100% of the Fund's assets, and the Adviser could change the allocations
without shareholder approval.
Portfolio
Management
Brian
W. Smith, CFA,
CPA, Senior Portfolio Manager, Victory Income Investors, a Victory Capital
investment franchise, has co-managed the Fund since 2018. Mr. Smith has 23 years
of investment management experience including 20 years with USAA Asset
Management Company (“AMCO”), which was acquired by the Adviser’s parent company
in 2019. Education: B.B.A., University of Texas at San Antonio; M.B.A.,
University of Texas at San Antonio. He holds the CFA designation and is a member
of the CFA Institute and the CFA Society of San Antonio.
Douglas
J. Rollwitz, CFA,
CPA, Portfolio Manager, Victory Income Investors, a Victory Capital investment
franchise, has co-managed the Fund since 2018. Mr. Rollwitz has 23 years of
investment management experience, including 19 years with AMCO, which was
acquired by the Adviser’s parent company in 2019. Education: B.B.A.,
University of Texas at San Antonio; M.B.A., University of Texas at
Arlington. He holds the CFA designation and is a member of the CFA
Institute and the San Antonio Financial Analysts Society.
James
F. Jackson, Jr., CFA,
Senior Portfolio Manager, co-Chief Investment Officer, and Head of Fixed Income
Portfolio Management, Victory Income Investors, a Victory Capital investment
franchise, has co-managed the Fund since 2019. Mr. Jackson has 23 years of
investment management experience including 10 years with AMCO, which was
acquired by the Adviser’s parent company in 2019. Education: M.B.A. with High
Distinction, Ross School of Business, University of Michigan; B.S., United
States Naval Academy. He holds the CFA designation and is a member of the CFA
Institute and the CFA Society of San Antonio.
20
Organization and
Management of the Fund
R.
Neal Graves, CFA,
CPA, Senior Portfolio Manager, Victory Income Investors, a Victory Capital
investment franchise, has co-managed the Fund since 2019. Mr. Graves has 27
years of finance related experience including 19 years of investment management
experience with AMCO, which was acquired by the Adviser’s parent company in
2019. Education: M.P.A, University of Texas at Austin; B.B.A., University of
Texas at Austin. He holds the CFA designation and is a member of the CFA
Institute and the CFA Society of San Antonio.
The
SAI provides additional information about the portfolio managers' compensation,
other accounts managed, and ownership of Fund securities.
21
Investing with the
Victory Funds
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
investment with the Victory Funds. These sections describe many of the share
classes currently offered by the Victory Funds. Choosing
a Share Class will help
you decide which share class may be to your advantage to buy.
Keep in
mind that Institutional Shares and Class R6 shares are available for purchase
only by eligible shareholders. In addition, not all Victory Funds offer each
class of shares described below; and therefore, certain classes may be discussed
that are not necessarily offered by a Fund. The classes of shares that are
offered by a Fund are those listed on the cover page designated with a ticker
symbol. A Fund also may offer other share classes in different
prospectuses.
This
section of the prospectus also describes how to open an account, how to access
information about your account, and how to buy, exchange, and sell shares of a
Fund. Note, this information may 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) 235-8396. They will be happy to assist
you.
|
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 financial intermediaries may charge fees
for their services. |
Choosing
a Share Class
Fund
Shares
◼
No
front-end sales charge. All your money goes to work for you right
away.
◼
Fund
Shares do not pay any ongoing distribution and/or service (12b-1)
fees.
◼
Typically,
lower annual expenses than all classes except Institutional and Class R6
shares.
Institutional
Shares
◼
No
front-end sales charge. All your money goes to work for you right
away.
◼
Institutional
Shares do not pay any ongoing distribution and/or service (12b-1)
fees.
◼
Institutional
Shares are only available to certain investors.
◼
Typically,
lower annual expenses than all classes except Class R6
shares.
Class
A
◼
No
front-end sales charge. All your money goes to work for you right
away.
◼
Class A
shares also pay ongoing distribution and/or service (12b-1) fees.
◼
Lower
annual expenses than Class C shares.
Class
C
◼
No
front-end sales charge. All your money goes to work for you right
away.
◼
A CDSC may
be imposed if you sell your shares within 12 months of purchase. The CDSC may be
waived or reduced in certain circumstances.
◼
Class C
shares also pay ongoing distribution and/or service (12b-1)
fees.
◼
Higher
annual expenses than all other classes of shares.
22
Investing with
the Victory Funds
Class
R6 Shares
◼
No
front-end sales charge or CDSC. All your money goes to work for you right
away.
◼
Class R6
Shares do not pay any ongoing distribution and/or service (12b-1)
fees.
◼
Class R6
Shares are only available to certain investors.
◼
Typically
lower annual expenses than all other classes of shares.
Share
Classes
When you
purchase shares of the Fund, you must choose a share class. The Fund offers the
share classes listed on the prospectus cover designated with their ticker
symbol. Each share class represents an interest in the same portfolio of
securities and is not a separate mutual fund. The classes differ in the sales
charges, if any, and expenses that apply to your investment, allowing you and
your Investment Professional to choose the class that best suits your investment
needs. The Fund may offer additional classes of shares in the
future.
Deciding
which share class best suits your investment needs depends on a number of
factors that you should discuss with your Investment Professional, including:
whether you are eligible to invest in a particular class, how long you expect to
hold your investment, how much you intend to invest in the Fund, and the total
expenses associated with each share class.
The Fund
reserves the right, without notice, to change the eligibility criteria for
purchasing a particular share class. For example, a class of shares may be
available to purchase only by retirement plans or by institutional investors.
The Fund also may waive any applicable eligibility criteria or investment
minimums at its discretion.
The Fund
or any class may be closed at any time for failure to achieve an economical
level of assets or for other reasons. Certain financial intermediaries who hold
shares on behalf of their customers impose fees when the amount of shares of a
particular class falls below a minimum threshold. To the extent that the amount
of shares falls below that threshold, the Fund reserves the right to liquidate
the shares held in accounts maintained by the financial
intermediary.
Shares of
the Fund are only available for sale in the United States and certain other
areas subject to U.S. jurisdiction and may not be offered for sale in non-U.S.
jurisdictions, except as approved by the Adviser. Investors residing outside of
the United States (except those with Air/Army Post Office (“APO”), Fleet Post
Office (“FPO”), or Diplomatic Post Office (“DPO”) addresses) generally may not
purchase shares of the Fund, even if they are U.S. citizens or lawful permanent
residents.
Eligibility
Requirements to Purchase Fund Shares
You may
open an account directly with the Fund and purchase Fund Shares on the Internet,
by telephone, or by mail. Fund Shares also are available through certain
financial intermediaries.
If Fund
Shares are purchased through a retirement account or an Investment Professional
(i.e., financial intermediary), the policies and procedures relating to these
purchases may differ from those discussed in this prospectus. Additional fees
also may apply to your investment in the Fund, including a transaction fee, if
you buy or sell shares of the Fund through a broker or other Investment
Professional. For more information on these fees, check with your Investment
Professional.
Eligibility
Requirements to Purchase Institutional Shares
The
Institutional Shares may be purchased by or through:
◼
Institutional
and individual investors with a minimum investment in Institutional Shares of
$1,000,000 who purchase through certain broker-dealers or directly from the
transfer agent;
◼
Investors
who purchase through advisory programs with an approved financial intermediary
in which the financial intermediary typically charges the investor a fee based
upon the value of the
23
Investing with
the Victory Funds
account
(“Advisory Programs”). Such transactions may be subject to additional rules or
requirements of the applicable Advisory Program;
◼
Brokerage
platforms of firms that have agreements with the Distributor to offer such
shares solely when acting as an agent for the investor and the investor may be
required to pay a commission and/or other forms of compensation to the broker;
or
◼
Institutional
investors, which include retirement plans, endowments, foundations, and bank
trusts, as well as Affiliated Funds, and other persons or legal entities that
the Fund may approve from time to time.
A 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 $1,000,000.
Eligibility
Requirements to Purchase Class A and Class C Shares
Class A
and Class C shares generally are made available through broker-dealers and other
financial intermediaries and are subject to certain sales charges.
Eligibility
Requirements to Purchase Class R6 Shares
Class R6
shares may only be purchased by or through:
◼
Endowments
and foundations;
◼
Retirement
plans, including Section 401 and 457 plans, section 403 plans sponsored by a
section 501(c)(3) organization, employer sponsored benefit plans (including
health savings accounts) and certain non-qualified deferred compensation
arrangements that operate in a similar manner to qualified plans;
◼
Advisory
Programs with an approved financial intermediary in which the financial
intermediary typically charges the investor a fee based upon the value of the
account; and
◼
Registered
investment companies.
Such
investments may be subject to additional rules or requirements of the applicable
Advisory Program.
The Class
R6 shares are not available to retail accounts, traditional or Roth IRAs, SEPs,
SARSEPs, SIMPLE IRAs, or 529 Education Savings Plans.
24
Investing with
the Victory Funds
Eligibility
of Individuals Associated with the Funds and Fund Service Providers
Current
and retired trustees of Victory-advised funds and the officers, directors,
trustees, employees, and family members of employees of the Adviser or
Affiliated Providers are eligible to purchase the lowest expense share class
offered by the Fund. In the case of Class A shares, such purchases are not
subject to a front-end sales charge. “Affiliated Providers” are affiliates of
the Adviser and organizations that provide services to Victory Portfolios III
(the “Trust”).
|
The Fund
reserves the right to change the criteria for eligible
investors
and the
investment minimums. |
Additional
Information Regarding Financial Intermediaries
Your
ability to purchase, exchange, redeem, and transfer shares will be affected by
the policies of the financial intermediary through which you do business. Some
policy differences may include: minimum investment requirements, exchange
policies, fund choices, cutoff time for investments, and trading
restrictions.
In
addition, your financial intermediary may charge a transaction or other fee for
the purchase or sale of shares of the Fund. Those charges are retained by the
financial intermediary and are not shared with us. Please contact your financial
intermediary or plan sponsor for a complete description of its
policies.
Copies of
the Fund's annual report, semi annual report, and SAI are available from your
financial intermediary or plan sponsor.
25
How to Buy
Shares
Opening
an Account With the Funds
You may
purchase shares directly from the Fund or through certain investment
professionals (e.g., financial intermediaries) as described below. If you
already have an account with us, you will not need to fill out another
application to invest in another fund, including other funds managed by the
Adviser (together with the Fund, we refer to these as the “Affiliated Funds” or
so simply as the “Funds”), unless the registration is different or we need
further information to verify your identity.
As
required by federal law, we must obtain certain information from you prior to
opening an account with us. If we are unable to verify your identity, we may
refuse to open your account, or we may open your account and take certain
actions without prior notice to you, including restricting account transactions
pending verification of your identity. You may be asked for a copy of your
driver’s license, passport, or other identifying documents as part of this
process which may be cross-referenced against a consumer report or other
electronic database. Additional information may be required to open accounts for
corporations and other entities. If we subsequently are unable to verify your
identity within a reasonable time, we may close your account or take other
appropriate action. If your account is closed for this reason, your shares will
be redeemed at the next calculated NAV. We prohibit opening accounts for certain
investors, including but not limited to, foreign financial institutions, shell
banks, correspondent accounts for foreign shell banks, and correspondent
accounts for foreign financial institutions. A “foreign shell bank” is a foreign
bank without a physical presence in any country. A “correspondent account” is an
account established for a foreign bank to receive deposits from, or to make
payments or other disbursements on behalf of, the foreign bank, or to handle
other financial transactions related to such foreign bank.
Each
shareholder named on an account with us must provide a Social Security number or
other taxpayer identification number to avoid “backup” tax withholding required
by the Internal Revenue Code of 1986, as amended (the “Code”).
Effective
Date of Purchase
Purchase,
exchange, and redemption requests are not processed until received in proper
form. “Proper form” means actual receipt of the order along with all information
and supporting documentation necessary to effect the transaction. Complete
information may include any verification or confirmation of identity that the
Fund's transfer agent or other authorized Fund agent may request. For purchase
requests, “proper form” also generally includes receipt of sufficient funds to
effect the purchase. The Fund, its transfer agent, or any authorized Fund agent
may, in its sole discretion, determine whether any particular transaction
request is in good order and reserve the right to change or waive any good order
requirement at any time. Financial intermediaries may have their own
requirements for recognizing a transaction in proper form or good order. If you
hold your shares through a financial intermediary, please contact them for
specific proper form or good order requirements.
When you
make a purchase, your purchase price will be the NAV per share next calculated
after we or the financial intermediary receive your request in “proper form.”
The Fund’s NAV per share is calculated as of the close of the regular trading
session (generally 4 p.m. Eastern time) of the New York Stock Exchange (“NYSE”)
each day it is open for trading. If we or the financial intermediary receive
your purchase request in proper form prior to that time, your purchase price
will be the NAV per share calculated for that day. If we or the financial
intermediary receive your purchase request in proper form after that time, the
purchase price will be the NAV per share calculated as of the close of the next
regular trading session of the NYSE.
The Fund
or the Fund's Distributor or transfer agent may enter into agreements with
Servicing Agents (such as financial intermediaries or plan sponsors), which hold
shares of the Fund in omnibus accounts for their customers, under which the
Servicing Agents are authorized to receive orders for
26
How to Buy
Shares
shares of
the Fund on the Fund’s behalf. Under these arrangements, the Fund will be deemed
to have received an order when an authorized Servicing Agent receives the order.
Accordingly, customer orders will be priced at the Fund’s NAV per share next
calculated after they are received by an authorized Servicing Agent even though
the orders may be transmitted to the Fund by the Servicing Agent after the time
the Fund calculates its NAV.
Paying
for Your Initial Purchase
If you
hold an account directly with the Fund and you plan to purchase shares from us
with a check, the instrument must be written in U.S. dollars and drawn on a U.S.
bank. In addition, initial purchases into an account by electronic funds
transfer or check may be held for up to 30 days before any redemptions may be
processed. We do not accept the following foreign instruments: checks, money
orders, traveler’s checks, or other similar instruments. In addition, we do not
accept cash or coins. If you plan to purchase shares through a financial
intermediary, please check with that financial intermediary regarding acceptable
forms of payment.
Minimum
Investments
Fund
Shares:
$3,000.
However, financial intermediaries may set different investment minimums, and the
Fund reserves the right to waive or lower purchase minimums in certain
circumstances.
Institutional
Shares:
$1
million. However, the Fund reserves the right to waive or lower purchase
minimums in certain circumstances.
Class
A and Class C Shares:
$2,500
minimum ($1,000 for IRA accounts, gift/transfer to minor accounts, and
purchases through automatic investment plans). However, financial intermediaries
may set different investment minimums, and the Fund reserves the right to waive
or lower purchase minimums in certain circumstances.
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, the
Administrator, and their affiliates. In addition, the minimum investment
required may be waived when the Fund is purchased through an Advisory Program or
within qualified retirement plans or in other similar
circumstances.
Class
R6 Shares:
There is
no minimum initial investment amount for Class R6 shares. However, financial
intermediaries or plan recordkeepers may require plans to meet different
investment minimums.
Purchasing
Additional Shares
Fund
Shares:
$50
minimum per transaction, per account. The Fund reserves the right to waive or
lower purchase minimums in certain circumstances.
Institutional
Shares:
There is
no subsequent purchase minimum for investments in Institutional
Shares.
27
How to Buy
Shares
Class
A and Class C Shares:
$50
minimum per transaction, per account.
Class
R6 Shares:
There is
no subsequent purchase minimum for investments in Class R6 shares. However,
financial intermediaries or plan recordkeepers may require participants to meet
different subsequent purchase requirements.
Contacting
the Victory Funds
The
following features may be available to you to purchase, exchange, and redeem
shares of the Fund you hold in an account opened directly with the Fund. 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. All website
transactions should be placed online at vcm.com.
◼
Internet
Access
Review
account information and make most account transactions. This includes making
purchases, exchanges, and redemptions; reviewing account activity; checking
balances; and more.
◼
Mobile
Access
Review
account information and make most account transactions.
◼
Telephone
Access
To access
account information and make account transactions, call toll free (800) 235-8396
during normal business hours to speak with a member service
representative.
◼
Mail
If you
would like to make a purchase or request a redemption by mail, send your written
instructions to:
Regular
Mail:
Victory Funds
P.O. Box 182593
Columbus, OH 43218-2593
Victory Funds
P.O. Box 182593
Columbus, OH 43218-2593
Overnight
Mail:
Use the following address ONLY for overnight packages:
Victory Funds
c/o FIS TA Operations
4249 Easton Way, Suite 400
Columbus, OH 43219
PHONE: (800) 235-8396
Use the following address ONLY for overnight packages:
Victory Funds
c/o FIS TA Operations
4249 Easton Way, Suite 400
Columbus, OH 43219
PHONE: (800) 235-8396
28
How to Buy
Shares
◼
Bank
Wire
To add to
your account or request a redemption by bank wire, visit the vcm.com website or
call (800) 235-8396 for instructions. This helps to ensure that your account
will be credited or debited promptly and correctly. Any commercial bank can
transfer same-day funds by wire.
Although
the transfer agent currently does not 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.
◼
Electronic
Funds Transfer
Additional
purchases on a regular basis may be deducted electronically from a bank account.
To sign up for these services when opening an account, visit the vcm.com website
or call (800) 235-8396 for assistance. Currently, the Fund does not charge a fee
for electronic transfers, but it reserves the right to charge for this service
in the future. Your originating bank may charge a fee for electronic
transfers.
29
How to Exchange
Shares and Class Conversions
|
There may be
limits on the ability to exchange between certain Victory
Funds.
You can
obtain a list of Victory Funds available for exchange by
calling
(800)
235-8396 or by visiting
VictoryFunds.com |
The shares
of any class of a 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
Funds, either through your investment professional or directly through the Fund,
subject to the conditions described below:
◼
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 into a
new share class.
◼
To
exchange between Victory Funds, the other Victory Fund you wish to exchange into
must be eligible for exchange with your Fund.
◼
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 your customer service representative 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.
Other
Exchange Rules You Should Know
If you
have opened an account directly with the Fund, you may make exchanges on
vcm.com. After we receive the exchange orders, the Fund’s transfer agent will
simultaneously process exchange redemptions and purchases at the share prices
next calculated pursuant to the procedures set forth herein. See Effective
Date of Purchase for
additional information. The investment minimums applicable to share purchases
also apply to exchanges.
If you
hold shares of the Fund in an account with a financial intermediary or plan
sponsor, the policies and procedures on an exchange may differ from those
discussed in this prospectus. Additional fees also may apply to your investment
in the Fund, including a transaction fee, if you buy, sell, or exchange shares
of the Fund through a broker or other Investment Professional. For more
information on these fees, check with your Investment Professional.
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.
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 upon 60 days’ notice to
shareholders.
For
information on how to exchange shares of a Fund that were purchased through your
employer’s retirement plan, including any restrictions and charges that the plan
may impose, please consult your employer.
Class
C Share Conversion
Class C
shares of the Fund will automatically convert to Class A shares in the month
following the eight-year anniversary date of the purchase of the Class C shares.
Your financial intermediary may have a conversion schedule that is shorter than
eight years. Class C conversions will be effected at the relative NAV of each
such class without the imposition of any sales charge, fee or other
charge.
30
How to Exchange
Shares and Class Conversions
You may be
able to voluntarily convert your Class C shares before the stated anniversary to
a different share class of the same Fund that has a lower total annual operating
expense ratio provided certain conditions are met. This voluntary 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.
Other
Conversions
Under
certain circumstances, we may convert your (i) Institutional Shares to Fund
Shares and (ii) Class A shares to Fund Shares or Institutional Shares, as
applicable.
The Fund
also may provide for other conversion privileges from time to time under which a
shareholder of the Fund may convert shares into another class of shares of the
same Fund under certain circumstances, subject to approval by the Fund’s
officers. For example, subject to approval by the Fund’s officers, a shareholder
may convert shares of one class of the Fund held through an eligible advisory
program into shares of another class of the Fund (if available) with a lower
expense ratio, provided that following the conversion the shareholder meets
applicable eligibility requirements for the class into which the shareholder
seeks to convert (as described in this prospectus).
Pricing
When a
conversion occurs, you receive shares of one class of a fund for shares of
another class of the same fund. At the time of conversion, the dollar value of
the “new” shares you receive equals the dollar value of the “old” shares that
were converted. In other words, the conversion has no effect on the value of
your investment in the fund at the time of the conversion. However, the number
of shares you own after the conversion may be greater than or less than the
number of shares you owned before the conversion, depending on the NAVs per
share of the two share classes. A conversion between share classes of the same
fund is a non-taxable event.
Conversions
are not subject to the Fund's restrictions on short-term trading activity
discussed under Excessive
Short-Term Trading.
31
How to Sell
Shares
Shareholders
will receive a redemption price of the NAV per share next calculated after we
receive the redemption request in “proper form” as provided under Effective
Date of Purchase. If we
receive the redemption request in proper form prior to the close of the NYSE’s
regular trading session (generally 4 p.m. Eastern time), the redemption price
will be the NAV per share calculated for that day. If we receive the redemption
request after that time, the redemption price will be the NAV per share
calculated as of the close of the next regular trading session of the
NYSE.
Under
certain circumstances and when deemed to be in the Fund’s best interests,
proceeds may not be sent to intermediaries for up to seven days after receipt of
the redemption order.
|
There are a
number of convenient ways to sell your
shares. |
If you
have a direct account with the Fund, you may redeem Fund Shares on the Internet,
by telephone, or by mail on any day the NAV per share is calculated. You can use
the same mailing addresses listed under the section titled How
to Buy Shares.
◼
By
Internet
Log on to
your account using vcm.com and place your redemption request.
◼
By
Telephone
Call toll
free (800) 235-8396 during normal business hours. You have the following options
for receiving your redemption proceeds:
◼
Mail a
check to the address of record;
◼
Wire funds
to a previously designated domestic financial institutional;
◼
Mail a
check to a previously designated alternate address; or
◼
Electronically
transfer your redemption via EFT to a previously designated domestic financial
institution.
The Fund
has undertaken certain authentication procedures regarding telephone
transactions and will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Before any discussion regarding your
account, we will obtain certain information from you to verify your identity.
Additionally, your telephone calls may be recorded or monitored, and
confirmations of account transactions are sent to the address of record or by
electronic delivery to your designated e-mail address.
◼
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.
◼
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 NYE, your funds will be wired on the next business day.
◼
By
Electronic Funds Transfer (“EFT”)
Normally,
your redemptions will be processed on the same day, but will be processed on the
next day if received after close of trading on the NYSE. It will be transferred
by EFT as long as the transfer is to a domestic bank.
Additional
Information About Redemptions
The Fund
may elect to suspend the redemption of shares or postpone the date of payment in
limited circumstances (e.g., if the NYSE is closed or when permitted by order of
the SEC).
32
How to Sell
Shares
Under
normal market conditions, the Fund typically expects to meet redemption requests
by paying out proceeds from cash or cash equivalent portfolio holdings, or by
selling portfolio holdings. Under deteriorating market conditions or market
stress, the Fund also may borrow to meet redemption requests. The Fund and the
other Affiliated Funds are limited as to the amount that each may individually
and collectively borrow in these circumstances. As a result, borrowings
available to the Fund may be insufficient to satisfy Fund redemption requests.
In addition, the Fund reserves the right to honor redemption orders wholly or
partly with in-kind distributions of Fund portfolio securities instead of
cash.
Fund
Shares:
If you
hold Fund Shares through an account directly with the Fund, the Fund typically
expects to pay out redemption proceeds on the next business day after your order
is received in proper form; however, it may take up to seven days to send your
proceeds.
Payment
for redemption of shares purchased by electronic funds transfer (“EFT”) or check
will be sent after the EFT or check has cleared, which could take up to 30 days
from the initial purchase date into the Fund and, for any subsequent purchases
into the Fund, seven business days from the purchase date.
If you
choose to have your redemption proceeds mailed to you and either the U.S. Postal
Service is unable to deliver the distribution check to you or the check remains
outstanding for more than 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.
If you
hold Fund Shares with a financial intermediary, please contact your financial
intermediary regarding redemption policies. Normally, the Fund transmits
proceeds to intermediaries for redemption orders that are received in proper
form on the next business day after receipt.
Institutional
Shares:
Institutional
Shares typically expect to pay out redemption proceeds on the next business day
after your order is received in proper form; however, it may take up to seven
days to send your proceeds.
Class
A and Class C Shares:
Check with
your financial intermediary for its policies on redemptions. Class A and Class C
shares purchased through a financial intermediary should be redeemed through the
financial intermediary. The Fund typically expects to transmit proceeds to
intermediaries for redemption orders received in proper form on the next
business day after receipt.
Class
R6 Shares:
Class R6
shares may be purchased or redeemed through employer-sponsored retirement plans
where a financial intermediary provides retirement recordkeeping services to
plan participants. Check with your financial intermediary or plan sponsor for
its policies on redemptions. Normally, the Fund transmits proceeds to
intermediaries and eligible institutional investors (foundations and endowments)
for redemption orders received in proper form on the next business day after
receipt.
For
federal income tax purposes, a redemption of shares of the Fund is a taxable
event, upon which you may recognize a capital gain or loss (unless you hold the
shares of the Fund in a tax-deferred account or are a tax-exempt investor). A
capital gain or loss is based on the difference between your basis in the
redeemed shares and the proceeds you receive upon their redemption. See
Important
Information About Taxes for
information regarding basis election and reporting.
33
Information About
Fees
The Fund
is comprised of multiple classes of shares. Each class shares the Fund's
investment objective and investment portfolio. The classes have different fees,
expenses, and/or minimum investment requirements. The difference in the fee
structures between the classes is primarily the result of their separate
arrangements for shareholder and distribution services and performance fee
arrangements. It is not the result of any difference in the base investment
management, custodial fee rate schedules, or other expenses related to the
management of the Fund's assets, which do not vary by class. Shareholders of
Class R6 shares do not require the same level of shareholder and administrative
services from the Fund as shareholders of the other classes. Different fees and
expenses will affect performance.
Except as
described below, the share classes have identical voting, dividend, liquidation,
and other rights, preferences, terms, and conditions. The primary differences
between the classes are: (a) each class may be subject to different expenses
specific to that class; (b) each class has a different identifying designation
or name; (c) each class has exclusive voting rights with respect to matters
solely affecting that class; and (d) each class may have different purchase,
exchange, and redemption privileges.
Distribution
and Service Plans
In
accordance with Rule 12b-1 under the Investment Company Act of 1940, the Trust
has adopted a Distribution and Service Plan for Class A and Class C
shares.
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 of
its Class A shares. The fee is paid for general distribution services and for
providing personal services to 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 generally are 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.
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 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. 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 generally are 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. For additional information about the
Rule 12b-1 Plan and its terms, see Distribution
and Service Plans in the
SAI.
34
Information About
Fees
Payments
to Financial Intermediaries
Certain
financial intermediaries perform recordkeeping, networking, administrative,
sub-transfer agency, and shareholder services for their clients with respect to
their investments in the Fund that otherwise would be performed by the Fund’s
transfer agent or administrator and shareholder servicing agent.
In some
circumstances, we, or one of our affiliates, will pay a financial intermediary
for these services out of our own resources, including any profits from the
advisory fees the Adviser receives from the Funds. In other circumstances, the
Fund will pay a fee to the financial intermediary for performing those services.
The Fund will not pay financial intermediaries more than it would pay its direct
service providers for transfer agency, administration, and/or shareholder
services. In cases where intermediary fees are higher due to differences in the
services being provided or other factors, the additional amounts will be paid by
us and/or the Distributor. In addition, these payments generally are based on
either (1) a percentage of the average daily net assets of Fund shareholders’
accounts serviced by a financial intermediary or (2) a fixed dollar amount for
each account serviced by a financial intermediary. The aggregate amount of these
payments may be substantial.
In
addition, we and the Fund's Distributor may make payments to intermediaries for
various additional services, other expenses, and/or the financial
intermediaries’ distribution of shares of the Fund. Such payments are sometimes
referred to as “revenue sharing” and generally are negotiated with a financial
intermediary on the basis of such factors as the number or value of shares of
the Fund that the financial intermediary sells or may sell; the value of client
assets invested; or the type and nature of services or support furnished by the
financial intermediary.
We (and
our affiliates) also may pay fixed fees for the listing of a Fund on a
broker-dealer’s or financial intermediary’s system. Such payments are not
considered to be revenue sharing payments.
The Fund
does not pay any service, distribution, or administrative fees to financial
intermediaries on Class R6 shares. As a result, the Class R6 shares pay lower
fees.
35
Distributions and
Taxes
Dividends
and Other Distributions
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 normally is paid once a year in
December.
|
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. |
Distributions
from net investment income (“dividends”) are accrued daily and distributed on
the last business day of each month. Dividends begin accruing on shares on the
day payment is received and continue to accrue through either the settlement
date or the day after the settlement date of a redemption, depending on the type
of account.
The Fund
may make additional distributions to shareholders, or may not make a
distribution, when considered appropriate or necessary. For example, the Fund
could make one or more additional distributions to avoid the imposition of any
federal income or excise taxes, or it may not make a distribution to limit
returns of capital.
Any
distribution made by the Fund will reduce the NAV per share of the class by the
amount of the distribution on the ex-distribution date. You should consider
carefully the effects of purchasing shares of the Fund shortly before any
distribution (as explained below under Important
Information About Taxes). Some or
all distributions may be subject to taxes.
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
The Fund
automatically reinvests all income dividends and capital gain distributions, if
any, on a share class in additional shares of that class unless you request to
receive those distributions in cash by way of check or by way of electronic
funds transfer.
Directed
Bank Account Option
When you
choose to receive cash dividends by way of electronic funds transfer to your
bank checking or savings account, we will send them to you after the
distribution date each month. The share price will be the NAV per share of the
class computed on the ex-distribution date.
Cash
Option
If you
elect to receive your distributions by check, and the distribution amount is $25
or less, the amount will automatically be reinvested in the Fund. Otherwise, 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 U.S. 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. The Fund will
invest in your account any dividend or other distribution payment returned to
the Fund by your financial institution at the current NAV per
share.
36
Distributions and
Taxes
Income
Earned Option
You can
automatically reinvest your dividends in additional Fund shares and have your
capital gains paid in cash, or reinvest capital gains and have your dividends
paid in cash.
Directed
Distributions Option
If you own
shares in more than one Victory Mutual Fund, you may direct that dividends
and/or capital gain distributions received from one Victory Mutual Fund be used
to purchase shares automatically in the same class of another Victory Mutual
Fund.
Important
Information About Taxes
|
The
tax information in this Prospectus is provided as general information.
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. |
Treatment
of the Fund
The Fund,
which is treated as a separate corporation for federal tax purposes, has
qualified for each past taxable year, and intends to continue to qualify, for
treatment as a “regulated investment company” under the Internal Revenue Code of
1986, as amended (the “Code”). By doing so, the Fund (but not its shareholders)
is relieved of federal income tax on the part of its investment company taxable
income and net capital gain if any, that it distributes to its
shareholders.
Shareholder
Taxation
◼
Distributions
that shareholders receive from the Fund generally are subject to federal income
tax and may be subject to state and/or local taxes.
◼
Dividends
and distributions of net short-term gains are taxable to you as ordinary income,
whether received in cash or reinvested in additional shares of the Fund or
another Victory Mutual Fund.
◼
A portion
of the Fund’s dividends (which is not expected to be substantial) may qualify
for (1) the 50% dividends-received deduction available to corporations, and (2)
the lower maximum federal income tax rates applicable to “qualified dividend
income” of individuals and certain other non-corporate shareholders (each, an
“individual shareholder”) who satisfy certain holding period and other
restrictions with respect to their shares of the Fund—a maximum of 15% for a
single shareholder with taxable income not exceeding $492,300 ($553,850 for
married shareholders filing jointly) and 20% for those individual shareholders
with taxable income exceeding those respective amounts (which are effective for
2023 and will be adjusted for inflation annually thereafter).
◼
Regardless
of the length of time you have held shares of the Fund, distributions of net
capital gains that the Fund realizes are taxable to you as long-term capital
gains, whether received in cash or reinvested in additional shares of the Fund,
and are taxed to individual shareholders at the 15% and 20% tax rates described
above.
◼
You may
realize a capital gain or loss for federal income tax purposes on a redemption
or an exchange (which is treated like a redemption for those purposes) of shares
of the Fund. Your gain or loss is based on the difference, if any, between your
basis in the redeemed (or exchanged) shares and the redemption proceeds (or the
aggregate NAV of the shares of the fund into which you exchange) you receive.
Any capital gain an individual shareholder recognizes on a redemption or
exchange of his or her shares of the Fund that have been held for more than one
year will qualify for the 15% and 20% tax rates.
◼
An
individual shareholder is subject to a 3.8% federal tax on the lesser of (1) the
individual’s “net
37
Distributions and
Taxes
investment
income,” which generally includes taxable distributions the Fund pays and net
gains realized on the redemption or exchange of shares of the Fund, or (2) the
excess of his or her “modified adjusted gross income” over $200,000 (or $250,000
if married and filing jointly). This tax is in addition to any other taxes due
on that income.
◼
Your basis
in shares of the Fund that you acquired after December 31, 2011, (“Covered
Shares”) will be determined in accordance with the Fund’s default method, which
is average basis, unless you affirmatively elect in writing (which may be
electronic) to use a different acceptable basis determination method, such as a
specific identification method. The basis determination method you elect (or the
default method) may not be changed with respect to a redemption of Covered
Shares after the settlement date of the redemption.
◼
You should
consult with your tax adviser to determine the best IRS-accepted basis
determination method.
◼
The Fund
may provide estimated capital gain distribution information through the website
at vcm.com.
◼
Tax
statements will be mailed from the Fund by mid-February showing the amounts and
tax status of distributions made to you in the prior calendar
year.
◼
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.
◼
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.
Taxpayer
Identification and Backup Withholding
◼
Each
shareholder named on an account with us must provide a Social Security number or
other taxpayer identification number to avoid “backup” tax withholding required
by the Code.
◼
Federal
law requires the Fund to withhold and remit to the U.S. Treasury 24% of (1)
dividends, capital gain distributions, and proceeds of redemptions, regardless
of the extent to which gain or loss may be realized, otherwise payable to any
individual shareholder who fails to furnish the Fund with a correct taxpayer
identification number and (2) those dividends and distributions otherwise
payable to any individual shareholder who underreports dividend or interest
income or fails to certify that he or she is not subject to backup
withholding.
◼
Backup
withholding is not an additional tax, and any amounts so withheld may be
credited against a shareholder’s federal income tax liability or refunded. To
avoid this withholding, you must certify on your application, or on a separate
IRS Form W-9 supplied by the Fund's transfer agent, that your taxpayer
identification number is correct and you currently are not subject to backup
withholding.
38
Important Fund
Policies and Other Information
Share
Price Calculation
The price
at which you purchase and redeem shares of the Fund is equal to the NAV per
share calculated on the effective date of the purchase or redemption. The NAV
per share is calculated by adding the value of the Fund’s assets (i.e., the
value of its investments and other assets), deducting liabilities, and dividing
by the number of shares outstanding. Shares of the Fund may be purchased and
sold at the NAV per share without a sales charge. The Fund’s NAV per share is
calculated as of the close of the NYSE (generally 4 p.m. Eastern time) each day
that the NYSE is open for regular trading. The NYSE is closed on most national
holidays and Good Friday.
|
NAV= |
Total
Assets - Liabilities |
|
Number of
Shares Outstanding |
Valuation
of Securities
The
Adviser, acting as the Valuation Designee, has established a Pricing and
Liquidity Committee (the “Committee”); and subject to the Board’s oversight, the
Committee administers and oversees the Fund's valuation policies and procedures,
which are approved by the Board. Among other things, these policies and
procedures allow the Fund to utilize independent pricing services, quotations
from securities dealers, and a wide variety of sources and information to
establish and adjust the fair value of securities as events occur and
circumstances warrant.
Debt
securities are valued each business day by a pricing service (the “Service”)
approved by the Adviser as Valuation Designee. The Service uses an evaluated bid
or the last sales price to price securities when, in the Service’s judgment,
these prices are readily available and are representative of the securities'
market values. For many securities, such prices are not readily available. The
Service generally prices these securities based on methods that include
consideration of yields or prices of securities of comparable quality, coupon,
maturity, and type; indications as to values from dealers in securities; and
general market conditions.
Short-term
debt securities with original or remaining maturities of 60 days or less
generally may be valued at amortized cost, provided that amortized cost
represents the fair value of such securities.
Repurchase
agreements are valued at cost.
Investments
in open-end investment companies, commingled, or other funds, other than ETFs,
are valued at their NAV at the end of each business day.
Futures
contracts are valued at the settlement price at the close of market on the
principal exchange on which they are traded or, in the absence of any
transactions that day, the values are based upon the settlement price on the
prior trading date.
Options
contracts are valued at the mean of the last bid and ask prices. Options on
futures are valued at the settlement price determined by the applicable
exchange.
In the
event that price quotations or valuations are not readily available, are not
reflective of market value, or a significant event has been recognized in
relation to a security or class of securities, the securities are valued in good
faith, at fair value, by the Committee in accordance with valuation procedures
approved by the Adviser as Valuation Designee. The effect of fair value pricing
is that securities may not be priced on the basis of quotations from the primary
market in which they are
39
Important Fund
Policies and Other Information
traded,
and the actual price realized from the sale of a security may differ materially
from the fair value price. Valuing these securities at fair value is intended to
cause the Fund’s NAV to be more reliable than it otherwise would
be.
Fair value
methods used by the Fund include, but are not limited to, obtaining market
quotations from secondary pricing services, broker-dealers, other pricing
services, or widely used quotation systems. General factors considered in
determining the fair value of securities include fundamental analytical data,
the nature and duration of any restrictions on disposition of the securities,
evaluation of credit quality, and an evaluation of the forces that influenced
the market in which the securities are purchased and sold.
For
additional information on how securities are valued, see Valuation
of Securities in the
Fund's SAI.
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 Fund must obtain the following information for each person who opens
a new account:
◼
Name;
◼
Date of
birth (for individuals);
◼
Residential
or business street address (although post office boxes are still permitted for
mailing); and
◼
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.
Statements
and Reports
You will
receive a periodic statement reflecting any transactions that affect the balance
or registration of Fund shares in 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.
The Fund
will report information to you annually concerning the tax status of your
dividends and other distributions for federal income tax purposes. In addition,
the Fund (or its administrative agent) must report to the IRS and furnish to its
shareholders the basis information for Covered Shares and indicate whether they
had a short-term (one year or less) or long-term (more than one year) holding
period. You should consult with your tax adviser to obtain more information
about how the basis reporting law applies to you.
40
Important Fund
Policies and Other Information
Shareholder
Communications
In order
to eliminate duplicate mailings to an address at which two or more shareholders
with the same last name reside, each household will receive a single copy of the
Fund’s most recent shareholder reports, proxy statements, prospectuses, and
their supplements, unless you have instructed us to the contrary. This
eliminates duplicate copies and saves paper and postage costs for the Fund.
However, if you would like to receive individual copies, please contact us; and
they will be delivered promptly.
Portfolio
Holdings Disclosure
A
description of the Fund's policies and procedures with respect to the disclosure
of the Fund's portfolio securities is available in the Fund's SAI, which is
available upon request and on the Fund’s website at
VictoryFunds.com.
IRA
Distribution Fee
The Fund
may apply a distribution fee to all full IRA distributions, except for those due
to death, disability, or divorce. Partial IRA distributions are not charged a
distribution fee.
Account
Balance
Victory
Capital Transfer Agency, Inc., the Fund's transfer agent, may assess annually a
small balance account fee of $12 to each shareholder account with a balance of
less than $2,000 at the time of assessment. Accounts exempt from the fee
include: (1) any account regularly purchasing additional shares each month
through an automatic investment plan; (2) any UGMA/UTMA account; (3) all
(non-IRA) money market fund accounts; (4) any account whose registered owner has
an aggregate balance of $50,000 or more invested in Affiliated Funds; and
(5) all IRAs (for the first year the account is open). The fee is not currently
being assessed. The Fund will provide advance notice in the event it is assessed
in the future.
Excessive
Short-Term Trading
At this
time, the Board has not adopted policies designed to prevent excessive
short-term trading activity for this Fund because the Fund is designed to
accommodate short-term investment activity, including checkwriting by
shareholders. The Fund does reserve the right to reject any purchase or exchange
order if in the best interest of the Fund, but at this time has not designated
categories of short-term trading activity as detrimental to the Fund. In the
future, the Fund can adopt such procedures if it determines certain patterns of
activity are detrimental to this Fund.
Other
Fund Rights
The Fund
reserves the right to:
◼
Reject or
restrict purchase or exchange orders when in the best interest of the
Fund;
◼
Limit or
discontinue the offering of shares of the Fund without notice to the
shareholders;
◼
Calculate
the NAV per share and accept purchase, exchange, and redemption orders on a
business day that the NYSE is closed;
◼
Redeem
some or all of its shares in kind when in the best interest of the
Fund;
◼
Require a
signature guarantee for transactions or changes in account information in those
instances where the appropriateness of a signature authorization is in question
(the SAI contains information on acceptable guarantors);
◼
Redeem an
account with less than $500, with certain limitations;
◼
Restrict
or liquidate an account when necessary or appropriate to comply with federal
law; and
41
Important Fund
Policies and Other Information
◼
Discontinue
or otherwise limit the opening of accounts with us.
Additional
Information
The Trust
enters into contractual arrangements with various parties, including, among
others, the Fund's adviser, transfer agent, and distributor, who provide
services to the Fund. Shareholders are not parties to, or intended (or
“third-party”) beneficiaries of, any of those contractual arrangements, and
those contractual arrangements are not intended to create in any individual
shareholder or group of shareholders any right to enforce them against the
service providers or to seek any remedy under them against the service
providers, either directly or on behalf of the Trust or the Fund.
This
prospectus provides information concerning the Trust and the Fund that you
should consider in determining whether to purchase shares of the Fund. Neither
this prospectus nor the related SAI is intended to be, or should be read to give
rise to, an agreement or contract between the Trust or the Fund and any
investor, or to give rise to any rights in any shareholder or other person other
than any rights under federal or state law that may not be
waived.
42
Financial
Highlights
The
following financial highlights tables are intended to help you understand the
Fund's and relevant share classes' financial performance for the past five
years or since inception. Certain information reflects financial results
for a single share. The total returns in the tables represent the rate that an
investor would have earned (or lost) on an investment in the Fund Shares,
Institutional Shares, Class A, and Class R6 shares (assuming reinvestment of all
income dividends and capital gain distributions).
The
information has been derived from financial statements audited by Ernst &
Young LLP, an independent registered public accounting firm, whose report, along
with the Fund's financial statements, are included in the Fund’s annual report
to shareholders, which is available upon request.
43
Victory
Ultra Short-Term Bond Fund
|
|
Fund
Shares | |||||
|
|
Four
Months
Ended
4/30/23(a) |
Year
Ended
12/31/22 |
Year
Ended
12/31/21 |
Year
Ended
12/31/20 |
Year
Ended
12/31/19 |
Year
Ended
12/31/18 |
|
Net
Asset Value, Beginning
of
Period |
$9.85 |
$10.12 |
$10.13 |
$10.05 |
$9.89 |
$9.97 |
|
Investment
Activities: |
|
|
|
|
|
|
|
Net
investment income
(loss) |
0.14(b) |
0.19(b) |
0.09(b) |
0.20(b) |
0.27(b) |
0.22 |
|
Net
realized and
unrealized
gains (losses) |
0.06 |
(0.26) |
(0.01) |
0.08 |
0.16 |
(0.08) |
|
Total
from Investment
Activities |
0.20 |
(0.07) |
0.08 |
0.28 |
0.43 |
0.14 |
|
Distributions
to Shareholders
from: |
|
|
|
|
|
|
|
Net
investment income |
(0.14) |
(0.20) |
(0.09) |
(0.20) |
(0.27) |
(0.22) |
|
Total
Distributions |
(0.14) |
(0.20) |
(0.09) |
(0.20) |
(0.27) |
(0.22) |
|
Net
Asset Value, End of
Period |
$9.91 |
$9.85 |
$10.12 |
$10.13 |
$10.05 |
$9.89 |
|
Total
Return(c),(d) |
2.05% |
(0.68)% |
0.80% |
2.81% |
4.37% |
1.40% |
|
Ratios
to Average Net
Assets: |
|
|
|
|
|
|
|
Net
Expenses(e),(f),(g),(h) |
0.66% |
0.63% |
0.62% |
0.60% |
0.61% |
0.60% |
|
Net
Investment Income
(Loss)
(e) |
4.32% |
1.96% |
0.89% |
2.01% |
2.69% |
2.19% |
|
Gross
Expenses(e),(f) |
0.68% |
0.63% |
0.62% |
0.60% |
0.61% |
0.60% |
|
Supplemental
Data: |
|
|
|
|
|
|
|
Net
Assets at end of period
(000's) |
$166,303 |
$169,400 |
$210,831 |
$212,503 |
$275,168 |
$283,769 |
|
Portfolio
Turnover(c),(i) |
15% |
45% |
57% |
39% |
59% |
48% |
(a)
Effective April
30, 2023, the Fund’s fiscal year-end changed from December 31 to April
30.
(b)
Per share net
investment income (loss) has been calculated using the average daily shares
method.
(c)
Not annualized for
periods less than one year.
(d)
Assumes
reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in accordance
with U.S. Generally Accepted Accounting Principles and could differ from the
reported return.
(e)
Annualized for
periods less than one year.
(f)
Does not include
acquired fund fees and expenses, if any.
(g)
The net expense
ratio may not correlate to the applicable expense limits in place during the
period since the current contractual expense limitation is applied for a period
beginning July 1, 2019, and in effect through August 31, 2024, instead of
coinciding with the Fund's fiscal year end.
(h)
From the period
beginning July 1, 2019, the amount of any waivers or reimbursements and the
amount of any recoupment are calculated without regard to the impact of any
performance adjustment to the Fund’s management fee.
(i)
Portfolio turnover
is calculated on the basis of the Fund as a whole without distinguishing between
the classes of shares.
44
Victory Ultra
Short-Term Bond Fund
|
|
Institutional
Shares | |||||
|
|
Four
Months
Ended
4/30/23(a) |
Year
Ended
12/31/22 |
Year
Ended
12/31/21 |
Year
Ended
12/31/20 |
Year
Ended
12/31/19 |
Year
Ended
12/31/18 |
|
Net
Asset Value, Beginning
of
Period |
$9.85 |
$10.12 |
$10.13 |
$10.05 |
$9.89 |
$9.97 |
|
Investment
Activities: |
|
|
|
|
|
|
|
Net
investment income
(loss) |
0.15(b) |
0.20(b) |
0.10(b) |
0.19(b) |
0.27(b) |
0.22 |
|
Net
realized and
unrealized
gains (losses) |
0.05 |
(0.26) |
(0.01) |
0.09 |
0.16 |
(0.08) |
|
Total
from Investment
Activities |
0.20 |
(0.06) |
0.09 |
0.28 |
0.43 |
0.14 |
|
Distributions
to Shareholders
from: |
|
|
|
|
|
|
|
Net
investment income |
(0.14) |
(0.21) |
(0.10) |
(0.20) |
(0.27) |
(0.22) |
|
Total
Distributions |
(0.14) |
(0.21) |
(0.10) |
(0.20) |
(0.27) |
(0.22) |
|
Net
Asset Value, End of
Period |
$9.91 |
$9.85 |
$10.12 |
$10.13 |
$10.05 |
$9.89 |
|
Total
Return(c),(d) |
2.07% |
(0.62)% |
0.87% |
2.87% |
4.43% |
1.45% |
|
Ratios
to Average Net
Assets: |
|
|
|
|
|
|
|
Net
Expenses(e),(f),(g),(h) |
0.58% |
0.57% |
0.55% |
0.56% |
0.55% |
0.55% |
|
Net
Investment Income
(Loss)
(e) |
4.45% |
2.03% |
0.96% |
1.86% |
2.75% |
2.25% |
|
Gross
Expenses(e),(f) |
0.60% |
0.67% |
0.55% |
0.63% |
0.64% |
0.77% |
|
Supplemental
Data: |
|
|
|
|
|
|
|
Net
Assets at end of period
(000's) |
$143,135 |
$102,043 |
$79,662 |
$56,042 |
$9,842 |
$8,433 |
|
Portfolio
Turnover(c),(i) |
15% |
45% |
57% |
39% |
59% |
48% |
(a)
Effective April
30, 2023, the Fund’s fiscal year-end changed from December 31 to April
30.
(b)
Per share net
investment income (loss) has been calculated using the average daily shares
method.
(c)
Not annualized for
periods less than one year.
(d)
Assumes
reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in accordance
with U.S. Generally Accepted Accounting Principles and could differ from the
reported return.
(e)
Annualized for
periods less than one year.
(f)
Does not include
acquired fund fees and expenses, if any.
(g)
The net expense
ratio may not correlate to the applicable expense limits in place during the
period since the current contractual expense limitation is applied for a period
beginning July 1, 2019, and in effect through August 31, 2024, instead of
coinciding with the Fund's fiscal year end.
(h)
From the period
beginning July 1, 2019, the amount of any waivers or reimbursements and the
amount of any recoupment are calculated without regard to the impact of any
performance adjustment to the Fund’s management fee.
(i)
Portfolio turnover
is calculated on the basis of the Fund as a whole without distinguishing between
the classes of shares.
45
Victory Ultra
Short-Term Bond Fund
|
|
Class
A | |||
|
|
Four
Months
Ended
4/30/23(a) |
Year
Ended
12/31/22 |
Year
Ended
12/31/21 |
6/29/20(b)
through
12/31/20 |
|
Net
Asset Value, Beginning of Period |
$9.85 |
$10.12 |
$10.13 |
$9.90 |
|
Investment
Activities: |
|
|
|
|
|
Net
investment income (loss)(c) |
0.13 |
0.27 |
0.07 |
0.07 |
|
Net
realized and unrealized gains (losses) |
0.06 |
(0.36) |
(0.01) |
0.23 |
|
Total
from Investment Activities |
0.19 |
(0.09) |
0.06 |
0.30 |
|
Distributions
to Shareholders from: |
|
|
|
|
|
Net
investment income |
(0.13) |
(0.18) |
(0.07) |
(0.07) |
|
Total
Distributions |
(0.13) |
(0.18) |
(0.07) |
(0.07) |
|
Net
Asset Value, End of Period |
$9.91 |
$9.85 |
$10.12 |
$10.13 |
|
Total
Return (excludes sales charges)(d),(e) |
1.96% |
(0.91)% |
0.57% |
3.02% |
|
Ratios
to Average Net Assets: |
|
|
|
|
|
Net
Expenses(f),(g),(h),(i) |
0.92% |
0.85% |
0.85% |
0.84% |
|
Net
Investment Income (Loss) (f) |
4.07% |
2.77% |
0.65% |
1.32% |
|
Gross
Expenses(f),(g) |
11.79% |
2.73% |
14.86% |
108.95% |
|
Supplemental
Data: |
|
|
|
|
|
Net
Assets at end of period (000's) |
$135 |
$133 |
$59 |
$19 |
|
Portfolio
Turnover(d),(j) |
15% |
45% |
57% |
39% |
(a)
Effective April
30, 2023, the Fund’s fiscal year-end changed from December 31 to April
30.
(b)
Commencement of
operations.
(c)
Per share net
investment income (loss) has been calculated using the average daily shares
method.
(d)
Not annualized for
periods less than one year.
(e)
Assumes
reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in accordance
with U.S. Generally Accepted Accounting Principles and could differ from the
reported return.
(f)
Annualized for
periods less than one year.
(g)
Does not include
acquired fund fees and expenses, if any.
(h)
The net expense
ratio may not correlate to the applicable expense limits in place during the
period since the current contractual expense limitation is applied for a period
beginning June 29, 2020, and in effect through August 31, 2024, instead of
coinciding with the Fund's fiscal year end.
(i)
The amount of any
waivers or reimbursements and the amount of any recoupment are calculated
without regard to the impact of any performance adjustment to the Fund’s
management fee.
(j)
Portfolio turnover
is calculated on the basis of the Fund as a whole without distinguishing between
the classes of shares.
46
Victory Ultra
Short-Term Bond Fund
|
|
Class
R6 | |||||
|
|
Four
Months
Ended
4/30/23(a) |
Year
Ended
12/31/22 |
Year
Ended
12/31/21 |
Year
Ended
12/31/20 |
Year
Ended
12/31/19 |
Year
Ended
12/31/18 |
|
Net
Asset Value, Beginning
of
Period |
$9.86 |
$10.12 |
$10.13 |
$10.05 |
$9.88 |
$9.97 |
|
Investment
Activities: |
|
|
|
|
|
|
|
Net
investment income
(loss) |
0.15(b) |
0.25(b) |
0.11(b) |
0.21(b) |
0.29(b) |
0.24 |
|
Net
realized and
unrealized
gains (losses) |
0.06 |
(0.30) |
(0.02) |
0.09 |
0.17 |
(0.09) |
|
Total
from Investment
Activities |
0.21 |
(0.05) |
0.09 |
0.30 |
0.46 |
0.15 |
|
Distributions
to Shareholders
from: |
|
|
|
|
|
|
|
Net
investment income |
(0.15) |
(0.21) |
(0.10) |
(0.22) |
(0.29) |
(0.24) |
|
Total
Distributions |
(0.15) |
(0.21) |
(0.10) |
(0.22) |
(0.29) |
(0.24) |
|
Net
Asset Value, End of
Period |
$9.92 |
$9.86 |
$10.12 |
$10.13 |
$10.05 |
$9.88 |
|
Total
Return(c),(d) |
2.12% |
(0.43)% |
0.91% |
3.02% |
4.70% |
1.51% |
|
Ratios
to Average Net
Assets: |
|
|
|
|
|
|
|
Net
Expenses(e),(f),(g),(h) |
0.44% |
0.47% |
0.48% |
0.41% |
0.39% |
0.39% |
|
Net
Investment Income
(Loss)
(e) |
4.53% |
2.56% |
1.09% |
2.15% |
2.92% |
2.41% |
|
Gross
Expenses(e),(f) |
0.83% |
0.83% |
0.49% |
0.51% |
0.80% |
0.69% |
|
Supplemental
Data: |
|
|
|
|
|
|
|
Net
Assets at end of period
(000's) |
$4,948 |
$5,309 |
$2,223 |
$7,648 |
$6,518 |
$4,980 |
|
Portfolio
Turnover(c),(i) |
15% |
45% |
57% |
39% |
59% |
48% |
(a)
Effective April
30, 2023, the Fund’s fiscal year-end changed from December 31 to April
30.
(b)
Per share net
investment income (loss) has been calculated using the average daily shares
method.
(c)
Not annualized for
periods less than one year.
(d)
Assumes
reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in accordance
with U.S. Generally Accepted Accounting Principles and could differ from the
reported return.
(e)
Annualized for
periods less than one year.
(f)
Does not include
acquired fund fees and expenses, if any.
(g)
The net expense
ratio may not correlate to the applicable expense limits in place during the
period since the current contractual expense limitation is applied for a period
beginning July 1, 2019, and in effect through August 31, 2024, instead of
coinciding with the Fund's fiscal year end.
(h)
From the period
beginning July 1, 2019, the amount of any waivers or reimbursements and the
amount of any recoupment are calculated without regard to the impact of any
performance adjustment to the Fund’s management fee.
(i)
Portfolio turnover
is calculated on the basis of the Fund as a whole without distinguishing between
the classes of shares.
47
Appendix A —
Variations in Sales Charge Reductions and Waivers Available Through Certain
Intermediaries
The
availability of certain initial and contingent deferred sales charge reductions
and waivers may depend on the particular financial intermediary or type of
account through which you purchase or hold Fund shares. The following
information about variations in sales charge reductions and waivers is
applicable only to investors who purchase Fund shares through a Merrill Lynch,
Ameriprise Financial, Morgan Stanley Wealth Management, Raymond James, Janney
Montgomery Scott, Edward D. Jones & Co., L.P., or Robert W. Baird & Co.
platform or account.
In all
instances, it is your responsibility to notify the Fund or your financial
intermediary at the time of purchase of any relationship or other facts
qualifying you for sales charge reductions or waivers. For reductions and
waivers not available through a particular intermediary, shareholders will have
to purchase Fund shares directly from the Fund or through another intermediary
to receive those reductions and waivers.
Merrill
Lynch
Shareholders
purchasing Fund shares through a Merrill Lynch platform or account will be
eligible only for the following load waivers (front-end sales charge waivers and
contingent deferred, or back-end, sales charge waivers) and discounts, which may
differ from those disclosed elsewhere in this Fund's Prospectus or in the
SAI.
Front-End
Sales Charge Waivers on Class A Shares available at Merrill
Lynch
◼
Employer-sponsored
retirement, deferred compensation, and employee benefit plans (including health
savings accounts) and trusts used to fund those plans, provided that the shares
are not held in a commission-based brokerage account and shares are held for the
benefit of the plan
◼
Shares
purchased by a 529 Plan (does not include 529 Plan units or 529-specific share
classes or equivalents)
◼
Shares
purchased through a Merrill Lynch affiliated investment advisory
program
◼
Shares
exchanged due to the holdings moving from a Merrill Lynch affiliated investment
advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to
Merrill Lynch’s policies relating to sales load discounts and
waivers
◼
Shares
purchased by third party investment advisors on behalf of their advisory clients
through Merrill Lynch's platform
◼
Shares of
funds purchased through the Merrill Edge Self-Directed platform (if
applicable)
◼
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family)
◼
Shares
exchanged from Class C (i.e. level-load) shares of the same fund pursuant to
Merrill Lynch's policies relating to sales load discounts and
waivers
◼
Employees
and registered representatives of Merrill Lynch or its affiliates and their
family members
◼
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any
of its affiliates, as described in this Prospectus
◼
Eligible
shares purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following the redemption, (2)
the redemption and purchase occur in the same account, and (3) redeemed shares
were subject to a front-end or deferred sales load (known as Rights of
Reinstatement). Automated transactions (i.e. systematic
48
Appendix
A — Variations in Sales Charge Reductions and Waivers Available
Through Certain Intermediaries
purchases
and withdrawals) and purchases made after shares are automatically sold to pay
Merrill Lynch’s account maintenance fees are not eligible for
reinstatement
CDSC
Waivers on A and C Shares available at Merrill Lynch
◼
Death or
disability of the shareholder
◼
Shares
sold as part of a systematic withdrawal plan as described in the Fund's
Prospectus
◼
Return of
excess contributions from an IRA Account
◼
Shares
sold as part of a required minimum distribution for IRA and retirement accounts
pursuant to the Internal Revenue Code
◼
Shares
sold to pay Merrill Lynch fees but only if the transaction is initiated by
Merrill Lynch
◼
Shares
acquired through a right of reinstatement
◼
Shares
held in retirement brokerage accounts, that are exchanged for a lower cost share
class due to transfer to a fee based account or platform (applicable to A and C
shares only)
◼
Shares
received through an exchange due to the holdings moving from a Merrill Lynch
affiliated investment advisory program to a Merrill Lynch brokerage
(non-advisory) account pursuant to Merrill Lynch’s policies relating to sales
load discounts and waivers
Front-end
load Discounts Available at Merrill Lynch: Breakpoints, Rights of Accumulation
& Letters of Intent
◼
Breakpoints
as described in this Prospectus
◼
Rights of
Accumulation (ROA) which entitle shareholders to breakpoint discounts as
described in the Fund’s prospectus will be automatically calculated based on the
aggregated holding of fund family assets held by accounts (including 529 program
holdings, where applicable) within the purchaser’s household at Merrill Lynch.
Eligible fund family assets not held at Merrill Lynch may be included in the ROA
calculation only if the shareholder notifies his or her financial advisor about
such assets
◼
Letters of
Intent (LOI) which allow for breakpoint discounts based on anticipated purchases
within a fund family, through Merrill Lynch, over a 13-month period of time (if
applicable)
Ameriprise
Financial
Class
A Shares Front-End Sales Charge Waivers Available at Ameriprise
Financial
Shareholders
purchasing Fund shares through an Ameriprise Financial brokerage account are
eligible for the following front-end sales charge waivers, which may differ from
those disclosed elsewhere in this Fund’s prospectus or SAI:
◼
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs or SAR-SEPs.
◼
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same Fund (but not any other fund
within the same fund family).
◼
Shares
exchanged from Class C shares of the same fund in the month of or following the
7-year anniversary of the purchase date. To the extent that this prospectus
elsewhere provides for a waiver with respect to exchanges of Class C shares or
conversion of Class C shares following a shorter holding period, that waiver
will apply.
◼
Employees
and registered representatives of Ameriprise Financial or its affiliates and
their immediate family members.
49
Appendix
A — Variations in Sales Charge Reductions and Waivers Available
Through Certain Intermediaries
◼
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education
Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit
plans) that are held by a covered family member, defined as an Ameriprise
financial advisor and/or the advisor’s spouse, advisor’s lineal ascendant
(mother, father, grandmother, grandfather, great grandmother, great
grandfather), advisor’s lineal descendant (son, step-son, daughter,
step-daughter, grandson, granddaughter, great grandson, great granddaughter) or
any spouse of a covered family member who is a lineal descendant.
◼
Shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales load (i.e. Rights of
Reinstatement).
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan Stanley Wealth Management transactional
brokerage account are eligible only for the following front-end sales charge
waivers with respect to Class A shares, which may differ from and may be more
limited than those disclosed elsewhere in the Fund's Prospectus or
SAI.
Front-end
Sales Charge Waivers on Class A Shares available at Morgan
Stanley
◼
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh
plans
◼
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley's
account linking rules
◼
Shares
purchased through reinvestment of dividends and capital gains distributions when
purchasing shares of the same fund
◼
Shares
purchased through a Morgan Stanley self-directed brokerage
account
◼
Class C
(i.e., level-load) shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to
Morgan Stanley Wealth Management’s share class conversion
program
◼
Shares
purchased from the proceeds of redemptions within the same fund family, provided
(i) the repurchase occurs within 90 days following the redemption, (ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares
were subject to a front-end or deferred sales charge
Raymond
James & Associates, Inc., Raymond James Financial Services, Inc. and each
entity’s affiliates (“Raymond James”)
Shareholders
purchasing fund shares through a Raymond James platform or account, or through
an introducing broker-dealer or independent registered investment adviser for
which Raymond James provides trade execution, clearance, and/or custody
services, will be eligible only for the following load waivers (front-end sales
charge waivers and contingent deferred, or back-end, sales charge waivers) and
discounts, which may differ from those disclosed elsewhere in this Fund's
Prospectus or SAI.
Front-End
Sales Charge Waivers on Class A Shares available at Raymond
James
◼
Shares
purchased in an investment advisory program
50
Appendix
A — Variations in Sales Charge Reductions and Waivers Available
Through Certain Intermediaries
◼
Shares
purchased within the same fund family through a systematic reinvestment of
capital gains and dividend distributions
◼
Employees
and registered representatives of Raymond James or its affiliates and their
family members as designated by Raymond James
◼
Shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales load (known as Rights of
Reinstatement)
◼
A
shareholder in the Fund's Class C shares will have their shares converted at net
asset value to Class A shares (or the appropriate share class) of the Fund if
the shares are no longer subject to a CDSC and the conversion is in line with
the policies and procedures of Raymond James
CDSC
Waivers on Classes A and C Shares available at Raymond James
◼
Death or
disability of the shareholder
◼
Shares
sold as part of a systematic withdrawal plan as described in the Fund's
Prospectus
◼
Return of
excess contributions from an IRA Account
◼
Shares
sold as part of a required minimum distribution for IRA and retirement accounts
due to the shareholder reaching the qualified age based on applicable IRS
regulations as described in the fund's prospectus
◼
Shares
sold to pay Raymond James fees but only if the transaction is initiated by
Raymond James
◼
Shares
acquired through a right of reinstatement
Front-End
Load Discounts Available at Raymond James: Breakpoints, Rights of Accumulation,
and/or Letters of Intent
◼
Breakpoints
as described in this Prospectus
◼
Rights of
Accumulation which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser's household at Raymond James. Eligible
fund family assets not held at Raymond James may be included in the calculation
of rights of accumulation only if the shareholder notifies his or her financial
advisor about such assets
◼
Letters of
intent which allow for breakpoint discounts based on anticipated purchases
within a fund family, over a 13-month time period. Eligible fund family assets
not held at Raymond James may be included in the calculation of letters of
intent only if the shareholder notifies his or her financial advisor about such
assets
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing fund shares through a Janney brokerage account will be eligible only
for the following load waivers (front-end sales charge waivers and contingent
deferred sales charge (“CDSC”), or back-end, sales charge waivers) and
discounts, which may differ from those disclosed elsewhere in this Fund's
Prospectus or SAI.
Front-End
Sales Charge Waivers on Class A shares available at Janney1
◼
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family)
◼
Shares
purchased by employees and registered representatives of Janney or its
affiliates and their family members as designated by
Janney
◼
Shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the
51
Appendix
A — Variations in Sales Charge Reductions and Waivers Available
Through Certain Intermediaries
repurchase
occurs within ninety (90) days following the redemption, (2) the redemption and
purchase occur in the same account, and (3) redeemed shares were subject to a
front-end or deferred sales load (i.e., right of
reinstatement)
◼
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh
plans
◼
Shares
acquired through a right of reinstatement
◼
Class C
shares that are no longer subject to a contingent deferred sales charge and are
converted to Class A shares of the same fund pursuant to Janney’s policies and
procedures
CDSC
Waivers on Class A and C shares available at Janney
◼
Shares
sold upon the death or disability of the shareholder
◼
Shares
sold as part of a systematic withdrawal plan as described in the fund’s
Prospectus
◼
Shares
purchased in connection with a return of excess contributions from an IRA
account
◼
Shares
sold as part of a required minimum distribution for IRA and other retirement
accounts due to the shareholder reaching the qualified age based on applicable
Internal Revenue Service regulations as described in the fund’s
Prospectus.
◼
Shares
sold to pay Janney fees but only if the transaction is initiated by
Janney
◼
Shares
acquired through a right of reinstatement
◼
Shares
exchanged into the same share class of a different fund.
Front-End
Load Discounts available at Janney: Breakpoints, Rights of Accumulation and/or
letters of intent1
◼
Breakpoints
as described in this Prospectus
◼
Rights of
accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will
be automatically calculated based on the aggregated holding of fund family
assets held by accounts within the purchaser’s household at Janney. Eligible
fund family assets not held at Janney may be included in the ROA calculation
only if the shareholder notifies his or her financial advisor about such
assets
◼
Letters of
intent which allow for breakpoint discounts based on anticipated purchases
within a fund family, over a 13-month time period. Eligible fund family assets
not held at Janney may be included in the calculation of letters of intent only
if the shareholder notifies his or her financial advisor about such
assets
1 Also
referred to as an “initial sales charge.”
Edward
D. Jones & Co., L.P. (“Edward Jones”)
The
following information supersedes prior information with respect to transactions
and positions held in fund shares through an Edward Jones system. Clients of
Edward Jones (also referred to as “shareholders”) purchasing fund shares on the
Edward Jones commission and fee-based platforms are eligible only for the
following sales charge discounts (also referred to as “breakpoints”) and
waivers, which can differ from discounts and waivers described elsewhere in the
mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of
the Victory Funds, or other facts qualifying the purchaser for discounts or
waivers. Edward Jones can ask for documentation of such circumstance.
Shareholders should contact Edward Jones if they have questions regarding their
eligibility for these discounts and waivers.
52
Appendix
A — Variations in Sales Charge Reductions and Waivers Available
Through Certain Intermediaries
Breakpoints
available at Edward Jones
◼
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in
the prospectus.
Rights
of Accumulation (“ROA”)
◼
The
applicable sales charge on a purchase of Class A shares is determined by taking
into account all share classes (except certain money market funds and any assets
held in group retirement plans) of the mutual fund family held by the
shareholder or in an account grouped by Edward Jones with other accounts for the
purpose of providing certain pricing considerations (“pricing groups”). If
grouping assets as a shareholder, this includes all share classes held on the
Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder
notifying Edward Jones of such assets at the time of calculation. Money market
funds are included only if such shares were sold with a sales charge at the time
of purchase or acquired in exchange for shares purchased with a sales
charge.
◼
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to
establish or change ROA for the IRA accounts associated with the plan to a
plan-level grouping as opposed to including all share classes at a shareholder
or pricing group level.
◼
ROA is
determined by calculating the higher of cost minus redemptions or market value
(current shares x NAV).
Letter
of Intent (“LOI”)
◼
Through a
LOI, shareholders can receive the sales charge and breakpoint discounts for
purchases shareholders intend to make over a 13-month period from the date
Edward Jones receives the LOI. The LOI is determined by calculating the higher
of cost or market value of qualifying holdings at LOI initiation in combination
with the value that the shareholder intends to buy over a 13-month period to
calculate the front-end sales charge and any breakpoint discounts. Each purchase
the shareholder makes during that 13-month period will receive the sales charge
and breakpoint discount that applies to the total amount. The inclusion of
eligible fund family assets in the LOI calculation is dependent on the
shareholder notifying Edward Jones of such assets at the time of calculation.
Purchases made before the LOI is received by Edward Jones are not adjusted under
the LOI and will not reduce the sales charge previously paid. Sales charges will
be adjusted if LOI is not met.
◼
If the
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to
establish or change ROA for the IRA accounts associated with the plan to a
plan-level grouping, LOIs will also be at the plan-level and may only be
established by the employer.
Sales
Charge Waivers available at Edward Jones
Sales
charges are waived for the following shareholders and in the following
situations:
◼
Associates
of Edward Jones and its affiliates and their family members who are in the same
pricing group (as determined by Edward Jones under its policies and procedures)
as the associate. This waiver will continue for the remainder of the associate's
life if the associate retires from Edward Jones in good-standing and remains in
good standing pursuant to Edward Jones’ policies and
procedures.
◼
Shares
purchased in an Edward Jones fee-based program.
◼
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment.
◼
Shares
purchased from the proceeds of redeemed shares of the same fund family so long
as the following conditions are met: 1) the proceeds are from the sale of shares
within 60 days of the purchase, and 2) the sale and purchase are made in the
same share class and the same account
53
Appendix
A — Variations in Sales Charge Reductions and Waivers Available
Through Certain Intermediaries
or the
purchase is made in an individual retirement account with proceeds from
liquidations in a non-retirement account.
◼
Shares
exchanged into Class A shares from another share class so long as the exchange
is into the same fund and was initiated at the discretion of Edward Jones.
Edward Jones is responsible for any remaining CDSC due to the fund company, if
applicable. Any future purchases are subject to the applicable sales charge as
disclosed in the prospectus.
◼
Exchanges
from Class C shares to Class A shares of the same fund, generally, in the
84th month
following the anniversary of the purchase date or earlier at the discretion of
Edward Jones.
Contingent
Deferred Sales Charge (“CDSC”) Waivers available at Edward Jones
If the
shareholder purchases shares that are subject to a CDSC and those shares are
redeemed before the CDSC is expired, the shareholder is responsible to pay the
CDSC except in the following conditions:
◼
The death
or disability of the shareholder.
◼
Systematic
withdrawals with up to 10% per year of the account value.
◼
Return of
excess contributions from an Individual Retirement Account
(“IRA”).
◼
Shares
sold as part of a required minimum distribution for IRA and retirement accounts
if the redemption is taken in or after the year the shareholder reaches
qualified age based on applicable IRS regulations.
◼
Shares
sold to pay Edward Jones fees or costs in such cases where the transaction is
initiated by Edward Jones.
◼
Shares
exchanged in an Edward Jones fee-based program.
◼
Shares
acquired through NAV reinstatement.
◼
Shares
redeemed at the discretion of Edward Jones for Minimum Balances, as described
below.
Other
Important Information Regarding Transactions Through Edward Jones
Minimum
Purchase Amounts
◼
Initial
purchase minimum: $250
◼
Subsequent
purchase minimum: none
Minimum
Balances
Edward
Jones has the right to redeem at its discretion fund holdings with a balance of
$250 or less. The following are examples of accounts that are not included in
this policy:
◼
A
fee-based account held on an Edward Jones platform
◼
A 529
account held on an Edward Jones platform
◼
An account
with an active systematic investment plan or LOI
Exchanging
Share Classes
◼
At any
time it deems necessary, Edward Jones has the authority to exchange at NAV a
shareholder's holdings in a fund to Class A shares of the same
fund.
Oppenheimer
& Co. Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an Oppenheimer & Co. Inc. platform or account
are eligible only for the following load waivers (front-end sales charge waivers
and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or
SAI.
Front-End
Sales Charge Waivers on Class A Shares available at
OPCO
54
Appendix
A — Variations in Sales Charge Reductions and Waivers Available
Through Certain Intermediaries
◼
Employer-sponsored
retirement, deferred compensation and employee benefit plans (including health
savings accounts) and trusts used to fund those plans, provided that the shares
are not held in a commission-based brokerage account and shares are held for the
benefit of the plan
◼
Shares
purchased by or through a 529 Plan
◼
Shares
purchased through an OPCO affiliated investment advisory
program
◼
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family)
◼
Shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales load (known as Rights of
Restatement)
◼
A
shareholder in the Fund’s Class C shares will have their shares converted at net
asset value to Class A shares (or the appropriate share class) of the Fund if
the shares are no longer subject to a CDSC and the conversion is in line with
the policies and procedures of OPCO
◼
Employees
and registered representatives of OPCO or its affiliates and their family
members
◼
Directors
or Trustees of the Fund, and employees of the Fund’s investment adviser or any
of its affiliates, as described in this prospectus
CDSC
Waivers on A and C Shares available at OPCO
◼
Death or
disability of the shareholder
◼
Shares
sold as part of a systematic withdrawal plan as described in the Fund's
Prospectus
◼
Return of
excess contributions from an IRA Account
◼
Shares
sold as part of a required minimum distribution for IRA and retirement accounts
due to the shareholder reaching the qualified age based on applicable IRS
regulations as described in the prospectus
◼
Shares
sold to pay OPCO fees but only if the transaction is initiated by
OPCO
◼
Shares
acquired through a right of reinstatement
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation &
Letters of Intent
◼
Breakpoints
as described in this Prospectus
◼
Rights of
Accumulation (ROA) which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at OPCO. Eligible fund family
assets not held at OPCO may be included in the ROA calculation only if the
shareholder notifies his or her financial advisor about such
assets
Waivers
Specific to Stifel, Nicolaus & Company, Incorporated (“Stifel”)
Shareholders
purchasing Fund shares through a Stifel platform or account or who own shares
for which Stifel or an affiliate is the broker-dealer of record are eligible for
the following additional sales charge waiver.
Front-end
Sales Load Waiver on Class A Shares
◼
Class C
shares that have been held for more than seven (7) years will be converted to
Class A shares of the same Fund pursuant to Stifel’s policies and
procedures
All other
sales charge waivers and reductions described elsewhere in the Fund’s Prospectus
or SAI still apply.
55
Appendix
A — Variations in Sales Charge Reductions and Waivers Available
Through Certain Intermediaries
Robert
W. Baird & Co. (“Baird”)
Shareholders
purchasing fund shares through a Baird platform or account will only be eligible
for the following sales charge waivers (front-end sales charge waivers and CDSC
waivers) and discounts, which may differ from those disclosed elsewhere in this
prospectus or the SAI
Front-End
Sales Charge Waivers on Investors A-shares Available at Baird
◼
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund
◼
Shares
purchase by employees and registers representatives of Baird or its affiliate
and their family members as designated by Baird
◼
Shares
purchased using the proceeds of redemptions from a Victory Fund, provided (1)
the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same accounts, and (3) redeemed shares were
subject to a front-end or deferred sales charge (known as rights of
reinstatement)
◼
A
shareholder in the Funds Investor C Shares will have their share converted at
net asset value to Investor A shares of the same fund if the shares are no
longer subject to CDSC and the conversion is in line with the policies and
procedures of Baird
◼
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at
Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit sharing and money purchase pension plans and defined benefit plans. For
purposes of this provision, employer-sponsored retirement plans do not include
SEP IRAs, Simple IRAs or SAR-SEPs
CDSC
Waivers on Investor A and C shares Available at Baird
◼
Shares
sold due to death or disability of the shareholder
◼
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
Prospectus
◼
Shares
bought due to returns of excess contributions from an IRA
Account
◼
Shares
sold as part of a required minimum distribution for IRA and retirement accounts
due to the shareholder reaching the qualified age based on applicable Internal
Revenue Service regulations as described in the Fund’s
prospectus
◼
Shares
sold to pay Baird fees but only if the transaction is initiated by
Baird
◼
Shares
acquired through a right of reinstatement
Front-End
Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of
Accumulations
◼
Breakpoints
as described in this prospectus
◼
Rights of
accumulations which entitles shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of Victory Funds assets
held by accounts within the purchaser’s household at Baird. Eligible Victory
Funds assets not held at Baird may be included in the rights of accumulations
calculation only if the shareholder notifies his or her financial advisor about
such assets
◼
Letters of
Intent (“LOI”) allow for breakpoint discounts based on anticipated purchases of
Victory Funds through Baird, over a 13-month period of time
J.P.
Morgan Securities LLC
Effective
September 29, 2023, if you purchase or hold fund shares through an applicable
J.P. Morgan Securities LLC brokerage account, you will be eligible for the
following sales charge waivers (front-end sales charge waivers and contingent
deferred sales charge (“CDSC”), or back-end sales charge,
56
Appendix
A — Variations in Sales Charge Reductions and Waivers Available
Through Certain Intermediaries
waivers),
share class conversion policy and discounts, which may differ from those
disclosed elsewhere in this fund’s prospectus or Statement of Additional
Information.
Front-end
sales charge waivers on Class A shares available at J.P. Morgan Securities
LLC
◼
Shares
exchanged from Class C (i.e. level-load) shares that are no longer subject to a
CDSC and are exchanged into Class A shares of the same fund pursuant to J.P.
Morgan Securities LLC’s share class exchange policy.
◼
Qualified
employer-sponsored defined contribution and defined benefit retirement plans,
nonqualified deferred compensation plans, other employee benefit plans and
trusts used to fund those plans. For purposes of this provision, such
plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or 501(c)(3)
accounts.
◼
Shares of
funds purchased through J.P. Morgan Securities LLC Self-Directed Investing
accounts.
◼
Shares
purchased through rights of reinstatement.
◼
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family).
◼
Shares
purchased by employees and registered representatives of J.P. Morgan Securities
LLC or its affiliates and their spouse or financial dependent as defined by J.P.
Morgan Securities LLC.
Class
C to Class A share conversion
◼
A
shareholder in the fund’s Class C shares will have their shares converted to
Class A shares (or the appropriate share class) of the same fund if the shares
are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C shares available at J.P. Morgan Securities
LLC
◼
Shares
sold upon the death or disability of the shareholder.
◼
Shares
sold as part of a systematic withdrawal plan as described in the fund’s
prospectus.
◼
Shares
purchased in connection with a return of excess contributions from an IRA
account.
◼
Shares
sold as part of a required minimum distribution for IRA and retirement accounts
pursuant to the Internal Revenue Code.
◼
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan Securities LLC: breakpoints, rights of
accumulation & letters of intent
◼
Breakpoints
as described in the prospectus.
◼
Rights of
Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as
described in the fund’s prospectus will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan Securities LLC. Eligible fund family assets not held at
J.P. Morgan Securities LLC (including 529 program holdings, where applicable)
may be included in the ROA calculation only if the shareholder notifies their
financial advisor about such assets.
Letters
of Intent (“LOI”), which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a
13-month period of time (if applicable).
57
94405-0923
By
mail:
Victory Funds
P.O. Box 182593
Columbus, OH 43218-2593
Victory Funds
P.O. Box 182593
Columbus, OH 43218-2593
P.O. Box 182593
Columbus, OH 43218-2593
Columbus, OH 43218-2593
Statement
of Additional Information (“SAI”): A complete
description of the Fund's policies and procedures with respect to the disclosure
of the Fund's portfolio securities is available in the Fund's SAI. The SAI has
been filed with the Securities and Exchange Commission (“SEC”) and is
incorporated by reference into this prospectus, which means it is legally part
of the prospectus.
Annual
and Semi Annual Reports: Annual and semi
annual reports contain more information about the Fund's investments. In the
Fund's annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's performance during
the last fiscal year.
How
to Obtain Information: You may obtain a
free copy of the SAI, annual or semi annual reports, or to ask other questions
about the Fund or your accounts, online at VictoryFunds.com, by contacting the
Victory Funds at the address or telephone number below, or by contacting your
financial intermediary.
By
telephone:
Call Victory Funds at
(800) 235-8396
Call Victory Funds at
(800) 235-8396
You also can obtain
information about the Fund (including the SAI and other reports) from the SEC on
the SEC’s EDGAR database at sec.gov or, after payment of a duplicating fee, by
electronic request at the following e-mail address:
[email protected]
Investment Company
Act File No. 811-7852