Victory Variable Insurance Funds N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number			811-08979
The Victory Variable Insurance Funds
(Exact name of registrant as specified in charter)
3435 Stelzer Road, Columbus, Ohio					43219
(Address of principal executive offices)					(Zip code)
Citi Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219
(Name and address of agent for service)
Registrant’s telephone number, including area code:				614-470-8000
Date of fiscal year end:	December 31
Date of reporting period:		June 30, 2015

Item 1. Reports to Stockholders.

June 30, 2015

Semi Annual Report

Diversified Stock Fund

vcm.com

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

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

•  Detailed performance records

•  Daily share prices

•  The latest fund news

•  Investment resources to help you become a better investor

•  A section dedicated to investment professionals

The Victory Variable Insurance Funds

Table of Contents

Shareholder Letter	3
Financial Statements
Schedule of Portfolio Investments	5
Statement of Assets and Liabilities	7
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	10
Notes to Financial Statements	11
Supplemental Information
Trustee and Officer Information	15
Proxy Voting and Form N-Q Information	17
Expense Examples	17
Portfolio Holdings	18

The Fund is distributed by Victory Capital Advisers Inc. Victory Capital Management Inc. is the investment adviser to the Fund and receives fees from the Fund for performing services for the Fund.

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus of The Variable Insurance Diversified Stock Fund.

The information in this semi-annual report is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections, or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Furthermore, Victory Capital Management Inc. and its affiliates, as agents for their clients, and any of its officers or employees may have a beneficial interest or position in any of the securities mentioned, which may be contrary to any opinion or projection expressed in this report. Past investment performance of markets or securities mentioned herein should not be considered to be indicative of future results.

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

Call Victory at:

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

Visit our website at:

www.vcm.com

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2

The Victory Funds Letter to Shareholders

Dear Shareholder:

Over the past six months, Victory Capital has worked diligently to expand its available product set and enhance the investor experience with our firm. In addition to its previously announced acquisition of Munder Capital Management, Victory Capital also acquired its ninth investment franchise, Compass Efficient Model Portfolios, LLC ("Compass EMP"), on April 30, 2015. Compass EMP has developed a strategic indexing approach that combines fundamental criteria with volatility weighting seeking to improve an investor's ability to outperform traditional indexing strategies. Victory Capital's acquisition of Compass EMP is an extension of the firm's multi-boutique business model and provides our investors access to this dynamic asset class. We believe that this partnership enables the firm and our clients to leverage new strengths, and we look forward to the opportunities afforded by this acquisition. In addition to a broadened product set, Victory Capital has also revamped its website, which now highlights our distinctly branded, autonomous investment franchises and significantly enhances our investor's browsing experience. As a shareholder, we encourage you to visit our new website (www.vcm.com) and benefit from these technological enhancements and expanded product offerings.

Marking the sixth consecutive year of positive gains, the S&P 500^® Index posted a 13.7% total return in 2014, despite increased uncertainty created by decelerating global economic growth and a rapidly evolving macroeconomic backdrop. While there were numerous geopolitical events impacting the global landscape, such as slowing growth in China, rising conflicts in the Ukraine, sanctions against Russia, and the potential Greek exit from the Eurozone, the dominant forces driving market action can be boiled down to: (1) the strengthening U.S. dollar, (2) declining energy prices and (3) accommodative global monetary policy. The S&P 500^® Index corrected nearly 10% in September/October during its initial reaction to the sharp decline in oil prices and the strengthening U.S. dollar before charging back to end the year at near record highs. This strength, which has continued into 2015, is due in large part to the monetary easing seen across the globe, resulting in record low interest rates, which in turn has helped justify P/E multiple expansion.

Indeed, 2015 and 2016 estimates continued to decline during the quarter, with EPS growth now expected to be a somewhat muted +2% year-over-year in 2015, the lowest level seen since exiting the great recession of 2008/2009. Expectations have been ratcheted backward on both the international and domestic fronts. In regards to the former, profits from overseas faced stiff headwinds from weak emerging market demand and a strengthening U.S. dollar. That said, a sharp reversal in both the dollar and oil prices post quarter end, could end up being a tailwind to estimates in the coming quarter.

It's worth noting that the dollar is both a proxy for the relative strength of the U.S. economy, as well as an equilibrium mechanism that helps drive economic convergence. It is also highly susceptible to cyclical and technical forces. Despite a few lackluster domestic economic data points such as flat GDP growth and lackluster retail sales, labor market indicators continue to harden and nonresidential investment remains solid. Continued productivity gains should lead to real wage increases in the U.S., which in turn should support positive GDP growth moving forward.

In the fixed income market, harsh winter weather, west coast port slowdowns and cut-backs in the energy sector, all contributed to slower growth over the past six months. Many expected the U.S. consumer to pick up the slack with strong consumption given the steep drop in gasoline prices, which functions to increase disposable income. Unfortunately, a significant pick-up in consumer spending did not materialize as readings on retail sales were mediocre and the personal savings rate became the primary beneficiary of lower energy prices. Similarly, outside of the U.S., growth and inflation remained low, and liquidity was on the rise as central banks in Europe and Japan continued to ease policy.

Weak growth and low inflation complicated the policy outlook for the Federal Reserve, as the committee continued to inch towards the beginning of policy normalization. The fixed income market conveyed a different outlook, however, as interest rates declined further given the uncertain outlook for both growth and inflation. The Fed's own forecast for short term interest rates declined as well, yet they continued to guide modest increases in the federal funds rate in 2015. The fixed income market remains skeptical regarding the pace of rate increases relative to the Fed's forecast as we look forward to the remainder of 2015, a dichotomy of views that underscores the "data dependent" nature of monetary policy.

This environment of slower growth and lower interest rates produced solidly, positive absolute returns in the fixed income markets. Furthermore, the uncertainty over monetary policy produced mixed results on an excess returns basis relative to Treasuries over the prior twelve months. This is because securitized sectors generally outperformed Treasuries while corporate bonds trailed.

We continue to believe that the markets could provide tactical challenges for investors to navigate. As we have stated in the past, we also believe that maintaining a long term view and building a portfolio that is diversified across asset classes is an appropriate strategy for investors seeking to weather possible market turbulence.

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

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

Christopher Dyer

President,
Victory Funds

4

The Victory Variable Insurance Funds  Schedule of Portfolio Investments

Diversified Stock Fund  June 30, 2015

(Amounts in Thousands, Except for Shares)  (Unaudited)

Security Description	Shares		Value
Common Stocks (99.5%):
Consumer Discretionary (15.8%):
Advance Auto Parts, Inc.		4,800	$	764
H&R Block, Inc.		40,100		1,189
Hilton Worldwide Holdings, Inc. (a)		46,500		1,281
Johnson Controls, Inc.		21,900		1,085
Newell Rubbermaid, Inc.		19,900		818
PVH Corp.		5,300		611
Starbucks Corp.		12,000		643
Tractor Supply Co.		4,500		405
				6,796
Consumer Staples (5.8%):
CVS Caremark Corp.		10,700		1,122
Diageo PLC, ADR		5,800		673
Wal-Mart Stores, Inc.		9,700		688
				2,483
Energy (4.9%):
Chesapeake Energy Corp.		33,000		369
Occidental Petroleum Corp.		10,780		838
Schlumberger Ltd.		5,000		431
Weatherford International PLC (a)		38,500		472
				2,110
Financials (15.8%):
American Express Co.		7,900		614
Bank of America Corp.		54,000		919
Bank of New York Mellon Corp.		30,500		1,280
Citigroup, Inc.		36,830		2,034
Principal Financial Group, Inc.		11,900		610
Progressive Corp.		48,700		1,356
				6,813
Health Care (16.3%):
Abbott Laboratories		12,400		609
Baxter International, Inc.		13,480		943
Cardinal Health, Inc.		7,700		644
Celgene Corp. (a)		2,400		278
Eli Lilly & Co.		6,900		576
Medtronic PLC		17,400		1,289
Merck & Co., Inc.		14,400		820
Perrigo Co. PLC		3,600		665
Pfizer, Inc.		35,220		1,181
				7,005
Industrials (14.4%):
Danaher Corp.		7,630		653
General Electric Co.		32,600		867
Masco Corp.		40,100		1,069
Nielsen Holdings NV		17,500		783
Precision Castparts Corp.		6,000		1,199
Stanley Black & Decker, Inc.		7,200		758
United Parcel Service, Inc., Class B		8,780		851
				6,180

See notes to financial statements.
5

The Victory Variable Insurance Funds  Schedule of Portfolio Investments — continued

Diversified Stock Fund  June 30, 2015

(Amounts in Thousands, Except for Shares)  (Unaudited)

Security Description	Shares		Value
Information Technology (24.1%):
Apple, Inc.		6,900	$	865
Applied Materials, Inc.		46,000		884
Cisco Systems, Inc.		46,600		1,280
EMC Corp.		53,600		1,415
F5 Networks, Inc. (a)		8,200		987
Facebook, Inc., Class A (a)		11,300		969
Google, Inc., Class C (a)		3,187		1,660
SAP SE, ADR		10,800		758
Twitter, Inc. (a)		17,300		627
Visa, Inc., Class A		13,600		913
				10,358
Materials (2.4%):
Air Products & Chemicals, Inc.		5,500		752
Potash Corp. of Saskatchewan, Inc.		9,000		279
				1,031
Total Common Stocks (Cost $37,521)				42,776
Investment Companies (0.2%):
Federated Treasury Obligations Fund, Institutional Shares, 0.01% (b)		94,870		95
Total Investment Companies (Cost $95)				95
Total Investments (Cost $37,616) — 99.7%				42,871
Other assets in excess of liabilities — 0.3%				140
NET ASSETS — 100.0%			$	43,011

(a)  Non-income producing security.

(b)  Rate disclosed is the daily yield on 6/30/15.

ADR — American Depositary Receipt

PLC — Public Liability Co.

See notes to financial statements.
6

  Statement of Assets and Liabilities

The Victory Variable Insurance Funds  June 30, 2015

(Amounts in Thousands, Except for Share Amounts)  (Unaudited)

	Diversified Stock Fund
ASSETS:
Investments, at value (Cost $37,616)	$	42,871
Dividends receivable		70
Receivable for capital shares issued		4
Receivable for investments sold		359
Prepaid expenses		15
Total Assets		43,319
LIABILITIES:
Payable for investments purchased		221
Payable for capital shares redeemed		1
Accrued expenses and other payables:
Investment advisory fees		11
Administration fees		3
Custodian fees		1
Transfer agent fees		2
Contract owner fees		25
12b-1 fees		9
Other accrued expenses		35
Total Liabilities		308
NET ASSETS:
Capital		30,404
Accumulated undistributed net investment income		10
Accumulated net realized gains from investments		7,342
Net unrealized appreciation on investments		5,255
Net Assets	$	43,011
Shares (unlimited number of shares authorized with a par value of 0.001 per share)		2,888
Net asset value, offering price & redemption price per share	$	14.89

See notes to financial statements.
7

  Statement of Operations

The Victory Variable Insurance Funds  For the Six Months Ended June 30, 2015

(Amounts in Thousands)  (Unaudited)

	Diversified Stock Fund
Investment Income:
Dividend income	$	413
Total Income		413
Expenses:
Investment advisory fees		69
Administration fees		20
Contract owner fees		56
12b-1 fees		57
Custodian fees		4
Transfer agent fees		7
Trustees' fees		5
Chief Compliance Officer fees		1
Legal and audit fees		25
Insurance fees		13
Other expenses		10
Total Expenses		267
Net Investment Income		146
Realized/Unrealized Gains from Investment Transactions:
Net realized gains on investment transactions		2,534
Net change in unrealized depreciation on investments		(3,272	)
Net realized/unrealized losses from investments		(738	)
Change in net assets resulting from operations	$	(592	)

See notes to financial statements.
8

The Victory Variable Insurance Funds   Statements of Changes in Net Assets

(Amounts in Thousands)

	Diversified Stock Fund
	Six Months Ended June 30, 2015			Year Ended December 31, 2014
	(Unaudited)
From Investment Activities:
Operations:
Net investment income	$	146		$	423
Net realized gains on investment transactions		2,534			5,369
Change in unrealized depreciation on investments		(3,272	)		(1,204	)
Change in net assets resulting from operations		(592	)		4,588
Distributions to Shareholders:
From net investment income		(136	)		(425	)
Change in net assets resulting from distributions to shareholders		(136	)		(425	)
Change in net assets from capital transactions		(4,785	)		(3,307	)
Change in net assets		(5,513	)		856
Net Assets:
Beginning of period		48,524			47,668
End of period	$	43,011		$	48,524
Accumulated undistributed net investment income	$	10		$	—
Capital Transactions:
Proceeds from shares issued	$	1,155		$	4,524
Dividends reinvested		135			425
Cost of shares redeemed		(6,075	)		(8,256	)
Change in net assets from capital transactions	$	(4,785	)	$	(3,307	)
Share Transactions:
Issued		77			317
Reinvested		9			29
Redeemed		(400	)		(580	)
Change in Shares		(314	)		(234	)

See notes to financial statements.
9

The Victory Variable Insurance Funds  Financial Highlights

For a Share Outstanding Throughout Each Period

	Diversified Stock Fund
	Six Months Ended June 30, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
	(Unaudited)
Net Asset Value, Beginning of Period	$	15.15		$	13.87		$	10.42		$	9.05		$	9.78		$	8.77
Investment Activities:
Net investment income		0.05			0.13			0.08			0.10			0.06			0.07
Net realized and unrealized gains/(losses) on investments		(0.26	)		1.28			3.45			1.37			(0.73	)		1.01
Total from Investment Activities		(0.21	)		1.41			3.53			1.47			(0.67	)		1.08
Distributions:
Net investment income		(0.05	)		(0.13	)		(0.08	)		(0.10	)		(0.06	)		(0.07	)
Total Distributions		(0.05	)		(0.13	)		(0.08	)		(0.10	)		(0.06	)		(0.07	)
Net Asset Value, End of Period	$	14.89		$	15.15		$	13.87		$	10.42		$	9.05		$	9.78
Total Return (a) (b)		(1.42	)%		10.20	%		33.93	%		16.28	%		(6.83	)%		12.34	%
Ratios/Supplemental Data:
Net assets at end of period (000)	$	43,011		$	48,524		$	47,668		$	33,090		$	32,874		$	41,356
Ratio of net expenses to average net assets (c)		1.17	%		1.16	%		1.16	%		1.19	%		1.26	%		1.23	%
Ratio of net investment income to average net assets (c)		0.64	%		0.89	%		0.67	%		0.96	%		0.62	%		0.77	%
Portfolio turnover		45	%		70	%		82	%		96	%		80	%		91	%

(a)  Total returns do not include any insurance, sales or administrative charges of variable annuity or life insurance contracts. If these charges were included, the returns would be lower.

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

(c)  Annualized for periods less than a year.

See notes to financial statements.
10

  Notes to Financial Statements

The Victory Variable Insurance Funds  June 30, 2015

(Unaudited)

1.  Organization:

The Victory Variable Insurance Funds (the "Trust") was organized on February 11, 1998 as a Delaware statutory trust. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust is authorized to issue an unlimited number of shares, which are units of beneficial interest with a par value of $0.001. The Trust currently offers shares of one fund: the Diversified Stock Fund (the "Fund"). The Fund offers a single class of shares: Class A Shares. Sales of shares of the Fund may only be made to separate accounts of various life insurance companies.

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

Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.

2.  Significant Accounting Policies:

The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

Securities Valuation:

The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:

• Level 1 — quoted prices in active markets for identical securities

• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates, applicable to those securities, etc.)

• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The Trust determines transfers between fair value hierarchy levels at the reporting period end. The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments.

Portfolio securities listed or traded on securities exchanges, including American Depositary Receipts ("ADRs"), are valued at the closing price on the exchange or system where the security is principally traded or at the NASDAQ Official Closing Price. If there have been no sales for that day on the exchange or system, a security is valued at the last available bid quotation on the exchange or system where the security is principally traded. These valuations are typically categorized as Level 1 in the fair value hierarchy.

Debt securities of U.S. issuers (other than short-term investments maturing in 60 days or less), including corporate and municipal securities, are valued on the basis of bid valuations provided by dealers or an independent pricing service approved by the Trust's Board of Trustees (the "Board"). Short-term investments maturing in 60 days or less may be valued at amortized cost, which approximates market value. These valuations are typically categorized as Level 2 in the fair value hierarchy.

Investments in other open-end investment companies are valued at net asset value. These valuations are typically categorized as Level 1 or Level 2 in the fair value hierarchy.

Investments for which there are no such quotations, or for which quotations do not appear reliable, are valued at fair value as determined in good faith by the Pricing Committee under the direction of the Board. These valuations are typically categorized as Level 2 or Level 3 in the fair value hierarchy.

For the period ended June 30, 2015, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

Continued
11

  Notes to Financial Statements — continued

The Victory Variable Insurance Funds  June 30, 2015

(Unaudited)

The following is a summary of the inputs used to value the Fund's investments as of June 30, 2015, while the breakdown, by category, of common stocks is disclosed on the Schedule of Portfolio Investments (in thousands):

Investment	LEVEL 1 — Quoted Prices		LEVEL 2 — Other Significant Observable Inputs		Total
Common Stocks	$	42,776	$	—	$	42,776
Investment Companies		—		95		95
Total	$	42,776	$	95	$	42,871

There were no transfers between Level 1 and Level 2 during the period ended June 30, 2015.

Securities Transactions and Related Income:

Changes in holdings of portfolio securities are accounted for no later than one business day following the trade date. For financial reporting purposes, however, portfolio security transactions are accounted for on trade date on the last business day of the reporting period. Interest income is recognized on the accrual basis and includes, where applicable, the amortization of premium or accretion of discount. Dividend income is recorded on the ex-dividend date. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.

Dividends to Shareholders:

Dividends from net investment income are declared and paid quarterly for the Fund. Distributable net realized gains, if any, are declared and distributed at least annually. The amounts of dividends from net investment income and of distributions from net realized gains are determined in accordance with federal income tax regulations which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., reclass of market discounts and gain/loss), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. To the extent dividends and distributions exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital in the accompanying Statement of Assets and Liabilities.

Federal Income Taxes:

It is the policy of the Fund to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes.

Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., the last four tax year ends and the interim tax period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.

Withholding taxes on interest, dividends and gains as a result of certain investments in ADRs by the Fund have been provided for in accordance with each investment's applicable country's tax rules and rates.

Subsequent Events:

The Fund has evaluated subsequent events and there are no subsequent events to report.

3.  Purchases and Sales of Securities:

Purchases and sales of securities (excluding short-term securities) for the period ended June 30, 2015 were as follows for the Fund (in thousands):

Purchases*		Sales*
$	20,404	$	24,616

* There were no Purchases or Sales of U.S. Government Securities during the period.

4.  Investment Advisory, Administration, and Distribution Agreements:

Investment advisory services are provided to the Fund by Victory Capital Management Inc. ("VCM" or the "Adviser"), a New York corporation registered as an investment adviser with the Securities and Exchange Commission (the "SEC"). The Adviser is a wholly owned subsidiary of Victory Capital Holdings, Inc. ("VCH"). A majority of the interest in VCH is owned by Crestview Partners II, L.P. and its affiliated funds with a substantial minority interest owned by employees of the Adviser.

Continued
12

  Notes to Financial Statements — continued

The Victory Variable Insurance Funds  June 30, 2015

(Unaudited)

Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive an annual fee of 0.30% of the average daily net assets of the Fund. The Adviser may use its resources to assist with the Fund's distribution and marketing expenses.

KeyBank National Association ("KeyBank"), serving as custodian for the Fund, receives custodian fees at an annualized rate of 0.005% of the daily net assets of the Trust, plus applicable per transaction fees. The Trust reimburses KeyBank for all of its reasonable out-of-pocket expenses incurred in providing custody services.

VCM also serves as the Fund's administrator and fund accountant. Under an Administration and Fund Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.108% of the first $8 billion in average daily net assets of the Trust and The Victory Portfolios (collectively, the "Trusts"), 0.078% of the average daily net assets above $8 billion to $10 billion of the Trusts, 0.075% of the average daily net assets above $10 billion to $12 billion of the Trusts and 0.065% of the average daily net assets over $12 billion of the Trusts.

Citi Fund Services Ohio, Inc. ("Citi") acts as sub-administrator and sub-fund accountant to the Fund under a Sub-Administration Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.

Effective April 1, 2015, Sungard Investor Services LLC serves as the Fund's transfer agent. Prior to April 1, 2015, Citi served as the Fund's transfer agent.

Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the shares of the Fund pursuant to a Distribution Agreement between the Distributor and the Trust.

Pursuant to the Trust's Distribution and Service Plan adopted in accordance with Rule 12b-1 under the 1940 Act, the Distributor may receive a monthly distribution and service fee, at an annual rate of 0.25% of the average daily net assets of the Fund. The Distributor may pay a 12b-1 fee to life insurance companies for activities primarily intended to result in the sale of Fund shares to life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies or to provide services to owners of variable annuity contracts and variable life insurance policies whose contracts or policies are funded with shares of the Fund, which services are not otherwise provided by life insurance companies and paid for with fees charged by life insurance companies. The Distributor re-allowed all except for $1 thousand to life insurance companies to provide these services.

The Fund has a Contract Owner Administrative Services Agreement. A contract owner servicing agent performs a number of services for its customers who hold contracts offered by separate accounts that invest in the Fund, such as establishing and maintaining accounts and records, processing additional contract units attributable to Fund dividend payments, arranging for bank wires, assisting in transactions, and changing account information. For these services, Class A Shares of the Fund pay a fee at an annual rate of up to 0.25% of its average daily net assets serviced by the agent. The Fund may enter into these agreements with financial institutions that provide such services. Contract owner servicing agents may waive all or a portion of their fee. (Not all agents may provide all services listed above.)

The Adviser, Citi, or other service providers, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining a competitive expense ratio. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time.

5.  Risks:

The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties to financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.

6.  Line of Credit:

The Trust, The Victory Portfolios and The Victory Institutional Funds (collectively, the "Victory Trusts"), participate in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement, the Victory Trusts may borrow up to $100 million, of which $50 million is committed and $50 million is uncommitted. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.10% on $50 million for providing the Line of Credit. For the period ended June 30, 2015, Citibank earned approximately $25 thousand for Line of Credit fees. Each fund in the Victory Trusts pays a pro-rata portion of this commitment fee plus any interest on amounts borrowed. During the period ended June 30, 2015, the Fund had no loans outstanding with Citibank.

7.  Federal Income Tax Information:

The tax character of distributions paid and the tax basis of current components of accumulated earnings/(deficit) will be determined at the end of the current tax year ending December 31, 2015.

Continued
13

  Notes to Financial Statements — continued

The Victory Variable Insurance Funds  June 30, 2015

(Unaudited)

The tax character of distributions paid during the fiscal year ended December 31, 2014 was as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (in thousands):

Distribution paid from
Ordinary Income		Net Long-Term Capital Gains		Total Distributions Paid
$	425	$	—	$	425

As of December 31, 2014, the components of accumulated earnings/(deficit) on a tax basis were as follows (in thousands):

Undistributed Ordinary Income		Undistributed Long-Term Capital Gains		Accumulated Capital and Other Losses		Unrealized Appreciation/ Depreciation*		Total Accumulated Earnings/ (Deficit)
$	1,108	$	3,816	$	—	$	8,411	$	13,335	��

* The difference between the book-basis unrealized appreciation/depreciation is attributable primarily to the tax deferral of losses on wash sales.

During the year ended December 31, 2014 the Fund utilized $459 (in thousands) of capital loss carry-forwards.

The cost basis for federal income tax purposes, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation/depreciation as of June 30, 2015, were as follows (in thousands):

Cost of Investments for Federal Tax Purposes		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Net Unrealized Appreciation/ Depreciation
$	37,762	$	6,055	$	(946	)	$	5,109

14

  Supplementary Information

The Victory Variable Insurance FundsJune 30, 2015

(Unaudited)

Trustee and Officer Information

Board of Trustees:

Overall responsibility for management of the Trust rests with the Board. The Trust is managed by the Board in accordance with the laws of the State of Delaware. There are currently eight Trustees, seven of whom are not "interested persons" of the Trust within the meaning of that term under the 1940 Act ("Independent Trustees") and one of whom is an "interested person" of the Trust within the meaning of that term under the 1940 Act ("Interested Trustee"). The Trustees, in turn, elect the officers of the Trust to actively supervise its day-to-day operations.

The following tables list the Trustees, their ages, position with the Trust, commencement of service, principal occupations during the past five years and any directorships of other investment companies or companies whose securities are registered under the Securities Exchange Act of 1934, as amended, or who file reports under that Act. Each Trustee oversees one portfolio in the Trust, one portfolio in The Victory Institutional Funds, 25 portfolios in The Victory Portfolios and 21 portfolios in the Compass EMP Funds Trust, each a registered investment company that, together with the Trust, comprise the Victory Fund Complex. Each Trustee's address is c/o The Victory Variable Insurance Funds, 3435 Stelzer Road, Columbus, Ohio 43219. Each Trustee has an indefinite term.

Name and Age	Position Held with the Trust	Date Commenced Service	Principal Occupation During Past 5 Years	Other Directorships Held During Past 5 Years
Independent Trustees.
David Brooks Adcock, 63	Trustee	February 2005	Consultant (since 2006).	FBR Funds (2011-2012).
Nigel D.T. Andrews, 68	Vice Chair and Trustee	August 2002	Retired.	Carlyle GMS Finance, Inc. (since 2012); Chemtura Corporation (2000-2010); Old Mutual plc (2002-2011); Old Mutual US Asset Management (2002-2014).
E. Lee Beard, 63	Trustee	February 2005	Consultant, The Henlee Group, LLC (consulting) (since 2005).	Penn Millers Holding Corporation (January 2011-November 2011).
Sally M. Dungan, 61	Trustee	February 2011	Chief Investment Officer, Tufts University (since 2002).	ProCredit Holding Supervisory Board (2006-2011).
John L. Kelly, 62	Trustee	February 2015	Bulk physical commodities broker, Endgate Commodities LLC (since 2014); Chief Operating Officer, Liquidnet Holdings, Inc. (2011-2014); Managing Member, Crossroad LLC (Consultants) (2009-2011).	Director, Caledonia Mining Corporation (since May 2012); Managing Member, Crossroad LLC (since May 2009).
David L. Meyer, 58	Trustee	December 2008	Retired.	None.
Leigh A. Wilson, 70	Chair and Trustee	February 1998	Private Investor.	Chair (since 2013) and Director (since 2012 and March-October 2008), Caledonia Mining Corporation; Director, The Mutual Fund Directors Forum (2004-2013); Chair, Old Mutual Funds II (15 portfolios) (2005-2010); Trustee, Old Mutual Funds III (13 portfolios) (2007-2010).
Interested Trustee.
David C. Brown, 43	Trustee	May 2008	Chief Executive Officer (since August 2013), Co- Chief Executive Officer (2011-2013), President — Investments and Operations (2010- 2011), and Chief Operating Officer (2004-2011), the Adviser; Chief Executive Officer (since 2013), Victory Capital Holdings, Inc.	None.

Mr. Brown is an "Interested Person" by reason of his relationship with the Adviser.

The Board has designated Mr. Meyer and Ms. Beard as its Audit Committee Financial Experts.

The Statement of Additional Information includes additional information about the Trustees of the Trust and is available, without charge, by calling 800-539-3863.

Continued
15

  Supplementary Information — continued

The Victory Variable Insurance FundsJune 30, 2015

(Unaudited)

Officers:

The officers of the Trust, their ages, commencement of service and their principal occupations during the past five years, are detailed in the following table. Each individual holds the same position with the other registered investment companies in the Victory Fund Complex, and each officer serves until the earlier of his or her resignation, removal, retirement, death, or the election of a successor. The mailing address of each officer of the Trust is 3435 Stelzer Road, Columbus, Ohio 43219. Except for the Chief Compliance Officer, the officers of the Trust receive no compensation directly from the Trust for performing the duties of their offices.

Name and Age	Position with the Trust	Date Commenced Service	Principal Occupation During Past 5 Years
Christopher K. Dyer, 53	President Secretary	December 2014 February 2006-December 2014	Director of Mutual Fund Administration, the Adviser.
Scott A. Stahorsky, 45	Vice President	December 2014	Manager, Fund Administration, the Adviser (since 2015); Senior Analyst, Fund Administration, the Adviser (prior to 2015).
Erin G. Wagner, 41	Secretary	December 2014	Associate General Counsel, the Adviser (since 2013); Associate, Dechert LLP (2001-2010).
Christopher E. Sabato, 46	Treasurer	May 2006	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc.
Edward J. Veilleux, 71	Chief Compliance Officer	October 2005	President of EJV Financial Services (mutual fund consulting).
Chuck Booth, 55	Anti-Money Laundering Compliance Officer and Identity Theft Officer	May 2015	Director, Regulatory Administration and CCO Support Services, Citi Fund Services Ohio, Inc.
Jay G. Baris, 61	Assistant Secretary	February 1998	Partner, Morrison & Foerster LLP (since 2011); Partner, Kramer Levin Naftalis & Frankel LLP (1994-2011).

Continued
16

  Supplementary Information — continued

The Victory Variable Insurance FundsJune 30, 2015

(Unaudited)

Proxy Voting and Form N-Q Information

Proxy Voting:

Information regarding the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the Security and Exchange Commission's ("SEC") website at www.sec.gov.

Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent twelve months ended June 30 is available on the SEC's website at www.sec.gov.

Availability of Schedules of Investments:

The Trust files a complete list of schedules of investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's website at www.sec.gov. You may also review or, for a fee, copy those documents by visiting the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 202-551-8090.

Expense Examples:

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2015 through June 30, 2015.

Actual Expenses:

The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Beginning Account Value 1/1/15		Ending Account Value 6/30/15		Expenses Paid During Period* 1/1/15-6/30/15		Annualized Expense Ratio During Period 1/1/15-6/30/15
$	1,000.00	$	985.80	$	5.76		1.17	%

*Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 181/365 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year)

Hypothetical Example for Comparison Purposes:

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

Beginning Account Value 1/1/15		Ending Account Value 6/30/15		Expenses Paid During Period* 1/1/15-6/30/15		Annualized Expense Ratio During Period 1/1/15-6/30/15
$	1,000.00	$	1,018.99	$	5.86		1.17	%

*Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 181/365 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year)

Continued
17

  Supplemental Information — continued

The Victory Variable Insurance FundsJune 30, 2015

(Unaudited)

Portfolio Holdings:

(As a Percentage of Total Investments)

18

Call Victory at:
800-539-FUND (800-539-3863) Visit our web site at:
www.vcm.com

1WF-SEMI-AR 8/15

Item 2. Code of Ethics.

Not applicable — only for annual reports.

Item 3. Audit Committee Financial Expert.

Not applicable — only for annual reports.

Item 4. Principal Accountant Fees and Services.

Not applicable — only for annual reports.

Item 5.Audit Committee of Listed Registrants.

Not applicable.

Item 6.Investments.

(a)Not applicable.

(b)Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 11. Controls and Procedures.

(a)The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b)There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1) Not applicable.

(a)(2) Certifications pursuant to Rule 30a-2(a) are attached hereto.

(a)(3) Not applicable.

(b)      Certifications pursuant to Rule 30a-2(b) are furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) The Victory Variable Insurance Funds

By (Signature and Title)*	/s/ Christopher E. Sabato
	Christopher E. Sabato, Treasurer

Date August 20, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)*	/s/ Christopher K. Dyer
	Christopher K. Dyer, President

Date August 20, 2015

By (Signature and Title)*	/s/ Christopher E. Sabato
	Christopher E. Sabato, Treasurer

Date August 20, 2015