Victory Variable Insurance Funds NCSR Certified 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

Victory Variable Insurance Funds
(Exact name of registrant as specified in charter)

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

Citi Fund Services Ohio, Inc., 4400 Easton Commons, Suite 200, Columbus, OH 43219
(Name and address of agent for service)

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

Date of fiscal year end:	December 31

Date of reporting period:		December 31, 2018

Item 1. Reports to Stockholders.

December 31, 2018

Annual Report

Victory Variable Insurance Funds

Victory INCORE Investment Quality Bond VIP Series

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Victory Funds' shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Victory Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on www.VictoryFunds.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change, and you need not take any action.

You may elect to receive shareholder reports and other communications from the Victory Funds or your financial intermediary electronically sooner than January 1, 2021 by notifying your financial intermediary directly or, if you are a direct investor, by calling 800-539-3863 or by sending an e-mail request to TA.Processing@FISGlobal.com.

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

www.vcm.com

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

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

• Detailed performance records

• Daily share prices

• The latest fund news

• Investment resources to help you become a better investor

• A section dedicated to investment professionals

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

Victory Variable
Insurance Funds

Table of Contents

Shareholder Letter (Unaudited)					3
Fund Review and Commentary (Unaudited)					4
Financial Statements
Schedule of Portfolio Investments					8
Statement of Assets and Liabilities					15
Statement of Operations					16
Statements of Changes in Net Assets					17
Financial Highlights					18
Notes to Financial Statements					19
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm					31
Supplemental Information (Unaudited)
Trustee and Officer Information					32
Proxy Voting and Form N-Q Information					35
Expense Examples					35
Advisory Contract Renewal					37
Privacy Policy (inside back cover)

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 Fund.

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

The information in this annual report is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections, or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Past investment performance of the Fund, 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

This page is intentionally left blank.

Victory Funds Letter to Shareholders

Dear Shareholder,

What a difference a year makes. The year ended December 31, 2018, was marked by an abrupt return of volatility, which had largely been missing in action for years. Consider the range of highs and lows we witnessed. For the S&P 500 Index, it was a year in which we celebrated an all-time high in late summer, only to be followed by the worst December since the 2008 financial crisis. And if that wasn't enough volatility, the Dow Jones Industrial Average also registered several of its worst-ever, single-day point declines during 2018.

Through all that the S&P 500 clocked in with its first negative annual return since 2008, falling by 4.4 percent. Given the risk-off sentiment that was obvious as the year drew to a close, it's no surprise that small-cap stocks, as measured by the Russell 2000 Index, fared even worse, falling approximately 11.0 percent for the year. The challenges for equity investors were also evident around the world as the MSCI ACWI and Emerging Markets indexes declined 8.9 and 14.3 percent, respectively.

So what ushered in the renewed era of volatility and these challenging times? There were multiple culprits. For starters, trade tensions ratcheted up throughout the year as anti-global rhetoric bloomed into a series of new tariffs, which sparked concerns of a prolonged trade war with China. The Federal Reserve remained persistent in its monetary tightening, raising the benchmark interest rate four times throughout the year to a range of 2.25 to 2.5 percent. And then the year ended with a partial shutdown of the federal government. These factors conspired to elevate concerns of a possible recession here and abroad.

Yet despite the headline risks, we think it's critically important to remain focused on the data. By all accounts, the U.S. economy continued chugging along in 2018 with a real gross domestic product (GDP) rising 3.4 percent in the third quarter of 2018, the latest figures available from the Bureau of Economic Analysis. Moreover, the labor picture continues to shine with consistent monthly job growth and an unemployment rate of 3.9 percent. All this comes against a backdrop of low inflation and solid corporate earnings.

The markets, it appears, have been vacillating between the dire headlines and higher perceived risks on one hand, and the continued positive economic data on the other. Of course, no one knows where the Fed will stop raising rates, nor is there any certainty on how the trade turmoil ultimately gets resolved. For now, however, we continue to embrace our solid economic fundamentals. Moreover, we believe all of Victory Capital's independent investment franchises are well positioned to take advantage of any short-term valuation dislocations resulting from the current era of heightened volatility.

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

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

Christopher K. Dyer, CFA

President,

Victory Funds

Victory Variable Insurance Funds

Victory INCORE Investment Quality Bond VIP Series

Portfolio Holdings

As a Percentage of Total Investments

Economic Perspective

As investors reflect on 2018, the old adage of coming in like a lion and going out like a lamb should resonate strongly. While financial markets were certainly more volatile through the first three quarters of the year, we entered the fourth quarter with equities at record highs, interest rates trending higher given the strong U.S. economy and credit spreads only modestly wider on the year. Clouds of uncertainty had been slowly gathering over the markets for several months and finally unleashed a significantly higher degree of volatility across global equity and fixed income markets. The CBOE Volatility (VIX) index, a market estimate of future volatility, more than doubled in the fourth quarter and closed the year at 25.42, up 130% from the end of 2017.

A plethora of factors contributed to the shift in sentiment in the fourth quarter; increasing concern for a policy error from the Federal Reserve (the Fed), further deterioration in the U.S./China trade relationship, slowing global growth, particularly in China, political chaos in Washington and the EU and the uncertain outcome of the Brexit negotiations. Despite some positive news late in the quarter — a 90-day trade truce with China, an OPEC agreement to cut oil production and a softer tone from Fed chair Powell — equity returns ended on a negative note for the year, credit spreads continued to widen and the front end of the yield curve inverted. The S&P 500 Index was down 13.97% for the quarter and down 6.24% for the year. The ICE Bank of America Merrill Lynch US Corporate Index saw its option-adjusted spread (OAS) widen 46 basis points during the quarter to end the year at 159 basis points, underperforming U.S. Treasuries by 2.84%. Perhaps one additional headwind to risk assets in 2019 will be cash as a competing asset class. Not too long-ago investors earned virtually nothing on cash balances, yet are now earning 2-2.5% with little to no duration or credit risk, which may appeal to some risk-averse investors should volatility remain elevated or increase. For perspective, 3-month Treasury bills now have a higher yield than the dividend yield on the S&P 500 Index.

Federal Reserve Chairman Powell's comments in early October suggesting monetary policy was a "long way from neutral" following three rate increases in 2018, incited fears of a Fed policy error and an increasing likelihood of an economic recession. Interest rates increased and equities began to fall following these comments. The subsequent spike in equity volatility, a sharp decline in oil prices and lack of inflationary pressure had many speculating the Fed may signal a pause in rate increases at their November meeting. The FOMC disappointed in that regard, interest rates reversed course and equity volatility moved higher. While Chairman Powell attempted to walk those comments back a bit in late November, it was too late given the committee's apparent determination to continue raising short-term rates. Further complicating the FOMC's agenda were Chairman Powell's comments following the December rate increase that the balance sheet normalization was "on autopilot." The market interpreted this such that even if the Fed did slow the pace of rate increases in 2019, the

Victory Variable Insurance Funds

Victory INCORE Investment Quality Bond VIP Series (continued)

shift from quantitative easing to quantitative tightening is on a preset path and the risk of policy error remains elevated. While the Fed did reduce their outlook for rate increases in 2019 from 3 to 2 moves, it was not enough to calm the financial markets. Chairman Powell again reversed course on January 4, saying the Fed would be flexible in managing the balance sheet.

The second and third quarters of 2018 were the strongest back-to back-growth quarters in the U.S. since 2014. Furthermore, the unemployment rate gradually declined throughout the year and wage growth broke above 3% on a year-over-year basis. Both the services and manufacturing sectors remained comfortably in expansionary territory and consumer and business confidence remained elevated. Combine these factors with inflation metrics near the Fed's 2% target rate and the case could be made for the Federal Open Market Committee to continue its gradual path of rate increases. While the data in hand was supportive of the move, the disconnect between the market and the Fed appeared to be the outlook given growing uncertainties. Complicating their decision-making process further was the increasing criticism of the rate increases, and Chairman Powell specifically, from President Trump. It remains an interesting question if the Fed would have increased rates in December had that dynamic not been present. We believe the public criticism left them little choice but to raise rates and demonstrate their independence and unwillingness to bow to political pressure.

In 2019, we expect economic growth to slow back towards the 2% area as the marginal benefits from fiscal stimulus (tax reform) and deregulation fade, trade uncertainty slows business investment and tighter financial conditions resulting from lower equity markets and higher interest rates impacts sentiment and spending. With that said, we do not expect to see a recession in the U.S. in 2019, but do see rising risks for 2020 if the Fed continues to raise rates on their current path and if there is not a positive resolution to the U.S. and China trade relationship soon.

Market Summary and Fund Attribution

The Victory INCORE Investment Quality Bond VIP Series ("Fund") seeks to provide a high level of current income and capital appreciation without undue risk to principal. The Fund underperformed the Bloomberg Barclays U.S. Aggregate Bond Index ("Index") for 2018, -0.41% versus 0.01%. The underperformance was driven largely by the allocation to high yield credit as spreads widened dramatically late in the year, as well as the underweight position in U.S. Treasuries. This was somewhat offset by positive allocation effects from securitized sectors, most notably agency mortgage-backed securities. Security selection was additive to performance in most sectors except for industrials in the corporate bond space. Duration and yield curve positioning contributed positively to relative performance.

Victory Variable Insurance Funds

Victory INCORE Investment Quality Bond VIP Series (continued)

2-year and 10-year Treasury notes declined to 19 basis points (0.19%) while the 2-year to 5-year spread ended the year at 2 basis points (0.02%). The spread relationship between 1-year and 5-year notes witnessed an inversion of 9 basis points, underscoring the market's view of the Fed heading for a policy error if they continue tightening monetary policy via rates and quantitative tightening.

Within the Index, corporate bonds were the glaring underperformer for both the quarter and the year with excess returns of -3.10% and -3.15%, respectively. Credit concerns at General Electric (GE) and the large California utilities resulting from the wild fires, coupled with heavy outflows from high grade bond funds, pressured spreads materially wider. Additionally, fears of rating downgrades and recession added to anxiety and exacerbated the underperformance. For the year, excess returns in utilities fared the worst (-3.94%), followed by industrials (-3.34%) then financials (-2.62%). In the structured sectors, agency mortgages were the weakest performer from an excess returns perspective (-0.59%), followed by commercial mortgage backed securities (-0.39%), while asset-backed securities posted positive excess returns (0.13%). Corporate bonds were the only sector to post negative absolute returns for the year, all other primary sectors were positive, led by asset-backed securities at 1.77%. Interestingly, asset-backed securities were also the only sector to post positive excess returns for the full year. High yield credit suffered a similar year as investment grade credit, only worse. This sector posted an absolute return of -2.08% for the year and underperformed U.S. Treasuries by -3.58%.

During the period, the Fund used both long and short positions in U.S. Treasury futures and U.S. Federal Funds Futures, as well as credit default swaps. The Fund entered into these transactions to more efficiently manage the Fund's total portfolio risks, in terms of duration, curve exposure and credit quality, which would be more costly and restrictive to manage by investing directly in a selection of cash bonds or ETFs. The derivatives strategy with regards to futures contributed +22 basis points to overall performance while the credit default swap strategy contributed approximately -20 basis points for the 12 months ended December 31, 2018.

Market Positioning

Our allocation to investment grade (IG) credit declined further in the fourth quarter and resulted in an underweight position in BBB-rated corporate bonds relative to the Index. Additionally, our high yield exposure ended the year well below our maximum position. Our proprietary credit momentum signal continued to reduce exposure to IG credit as the option adjusted spread (OAS) of BBB-rated corporate bonds widened significantly over the trailing three months. Given this movement in OAS, valuations are now looking more compelling relative to fundamentals, yet we remain patient and ready to add risk when appropriate. Yield curve positioning and duration will be actively-managed based upon our proprietary trading signals as well as changes in the shape of the yield curve. The market's assessment of the Fed's actions/communication, as reflected by changes in the shape of the curve, will be a focal point in the coming quarters.

Victory Variable Insurance Funds

Victory INCORE Investment Quality Bond VIP Series (continued)

Average Annual Return

Year Ended December 31, 2018

	Class I
INCEPTION DATE	5/1/83
	Net Asset Value			Bloomberg Barclays U.S. Aggregate Bond Index¹
One Year		–0.41	%		0.01	%
Three Year		2.40	%		2.06	%
Five Year		2.60	%		2.52	%
Ten Year		4.32	%		3.48	%
Since Inception		6.64	%		N/A

Expense Ratios

Gross					0.61	%
With Applicable Waivers					0.56	%

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

The above expense ratios are from the Fund's prospectus dated May 1, 2018. Additional information pertaining to the Fund's expense ratios as of December 31, 2018 can be found in the financial highlights.

The total return figures set forth above include all waivers of fees for various periods since inception. Without such fee waivers, the total returns would have been lower. Some fee waivers are voluntary and may be modified or terminated at any time. The total returns do not include any insurance, sales or administrative charges of variable annuity or life insurance contracts. If these charges were included, the total returns would have been lower.

Victory INCORE Investment Quality Bond VIP Series — Growth of $10,000

¹The Bloomberg Barclays U.S. Aggregate Bond Index is generally considered to be representative of U.S. bond market activity. The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index that is not available for direct investment. There are no expenses associated with the index while there are expenses associated with the Fund. It is not possible to invest directly in an index.

The graph reflects investment of growth of a hypothetical $10,000 investment in the Fund. Past performance is no guarantee of future results.

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

Victory Variable Insurance Funds
Victory INCORE Investment Quality Bond VIP Series

Schedule of Portfolio Investments
December 31, 2018

Security Description	Principal Amount		Value
Asset Backed Securities (4.4%)
AmeriCredit Automobile Receivables Trust , Series 2018-1, Class B, 3.26%, 1/18/24, Callable 1/18/22 @ 100 (a)	$	1,000,000	$	1,001,602
Avis Budget Rental Car Funding (AESOP) LLC , Series 2014-1, Class A, 2.46%, 7/20/20 (a) (b)		4,000,000		3,989,652
CarMax Auto Owner Trust , Series 2015-3, Class B, 2.28%, 4/15/21, Callable 11/15/19 @ 100		3,225,000		3,201,158
Drive Auto Receivables Trust , Series 2017-3, Class B, 2.30%, 5/17/21, Callable 7/15/20 @ 100		928,219		927,135
Drive Auto Receivables Trust , Series 2017-1, Class B, 2.36%, 3/15/21, Callable 7/15/20 @ 100 (a)		404,749		404,574
DT Auto Owner Trust , Series 2017-2A, Class B, 2.44%, 2/15/21, Callable 9/15/20 @ 100 (a) (b)		834,111		833,589
DT Auto Owner Trust , Series 2017-3A, Class B, 2.40%, 5/17/21, Callable 1/15/21 @ 100 (b)		1,678,942		1,675,888
Popular ABS Mortgage Pass-Through Trust , Series 2005-2, Class AV1B, 2.77% (LIBOR01M+26bps), 4/25/35, Callable 6/25/20 @ 100 (c)		911,784		906,325
Santander Drive Auto Receivables Trust , Series 2017-3, Class B, 2.19%, 3/15/22, Callable 12/15/20 @ 100 (a)		3,495,000		3,470,084
Santander Drive Auto Receivables Trust , Series 2018-2, Class B, 3.03%, 9/15/22, Callable 5/15/21 @ 100 (a)		4,250,000		4,242,019
Santander Drive Auto Receivables Trust , Series 2017-2, Class B, 2.21%, 10/15/21, Callable 6/15/20 @ 100 (a)		4,123,000		4,111,208
Santander Retail Auto Lease Trust , Series 2018-A, Class B, 3.20%, 4/20/22, Callable 3/20/21 @ 100 (a) (b)		3,825,000		3,813,862
Total Asset Backed Securities (Cost $28,649,051)				28,577,096
Collateralized Mortgage Obligations (2.5%)
Commercial Mortgage Trust , Series 2012-CR4, Class B, 3.70%, 10/15/45 (b)		4,580,000		4,394,159
DBUBS Mortgage Trust , Series 2011-LC1A, Class A3, 5.00%, 11/10/46 (a) (b)		4,500,000		4,612,044
GS Mortgage Securities Trust , Series 2012-GC6, Class B, 5.65%, 1/10/45 (a) (b) (d)		3,250,000		3,409,015
Morgan Stanley BAML Trust , Series 2013-C13, Class A2, 2.94%, 11/15/46 (a)		603,301		601,706
WF-RBS Commercial Mortgage Trust , Series 2012-C6, Class B, 4.70%, 4/15/45		3,275,000		3,349,789
Total Collateralized Mortgage Obligations (Cost $17,845,924)				16,366,713
Residential Mortgage Backed Securities (1.0%)
Ameriquest Mortgage Securities, Inc. , Series 2003-5, Class A6, 4.16%, 4/25/33, Callable 1/25/19 @ 100 (a) (d)		84,772		84,594
Bear Stearns Alt-A Trust , Series 2003-3, Class 2A, 4.36%, 10/25/33, Callable 1/25/19 @ 100 (a) (d)		1,136,182		1,132,916
Countrywide Home Loans, Inc. , Series 2002-19, Class 1A1, 6.25%, 11/25/32, Callable 1/25/19 @ 100		142,696		142,696

See notes to financial statements.

Victory Variable Insurance Funds
Victory INCORE Investment Quality Bond VIP Series

Schedule of Portfolio Investments — continued
December 31, 2018

Security Description	Principal Amount		Value
Credit Suisse First Boston Mortgage Securities Corp. , Series 2002-HE16, Class M1, 3.83% (LIBOR01M+132bps), 10/25/32, Callable 1/25/19 @ 100 (c)	$	1,012,389	$	1,008,722
GSR Mortgage Loan Trust , Series 2004-10F, Class 6A1, 5.00%, 9/25/34, Callable 1/25/19 @ 100 (a)		381,546		381,546
JPMorgan Mortgage Trust , Series 2004-S2, Class 1A3, 4.75%, 11/25/19, Callable 5/25/19 @ 100 (a)		54,431		54,313
JPMorgan Mortgage Trust , Series 2016-4, Class A5, 3.50%, 10/25/46, Callable 8/25/37 @ 100 (a) (b) (d)		1,664,953		1,654,592
MASTR Adjustable Rate Mortgage Trust , Series 2004-13, Class 3A1, 4.44%, 11/21/34, Callable 1/21/19 @ 100 (d)		804,774		804,774
Prime Mortgage Trust , Series 2004-2, Class A3, 5.25%, 11/25/19, Callable 1/25/19 @ 100 (a)		19,375		19,375
Residential Funding Mortgage Securities I, Inc. , Series 2005-S3, Class A1, 4.75%, 3/25/20, Callable 1/25/19 @ 100 (a)		58,012		58,008
Structured Asset Securities Corp. , Series 2004-21XS, Class 2A6A, 5.24%, 12/25/34, Callable 1/25/19 @ 100 (a) (d)		839		840
Wells Fargo Mortgage Backed Securities Trust , Series 2004-Y, Class 3A1, 4.92%, 11/25/34, Callable 1/25/19 @ 100 (a) (d)		1,150,352		1,150,352
Wells Fargo Mortgage Backed Securities Trust , Series 2005-2, Class 2A1, 4.75%, 4/25/20, Callable 1/25/19 @ 100 (a)		27,247		27,247
Total Residential Mortgage Backed Securities (Cost $6,588,757)				6,519,975
Corporate Bonds (20.9%)
Communication Services (2.2%):
AT&T, Inc. 2.30%, 3/11/19 (a)		9,000,000		8,985,600
5.15%, 11/15/46, Callable 5/15/46 @ 100 (a)		3,833,000		3,568,907
SES Global Americas Holdings GP, 5.30%, 3/25/44 (b)		2,475,000		2,142,707
				14,697,214
Consumer Discretionary (1.7%):
Hasbro, Inc., 6.35%, 3/15/40		2,155,000		2,265,508
Magna International, Inc., 3.63%, 6/15/24, Callable 3/15/24 @ 100		4,305,000		4,250,413
NIKE, Inc., 3.88%, 11/1/45, Callable 5/1/45 @ 100		2,624,000		2,512,585
Ross Stores, Inc., 3.38%, 9/15/24, Callable 6/15/24 @ 100		1,220,000		1,204,482
				10,232,988
Consumer Staples (1.3%):
Estee Lauder Cos., Inc., 4.15%, 3/15/47, Callable 9/15/46 @ 100		1,000,000		1,001,540
Mead Johnson Nutrition Co. 3.00%, 11/15/20 (e)		3,000,000		2,990,850
4.60%, 6/1/44, Callable 12/1/43 @ 100 (a)		2,091,000		2,143,191
Reynolds American, Inc., 5.70%, 8/15/35, Callable 2/15/35 @ 100		1,835,000		1,789,529
				7,925,110
Energy (1.0%):
Dolphin Energy Ltd., 5.89%, 6/15/19 (b)		174,400		175,507
Exxon Mobil Corp., 4.11%, 3/1/46, Callable 9/1/45 @ 100		1,032,000		1,047,810
Marathon Petroleum Corp. 6.50%, 3/1/41, Callable 9/1/40 @ 100		1,285,000		1,382,519
5.85%, 12/15/45, Callable 6/15/45 @ 100		850,000		844,365

See notes to financial statements.

Victory Variable Insurance Funds
Victory INCORE Investment Quality Bond VIP Series

Schedule of Portfolio Investments — continued
December 31, 2018

Security Description	Principal Amount		Value
Statoil ASA, 3.95%, 5/15/43	$	930,000	$	885,611
Valero Energy Corp., 6.63%, 6/15/37		2,520,000		2,777,443
				7,113,255
Financials (8.6%):
Aflac, Inc. 2.88%, 10/15/26, Callable 7/15/26 @ 100		2,450,000		2,279,407
4.75%, 1/15/49, Callable 7/15/48 @ 100		595,000		607,132
Alleghany Corp., 4.90%, 9/15/44, Callable 3/15/44 @ 100		1,648,000		1,654,905
Bank of America Corp. 2.33%, (LIBOR03M+63bps), 10/1/21, Callable 10/1/20 @ 100 (c)		1,875,000		1,834,688
2.50%, 10/21/22, Callable 10/21/21 @ 100, MTN		3,500,000		3,359,755
3.25%, 10/21/27, Callable 10/21/26 @ 100		1,775,000		1,643,153
BB&T Corp., 2.75%, 4/1/22, MTN, Callable 3/1/22 @ 100		3,550,000		3,484,431
Cincinnati Financial Corp., 6.13%, 11/1/34		2,170,000		2,534,451
Citigroup, Inc., 3.88%(LIBOR03M+117bps), 1/24/39, Callable 1/24/38 @ 100 (c)		1,760,000		1,573,669
HSBC Holdings PLC, 5.10%, 4/5/21 (a)		5,000,000		5,164,050
JPMorgan Chase & Co., 5.60%, 7/15/41		1,710,000		1,932,488
KeyBank NA, 2.25%, 3/16/20		6,523,000		6,452,290
Morgan Stanley 3.75%, 2/25/23 (a)		3,000,000		2,994,780
3.13%, 7/27/26, MTN		5,500,000		5,069,680
Newcrest Finance Pty Ltd., 5.75%, 11/15/41 (b)		1,720,000		1,703,884
The Goldman Sachs Group, Inc. 2.35%, 11/15/21, Callable 11/15/20 @ 100		4,540,000		4,374,063
5.75%, 1/24/22 (a)		2,750,000		2,879,360
UBS Group Funding Switzerland AG, 2.95%, 9/24/20 (a) (b)		3,750,000		3,710,138
Wells Fargo & Co., 4.90%, 11/17/45 (a)		1,850,000		1,801,919
				55,054,243
Health Care (1.9%):
Amgen, Inc., 4.40%, 5/1/45, Callable 11/1/44 @ 100		1,825,000		1,709,916
Express Scripts Holding Co., 2.25%, 6/15/19 (a)		3,102,000		3,088,413
Gilead Sciences, Inc. 4.40%, 12/1/21, Callable 9/1/21 @ 100 (a)		6,150,000		6,342,494
4.80%, 4/1/44, Callable 10/1/43 @ 100		1,285,000		1,282,957
				12,423,780
Industrials (1.5%):
AerCap Ireland Capital Ltd., 3.75%, 5/15/19 (a)		2,900,000		2,899,536
Canadian National Railway Co., 3.20%, 8/2/46, Callable 2/2/46 @ 100		825,000		705,771
Kansas City Southern, 4.95%, 8/15/45, Callable 2/15/45 @ 100		1,440,000		1,453,176
Rockwell Automation, Inc., 6.25%, 12/1/37		1,151,000		1,387,312
Snap-on, Inc., 4.10%, 3/1/48, Callable 9/1/47 @ 100		1,100,000		1,066,428
Valmont Industries, Inc., 5.00%, 10/1/44, Callable 4/1/44 @ 100 (a)		2,603,000		2,292,384
				9,804,607
Information Technology (0.7%):
Apple, Inc., 4.65%, 2/23/46, Callable 8/23/45 @ 100		1,569,000		1,658,904
NVIDIA Corp., 2.20%, 9/16/21, Callable 8/16/21 @ 100 (e)		1,230,000		1,201,624
Texas Instruments, Inc., 4.15%, 5/15/48, Callable 11/15/47 @ 100		1,512,000		1,509,520
				4,370,048

See notes to financial statements.

Victory Variable Insurance Funds
Victory INCORE Investment Quality Bond VIP Series

Schedule of Portfolio Investments — continued
December 31, 2018

Security Description	Principal Amount		Value
Materials (0.6%):
LyondellBasell Industries NV, 5.00%, 4/15/19, Callable 2/7/19 @ 100 (a)	$	1,800,000	$	1,801,170
Rio Tinto Finance USA Ltd. 3.75%, 6/15/25, Callable 3/15/25 @ 100		1,415,000		1,418,183
5.20%, 11/2/40 (e)		723,000		799,848
				4,019,201
Utilities (1.4%):
Arizona Public Service Co., 2.95%, 9/15/27, Callable 6/15/27 @ 100		1,800,000		1,691,082
Consolidated Edison, Inc., 6.30%, 8/15/37		1,870,000		2,284,504
Iberdrola International BV 6.75%, 9/15/33		373,000		429,129
6.75%, 7/15/36 (e)		783,000		935,481
Nevada Power Co., 6.65%, 4/1/36 (a)		600,000		767,742
Oklahoma G&E Co., 5.25%, 5/15/41, Callable 11/15/40 @ 100		1,546,000		1,702,285
Public Service Enterprise Group, Inc., 4.00%, 6/1/44, Callable 12/1/43 @ 100		1,289,000		1,238,587
				9,048,810
Total Corporate Bonds (Cost $139,919,786)				134,689,256
U.S. Government Mortgage Backed Agencies (62.1%)
Federal Home Loan Mortgage Corp. 5.00%, 6/15/23 – 7/1/39 (a)		2,043,268		2,163,136
Series 4139, Class DA, 1.25%, 12/15/27 (a)		7,884,802		7,472,041
Series 4395, Class PA, 2.50%, 4/15/37 (a)		3,049,119		2,963,296
7.00%, 9/1/38 (a)		77,650		88,552
Series 4290, Class CA, 3.50%, 12/15/38 – 3/1/48 (a)		30,806,409		30,945,872
Series 3713, Class PA, 2.00%, 2/15/40 – 3/15/40 (a)		9,382,652		9,094,192
4.00%, 1/1/41 (a)		2,024,751		2,084,703
4.50%, 1/1/41 – 5/1/47 (a)		12,495,629		13,026,453
Series 4049, Class AB, 2.75%, 12/15/41 (a)		1,524,368		1,510,601
Series 4494, Class JA, 3.75%, 5/15/42 (a)		6,099,258		6,227,855
				75,576,701
Federal National Mortgage Association 6.00%, 8/1/21 – 2/1/37 (a)		2,881,957		3,188,520
5.00%, 4/1/23 – 12/1/39 (a)		1,416,745		1,504,451
7.50%, 12/1/29 (a)		46,931		53,677
8.00%, 1/1/30 – 9/1/30 (a)		24,195		27,828
7.00%, 2/1/32 – 6/1/32 (a)		38,746		44,148
4.63%(LIBOR12M+166bps), 12/1/36 (a) (c)		137,945		140,706
5.50%, 1/1/38 – 2/1/39 (a)		902,495		973,151
4.50%, 12/1/38 – 6/1/40 (a)		9,713,951		10,069,667
Series 2013-33, Class UD, 2.50%, 4/25/39 – 12/25/47 (a)		9,286,424		9,040,121
Series 2013-137, Class A, 3.50%, 3/25/40 – 12/25/50 (a) (f)		115,540,716		115,804,972
4.00%, 9/1/40 – 1/25/49 (a) (f)		73,808,589		75,452,406
Series 2011-101, Class LA, 3.00%, 10/25/40 – 1/25/49 (a) (f)		85,968,130		84,085,178
Series 2013-81, Class KA, 2.75%, 9/25/42		6,070,611		5,935,384
Series 2013-44, Class PB, 1.75%, 1/25/43		6,503,444		6,049,673
				312,369,882

See notes to financial statements.

Victory Variable Insurance Funds
Victory INCORE Investment Quality Bond VIP Series

Schedule of Portfolio Investments — continued
December 31, 2018

Security Description	Shares or Principal Amount		Value
Government National Mortgage Association 6.00%, 10/15/32 (a)	$	103,800	$	114,676
Series 2014-42, Class AD, 2.50%, 7/16/41		522,412		511,327
Series 2016-116, Class GA, 1.75%, 11/20/44		12,028,027		11,300,784
				11,926,787
Multi-family (0.0%): (g)
Collateralized Mortgage Obligations (0.0%): (g)
Government National Mortgage Association 6.00%, 12/15/33 (a)		35,131		39,298
Total U.S. Government Mortgage Backed Agencies (Cost $402,652,080)				399,912,668
U.S. Treasury Obligations (25.3%)
U.S. Treasury Bonds 2.88%, 5/15/43 (a)		11,646,000		11,369,959
3.63%, 2/15/44 (a)		9,638,000		10,677,204
3.00%, 2/15/48		20,760,000		20,650,850
U.S. Treasury Notes 2.75%, 9/30/20		9,400,000		9,435,637
2.75%, 4/30/23 (a)		16,008,000		16,176,010
2.75%, 8/31/23		38,191,000		38,622,301
2.88%, 10/31/23		7,000,000		7,117,393
2.00%, 8/15/25 (a)		16,219,000		15,638,862
2.75%, 2/15/28 (a)		30,450,000		30,608,782
2.88%, 8/15/28		2,902,000		2,946,903
Total U.S. Treasury Obligations (Cost $158,058,375)				163,243,901
Collateral for Securities Loaned^ (0.3%)
BlackRock Liquidity Funds TempFund Portfolio, Institutional Class, 2.49% (h)		372,175		372,175
Fidelity Investments Money Market Government Portfolio, Class I, 2.28% (h)		537,775		537,775
Fidelity Investments Prime Money Market Portfolio, Class I, 2.46% (h)		16,606		16,606
Goldman Sachs Financial Square Prime Obligations Fund, Institutional Class, 2.55% (h)		206,766		206,766
JPMorgan Prime Money Market Fund, Capital Class, 2.49% (h)		330,805		330,805
Morgan Stanley Institutional Liquidity Prime Portfolio, Institutional Class, 2.58% (h)		496,239		496,239
Total Collateral for Securities Loaned (Cost $1,960,366)				1,960,366
Total Investments (Cost $755,674,339) — 116.5%				751,269,975
Liabilities in excess of other assets — (16.5)%				(106,268,538	)
NET ASSETS — 100.00%			$	645,001,437

^ Purchased with cash collateral from securities on loan.

(a) All or a portion of this security has been segregated as collateral for derivative instruments.

See notes to financial statements.

Victory Variable Insurance Funds
Victory INCORE Investment Quality Bond VIP Series

Schedule of Portfolio Investments — continued
December 31, 2018

(b) Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid based upon procedures approved by the Board of Trustees. As of December 31, 2018, the fair value of these securities was $32,115,037 and amounted to 4.9% of net assets.

(d) The rate for certain asset backed and mortgage backed securities may vary based on factors relating to the pool of assets underlying the security. The rate disclosed is the rate in effect at December 31, 2018.

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

(f) Security purchased on a when-issued basis.

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

(h) Rate disclosed is the daily yield on December 31, 2018.

bps — Basis points

LIBOR — London InterBank Offered Rate

LIBOR01M — 1 Month US Dollar LIBOR, rate disclosed as of December 31, 2018, based on the last reset date of the security

LIBOR03M — 3 Month US Dollar LIBOR, rate disclosed as of December 31, 2018, based on the last reset date of the security

LIBOR12M — 12 Month US Dollar LIBOR, rate disclosed as of December 31, 2018, based on the last reset date of the security

LLC — Limited Liability Company

MTN — Medium Term Note

PLC — Public Limited Company

Futures Contracts Purchased

				Number of Contracts				Expiration Date				Notional Amount				Value				Unrealized Appreciation (Depreciation)
5-Year U.S. Treasury Note Future					175			3/29/19				$	19,842,598			$	20,070,313			$	227,715

Futures Contracts Sold

	Number of Contracts		Expiration Date	Notional Amount		Value		Unrealized Appreciation (Depreciation)
10-Year U.S. Treasury Note Future		317	3/20/19	$	38,108,778	$	38,678,946	$	(570,168	)
2-Year U.S.Treasury Note Future		145	3/29/19		30,585,834		30,785,327		(199,493	)
30-Year U.S. Treasury Bond Future		128	3/20/19		17,905,683		18,688,000		(782,317	)
								$	(1,551,978	)
Total unrealized appreciation								$	227,715
Total unrealized depreciation									(1,551,978	)
Total net unrealized appreciation(depreciation)								$	(1,324,263	)

See notes to financial statements.

Victory Variable Insurance Funds
Victory INCORE Investment Quality Bond VIP Series

Schedule of Portfolio Investments — continued
December 31, 2018

Credit Default Swap Agreements — Sell Protection (a)

Underlying Instrument	Fixed Deal Received Rate			Expiration Date	Payment Frequency	Implied Credit Spread at December 31, 2018 (b)			Notional Amount (c)		Value		Premiums Paid (Received)		Unrealized Appreciation (Depreciation)
CDX North America High Yield Index; Series 31		5.00	%	12/20/23	Daily		4.46	%	$	60,800,000	$	1,241,851	$	4,407,260	$	(3,165,409	)
											$	1,241,851	$	4,407,260	$	(3,165,409	)

(a) When a credit event occurs as defined under the terms of the swap agreement, the Fund as a seller of credit protection will either (i) pay to the buyer of protection an amount equal to the par value of the defaulted reference entity and take delivery of the reference entity or (ii) pay a net amount equal to the par value of the defaulted reference entity less its recovery value.

(b) Implied credit spread, represented in absolute terms, utilized in determining the value of the credit default swap agreements as of period end will serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a referenced entity reflects the cost of buying/selling protection and may include payments required to be made to enter into the agreement. Generally, wider credit spreads represent a perceived deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the swap agreement.

(c) The notional amount represents the maximum potential amount the Fund could be required to pay as a seller of credit protection if a credit event occurs, as defined under the terms of the swap agreement, for each security included in the CDX North America High Yield Index.

See notes to financial statements.

Victory Variable Insurance Funds

Statement of Assets and Liabilities
December 31, 2018

	Victory INCORE Investment Quality Bond VIP Series
ASSETS:
Investments, at value (Cost $755,674,339)	$	751,269,975	(a)
Cash and cash equivalents		10,801,618
Deposits with brokers for futures contracts		817,949
Deposits with brokers for swap agreements		4,318,538
Interest and dividends receivable		3,523,041
Receivable for capital shares issued		13,503
Receivable for investments sold		1,330,574
Variation margin receivable on open futures contracts		43,750
Variation margin receivable on open swap agreements		74,308
Receivable from Adviser		186,847
Total Assets		772,380,103
LIABILITIES:
Payables:
Collateral received on loaned securities		1,960,366
Investments purchased		124,641,125
Capital shares redeemed		94,550
Variation margin on open futures contracts		204,230
Accrued expenses and other payables:
Investment advisory fees		274,382
Administration fees		33,674
Custodian fees		7,920
Transfer agent fees		72,928
Chief Compliance Officer fees		1,228
Trustees' fees		628
Other accrued expenses		87,635
Total Liabilities		127,378,666
NET ASSETS:
Capital		649,062,734
Total distributable earnings/(loss)		(4,061,297	)
Net Assets	$	645,001,437
Shares Outstanding (unlimited shares authorized, with a par value of $0.001 per share):		53,966,829
Net asset value:	$	11.95

(a) Includes $1,900,810 of securities on loan.

See notes to financial statements.

Victory Variable Insurance Funds

Statement of Operations
For the Year Ended December 31, 2018

	Victory INCORE Investment Quality Bond VIP Series
Investment Income:
Interest	$	21,343,031
Securities lending (net of fees)		15,762
Total Income		21,358,793
Expenses:
Investment advisory fees		3,462,863
Administration fees		413,829
Custodian fees		33,004
Transfer agent fees		146,671
Trustees' fees		56,873
Chief Compliance Officer fees		6,008
Legal and audit fees		94,036
Interest expense on interfund lending		29
Other expenses		105,307
Total Expenses		4,318,620
Expenses waived/reimbursed by Adviser		(441,458	)
Net Expenses		3,877,162
Net Investment Income (Loss)		17,481,631
Realized/Unrealized Gains (Losses) from Investment Transactions:
Net realized gains (losses) from investment transactions		(10,355,978	)
Net realized gains (losses) from futures transactions		(2,898,933	)
Net realized gains (losses) from swap transactions		2,246,399
Net change in unrealized appreciation/depreciation on investments		(6,335,521	)
Net change in unrealized appreciation/depreciation on futures transactions		(1,125,053	)
Net change in unrealized appreciation/depreciation on swap transactions		(3,373,041	)
Net realized/unrealized gains (losses) on investments		(21,842,127	)
Change in net assets resulting from operations	$	(4,360,496	)

See notes to financial statements.

Victory Variable Insurance Funds

Statements of Changes in Net Assets

	Victory INCORE Investment Quality Bond VIP Series
	Year Ended December 31, 2018			Year Ended December 31, 2017
From Investment Activities:
Operations:
Net investment income (loss)	$	17,481,631		$	16,911,088
Net realized gains (losses) from investment transactions		(11,008,512	)		4,641,216
Net change in unrealized appreciation (depreciation) on investments		(10,833,615	)		8,760,833
Change in net assets resulting from operations		(4,360,496	)		30,313,137
Distributions to Shareholders: (a)
Change in net assets resulting from distributions to shareholders		(4,289,680	)		(17,209,084	)
Change in net assets resulting from capital transactions		(73,069,861	)		(2,674,726	)
Change in net assets		(81,720,037	)		10,429,327
Net Assets:
Beginning of period		726,721,474			716,292,147
End of period	$	645,001,437		$	726,721,474
Capital Transactions:
Proceeds from shares issued	$	47,220,231		$	84,023,731
Distributions reinvested		4,289,680			17,209,084
Cost of shares redeemed		(124,579,772	)		(103,907,541	)
Change in net assets resulting from capital transactions	$	(73,069,861	)	$	(2,674,726	)
Share Transactions:
Issued		3,953,299			6,961,615
Reinvested		360,968			1,429,326
Redeemed		(10,495,215	)		(8,518,824	)
Change in Shares		(6,180,948	)		(127,883	)

(a) Current and prior year distributions to shareholders have been reclassified and conform to amended GAAP presentation under Regulation S-X (See Item 10 in the Notes to Financial Statements).

See notes to financial statements.

Victory Variable Insurance Funds

Financial Highlights

For a Share Outstanding Throughout Each Period

	Victory INCORE Investment Quality Bond VIP Series
	Year Ended December 31, 2018			Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014
Net Asset Value, Beginning of Period	$	12.08		$	11.88		$	11.98		$	12.38		$	12.18
Investment Activities:
Net investment income (loss)		0.30	(a)		0.28	(a)		0.27	(a)		0.31	(a)		0.38
Net realized and unrealized gains (losses) on investments		(0.35	)		0.21			0.15			(0.27	)		0.30
Total from Investment Activities		(0.05	)		0.49			0.42			0.04			0.68
Distributions to Shareholders:
Net investment income		(0.08	)		(0.29	)		(0.30	)		(0.32	)		(0.38	)
Net realized gains from investments		—	(b)		—			(0.22	)		(0.12	)		(0.10	)
Total Distributions to Shareholders		(0.08	)		(0.29	)		(0.52	)		(0.44	)		(0.48	)
Capital Contributions from Prior Custodian, Net (See Note 8)		—			—			—	(b)		—			—
Net Asset Value, End of Period	$	11.95		$	12.08		$	11.88		$	11.98		$	12.38
Total Return (c)		(0.41	)%		4.15	%		3.53	%(d)		0.33	%		5.55	%
Ratios/Supplemental Data:
Net Assets at end of period (000)	$	645,001		$	726,721		$	716,292		$	755,696		$	802,377
Ratio of net expenses to average net assets		0.56	%		0.56	%		0.55	%		0.56	%		0.56	%
Ratio of net investment income (loss) to average net assets		2.52	%		2.28	%		2.17	%		2.47	%		2.93	%
Ratio of gross expenses to average net assets		0.62	%(e)		0.61	%(e)		0.55	%		0.56	%		0.56	%
Portfolio turnover		109	%		83	%		142	%		41	%		47	%

(a) Per share net investment income (loss) has been calculated using the average daily shares method.

(b) Amount is less than $0.005 per share.

(c) Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance & Annuity Company, Inc's variable contracts. Inclusion of such charges would reduce the total returns for all periods shown.

(d) The Fund received monies related to a nonrecurring refund from the prior Custodian. The corresponding impact to the total return was less than 0.01% for the period shown. (See Note 8)

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

See notes to financial statements.

Victory Variable Insurance Funds

Notes to Financial Statements
December 31, 2018

1. Organization:

Victory Variable Insurance Funds (the "Trust") was organized on February 11, 1998 as a Delaware statutory trust. The Trust is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified open-end investment company. The Trust is comprised of nine funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with a par value of $0.001 per share.

The accompanying financial statements are those of the Victory INCORE Investment Quality Bond VIP Series (the "Fund"). The Fund offers a single class of shares: Class I Shares. Sales of shares of the Fund may only be made to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. ("GIAC") that fund certain variable annuity and variable life insurance contracts issued by GIAC. GIAC is a wholly owned subsidiary of The Guardian Life Insurance Company of America ("Guardian Life").

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 in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies.

Investment 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 inputs or methodologies used for valuation techniques are not necessarily an indication of the risk associated with entering into those investments.

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

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

Futures contracts are valued at the settlement price established each day by the board of trade or an exchange on which they are traded. These valuations are typically categorized as Level 1 in the fair value hierarchy.

Swap agreements are valued at the mean between the current bid and ask prices. These valuations are typically categorized as Level 2 in the fair value hierarchy.

Debt securities of United States ("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. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant basis to the maturity of the security. In each of these situations, valuations are typically categorized as 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 in accordance with procedures established by and under the general supervision and responsibility of the Board. These valuations are typically categorized as Level 2 or Level 3 in the fair value hierarchy, based on the observability of inputs used to determine the fair value.

A summary of the valuations as of December 31, 2018, based upon the three levels defined above, is included in the table below while the breakdown, by category, of investments is disclosed in the Schedule of Portfolio Investments:

	LEVEL 1 — Quoted Prices					LEVEL 2 — Other Significant Observable Inputs					Total
	Investments in Securities		Other Financial Investments^			Investments in Securities		Other Financial Investments^			Investments in Securities		Other Financial Investments^
Asset Backed Securities	$	—	$	—		$	28,577,096	$	—		$	28,577,096	$	—
Collateralized Mortgage Obligations		—		—			16,366,713		—			16,366,713		—
Residential Mortgage Backed Securities		—		—			6,519,975		—			6,519,975		—
Corporate Bonds		—		—			134,689,256		—			134,689,256		—
U.S. Government Mortgage Backed Agencies		—		—			399,912,668		—			399,912,668		—
U.S. Treasury Obligations		—		—			163,243,901		—			163,243,901		—
Collateral for Securities Loaned		1,960,366		—			—		—			1,960,366		—
Futures Contracts		—		(1,324,263	)		—		—			—		(1,324,263	)
Credit Default Swap Agreements		—		—			—		(3,165,409	)		—		(3,165,409	)
Total	$	1,960,366	$	(1,324,263	)	$	749,309,609	$	(3,165,409	)	$	751,269,975	$	(4,489,672	)

^ Other Financial instruments include any derivative instruments not reflected in the Schedule of Portfolio Investments as investment securities, such as futures contracts and swap agreements. These instruments are generally recorded in the financial statements at the unrealized gain or loss on the investment.

For the year ended December 31, 2018, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

Securities Purchased on a When-Issued Basis:

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

account is established and the Fund maintains cash and/or marketable securities at least equal in value to commitments for when-issued securities. If the Fund owns when-issued securities, these values are included in "Payable for investments purchased" on the accompanying Statements of Assets and Liabilities. As of December 31, 2018, the Fund had no outstanding when-issued purchase commitments.

Loans:

Floating rate loans in which the Fund invests are primarily "senior" loans. Senior floating rate loans typically hold a senior position in the capital structure of the borrower, are typically secured by specific collateral, and have a claim on the assets and/or stock of the borrower that is senior to that held by subordinated debtholders and stockholders of the borrower. While these protections may reduce risk, these investments still present significant credit risk. A significant portion of the Fund's floating rate investments may be issued in connection with highly leveraged transactions such as leveraged buyouts, leveraged recapitalization loans, and other types of acquisition financing. Obligations in these types of transactions are subject to greater credit risk (including default and bankruptcy) than many other investments and may be, or become, illiquid. See the note below regarding below investment grade securities.

The Fund may purchase second lien loans (secured loans with a claim on collateral subordinate to a senior lender's claim on such collateral), fixed rate loans, unsecured loans, and other debt obligations.

Transactions in loans often settle on a delayed basis, and the Fund may not receive the proceeds from the sale of a loan or pay for a loan purchase for a substantial period of time after entering into the transactions.

Below Investment Grade Securities:

The Fund may invest in below investment grade securities (i.e. lower-quality, "junk" debt), which are subject to various risks. Lower-quality debt is considered to be speculative because it is less certain that the issuer will be able to pay interest or repay the principal than in the case of investment grade debt. These securities can involve a substantially greater risk of default than higher-rated securities, and their values can decline significantly over short periods of time. Lower-quality debt securities tend to be more sensitive to adverse news about their issuers, the market and the economy in general, than higher-quality debt securities. The market for these securities can be less liquid, especially during periods of recession or general market decline.

Investment Companies:

The Fund may invest in portfolios of open-end investment companies. These investment companies value securities in their portfolios for which market quotations are readily available at their market values (generally the last reported sale price) and all other securities and assets at their fair value by the methods established by the board of directors of the underlying fund.

Derivative Instruments:

Futures Contracts:

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

currencies. A good faith margin deposit, known as initial margin, of cash or government securities with a broker or custodian is required to initiate and maintain open positions in futures contracts. Subsequent payments, known as variation margin, are made or received by the Fund based on the change in the market value of the position and are recorded as unrealized appreciation or depreciation until the contract is closed out, at which time the gain or loss is realized. The Fund may lose the expected benefit of futures transactions if interest rates, exchange rates or securities prices change in an unanticipated manner. Such unanticipated changes may also result in lower overall performance than if the Fund had not entered into any futures transactions. In addition, the value of the Fund's futures positions may not prove to be perfectly or even highly correlated with the value of its portfolio securities or foreign currencies, limiting the Fund's ability to hedge effectively against interest rate, exchange rate and/or market risk and giving rise to additional risks. There is no assurance of liquidity in the secondary market for purposes of closing out futures positions. The collateral held by the Fund is presented on the Statement of Assets and Liabilities under Deposits with brokers for futures contracts.

As of December 31, 2018, the Fund entered into Futures Contracts primarily for the strategy of hedging or other purposes, including but not limited to, providing liquidity and equitizing cash.

Credit Derivatives:

The Fund may enter into credit derivatives, including centrally-cleared credit default swaps on individual obligations or credit indices. The Fund may use these investments (i) as alternatives to direct long or short investment in a particular security or securities, (ii) to adjust the Fund's asset allocation or risk exposure, or (iii) for hedging purposes. The use by the Fund of credit default swaps may have the effect of creating a short position in a security. Credit derivatives can create investment leverage and may create additional investment risks that may subject the Fund to greater volatility than investments in more traditional securities, as described in the Fund's Statement of Additional Information.

Credit default swap ("CDS") agreements on credit indices involve one party making a stream of payments (referred to as the buyer of protection) to another party (the seller of protection) in exchange for the right to receive a specified return in the event of a write-down, principal shortfall, interest shortfall or default of all or part of the referenced entities comprising the credit index. A credit index is a basket of credit instruments or exposures designed to be representative of a specific sector of the credit market as a whole. These indices are made up of reference credits that are judged by a poll of dealers to be the most liquid entities in the CDS.

The counterparty risk for cleared swap agreements is generally lower than uncleared over-the-counter swap agreements because generally a clearing organization becomes substituted for each counterparty to a cleared swap agreement and, in effect, guarantees each party's performance under the contract as each party to a trade looks only to the clearing organization for performance of financial obligations. However, there can be no assurance that the clearing organization, or its members, will satisfy its obligations to the Fund.

The Fund may enter into CDS agreements either as a buyer or seller. The Fund may buy protection under a CDS to attempt to mitigate the risk of default or credit quality deterioration in one or more individual holdings or in a segment of the fixed income securities market. The Fund may sell protection under a CDS in an attempt to gain exposure to an underlying issuer's credit quality characteristics without investing directly in that issuer. For swaps entered with an individual counterparty, the Fund bears the risk of loss of the uncollateralized amount expected to be received under a CDS agreement in the event of the default or bankruptcy of the counterparty. CDS agreements are generally valued at a price at which the counterparty to such agreement would terminate the agreement. The Fund may also enter into cleared swaps.

Upon entering into a cleared CDS, the Fund may be required to deposit with the broker an amount of cash or cash equivalents in the range of approximately 3% to 6% of the notional amount for CDS on high yield debt issuers (this amount is subject to change by the clearing organization that clears the trade). This amount, known as "initial margin," is in the nature of a performance bond or good faith deposit on the CDS and is returned to a Fund upon termination of the CDS, assuming all contractual obligations have been satisfied. Subsequent payments, known as "variation margin," to and from the

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

broker will be made daily as the price of the CDS fluctuates, making the long and short positions in the CDS contract more or less valuable, a process known as "marking-to-market." The premium (discount) payments are built into the daily price of the CDS and thus are amortized through the variation margin. The variation margin payment also includes the daily portion of the periodic payment stream.

The maximum potential amount of future payments (undiscounted) that the Fund as a seller of protection could be required to make under a CDS agreement equals the notional amount of the agreement. Notional amounts of each individual CDS agreement outstanding as of period end for which the Fund is the seller of protection are disclosed on the Schedule of Portfolio Investments. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, periodic interest payments, or net amounts received from the settlement of buy protection CDS agreements entered into by the Fund for the same referenced entity or entities.

As of December 31, 2018, the Fund entered into centrally cleared CDS agreements primarily for the strategy of asset allocation and risk exposure management.

Summary of Derivative Instruments:

The following table presents the effect of derivative instruments on the Statement of Assets and Liabilities, categorized by risk exposure, as of December 31, 2018.

	Assets				Liabilities
	Variation Margin Receivable on Open Futures Contracts*		Variation Margin Receivable on Open Swap Agreements*		Variation Margin Payable on Open Futures Contracts*		Variation Margin Payable on Open Swap Agreements*
Credit Risk Exposure	$	—	$	—	$	—	$	3,165,409
Interest Rate Risk Exposure		227,715		—		1,551,978		—

* Includes cumulative appreciation (depreciation) of futures contracts and centrally cleared swap agreements as reported in the Schedule of Investments. Only current day's variation margin is reported within the Statement of Assets and Liabilities.

The following table presents the effect of derivative instruments on the Statement of Operations, categorized by risk exposure, for the year ended December 31, 2018.

	Net Realized Gains (Losses) on Derivatives Recognized as a Result from Operations					Net Change in Unrealized Appreciation/Depreciation on Derivatives Recognized as a Result of Operations
	Net Realized Gains (Losses) from Futures Transactions			Net Realized Gains (Losses) from Swap Transactions		Net Change in Unrealized Appreciation/ Depreciation on Futures Transactions			Change in Net Unrealized Appreciation/ Depreciation on Swap Transactions
Credit Risk Exposure	$	—		$	2,246,399	$	—		$	(3,373,041	)
Interest Rate Risk Exposure		(2,898,933	)		—		(1,125,053	)		—

All open derivative positions at period end are reflected on the Fund's Schedule of Portfolio Investments. The underlying face value of open derivative positions relative to the Fund's net assets at period end is generally representative of the notional amount of open positions to net assets throughout the period.

Investment Transactions and Related Income:

Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

trade date on the last business day of the reporting period. Interest income is recognized on an accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. 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.

The Fund may receive other income from investment in loan assignments and/or unfunded commitments, including amendment fees, consent fees and commitment fees. These fees are recorded as income when received by the Fund. These amounts are included in Interest Income in the Statement of Operations.

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.

Securities Lending:

The Trust has entered into a Master Securities Lending Agreement ("MSLA") with Citibank, N.A. ("Citibank" or the "Agent"). Under the terms of the MSLA, the Fund may lend securities to certain broker-dealers and banks in exchange for collateral in the amount of at least 102% of the value of U.S. securities loaned or at least 105% of the value of non-U.S. securities loaned, marked-to-market daily. Any collateral shortfalls associated with increases in the valuation of the securities loaned are adjusted the next business day. The collateral can be received in the form of cash collateral and/or non-cash collateral. Non-cash collateral can include U.S. Government Securities, letters of credit and certificates of deposit. The cash collateral is invested in short-term instruments or cash equivalents as noted on the Fund's Schedule of Portfolio Investments. The Trust does not have effective control of the non-cash collateral and therefore it is not disclosed in the Fund's Schedule of Portfolio Investments. The Fund continues to benefit from interest or dividends on the securities loaned and may also earn a return from the collateral. The Fund pays various fees in connection with the investment of cash collateral. The Fund pays the Agent fees based on the investment income received from securities lending activities. Securities lending income is disclosed in the Fund's Statement of Operations. Although risk is mitigated by the collateral, the Fund could experience a delay in recovering its securities and possible loss of income or value if the borrower fails to return them.

Securities lending transactions are entered into by the Fund under the MSLA, which permits the Fund, under certain circumstances such as an event of default, to offset amounts payable by the Fund to the same counterparty against amounts receivable from the counterparty to create a net payment due to or from the Fund.

The following table is a summary of the Fund's securities lending transactions which are subject to offset under the MSLA as of December 31, 2018. These transactions are accounted for as secured borrowings with an overnight and continuous contractual maturity for cash collateral, and greater than overnight and continuous contractual maturity for non-cash collateral.

Gross Amount of Recognized Assets (Value of		Value of Cash		Value of Non-cash Collateral Received by Maturity
Securities on Loan)		Collateral Received		<30 Days		Between 30 & 90 days		>90 Days		Net Amount
$	1,900,810	$	1,960,366	$	—	$	—	$	—	$	59,556

Dividends to Shareholders:

Dividends from net investment income, if any, are declared and paid annually by the Fund. Distributable net realized gains, if any, are declared and distributed at least annually.

The amounts of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. To the

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

extent these "book/tax" differences are permanent in nature (e.g., net operating loss, distribution reclassification, and deemed distribution due to shareholder redemptions), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) 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 on the accompanying Statement of Assets and Liabilities.

As of December 31, 2018, on the Statement of Assets and Liabilities, there were no permanent book-to-tax differences, reclassification adjustments.

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. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of December 31.

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.

Allocations:

Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.

Affiliated Securities Transactions:

Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the year ended December 31, 2018, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.

3. Purchases and Sales of Securities:

Purchases and sales of securities (excluding securities maturing less than one year from acquisition) for the year ended December 31, 2018 were as follows for the Fund:

Purchases (excluding U.S. Government Securities)				Sales (excluding U.S. Government Securities)				Purchases of U.S. Government Securities				Sales of U.S. Government Securities
$	147,714,823			$	337,828,145			$	580,696,532			$	442,311,712

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

4. Fees and Transactions with Affiliates and Related Parties:

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 ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC.

Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive 0.50% 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.

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 0.08% of the first $15 billion in average daily net assets of the Trust, Victory Portfolios and Victory Portfolios II (collectively, the "Trusts"), 0.05% of the average daily net assets above $15 billion to $30 billion of the Trusts and 0.04% of the average daily net assets over $30 billion of the Trusts.

Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, N.A., acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services 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.

FIS Investor Services, LLC ("FIS") serves as the Fund's transfer agent. Under the Transfer Agent Agreement, the Trust pays FIS a fee for its services and reimburses FIS for all of their reasonable out-of-pocket expenses incurred in providing these services.

The Chief Compliance Officer ("CCO") is an employee of the Adviser, which pays the compensation of the CCO and his support staff. The Trust has entered into an Agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the CCO, and other resources reasonably necessary to provide the Trust with compliance oversight services related to the design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. Funds in the Trust, Victory Portfolios, Victory Institutional Funds, and Victory Portfolios II (collectively, the "Victory Funds Complex"), in the aggregate, compensate the Adviser for these services.

The Victory Funds Complex pays an annual retainer to each Independent Trustee, plus an additional annual retainer to the Chairman of the Board. The aggregate amount of the fees and expenses of the Independent Trustees are allocated amongst all the funds in the Victory Funds Complex and are presented in the Statement of Operations.

Shearman & Sterling LLP provides legal services to the Trust.

The Adviser has entered into an expense limitation agreement with the Fund until at least April 30, 2019. Under the terms of the agreement, to the extent that ordinary operating expenses incurred by certain classes of the Fund in any fiscal year exceed the expense limit for such classes of the Fund, such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of a Fund's business are excluded from the expense limitation agreement. For the year ended December 31, 2018, the expense limit (excluding voluntary waivers) is 0.56%.

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

place at the time of repayment. As of December 31, 2018, the following amounts are available to be repaid to the Adviser. Amounts repaid to the Adviser during the year ended, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".

				Expires 12/31/2020				Expires 12/31/2021
				$	362,552			$	441,458

The Adviser 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. There were no voluntary waivers or reimbursements for the year ended December 31, 2018.

Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Fund Accountant, Sub-Administrator, Sub-Fund Accountant, and Legal.

5. Risks:

The Fund may be subject to other risks in addition to these identified risks.

An investment in the Fund's shares represents an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.

The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for 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.

The Fund will be subject to credit and interest rate risk with respect to fixed income securities. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rates may rise or the rate of inflation may increase, impacting the value of investments in fixed income securities. A debt issuers' credit quality may be downgraded or an issuer may default. Interest rates may fluctuate due to changes in governmental fiscal policy initiatives and resulting market reaction to those initiatives.

6. Borrowing and Interfund Lending:

Line of Credit:

The Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex may borrow up to $250 million, of which $100 million is committed and $150 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. 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. The current agreement was amended on July 27, 2018 with a new termination date of July 26, 2019. Citibank receives an annual commitment fee of 0.15% on $100 million for providing the Line of Credit. For the year ended December 31, 2018, Citibank earned approximately $150,000 in commitment fees from the Victory Funds Complex. Each fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest on

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

amounts borrowed. Interest accrued by the Fund during the period is presented on the Statement of Operations under Interest expense on line of credit.

The Fund did not utilize or participate in the Line of Credit during the year ended December 31, 2018.

Interfund Lending:

The Trust and Adviser rely on an exemptive order granted by the SEC in March 2017 (the "Order"), permitting the establishment and operation of an Interfund Lending Facility (the "Facility"). The Facility allows the Fund to directly lend and borrow money to or from any other Victory Fund relying upon the Order at rates beneficial to both the borrowing and lending funds. Advances under the Facility are allowed for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to each Fund's borrowing restrictions. The interfund loan rate is determined, as specified in the Order, by averaging the current repurchase agreement rate and the current bank loan rate. Interest accrued by the Fund during the period is presented on the Statement of Operations under Interest expense on interfund lending.

The average loans for the days outstanding and average interest rate the Fund during the year ended December 31, 2018 were as follows:

				Borrower or Lender				Amount Outstanding at December 31, 2018				Average Borrowing*				Days Borrowing Outstanding				Average Interest Rate*				Maximum Borrowing During the Period
				Borrower				$	—			$	375,000				1				2.85	%		$	375,000

*For the year ended December 31, 2018, based on the number of days borrowings were outstanding.

7. Federal Income Tax Information:

The tax character of distributions paid during the tax years ended, as noted below, were as follows (total distributions paid may differ from the Statements of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid).

Year Ended December 31, 2018
Distributions paid from
Ordinary Income		Net Long-Term Capital Gains		Total Distributions Paid
$	4,289,680	$	—	$	4,289,680
Year Ended December 31, 2017
Distributions paid from
Ordinary Income		Net Long-Term Capital Gains		Total Distributions Paid
$	17,209,084	$	—	$	17,209,084

As of the tax year ended December 31, 2018, the components of accumulated earnings (deficit) on a tax basis were as follows:

Undistributed Ordinary Income				Undistributed Long-Term Capital Gains				Accumulated Earnings				Accumulated Capital and Other Losses				Unrealized Appreciation (Depreciation)*				Total Accumulated Earnings (Deficit)
$	17,229,581			$	—			$	17,229,581			$	(13,332,054	)		$	(7,958,824	)		$	(4,061,297	)

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

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

As of the tax year ended December 31, 2018, the Fund has short term and long term capital loss carryforwards of $5,300,039 and $8,032,015 respectively that are not subject to expiration.

During the tax year ended December 31, 2018, the Fund did not utilize capital loss carryforwards.

As of December 31, 2018, the cost basis for federal income tax purposes, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation (depreciation) for investments were as follows:

Cost of Investments for Federal Tax Purposes				Gross Unrealized Appreciation				Gross Unrealized Depreciation				Net Unrealized Appreciation (Depreciation)
$	757,144,561			$	8,870,390			$	(16,829,214	)		$	(7,958,824	)

8. Capital Contribution from Prior Custodian:

During 2016, the Fund received notification from the Fund's prior custodian, State Street Bank and Trust ("State Street"), related to over-billing on certain categories of expenses during the approximately 16-year period from 1998 through October 31, 2014. The over-billing primarily related to categories of expenses that involved an allocation of general costs among multiple clients.

State Street paid the refunded amounts during January 2017. Based on billing information received during 2016 from State Street and an analysis of any expense limitation agreements that were in place during the period of the over-billing, including the application of any recoupment provisions in such agreements, the Adviser received a portion of the refund.

The portion of the refund retained by the Fund was accounted for as a capital contribution and is reflected on the Financial Highlights as "Capital Contribution from Prior Custodian, Net".

9. Fund Ownership:

Ownership of more than 25% of the voting securities of a fund creates presumptions of control of the fund, under section 2(a)(9) of the 1940 Act. As of December 31, 2018, the shareholders listed below held more than 25% of the shares outstanding of the Fund and may be deemed to control the Fund.

				Shareholder				Percent
				GIAC					100	%

10. Recent Accounting Pronouncements:

In October 2016, the SEC released its Final Rules on Investment Company Reporting Modernization (the "Rules"). The Rules introduced two new regulatory reporting forms for investment companies, Form N-PORT and Form N-CEN. The Fund's compliance date for Form N-PORT was June 1, 2018, and the Fund will make its initial filing with the SEC on Form N-PORT for the period ending March 31, 2019. Effective with the period ended June 30, 2018, the Fund was required to maintain, and make available to the SEC upon request, the information required to be included in Form N-PORT. Form N-PORT will replace Form N-Q filings effective with the requirement to file the Form N-PORT with the SEC for the period ending March 31, 2019. The Fund's compliance date for Form N-CEN was June 1, 2018, and the Fund will make its initial filing on Form N-CEN for the period ended December 31, 2018. Form N-CEN will replace Form N-SAR filings. The Fund's adoption of these amendments have no effect on the Fund's net assets or results of operations.

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management does not believe that adoption of ASU 2017-08 will materially impact the Fund's financial statements.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurements" ("ASU 2018-13"). This update makes certain removals from, changes to and additions to existing disclosure requirements for fair value measurements. ASU 2018-13 does not change fair value measurements already required or permitted by existing standards. ASU 2018-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. As permitted, the Fund has early adopted ASU 2018-13 with the financial statements prepared as of December 31, 2018.

In August 2018, the SEC adopted amendments to certain financial statement disclosure requirements to conform them to GAAP for investment companies. These amendments made certain disclosure requirements effective under Regulation S-X. The Fund's adoption of these amendments, effective with the financial statements prepared as of December 31, 2018 had no effect on the Fund's net assets or results of operations. As a result of adopting these amendments, the distributions to shareholders in the December 31, 2017 Statements of Changes in Net Assets presented herein have been reclassified to conform to the current year presentation, which includes all distributions to each class of shareholders, other than tax basis return of capital distributions, in one line item per share class. Distributions to shareholders for the year ended December 31, 2017 from net investment income and net realized gains in the Fund were as follows:

Distributions to Shareholders:

From net investment income:				$	(17,209,084	)
From net Realized Gains:					—

11. Subsequent Events:

The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Trustees of Victory INCORE Investment Quality Bond VIP Series

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Victory INCORE Investment Quality Bond VIP Series (the "Fund") (one of the funds constituting the Victory Variable Insurance Funds (the "Trust")), including the portfolio of investments, as of December 31, 2018, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the three years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting the Trust) at December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the three years in the period then ended, in conformity with U.S. generally accepted accounting principles.

The financial highlights of the Fund for each of the periods presented through December 31, 2015 were audited by other auditors, whose report dated February 22, 2016 expressed an unqualified opinion on those financial highlights.

Basis for Opinion

These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust's internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian, transfer agent, and brokers or by other appropriate auditing procedures where replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Victory Capital's investment companies since 1995.

Cincinnati, Ohio
February 15, 2019

Victory Variable Insurance Funds

Supplemental Information
December 31, 2018

(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 ten Trustees, nine 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 nine portfolios in the Trust, one portfolio in Victory Institutional Funds, 42 portfolios in Victory Portfolios and 20 portfolios in Victory Portfolios II, each a registered investment company that, together with the Trust, comprise the Victory Funds Complex. Each Trustee's address is c/o Victory Variable Insurance Funds, 4900 Tiedeman Road, 4th Floor, Brooklyn, Ohio 44144. 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, 67

Trustee

February 2005

Consultant (since 2006).

Chair and Trustee, Turner Funds (December 2016-December 2017).

Nigel D.T. Andrews, 71

Vice Chair and Trustee

August 2002

Retired.

Director, TCG BDC II, Inc. (since 2017); Director, TCG BDC I, Inc. (formerly Carlyle GMS Finance, Inc.) (since 2012); Director, Old Mutual US Asset Management (2002-2014).

E. Lee Beard, 67*

Trustee

February 2005

Retired (since 2015); Consultant, The Henlee Group, LLC (consulting) (2005-2015).

None.

Dennis M. Bushe, 75

Trustee

July 2016

Retired.

Trustee, RS Investment Trust and RS Variable Products Trust (November 2011-July 2016).

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(Unaudited)

Name and Age

Position
Held with
the Trust

Date
Commenced
Service

Principal Occupation
During Past 5 Years

Other
Directorships
Held During
Past 5 Years

Sally M. Dungan, 64

Trustee

February 2011

Chief Investment Officer, Tufts University (since 2002).

None.

John L. Kelly, 65

Trustee

February 2015

Partner, McCarvill Capital Partners (September 2016-September 2017); Advisor(January 2016-April 2016) and Managing Partner (August 2014- January 2016), Endgate Commodities LLC; Chief Operating Officer, Liquidnet Holdings, Inc. (2011-2014).

Director, Caledonia Mining Corporation (since May 2012).

David L. Meyer, 61*

Trustee

December 2008

Retired.

None.

Gloria S. Nelund, 57

Trustee

July 2016

Chair, CEO and Co-Founder of TriLinc Global, LLC, an investment firm.

TriLinc Global Impact Fund, LLC (since 2012); Trustee, RS Investment Trust and RS Variable Products Trust (November 2007-July 2016).

Leigh A. Wilson, 74

Chair and Trustee

February 1998

Private Investor.

Chair (since 2013), Caledonia Mining Corporation.

Interested Trustee.

David C. Brown, 46**

Trustee

May 2008

Chairman and Chief Executive Officer (since 2013), Co-Chief Executive Officer (2011-2013), the Adviser; Chairman and Chief Executive Officer, Victory Capital Holdings, Inc. (since 2013).

None.

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

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

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

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(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 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 4900 Tiedeman Road, 4th Floor, Brooklyn, Ohio 44144. 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, 57

President

February 2006*

Director of Mutual Fund Administration, the Adviser.

Scott A. Stahorsky, 49

Vice President

December 2014

Manager, Fund Administration, the Adviser (since 2015); Senior Analyst, Fund Administration, the Adviser (prior to 2015).

Erin G. Wagner, 45

Secretary

December 2014

Associate General Counsel, the Adviser (since 2013).

Allan Shaer, 53

Treasurer

May 2017

Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc. (since 2016); Vice President, Mutual Fund Administration, JP Morgan Chase (2011-2016).

Christopher A. Ponte, 34

Assistant Treasurer

December 2017

Manager, Fund Administration, the Adviser (since 2017); Senior Analyst, Fund Administration, the Adviser (prior to 2017); Chief Financial Officer, Victory Capital Advisers, Inc. (since 2018).

Colin Kinney, 45

Chief Compliance Officer

July 2017

Chief Compliance Officer (since 2013) and Chief Risk Officer (2009-2017), the Adviser.

Chuck Booth, 58

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, 65

Assistant Secretary

February 1998

Partner, Shearman & Sterling LLP (since 2018); Partner, Morrison & Foerster LLP (2011-2017).

* On December 3, 2014, Mr. Dyer resigned as Secretary of the Trust and accepted the position of President.

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(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 SEC's 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 Portfolio Investments:

The Trust expects to file a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT beginning March 1, 2019. Prior to that date, the Trust has filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.

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. These examples are 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 July 1, 2018 through December 31, 2018.

The Actual Expense figures in the table below provide 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 "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

The Hypothetical Expense figures in the table below provide 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 shareholder reports of other funds.

Please note 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 7/1/18				Actual Ending Account Value 12/31/18				Hypothetical Ending Account Value 12/31/18				Actual Expenses Paid During Period 7/1/18-12/31/18*				Hypothetical Expenses Paid During Period 7/1/18-12/31/18*				Annualized Expense Ratio During Period 7/1/18-12/31/18
$	1,000.00			$	1,010.90			$	1,022.38			$	2.84			$	2.85				0.56	%

* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 184/365 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(Unaudited)

Additional Federal Income Tax Information

For the year ended December 31, 2018, the Fund designated short-term capital gain distributions in the amount of $127,507.

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(Unaudited)

Considerations of the Board in Continuing the Investment Advisory Agreement (the "Agreement")

The Board approved the Agreement on behalf of the Series at a meeting, which was called for that purpose, on December 5, 2018. The Board also considered information relating to the Series and the Agreement provided throughout the year and, more specifically, at a meeting on October 23, 2018. The Board noted that prior to the Series' reorganization on July 29, 2016, the Series was managed by RS Investment Management Co. LLC, which was acquired by the Adviser on July 29, 2016. In considering whether to approve the Agreement, the Board requested, and the Adviser provided, information that the Board believed to be reasonably necessary to reach its conclusions. The Board, including the Independent Trustees, evaluated this information along with other information obtained throughout the year and was advised by legal counsel to the Series and by independent legal counsel to the Independent Trustees. In addition, in 2017 the Independent Trustees, through their counsel, retained an independent consultant to assist with a review of the overall process for conducting the annual review of these advisory arrangements. The Board considered the Series' advisory fee, expense ratio and investment performance as significant factors in determining whether the Agreement should be continued. In considering whether the compensation paid to the Adviser was fair and reasonable, the Board also evaluated, among other things, the following factors:

• The requirements of the Series for the services provided by the Adviser;

• The nature, quality and extent of the services provided and expected to be provided;

• The performance of the Series as compared to comparable funds;

• The fees payable for the services and whether the fee arrangements provided for economies of scale that would benefit Series shareholders as the Series grows;

• Whether the fee would be sufficient to enable the Adviser to attract and retain experienced personnel and continue to provide quality services to the Series;

• Fees paid by other clients of the Adviser whose accounts are managed in a similar investment style and any differences in the services provided to the other clients compared to those provided to the Series;

• Total expenses of the Series, taking into consideration any distribution or shareholder servicing fees;

• Management's commitment to operating the Series at competitive expense levels;

• The profitability of the Adviser (as reflected by comparing fees earned against an estimate of the Adviser's costs) with respect to the Adviser's relationship with the Series;

• Research and other service benefits received by the Adviser obtained through payment of client commissions for securities transactions;

• Other benefits received by the Adviser, and its affiliates, including revenues paid to the Adviser, or its affiliates, by the Series for administration and fund accounting services, and distribution;

• The capabilities and financial condition of the Adviser;

• Current economic and industry trends; and

• The historical relationship between the Series and the Adviser.

The Board reviewed the Series' current management fee, comprised of the advisory fee plus the administrative services fee paid to the Adviser, in the context of the Adviser's profitability of the Series. In addition, the Board compared the Series' total operating expense ratio on a net and gross basis, taking into consideration any distribution or shareholder servicing fees and management fees with a universe of comparable mutual funds compiled by an independent consultant, FUSE Research Network, LLC ("FUSE"), and a peer group of funds with similar investment strategies selected by FUSE from the universe. The Board reviewed the factors and methodology used by FUSE in the selection of the Series' peer group, including FUSE's selection of a broad universe of funds using the standard Retail Morningstar Categories, the more specific universe of comparable funds, and peer groups of funds with comparable investment strategies and asset levels, among other factors. The Board also reviewed any changes to FUSE's methodology as compared to the prior year, including as a result of input from the Adviser, if any. The Board also reviewed fees and other information related to the Adviser's management of similarly managed institutional or private accounts, and the differences in the services provided to the other accounts, to the extent applicable. The Board noted that the advisory fee arrangements

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(Unaudited)

for the Series do not include breakpoints, which are generally viewed as a method by which the investment adviser shares any economies of scale with a fund as a fund grows. The Board also considered the Adviser's commitment to limit expenses as discussed in more detail below.

The Board reviewed the Series' performance over one-, three-, five- and ten-year periods against the performance of the Series' selected peer group and benchmark index. The Board recognized that the performance of the Series and the peer group funds are net of expenses, while the performance of the benchmark index is gross returns. The Board considered the additional resources that the Adviser has committed to enhance portfolio analysis, compliance and trading systems.

The Board reviewed various other specific factors with respect to the Series, as described below. In their deliberations, the Trustees did not rank the importance of any particular information or factor considered and each Trustee may have attributed different weights to various factors.

The Board concluded that the Series' gross annual management fee was reasonable as compared to the median gross management fee charged to the funds in the Series' peer group. The Board noted that the Series' net annual expense ratio, taking into account any shareholder servicing or distribution fees, was reasonable as compared to the median expense ratio for the peer group. The Board considered the Adviser's contractual agreement to waive its fees and reimburse expenses for a specified period of time, as described in the Series' prospectus. The Board then compared the Series' performance for the one-, three-, five- and ten-year periods ended June 30, 2018, to that of the median performance of the peer group and benchmark index for the same periods and considered the fact that the Series outperformed the benchmark index for all periods reviewed, outperformed the peer group for the one-, three- and five-year periods and underperformed the peer group for the ten-year period.

Having considered, among other things: (1) that the Series' management fee was within the ranges of advisory fees charged to comparable mutual funds; (2) that the Series' total expense ratio was reasonable; (3) the Adviser's willingness to limit the expenses for a period of time would provide stability to the Series' expenses during that period; and (4) the performance of the Series, the Board concluded that the Agreement continued to be in the best interests of the Series' shareholders.

The Board noted that the Adviser's INCORE investment management team replaced the predecessor fund's investment sub-adviser as portfolio managers for the Series upon completion of the Series' reorganization.

Conclusion

Based on its review of the information requested and provided, and following extended discussions, the Board determined that the Agreement, on behalf of the Series, was consistent with the best interests of the Series and its shareholders, and the Board unanimously approved the Agreement, on behalf of the Series, for an additional annual period on the basis of the foregoing review and discussions and the following considerations, among others:

• The fairness and reasonableness of the investment advisory fee payable to the Adviser under the Agreement in light of the investment advisory services provided, the costs of these services, the profitability of the Adviser's relationship with the Series and the comparability of the fee paid to the fees paid by other investment companies;

• The nature, quality and extent of the investment advisory services provided by the Adviser;

• The Adviser's entrepreneurial commitment to the management of the Series and the creation of a broad-based family of funds, which could entail a substantial commitment of the Adviser's resources to the successful operation of the Series;

• The Adviser's representations regarding its staffing and capabilities to manage the Series, including the retention of personnel with relevant portfolio management experience;

• The Adviser's efforts to enhance investment results by, among other things, developing quality portfolio management teams; and

• The overall high quality of the personnel, operations, financial condition, investment management capabilities, methodologies and performance of the Adviser.

Privacy Policy

Protecting the Privacy of Information

The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.

We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.

To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*

* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.

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

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

VVIF-RS-IIQBVIP-AR (12/18)

December 31, 2018

Annual Report

Victory Variable Insurance Funds

Victory High Yield VIP Series

www.vcm.com

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

• 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

Victory Variable Insurance Funds

Table of Contents

Shareholder Letter (Unaudited)					3
Fund Review and Commentary (Unaudited)					4
Financial Statements
Schedule of Portfolio Investments					7
Statement of Assets and Liabilities					11
Statement of Operations					12
Statements of Changes in Net Assets					13
Financial Highlights					14
Notes to Financial Statements					15
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm					24
Supplemental Information (Unaudited)
Trustee and Officer Information					25
Proxy Voting and Form N-Q Information					28
Expense Examples					28
Additional Federal Income Tax Information					29
Advisory Contract Renewal					30
Privacy Policy (inside back cover)

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 Fund.

• 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

This page is intentionally left blank.

Victory Funds Letter to Shareholders

Dear Shareholder,

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

Christopher K. Dyer, CFA

President,

Victory Funds

Victory Variable Insurance Funds

Victory High Yield VIP Series

Portfolio Holdings

As a Percentage of Total Investments

Performance Summary

The Victory High Yield VIP Series ("Fund") seeks to provide current income. The Fund outperformed its benchmark, the Bloomberg Barclays U.S. Corporate High Yield Bond Index (the "Index"), in 2018, returning 0.29% compared with -2.08% for the Index.

Security selection was the chief contributor to the outperformance, with asset allocation also positive.

The top contributors to performance relative to the Index were an allocation to floating rate bank loans, which are not in the Index, and both asset allocation and security selection in energy. Security selection in CCC-rated bonds was also very strong, outweighing the negative impact of an overweight there.

Security selection in health care detracted from relative performance, as did both asset allocation and security selection in media & entertainment and building materials.

Market Review

The final months of 2018 were an all-you-can-eat banquet of worry for investors, particularly in equities and corporate bonds. Among the concerns: rising interest rates and an aging economic boom at home, slowing economies overseas, trade disputes, tumbling energy prices, dysfunction in Washington, scandals over online privacy and election meddling, and a bungling Brexit.

The concerns that shook the markets in the fourth quarter were not new and there were spikes in volatility in the first and second quarters of 2018, but a strong domestic economy and solid corporate earnings limited their impact on returns until the fourth quarter.

Market Recap

The U.S. high yield market benefitted from a favorable technical climate, solid corporate fundamentals and the relative strength of the U.S. economy throughout much of 2018. The high yield market's domestic focus also helped in a year marked by trade disputes and weakening growth overseas. But none of that was enough to stave off a dramatic reversal at the end of the year that generated an Index return of -4.5% in the fourth quarter and wiped out the Index's gains for the year.

Amid an overall market shakeup in the fourth quarter, sharply weaker oil prices and concerns about the health of some weaker investment grade companies combined to pressure the Index, 16% of which is composed of energy companies. In addition, the leveraged loan market, which is also mostly below investment grade, was offering attractive yields for investors and better terms for issuers.

For the full year, high yield corporate bonds underperformed comparable-maturity Treasuries, but still they held up far better in relation to Treasurys than investment grade corporates.

Victory Variable Insurance Funds

Victory High Yield VIP Series (continued)

Portfolio Review

By the beginning of the fourth quarter, we had come to view the energy sector as overvalued, and we reduced energy exposure from 10% to about 1% just before oil prices started to collapse in early October. This had a strong positive impact on relative performance in both the fourth quarter and the full year. Quality sector changes within the portfolio were limited given our view that tighter spreads are making some sections of the market less attractive. We remained underweight in BB-rated bonds, which we view as most vulnerable to interest rate and duration risk. Toward the end of the year, we began to reduce our exposure to CCC-rated bonds, reflecting our view that a pivot toward higher quality will be required over the next 12-15 months.

Recognizing that leveraged loans may currently offer investors a compelling relative value, we have maintained the portfolio's exposure at 30%. We believe loans also offer a high-quality, high-yielding alternative to longer-term BB-rated bonds, which can respond particularly negatively to rising interest rates. We continue to watch for an inflection point in the relative value of bonds and loans.

We also are monitoring the energy and commodities markets for attractive re-entry points. As has long been our practice, we continue to make bottom-up assessments across sectors of potential merger and acquisition activity, asset sales, and shifts in issuers' lines of business, as these events can offer attractive total return opportunities.

Market Outlook

We believe that the high yield market currently offers attractive yields and will continue to generate steady demand, driving spreads tighter. We expect a strong technical environment with moderating mutual fund outflows, limited new issuance and low default rates through at least the first half of 2019.

Barring any external events, we believe modest spread tightening and a catalyst in the energy sector could provide investment opportunities in 2019. We believe that these two factors could largely offset concerns about the domestic credit cycle, though we remain vigilant for an investor pivot toward higher-quality issuers within high yield.

Victory Variable Insurance Funds

Victory High Yield VIP Series (continued)

Average Annual Return

Year Ended December 31, 2018

	Class I
INCEPTION DATE	9/13/99
		Net Asset Value		Bloomberg Barclays U.S. Corporate High Yield Bond Index¹
One Year		0.29	%	–2.08	%
Three Year		8.37	%	7.23	%
Five Year		3.79	%	3.83	%
Ten Year		9.21	%	11.12	%
Since Inception		5.57	%	N/A

Expense Ratios

Gross					0.79	%
With Applicable Waivers					0.79	%

Victory High Yield VIP Series — Growth of $10,000

¹The Bloomberg Barclays U.S. Corporate High-Yield Bond Index is generally considered to be representative of the investable universe of the U.S.-dominated high yield debt market. The Barclays U.S. Corporate High-Yield Bond Index is not available for direct investment. There are no expenses associated with the index, while there are expenses associated with the Fund. It is not possible to invest directly in an index.

The graph reflects investment of growth of a hypothetical $10,000 investment in the Fund. Past performance is no guarantee of future results.

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

Victory Variable Insurance Funds
Victory High Yield VIP Series

Schedule of Portfolio Investments
December 31, 2018

Security Description	Shares or Principal Amount		Value
Common Stocks (2.1%)
Communication Services (1.5%):
AMC Networks, Inc., Class A (a)	$	3,000	$	164,640
Cinemark Holdings, Inc.		2,500		89,500
TEGNA, Inc.		17,000		184,790
				438,930
Consumer Discretionary (0.6%):
Wynn Resorts Ltd.		2,000		197,820
Total Common Stocks (Cost $731,222)				636,750
Senior Secured Loans (29.5%)
Ai Ladder Luxembourg Subco Sarl, 1st Lien Term Loan B, 7.02% (LIBOR06M+450bps), 5/4/25 (b)		398,261		392,785
Alphabet Holding Co., Inc., 2nd Lien Term Loan, 10.09% (LIBOR01M+775bps), 8/15/25, Callable 2/6/19 @ 101 (b)		500,000		410,000
Avaya, Inc., 1st Lien Term Loan B, 6.71% (LIBOR01M+425bps), 12/15/24, Callable 2/6/19 @ 100 (b)		346,500		333,939
Bass Pro Group LLC, Term Loan B, 7.34% (LIBOR01M+500bps), 12/16/23, Callable 2/6/19 @ 101 (b)		491,256		468,904
Caesars Resort Collection LLC, 1st Lien Term Loan B, 5.09% (LIBOR01M+275bps), 10/2/24, Callable 2/6/19 @ 100 (b)		245,630		235,453
CPM Holdings, Inc., 6.27% (LIBOR01M+375bps), 10/24/25 (b)		200,000		195,750
Crown Finance US, Inc., 1st Lien Term Loan B, 4.84% (LIBOR01M+250bps), 2/7/25, Callable 2/6/19 @ 100 (b)		347,375		327,689
Dayco Products LLC, 6.96% (LIBOR03M+425bps), 5/19/24, Callable 2/6/19 @ 100 (b)		489,737		476,269
Hertz Corp., Term Loan B1, 5.09% (LIBOR01M+275bps), 6/30/23, Callable 2/6/19 @ 100 (b)		489,822		469,881
Holley Purchaser, Inc., 1st Lien Term Loan, 7.51% (LIBOR03M+500bps), 10/24/25, Callable 2/6/19 @ 101 (b)		200,000		195,000
LifeScan Global Corp., 1st Lien Term Loan, 8.40% (LIBOR03M+600bps), 6/19/24, Callable 2/6/19 @ 101 (b)		500,000		471,250
Navistar, Inc., 1st Lien Term Loan B, 5.89% (LIBOR01M+350bps), 11/2/24, Callable 2/6/19 @ 100 (b)		246,250		237,016
Packaging Coordinators Midco, Inc., 2nd Lien Term Loan, 11.14% (LIBOR03M+875bps), 7/1/24, Callable 2/6/19 @ 100 (b)		400,000		398,000
PetSmart, Inc., 5.38% (LIBOR01M+300bps), 3/10/22, Callable 2/6/19 @ 100 (b)		492,367		387,739
Radiate Holdco LLC, 5.34% (LIBOR01M+300bps), 2/1/24, Callable 2/6/19 @ 100 (b)		494,962		465,804
Regionalcare Hospital Partners Holdings, Inc., 7.13% (LIBOR03M+450bps), 11/16/25 (b)		250,000		236,563
Reynolds Group Holdings, Inc., 1st Lien Term Loan B, 5.09% (LIBOR01M+275bps), 2/5/23, Callable 2/6/19 @ 100 (b)		654,959		622,211
SIWF Holdings, Inc., 10.97% (LIBOR01M+850bps), 5/26/26 (b)		500,000		460,000
Specialty Building Products Holdings LLC, 1st Lien Term Loan, 8.09% (LIBOR01M+575bps), 10/1/25, Callable 2/6/19 @ 101 (b)		500,000		482,500

See notes to financial statements.

Victory Variable Insurance Funds
Victory High Yield VIP Series

Schedule of Portfolio Investments — continued
December 31, 2018

Security Description	Principal Amount		Value
Sprint Communications, Inc., 1st Lien Term Loan B, 4.88% (LIBOR01M+250bps), 2/2/24, Callable 2/6/19 @ 100 (b)	$	496,212	$	470,990
Stars Group Holdings BV, 5.89% (LIBOR03M+350bps), 6/27/25 (b)		497,500		479,674
Tenneco, Inc., 1st Lien Term Loan B, 5.09% (LIBOR01M+275bps), 6/18/25, Callable 2/6/19 @ 101 (b)		200,000		187,400
Utz Quality Foods LLC, 2nd Lien Term Loan, 9.59% (LIBOR01M+725bps), 11/21/25, Callable 2/6/19 @ 101 (b)		300,000		282,000
Windstream Services LLC. 1st Lien Term Loan, 5.71% (LIBOR01M+325bps), 2/8/24, Callable 2/6/19 @ 100 (b)		246,207		207,121
Wynn Resorts Ltd., 1st Lien Term Loan B, 4.60% (LIBOR01M+225bps), 10/30/24, Callable 2/6/19 @ 101 (b)		250,000		235,783
Total Senior Secured Loans (Cost $9,565,296)				9,129,721
Corporate Bonds (66.5%)
Communication Services (7.1%):
AMC Entertainment Holdings, Inc., 5.75%, 6/15/25, Callable 6/15/20 @ 102.88		500,000		443,330
AMC Networks, Inc., 4.75%, 8/1/25, Callable 8/1/21 @ 102.38		400,000		365,884
Cablevision Systems Corp., 5.88%, 9/15/22		500,000		492,055
Hughes Satellite Systems Corp., 6.63%, 8/1/26 (c)		500,000		459,340
Telesat Canada/Telesat LLC, 8.88%, 11/15/24, Callable 11/15/19 @ 106.66 (d)		300,000		312,138
Windstream Services LLC / Windstream Finance Corp., 9.00%, 6/30/25, Callable 6/30/21 @ 104.5 (d)		178,000		120,558
				2,193,305
Consumer Discretionary (10.5%):
AV Homes, Inc., 6.63%, 5/15/22, Callable 5/15/19 @ 103.31		175,000		175,189
Beazer Homes USA, Inc., 5.88%, 10/15/27, Callable 10/15/22 @ 102.94 (c)		400,000		316,004
Boyd Gaming Corp., 6.38%, 4/1/26, Callable 4/1/21 @ 103.19		392,000		378,429
Delta Merger Sub, Inc., 6.00%, 9/15/26, Callable 9/15/21 @ 104.5 (d)		400,000		377,952
Golden Nugget, Inc., 8.75%, 10/1/25, Callable 10/1/20 @ 104.38 (d)		500,000		479,939
Party City Holdings, Inc., 6.63%, 8/1/26, Callable 8/1/21 @ 103.31 (c) (d)		500,000		454,720
The Enterprise Development Authority, 12.00%, 7/15/24, Callable 7/15/21 @ 109 (d)		500,000		457,910
Travelport Corporate Finance PLC, 6.00%, 3/15/26, Callable 3/15/21 @ 103 (d)		160,000		161,438
Yum! Brands, Inc., 5.35%, 11/1/43, Callable 5/1/43 @ 100		550,000		459,420
				3,261,001
Consumer Staples (6.1%):
Albertsons Cos. LLC, 5.75%, 3/15/25, Callable 9/15/19 @ 104.31		500,000		437,500
B&G Foods, Inc., 4.63%, 6/1/21, Callable 2/7/19 @ 101.16		200,000		195,598
Cott Holdings, Inc., 5.50%, 4/1/25, Callable 4/1/20 @ 104.13 (d)		500,000		472,705
Dole Food Co., Inc., 7.25%, 6/15/25, Callable 6/15/20 @ 103.63 (d)		500,000		450,235
Simmons Foods, Inc., 7.75%, 1/15/24, Callable 1/15/21 @ 103.88 (c) (d)		330,000		332,521
				1,888,559
Energy (2.2%):
Diamond Offshore Drilling, Inc., 4.88%, 11/1/43, Callable 5/1/43 @ 100		618,000		345,116
Endeavor Energy Resources LP/EER Finance, Inc., 5.50%, 1/30/26, Callable 1/30/21 @ 104.13 (d)		350,000		355,324
				700,440

See notes to financial statements.

Victory Variable Insurance Funds
Victory High Yield VIP Series

Schedule of Portfolio Investments — continued
December 31, 2018

Security Description	Principal Amount		Value
Financials (7.1%):
Compass Group Diversified Holdings LLC, 8.00%, 5/1/26, Callable 5/1/21 @ 104 (d)	$	500,000	$	495,785
Downstream Development Authority of the Quapaw Tribe of Oklahoma, 10.50%, 2/15/23, Callable 2/15/20 @ 105.25 (d)		500,000		480,255
Gray Escrow, Inc., 7.00%, 5/15/27, Callable 5/15/22 @ 105.25 (d)		120,000		116,828
Intelsat Jackson Holdings SA, 5.50%, 8/1/23, Callable 2/7/19 @ 102.75		500,000		439,490
Resideo Funding, Inc., 6.13%, 11/1/26, Callable 11/1/21 @ 104.59 (d)		670,000		661,638
				2,193,996
Health Care (13.0%):
Air Medical Group Holdings, Inc., 6.38%, 5/15/23, Callable 2/7/19 @ 103.19 (d)		500,000		422,505
Avantor, Inc., 9.00%, 10/1/25, Callable 10/1/20 @ 106.75 (d)		500,000		499,715
Change Health/Finance, Inc., 5.75%, 3/1/25, Callable 3/1/20 @ 102.88 (d)		300,000		280,164
Endo Finance LLC, 6.00%, 2/1/25, Callable 2/1/20 @ 103 (d)		200,000		143,500
Polaris Intermediate Corp., 8.50%, 12/1/22, Callable 6/1/19 @ 104 (d)		500,000		456,740
Sotera Health Topco, Inc., 8.13%, 11/1/21, Callable 2/7/19 @ 101 (d)		500,000		466,340
Surgery Center Holdings, 6.75%, 7/1/25, Callable 7/1/20 @ 103.38 (c) (d)		500,000		426,595
Tenet Healthcare Corp., 8.13%, 4/1/22		200,000		200,256
Valeant Pharmaceuticals International, Inc., 5.88%, 5/15/23, Callable 2/7/19 @ 102.94 (d)		500,000		461,241
Verscend Escrow Corp., 9.75%, 8/15/26, Callable 8/15/21 @ 104.88 (d)		500,000		469,915
Vizient, Inc., 10.38%, 3/1/24, Callable 3/1/19 @ 107.78 (d)		200,000		211,872
				4,038,843
Industrials (15.3%):
Ahern Rentals, Inc., 7.38%, 5/15/23, Callable 2/7/19 @ 105.53 (c) (d)		500,000		400,480
Algeco Global Finance 2 PLC, 10.00%, 8/15/23, Callable 2/15/20 @ 105 (c) (d)		550,000		512,974
Apex Tool Group LLC /BC Mountain Finance, Inc., 9.00%, 2/15/23, Callable 2/15/19 @ 102 (c) (d)		500,000		426,115
Beacon Escrow Corp., 4.88%, 11/1/25, Callable 11/1/20 @ 102.44 (d)		470,000		413,492
Covanta Holding Corp., 5.88%, 7/1/25, Callable 7/1/20 @ 104.41		500,000		459,960
Pisces Midco, Inc., 8.00%, 4/15/26, Callable 4/15/21 @ 104 (c) (d)		500,000		457,500
SRS Distribution, Inc., 8.25%, 7/1/26, Callable 7/1/21 @ 104.13 (c) (d)		500,000		459,540
Stevens Holding Co., Inc., 6.13%, 10/1/26, Callable 10/1/23 @ 101.53 (d)		330,000		325,482
TransDigm, Inc., 6.50%, 7/15/24, Callable 7/15/19 @ 103.25		200,000		194,530
Triumph Group, Inc., 4.88%, 4/1/21, Callable 2/7/19 @ 101.22		500,000		446,485
United Rentals, Inc., 6.50%, 12/15/26, Callable 12/15/21 @ 103.25		200,000		197,000
W/S Packaging Holdings, Inc., 9.00%, 4/15/23, Callable 4/15/20 @ 104.5 (d)		400,000		398,000
				4,691,558
Materials (5.2%):
Intertape Polymer Group, Inc., 7.00%, 10/15/26, Callable 10/15/21 @ 103.5 (d)		670,000		661,625
Plastipak Holdings, Inc., 6.25%, 10/15/25, Callable 10/15/20 @ 103.13 (d)		330,000		295,155
Reynolds Group Issuer, Inc., 5.75%, 10/15/20, Callable 2/7/19 @ 100		193,822		193,316
Titan Acquisition Ltd. / Titan Co-Borrower LLC, 7.75%, 4/15/26, Callable 4/15/21 @ 103.88 (d)		500,000		430,550
				1,580,646
Total Corporate Bonds (Cost $22,012,235)				20,548,348

See notes to financial statements.

Victory Variable Insurance Funds
Victory High Yield VIP Series

Schedule of Portfolio Investments — continued
December 31, 2018

Security Description	Shares		Value
Collateral for Securities Loaned^ (12.5%)
BlackRock Liquidity Funds TempFund Portfolio, Institutional Class, 2.49% (e)		734,926	$	734,926
Fidelity Investments Money Market Government Portfolio, Class I, 2.28% (e)		1,061,934		1,061,934
Fidelity Investments Prime Money Market Portfolio, Class I, 2.46% (e)		32,793		32,793
Goldman Sachs Financial Square Prime Obligations Fund, Institutional Class, 2.55% (e)		408,297		408,297
JPMorgan Prime Money Market Fund, Capital Class, 2.49% (e)		653,235		653,235
Morgan Stanley Institutional Liquidity Prime Portfolio, Institutional Class, 2.58% (e)		979,913		979,913
Total Collateral for Securities Loaned (Cost $3,871,098)				3,871,098
Total Investments (Cost $36,179,851) — 110.6%				34,185,917
Liabilities in excess of other assets — (10.6)%				(3,267,682	)
NET ASSETS — 100.00%			$	30,918,235

^ Purchased with cash collateral from securities on loan.

(a) Non-income producing security.

(b) Variable or Floating-Rate Security. Rate disclosed is as of December 31, 2018.

(d) Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid based upon procedures approved by the Board of Trustees. As of December 31, 2018, the fair value of these securities was $14,349,445 and amounted to 46.6% of net assets.

(e) Rate disclosed is the daily yield on December 31, 2018.

bps — Basis points

LIBOR — London InterBank Offered Rate

LIBOR01M — 1 Month US Dollar LIBOR, rate disclosed as of December 31, 2018, based on the last reset date of the security

LIBOR03M — 3 Month US Dollar LIBOR, rate disclosed as of December 31, 2018, based on the last reset date of the security

LIBOR06M — 6 Month US Dollar LIBOR, rate disclosed as of December 31, 2018, based on the last reset date of the security

LLC — Limited Liability Company

LP — Limited Partnership

PLC — Public Limited Company

See notes to financial statements.

Victory Variable Insurance Funds

Statement of Assets and Liabilities
December 31, 2018

	Victory High Yield VIP Series
ASSETS:
Investments, at value (Cost $36,179,851)	$	34,185,917	(a)
Cash and cash equivalents		175,369
Interest and dividends receivable		493,788
Receivable for capital shares issued		36
Receivable for investments sold		2,326
Total Assets		34,857,436
LIABILITIES:
Payables:
Collateral received on loaned securities		3,871,098
Capital shares redeemed		19,952
Accrued expenses and other payables:
Investment advisory fees		16,120
Administration fees		1,647
Custodian fees		2,781
Transfer agent fees		3,700
Chief Compliance Officer fees		62
Trustees' fees		31
Other accrued expenses		23,810
Total Liabilities		3,939,201
NET ASSETS:
Capital		34,354,997
Total distributable earnings/(loss)		(3,436,762	)
Net Assets	$	30,918,235
Shares Outstanding (unlimited shares authorized, with a par value of $0.001 per share):		4,522,777
Net asset value:	$	6.84

(a) Includes $3,699,274 of securities on loan.

See notes to financial statements.

Victory Variable Insurance Funds

Statement of Operations
For the Year Ended December 31, 2018

	Victory High Yield VIP Series
Investment Income:
Dividend	$	15,070
Interest		2,450,163
Securities lending (net of fees)		57,424
Total Income		2,522,657
Expenses:
Investment advisory fees		209,946
Administration fees		20,931
Custodian fees		10,163
Transfer agent fees		7,566
Trustees' fees		3,311
Chief Compliance Officer fees		301
Legal and audit fees		18,638
Other expenses		19,330
Total Expenses		290,186
Net Investment Income (Loss)		2,232,471
Realized/Unrealized Gains (Losses) from Investment Transactions:
Net realized gains (losses) from investment transactions		356,829
Net change in unrealized appreciation/depreciation on investments		(2,369,605	)
Net realized/unrealized losses on investments		(2,012,776	)
Change in net assets resulting from operations	$	219,695

See notes to financial statements.

Victory Variable Insurance Funds

Statements of Changes in Net Assets

	Victory High Yield VIP Series
	Year Ended December 31, 2018			Year Ended December 31, 2017
From Investment Activities:
Operations:
Net investment income (loss)	$	2,232,471		$	2,315,794
Net realized gains (losses) from investment transactions		356,829			573,774
Net change in unrealized appreciation/depreciation on investments		(2,369,605	)		757,766
Change in net assets resulting from operations		219,695			3,647,334
Distributions to Shareholders: (a)
Change in net assets resulting from distributions to shareholders		(179,666	)		(2,204,964	)
Change in net assets resulting from capital transactions		(6,521,715	)		(2,884,746	)
Change in net assets		(6,481,686	)		(1,442,376	)
Net Assets:
Beginning of period		37,399,921			38,842,297
End of period	$	30,918,235		$	37,399,921
Capital Transactions:
Proceeds from shares issued	$	1,232,848		$	2,746,992
Distributions reinvested		179,666			2,204,964
Cost of shares redeemed		(7,934,229	)		(7,836,702	)
Change in net assets resulting from capital transactions	$	(6,521,715	)	$	(2,884,746	)
Share Transactions:
Issued		176,340			394,480
Reinvested		26,344			321,893
Redeemed		(1,133,739	)		(1,121,744	)
Change in Shares		(931,055	)		(405,371	)

(a) Current and prior year distributions to shareholders have been reclassified and conform to amended GAAP presentation under Regulation S-X (See Item 10 in the Notes to Financial Statements).

See notes to financial statements.

Victory Variable Insurance Funds

Financial Highlights

For a Share Outstanding Throughout Each Period

	Victory High Yield VIP Series
	Year Ended December 31, 2018			Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014
Net Asset Value, Beginning of Period	$	6.86		$	6.63		$	6.13		$	6.90		$	7.70
Investment Activities:
Net investment income (loss)		0.45	(a)		0.42	(a)		0.41	(a)		0.43	(a)		0.50
Net realized and unrealized gains (losses) on investments		(0.43	)		0.24			0.53			(0.75	)		(0.56	)
Total from Investment Activities		0.02			0.66			0.94			(0.32	)		(0.06	)
Distributions to Shareholders:
Net investment income		(0.04	)		(0.43	)		(0.45	)		(0.44	)		(0.53	)
Net realized gains from investments		—			—			—			—			(0.21	)
Return of Capital		—			—			—			(0.01	)		—
Total Distributions to Shareholders		(0.04	)		(0.43	)		(0.45	)		(0.45	)		(0.74	)
Capital Contributions from Prior Custodian, Net (See Note 8)		—			—			0.01			—			—
Net Asset Value, End of Period	$	6.84		$	6.86		$	6.63		$	6.13		$	6.90
Total Return (b)		0.29	%		9.94	%		15.44	%(c)		(4.58	)%		(0.84	)%
Ratios/Supplemental Data:
Net Assets at end of period (000)	$	30,918		$	37,411		$	38,842		$	38,503		$	44,533
Ratio of net expenses to average net assets		0.83	%		0.79	%		0.87	%		0.89	%		0.82	%
Ratio of net investment income (loss) to average net assets		6.38	%		6.02	%		6.31	%		6.15	%		5.68	%
Ratio of gross expenses to average net assets		0.83	%		0.79	%		0.87	%(d)		0.89	%		0.82	%
Portfolio turnover		94	%		173	%		159	%		148	%		212	%

(a) Per share net investment income (loss) has been calculated using the average daily shares method.

(b) Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance & Annuity Company, Inc's variable contracts. Inclusion of such charges would reduce the total returns for all periods shown.

(c) The Fund received monies related to a nonrecurring refund from the prior Custodian. The corresponding impact to the total return was less than 0.15% for the period shown. (See Note 8)

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

See notes to financial statements.

Victory Variable Insurance Funds

Notes to Financial Statements
December 31, 2018

1. Organization:

The accompanying financial statements are those of the Victory High Yield VIP Series (the "Fund"). The Fund offers a single class of shares: Class I Shares. Sales of shares of the Fund may only be made to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. ("GIAC") that fund certain variable annuity and variable life insurance contracts issued by GIAC. GIAC is a wholly owned subsidiary of The Guardian Life Insurance Company of America ("Guardian Life").

2. Significant Accounting Policies:

Investment Valuation:

• 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)

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

	LEVEL 1 — Quoted Prices		LEVEL 2 — Other Significant Observable Inputs		Total
	Investments in Securities		Investments in Securities		Investments in Securities
Common Stocks	$	636,750	$	—	$	636,750
Senior Secured Loans		—		9,129,721		9,129,721
Corporate Bonds		—		20,548,348		20,548,348
Collateral for Securities Loaned		3,871,098		—		3,871,098
Total	$	4,507,848	$	29,678,069	$	34,185,917

For the year ended December 31, 2018, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

Securities Purchased on a When-Issued Basis:

The Fund may purchase securities on a when-issued basis. When-issued securities are securities purchased for delivery beyond normal settlement periods at a stated price and/or yield, thereby involving the risk that the price and/or yield obtained may be more or less than those available in the market when delivery takes place. At the time the Fund makes the commitment to purchase a security on a when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. No interest accrues to the Fund until the transaction settles and payment takes place. Normally, the settlement date occurs within one month of the purchase. A segregated account is established and the Fund maintains cash and/or marketable securities at least equal in value to commitments for when-issued securities. Values of when issued securities are included in "Payable for investments purchased" on the accompanying Statement of Assets and Liabilities. As of December 31, 2018, the Fund had no outstanding when-issued purchase commitments.

Loans:

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

Below Investment Grade Securities:

Investment Companies:

Investment Transactions and Related Income:

Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on trade date on the last business day of the reporting period. Interest income is recognized on an accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. 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.

Securities Lending:

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

Gross Amount of Recognized Assets (Value of		Value of Cash		Value of Non-cash Collateral Received by Maturity
Securities on Loan)		Collateral Received		<30 Days		Between 30 & 90 days		>90 Days		Net Amount
$	3,699,274	$	3,871,098	$	—	$	—	$	—	$	171,824

Dividends to Shareholders:

Dividends from net investment income, if any, are declared and paid annually by the Fund. Distributable net realized gains, if any, are declared and distributed at least annually.

The amounts of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in nature (e.g., net operating loss, distribution reclassification, and deemed distribution due to shareholder redemptions), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) 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 on the accompanying Statement of Assets and Liabilities.

As of December 31, 2018, on the Statement of Assets and Liabilities, there were no permanent book-to-tax differences, reclassification adjustments.

Federal Income Taxes:

Allocations:

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

Affiliated Securities Transactions:

3. Purchases and Sales of Securities:

Purchases and sales of securities (excluding securities maturing less than one year from acquisition) for the year ended December 31, 2018 were as follows for the Fund:

Purchases				Sales
$	31,734,330			$	34,779,665

For the year ended December 31, 2018, there were no purchases or sales of U.S. Government Securities.

4. Fees and Transactions with Affiliates and Related Parties:

VCM has entered into a Sub-Advisory Agreement with Park Avenue Institutional Advisers LLC ("Park Avenue") with respect to the Fund. Park Avenue is responsible for providing day-to-day investment advisory services to the Fund, subject to the oversight of the Board of Trustees of the Trust. Sub-investment advisory fees, which are paid by VCM to Park Avenue, and do not represent a separate or additional expense to the Fund.

Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive 0.60% 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.

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

Shearman & Sterling LLP provides legal services to the Trust.

The Adviser has entered into an expense limitation agreement with the Fund until at least April 30, 2019. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by certain classes of the Fund in any fiscal year exceed the expense limit for such classes of the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of a Fund's business are excluded from the expense limits. For the year ended December 31, 2018, the expense limit (excluding voluntary waivers) is 0.89%.

The Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three fiscal years after such waiver or reimbursement was made to the extent such payments or repayments would not cause the expenses of a class to exceed the original expense limitation in place at the time of the waiver or reimbursement or any expense limitation agreement in place at the time of repayment. As of December 31, 2018, the following amounts are available to be repaid to the Adviser. Amounts repaid to the Adviser during the year ended, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".

				Expires 12/31/2019
				$	29

Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Fund Accountant, Sub-Administrator, Sub-Fund Accountant, and Legal.

5. Risks:

The Fund may be subject to other risks in addition to these identified risks.

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

may rise or the rate of inflation may increase, impacting the value of investments in fixed income securities. A debt issuers' credit quality may be downgraded or an issuer may default. Interest rates may fluctuate due to changes in governmental fiscal policy initiatives and resulting market reaction to those initiatives.

6. Borrowing and Interfund Lending:

Line of Credit:

The Fund did not utilize or participate in the Line of Credit during the year ended December 31, 2018.

Interfund Lending:

The Fund did not utilize or participate in the Facility during the year ended December 31, 2018.

7. Federal Income Tax Information:

Year Ended December 31, 2018
Distributions paid from
Ordinary Income		Net Long-Term Capital Gains		Total Distributions Paid
$	179,666	$	—	$	179,666
Year Ended December 31, 2017
Distributions paid from
Ordinary Income		Net Long-Term Capital Gains		Total Distributions Paid
$	2,204,964	$	—	$	2,204,964

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

As of the tax year ended December 31, 2018, the components of accumulated earnings (deficit) on a tax basis were as follows:

Undistributed Ordinary Income				Undistributed Long-Term Capital Gains				Accumulated Earnings				Accumulated Capital and Other Losses				Unrealized Appreciation (Depreciation)*				Total Accumulated Earnings (Deficit)
$	2,209,103			$	—			$	2,209,103			$	(3,651,790	)		$	(1,994,075	)		$	(3,436,762	)

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

As of the tax year ended December 31, 2018, the Fund has short term and long term capital loss carryforwards of $1,034,189 and $2,617,601 respectively that are not subject to expiration.

During the tax year ended December 31, 2018, the Fund utilized $349,395 of capital loss carryforwards.

Cost of Investments for Federal Tax Purposes				Gross Unrealized Appreciation				Gross Unrealized Depreciation				Net Unrealized Appreciation (Depreciation)
$	36,179,992			$	957,862			$	(2,951,937	)		$	(1,994,075	)

8. Capital Contribution from Prior Custodian:

During 2016, the Fund received notification from the Fund's prior custodian, State Street Bank and Trust ("State Street"), concerning issues related to billing on certain categories of expenses during the approximately 16-year period from 1998 through October 31, 2014. The over-billing primarily related to categories of expenses that involved an allocation of general costs among multiple clients.

State Street paid the refunded amounts during January 2017. Based on billing information received during 2016 from State Street and an analysis of any expense limitation agreements that were in place during the period of the activities in question, including the application of any recoupment provisions in such agreements, the Adviser received a portion of the refund.

The portion of the refund retained by the Fund was accounted for as a capital contribution and is reflected on the Financial Highlights as "Capital Contribution from Prior Custodian, Net".

9. Fund Ownership:

Shareholder				Percent
GIAC					100.0	%

10. Recent Accounting Pronouncements:

Victory Variable Insurance Funds

Notes to Financial Statements — continued
December 31, 2018

2018. Form N-CEN will replace Form N-SAR filings. The Fund's adoption of these amendments have no effect on the Fund's net assets or results of operations.

In March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-08 "Premium Amortization on Purchased Callable Debt Securities" ("ASU 2017-08"), which shortens the premium amortization period for purchased non-contingently callable debt securities. ASU 2017-08 specifies that the premium amortization period ends at the earliest call date, for purchased non-contingently callable debt securities. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management does not believe that adoption of ASU 2017-08 will materially impact the Fund's financial statements.

Distributions to Shareholders:

From net investment income:				$	(2,204,964	)
From net Realized Gains:					—

11. Subsequent Events:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Trustees of Victory High Yield VIP Series

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Victory High Yield VIP Series (the "Fund") (one of the funds constituting the Victory Variable Insurance Funds (the "Trust")), including the portfolio of investments, as of December 31, 2018, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the three years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting the Trust) at December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the three years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

We have served as the auditor of one or more Victory Capital's investment companies since 1995.

Cincinnati, Ohio
February 15, 2019

Victory Variable Insurance Funds

Supplemental Information
December 31, 2018

(Unaudited)

Trustee and Officer Information

Board of Trustees:

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, 67

Trustee

February 2005

Consultant (since 2006).

Chair and Trustee, Turner Funds (December 2016-December 2017).

Nigel D.T. Andrews, 71

Vice Chair and Trustee

August 2002

Retired.

Director, TCG BDC II, Inc. (since 2017); Director, TCG BDC I, Inc. (formerly Carlyle GMS Finance, Inc.) (since 2012); Director, Old Mutual US Asset Management (2002-2014).

E. Lee Beard, 67*

Trustee

February 2005

Retired (since 2015); Consultant, The Henlee Group, LLC (consulting) (2005-2015).

None.

Dennis M. Bushe, 75

Trustee

July 2016

Retired.

Trustee, RS Investment Trust and RS Variable Products Trust (November 2011-July 2016).

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(Unaudited)

Name and Age

Position
Held with
the Trust

Date
Commenced
Service

Principal Occupation
During Past 5 Years

Other
Directorships
Held During
Past 5 Years

Sally M. Dungan, 64

Trustee

February 2011

Chief Investment Officer, Tufts University (since 2002).

None.

John L. Kelly, 65

Trustee

February 2015

Director, Caledonia Mining Corporation (since May 2012).

David L. Meyer, 61*

Trustee

December 2008

Retired.

None.

Gloria S. Nelund, 57

Trustee

July 2016

Chair, CEO and Co-Founder of TriLinc Global, LLC, an investment firm.

TriLinc Global Impact Fund, LLC (since 2012); Trustee, RS Investment Trust and RS Variable Products Trust (November 2007-July 2016).

Leigh A. Wilson, 74

Chair and Trustee

February 1998

Private Investor.

Chair (since 2013), Caledonia Mining Corporation.

Interested Trustee.

David C. Brown, 46**

Trustee

May 2008

Chairman and Chief Executive Officer (since 2013), Co-Chief Executive Officer (2011- 2013), the Adviser; Chairman and Chief Executive Officer, Victory Capital Holdings, Inc. (since 2013).

None.

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

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

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

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(Unaudited)

Officers:

Name and Age

Position with
the Trust

Date
Commenced
Service

Principal Occupation During Past 5 Years

Christopher K. Dyer, 57

President

February 2006*

Director of Mutual Fund Administration, the Adviser.

Scott A. Stahorsky, 49

Vice President

December 2014

Manager, Fund Administration, the Adviser (since 2015); Senior Analyst, Fund Administration, the Adviser (prior to 2015).

Erin G. Wagner, 45

Secretary

December 2014

Associate General Counsel, the Adviser (since 2013).

Allan Shaer, 53

Treasurer

May 2017

Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc. (since 2016); Vice President, Mutual Fund Administration, JP Morgan Chase (2011-2016).

Christopher A. Ponte, 34

Assistant Treasurer

December 2017

Manager, Fund Administration, the Adviser (since 2017); Senior Analyst, Fund Administration, the Adviser (prior to 2017); Chief Financial Officer, Victory Capital Advisers, Inc. (since 2018).

Colin Kinney, 45

Chief Compliance Officer

July 2017

Chief Compliance Officer (since 2013) and Chief Risk Officer (2009-2017), the Adviser.

Chuck Booth, 58

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, 65

Assistant Secretary

February 1998

Partner, Shearman & Sterling LLP (since 2018); Partner, Morrison & Foerster LLP (2011-2017).

* On December 3, 2014, Mr. Dyer resigned as Secretary of the Trust and accepted the position of President.

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(Unaudited)

Proxy Voting and Form N-Q Information

Proxy Voting:

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 Portfolio Investments:

Expense Examples

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2018 through December 31, 2018.

Beginning Account Value 7/1/18				Actual Ending Account Value 12/31/18				Hypothetical Ending Account Value 12/31/18				Actual Expenses Paid During Period 7/1/18-12/31/18*				Hypothetical Expenses Paid During Period 7/1/18-12/31/18*				Annualized Expense Ratio During Period 7/1/18-12/31/18
$	1,000.00			$	987.10			$	1,020.92			$	4.26			$	4.33				0.85	%

Victory Variable Insurance Funds

Supplemental Information — continued
December 31, 2018

(Unaudited)

Additional Federal Income Tax Information

For the year ended December 31, 2018, the Fund paid qualified dividend income for purposes of reduced individual federal income tax rates of 1%.

Dividends qualifying for corporate dividends received a deduction of 1%.