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Report of Independent Accountants
To the Trustees of the Victory Variable Insurance Funds
We have examined management's assertion about the Victory Variable Insurance
Funds' (comprising the Victory Variable Insurance Investment Quality Bond Fund,
the Victory Variable Insurance Diversified Stock Fund, and the Victory Variable
Insurance Small Company Opportunity Fund) compliance with the requirements of
subsections (b) and (c) of Rule 17f-2 under the Investment Company Act of 1940
as of December 31, 1999, included in the accompanying Management Statement
Regarding Compliance with Certain Provisions of the Investment Company Act of
1940. Management is responsible for the Victory Variable Insurance Funds'
compliance with those requirements. Our responsibility is to express an opinion
on management's assertion about the Victory Variable Insurance Funds' compliance
based on our examination.
Our examination was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants and,
accordingly, included examining, on a test basis, evidence about the Victory
Variable Insurance Funds' compliance with those requirements and performing such
other procedures as we considered necessary in the circumstances. Included among
our procedures were the following tests performed as of December 31, 1999 with
respect to the securities of the Victory Variable Insurance Funds:
. Confirmation, or other procedures as we considered necessary, of all
securities by the Federal Reserve Bank of Cleveland, Depository Trust
Company, or Bank of New York;
. Confirmation, or other procedures as we considered necessary, of all
securities out for transfer with brokers; and
. Reconciliation of all such securities to the books and records of the
Funds and Key Trust Company of Ohio, N.A. in Cleveland, Ohio.
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Victory Variable
Insurance Funds' compliance with specified requirements.
In our opinion, management's assertion that the Victory Variable Insurance Funds
were in compliance with the requirements of subsections (b) and (c) of Rule
17f-2 of the Investment Company Act of 1940 as of December 31, 1999 with respect
to securities reflected in the
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investment account of the Victory Variable Insurance Funds is fairly stated, in
all material respects.
This report is intended solely for the information and use of the Victory
Variable Insurance Funds, and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other than these specified
parties.
/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
February 15, 2000
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Management Statement Regarding Compliance With Certain Provisions
of the Investment Company Act of 1940
We, as members of management of Victory Variable Insurance Funds (comprising the
Victory Variable Insurance Investment Quality Bond Fund, the Victory Variable
Insurance Diversified Stock Fund, and the Victory Variable Insurance Small
Company Opportunity Fund) are responsible for complying with the requirements
of subsections (b) and (c) of Rule 17f-2, "Custody of Investments by Registered
Management Companies," of the Investment Company Act of 1940. We are also
responsible for establishing and maintaining effective internal controls over
compliance with those requirements. We have performed an evaluation of Victory
Variable Insurance Funds' compliance with the requirements of subsections (b)
and (c) of Rule 17f-2 as of December 31, 1999. Based on this evaluation, we
assert that Victory Variable Insurance Funds were in compliance with the
provisions of subsections (b) and (c) of Rule 17f-2 of the Investment Company
Act of 1940 as of December 31, 1999, with respect to securities reflected in the
investment accounts of Victory Variable Insurance Funds.
Victory Variable Insurance Funds
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