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<PAGE> PAGE 2
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<PAGE> PAGE 12
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<PAGE> PAGE 15
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SIGNATURE BARBARA ROGERS
TITLE SUPERVISOR
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<CIK> 0000927290
<NAME> BB&T MUTUAL FUND GROUP
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<NAME> GROWTH & INCOME VARIABLE INSURANCE FUND
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<REALIZED-GAINS-CURRENT> (20598)
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</TABLE>
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<NAME> VARIABLE INSURANCE FUNDS
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</TABLE>
Report of Independent Accountants
To the Shareholders and Trustees of
The BB&T Growth & Income Fund
We have audited the accompanying statement of assets and
liabilities of the BB&T Growth & Income Fund including the
schedule of investments as of December 31, 1997, and the
related statements of operations and changes in net assets,
and the financial highlights for the period from June 3, 1997
through December 31, 1997. These financial statements and
financial highlights are the responsibility of the BB&T
Growth & Income Fund's management. Our responsibility is
to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1997 by correspondence with
the custodian and brokers or other auditing procedures where
confirmations from brokers were not received. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of the BB&T Growth & Income
Fund as of December 31, 1997, and the results of operations,
the changes in net assets and the financial highlights for the
period referred to above in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
February 6, 1998
Report of Independent Accountants
To the Shareholders and Trustees of
The AmSouth Equity Income Fund
We have audited the accompanying statement of assets and
liabilities of the AmSouth Equity Income Fund including the
schedule of investments as of December 31, 1997, and the
related statements of operations and changes in net assets,
and the financial highlights for the period from October 23,
1997 through December 31, 1997. These financial statements
and financial highlights are the responsibility of the AmSouth
Equity Income Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation
and verification by examination of securities owned as of
December 31, 1997 by correspondence with the custodian and
brokers or other auditing procedures where confirmations from
brokers were not received. An audit also includes assessing
the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of the AmSouth Equity Income
Fund as of December 31, 1997, and the results of operations,
the changes in net assets and the financial highlights for the
period referred to above in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
February 6, 1998
