VARIABLE INSURANCE FUNDS, 497, 2000-05-05

VARIABLE INSURANCE FUNDS
497, 2000-05-05

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AmSouth Equity Income Fund

Variable Insurance Funds
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-451-8382

The AmSouth Equity Income Fund seeks to provide above average income and capital
appreciation by investing primarily in income-producing equity securities. The
Fund's goals and investment program are described in more detail inside. AmSouth
Bank ("AmSouth") serves as the Fund's investment adviser, and Rockhaven Asset
Management, LLC ("Rockhaven") serves as the investment sub-adviser of the Fund.

The Fund sells its shares to insurance company separate accounts, so that the
Fund may serve as an investment option under variable life insurance policies
and variable annuity contracts issued by insurance companies. The Fund also may
sell its shares to certain other investors, such as qualified pension and
retirement plans, insurance companies, AmSouth, and Rockhaven.

This prospectus should be read in conjunction with the separate account's
prospectus describing the variable insurance contract. Please read both
prospectuses and retain them for future reference.

The Securities and Exchange Commission has not approved the Fund's shares or
determined whether this prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.

The date of this prospectus is May 1, 2000.

TABLE OF CONTENTS

RISK/RETURN SUMMARY AND FUND EXPENSES MANAGEMENT OF THE FUND
Investment Objective Investment Advisor and Sub-Adviser
Principal Investment Strategies Administrator and Distributor
Principal Investment Risks Servicing Agents
Fund Performance TAXATION
FINANCIAL HIGHLIGHTS GENERAL INFORMATION
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS Description of the Trust and Its Shares
VALUATION OF SHARES Similar Fund Performance Information
PURCHASING AND REDEEMING SHARES Prior Performance of Portfolio Manager
Miscellaneous
</TABLE>

<PAGE>

RISK/RETURN SUMMARY AND FUND EXPENSES

Investment Objective

The Fund seeks to provide above average income and capital appreciation.

Principal Investment Strategies

Under normal market conditions, the Fund will invest at least 65% of its total
assets in income producing equity securities, including common stock, preferred
stock and securities convertible into common stocks, such as convertible bonds
and convertible preferred stocks.

Principal Investment Risks

An investment in the Fund entails investment risk, including possible loss of
the principal amount invested. The Fund is subject to market risk, which is the
risk that the market value of a portfolio security may move up and down,
sometimes rapidly and unpredictably. This risk may be greatest for the Fund's
investments in equity securities. The Fund also is subject to interest rate
risk, which is the risk that changes in interest rates will affect the value of
the Fund's investments. In particular, the Fund's investments in fixed income
securities generally will change in value inversely with changes in interest
rates. Also, an investment by the Fund in fixed income securities generally will
expose the Fund to credit risk, which is the risk that the issuer of a security
will default or not be able to meet its financial obligations. This risk may be
greater with respect to the Fund's investments in lower rated securities.

An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.

Fund Performance

The following chart and table show how the Fund has performed. The chart
demonstrates how the Fund's performance varies from year to year, and the table
compares the Fund's performance to that of the S&P 500(R) Index, a widely
recognized, unmanaged index of common stocks. The information does not reflect
charges and fees associated with a separate account that invests in the Fund or
any insurance contract for which the Fund is an investment option. These charges
and fees will reduce returns. Investors should be aware that past performance
does not indicate how the Fund will perform in the future.

<PAGE>

Calendar Year Total Returns*

[Bar Chart] 12.36% 25.00%
1998 1999
Best Quarter: 19.65% 12/31/99
Worst Quarter: -4.61% 9/30/99

Average Annual Total Return* (for the periods ended December 31, 1999)

Since Inception
Past Year (October 23, 1997)
Fund 25.00% 18.14%
S&P 500(R) Index* 21.03% 23.74%

- ------------------
* Assumes reinvestment of dividends and distributions.

<PAGE>

FINANCIAL HIGHLIGHTS

The following table is included to assist investors in evaluating the financial
performance of the Fund since its commencement of operations through December
31, 1999. Certain information reflects financial results of a single share.
"Total Return" represents how much an investment in the Fund would have earned
(or lost) during each period. This information has been audited by
PricewaterhouseCoopers LLP, the Fund's independent auditors, whose report on the
Fund's financial statements, along with the Fund's financial statements, are
included in the Fund's annual report, which may be obtained without charge upon
request.
<TABLE>
<S> <C> <C> <C> p

Year ended December 31, October 23, 1997 through
For a share outstanding throughout the period: 1999 1998 December 31, 1997 (a)
- --------------------------------------------- --------------------------------------------------------------------------

Net Asset Value, Beginning of Period $ 11.26 $ 10.23 $ 10.00
------------------------ ----------------------- ----------------------------

Income From Investment Operations:
Net investment income 0.15 0.22 0.03
Net gains or losses on securities (realized 2.64 1.03 0.23
and unrealized)
------------------------ ----------------------- ----------------------------

Total from investment operations 2.79 1.25 0.26
------------------------ ----------------------- ----------------------------

Less Distributions:
Dividends (from net investment income) (0.16) (0.22) (0.03)
------------------------ ----------------------- ----------------------------

Total distributions (0.16) (0.22) (0.03)
------------------------ ----------------------- ----------------------------

Net Asset Value, End of Period $ 13.89 $ 11.26 $ 10.23
======================== ======================= ============================

Total Return 25.00% 12.36% 2.27%(b)

Ratios/Supplementary Data:
Net assets, end of period (000's) $ 35,554 $ 22,543 $ 2,387
Ratio of expenses to average net assets 1.22% 1.14% 1.22%(c)
Ratio of net income to average net assets 1.31% 2.13% 2.39%(c)
Ratio of expenses to average net assets* 1.37% 1.53% 7.26%(c)
Ratio of net income to average net assets* 1.16% 1.74% (3.65)%(c)
Portfolio turnover rate 110.31% 120.83% 4.00%

</TABLE>

- -------------------------------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
* During the period, certain fees were reimbursed and voluntarily reduced. If
such reimbursements and voluntary fee reductions had not occurred, the
ratios would have been as indicated.

<PAGE>

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

Investors should be aware that the investments made by the Fund at any given
time are not expected to be the same as those made by other mutual funds for
which AmSouth acts as investment adviser, including mutual funds with names,
investment objectives and policies similar to the Fund. Investors should
carefully consider their investment goals and willingness to tolerate investment
risk before allocating their investment to the Fund.

The Fund seeks to provide above average income and capital appreciation. The
Fund's stock selection emphasizes those common stocks in each sector that have
good value, attractive yield, and dividend growth potential. The Fund also
utilizes convertible securities, which typically offer higher yields and good
potential for capital appreciation. The portion of the Fund's total assets
invested in common stock, preferred stock, and convertible securities varies
according to Rockhaven's assessment of market and economic conditions and
outlook. Most companies in which the Fund invests are listed on national
securities exchanges.

Rockhaven seeks to invest in equity securities which are believed to represent
investment value. Factors which may be considered in selecting equity securities
include industry and company fundamentals, historical price relationships,
and/or underlying asset value.

The Fund may invest in companies of any size, although most equities purchased
will be issued by companies whose market capitalizations are large relative to
the entirety of the U.S. securities markets, but not as large as many of the
securities represented in such broad market indexes as the S&P 500(R) Index.

The Fund has the flexibility to make portfolio investments and engage in other
investment techniques that are different than its principal strategies mentioned
here. More information on the Fund's investment strategies may be found in its
most recent annual/semi-annual report and in the Statement of Additional
Information (see back cover).

The Fund's investment strategies may subject it to a number of risks, including
the following.

Market Risk

Although equities historically have outperformed other asset classes over the
long term, their prices tend to fluctuate more dramatically over the shorter
term. These movements may result from factors affecting individual companies, or
from broader influences like changes in interest rates, market conditions,
investor confidence or announcements of economic, political or financial
information. While potentially offering greater opportunities for capital growth
than larger, more established companies, the equities of smaller companies may
be particularly volatile, especially during periods of economic uncertainty.
These companies may face less certain growth prospects, or depend heavily on a
limited line of products and services or the efforts of a small number of key
management personnel.

<PAGE>

The Fund may invest in equities issued by foreign companies. The equities of
foreign companies may pose risks in addition to, or to a greater degree than,
the risks described above. Foreign companies may be subject to disclosure,
accounting, auditing and financial reporting standards and practices that are
different from those to which U.S. issuers are subject. Accordingly, the Fund
may not have access to adequate or reliable company information. In addition,
political, economic and social developments in foreign countries and
fluctuations in currency exchange rates may affect the operations of foreign
companies or the value of their securities.

Rockhaven tries to manage market risk by primarily investing in relatively large
capitalization "value" equities of U.S. issuers. Equities of larger companies
tend to be less volatile than those of smaller companies, and value equities in
theory limit downside risk because they are underpriced. Of course, Rockhaven's
success in moderating market risk cannot be assured. In addition, the Fund may
produce more modest gains than equity funds with more aggressive investment
profiles.

Interest Rate Risk

The Fund may invest in debt securities and other types of fixed income
securities, such as convertible preferred stock and convertible bonds and
debentures. Generally, the value of these securities will change inversely with
changes in interest rates. In addition, changes in interest rates may affect the
operations of the issuers of stocks in which the Fund invests. Rising interest
rates, which may be expected to lower the value of fixed income instruments and
negatively impact the operations of many issuers, generally exist during periods
of inflation or strong economic growth.

Credit Risk

The Fund's investments, and particularly investments in convertible securities
and debt securities, may be affected by the creditworthiness of issuers in which
the Fund invests. Changes in the financial strength, or perceived financial
strength, of a company may affect the value of its securities and, therefore,
impact the value of the Fund's shares.

The Fund may invest in lower rated convertible securities and debt obligations,
including convertible securities that are not "investment grade", which are
commonly referred to as "junk bonds". To a greater extent than more highly rated
securities, lower rated securities tend to reflect short-term corporate,
economic and market developments, as well as investor perceptions of the
issuer's credit quality. Lower rated securities may be especially susceptible to
real or perceived adverse economic and competitive industry conditions. In
addition, lower rated securities may be less liquid than higher quality
investments. Reduced liquidity may prevent the Fund from selling a security at
the time and price that would be most beneficial to the Fund.

<PAGE>

Rockhaven attempts to reduce the credit risk associated with lower rated
securities through diversification of the Fund's portfolio, credit analysis of
each issuer in which the Fund invests, and monitoring broad economic trends and
corporate and legislative developments. However, there is no assurance that
Rockhaven will successfully or completely reduce credit risk.

Temporary Investments

Rockhaven may temporarily invest up to 100% of the Fund's assets in high
quality, short-term money market instruments if it believes adverse economic or
market conditions, such as excessive volatility or sharp market declines,
justify taking a defensive investment posture. If the Fund attempts to limit
investment risk by temporarily taking a defensive investment position, it may be
unable to pursue its investment objective during that time, and it may miss out
on some or all of an upswing in the securities markets.

Please see the Statement of Additional Information for more detailed information
about the Fund, its investment strategies, and its risks.

VALUATION OF SHARES

The Fund prices its shares on the basis of the net asset value of the Fund,
which is determined as of the close of the New York Stock Exchange ("NYSE")
(generally 4:00 p.m. Eastern Time) on each Business Day (other than a day on
which there are insufficient changes in the value of the Fund's portfolio
securities to materially affect the Fund's net asset value or a day on which no
shares are tendered for redemption and no order to purchase any shares is
received). A Business Day is a day on which the NYSE is open for trading.

Net asset value per share for purposes of pricing sales and redemptions is
calculated by dividing the value of all securities and other assets belonging to
the Fund, less the liabilities charged to the Fund and any liabilities allocable
to the Fund, by the number of the Fund's outstanding shares. The net asset value
per share of the Fund will fluctuate as the value of the investment portfolio of
the Fund changes.

The securities in the Fund will be valued at market value. If market quotations
are not available, the securities will be valued by a method which the Board of
Trustees of Variable Insurance Funds (the "Trust") believes accurately reflects
fair value. For further information about valuation of investments, see the
Statement of Additional Information.

PURCHASING AND REDEEMING SHARES

Shares of the Fund are available for purchase by insurance company separate
accounts to serve as an investment medium for variable insurance contracts, and
by qualified pension and retirement plans, certain insurance companies, AmSouth
and Rockhaven. Shares of the Fund are purchased or redeemed at the net asset
value per share next determined after receipt by the Fund's distributor (or
other agent) of a purchase order or redemption request. Transactions in shares
of the Fund will be effected only on a Business Day of the Fund.
<PAGE>

Payment for shares redeemed normally will be made within seven days. The Fund
intends to pay cash for all shares redeemed, but under abnormal conditions which
make payment in cash unwise, payment may be made wholly or partly in portfolio
securities at their then market value equal to the redemption price. A
shareholder may incur brokerage costs in converting such securities to cash.
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining investors.

Investors do not deal directly with the Fund to purchase or redeem shares.
Please refer to the prospectus for the separate account for information on the
allocation of premiums and on transfers of accumulated value among sub-accounts
of the separate account that invests in the Fund.

The Fund currently does not foresee any disadvantages to investors if the Fund
served as an investment medium for both variable annuity contracts and variable
life insurance policies. However, it is theoretically possible that the interest
of owners of annuity contracts and insurance policies for which the Fund served
as an investment medium might at some time be in conflict due to differences in
tax treatment or other considerations. The Board of Trustees and each
participating insurance company would be required to monitor events to identify
any material conflicts between variable annuity contract owners and variable
life insurance policy owners, and would have to determine what action, if any,
should be taken in the event of such a conflict. If such a conflict occurred, an
insurance company participating in the Fund might be required to redeem the
investment of one or more of its separate accounts from the Fund, which might
force the Fund to sell securities at disadvantageous prices.

The Fund reserves the right to discontinue offering shares at any time, or to
cease investment operations entirely. In such an event, any investments
allocated to the Fund will, subject to any necessary regulatory approvals, be
invested in another portfolio of the Trust deemed appropriate by the Board of
Trustees, or in another mutual fund.

MANAGEMENT OF THE FUND

Investment Adviser and Sub-Adviser

AmSouth

AmSouth Bank, 1901 Sixth Avenue North, Birmingham, Alabama 35203, is the
investment adviser of the Fund. AmSouth is the principal bank affiliate of
AmSouth Bancorporation, one of the largest banking institutions headquartered in
the mid-south region. AmSouth Bancorporation reported assets as of December 31,
1999 of $43.4 billion and operated more than 660 banking offices and 1,300 ATM
locations in Alabama, Florida, Georgia, Louisiana, Kentucky, Virginia and
Tennessee. AmSouth has provided investment management services through its Trust
Investment Department since 1915. As of December 31, 1999, AmSouth and its
affiliates had over $9 billion in assets under discretionary management. AmSouth
is the largest provider of trust services in Alabama, and its Trust Natural
Resources and Real Estate Department is a major manager of timberland, mineral,
oil and gas properties and other real estate interests.
<PAGE>

Subject to the general supervision of the Board of Trustees and in accordance
with the investment objective and restrictions of the Fund, AmSouth is
authorized to manage the Fund, make decisions with respect to and place orders
for all purchases and sales of its investment securities, and maintain its
records relating to such purchases and sales.

Under an investment advisory agreement between the Trust and AmSouth, the fee
payable to AmSouth by the Trust for investment advisory services is the lesser
of (a) a fee computed daily and paid monthly at the annual rate of 0.60% of the
Fund's daily net assets or (b) such fee as may from time to time be agreed upon
in writing by the Trust and AmSouth. For services provided and expenses assumed
during the fiscal year ended December 31, 1999, AmSouth received an investment
advisory fee equal to 0.51% of the Fund's average daily net assets, out of which
it paid a sub-advisory fee to Rockhaven equal to 0.31% of the Fund's average
daily net assets.

Rockhaven

Rockhaven serves as investment sub-adviser of the Fund in accordance with a
sub-advisory agreement with AmSouth. Rockhaven makes the day-to-day investment
decisions for the Fund and continuously reviews, supervises and administers the
Fund's investment program, subject to the general supervision of the Board of
Trustees and AmSouth, in accordance with the Fund's investment objective,
policies and restrictions. For its services and expenses assumed under the
sub-advisory agreement, Rockhaven is entitled to a fee payable by AmSouth, as
described above.

Rockhaven is 50% owned by AmSouth and 50% owned by Mr. Christopher H. Wiles.
Rockhaven was organized in 1997 to perform advisory services for investment
companies and has its principal offices at 100 First Avenue, Suite 1050,
Pittsburgh, Pennsylvania 15222.

Mr. Wiles is the portfolio manager for the Fund and, as such, has the primary
responsibility for the day-to-day portfolio management of the Fund. Mr. Wiles is
the President and Chief Investment Officer of Rockhaven. From May, 1991 to
January, 1997, he was portfolio manager of the Federated Equity Income Fund.

Administrator and Distributor

BISYS Fund Services Ohio, Inc. is the administrator for the Fund, and BISYS Fund
Services acts as the Fund's principal underwriter and distributor. The address
of each is 3435 Stelzer Road, Columbus, Ohio 43219-3035.

See the Statement of Additional Information for further information about the
Fund's service providers.
<PAGE>

Servicing Agents

The Trust has adopted a plan under which up to 0.25% of the Fund's average daily
net assets may be expended for support services to investors, such as
establishing and maintaining accounts and records, providing account
information, arranging for bank wires, responding to routine inquiries,
forwarding investor communications, assisting in the processing of purchase,
exchange and redemption requests, and assisting investors in changing account
designations and addresses. For expenses incurred and services provided, a
financial institution (or its affiliate) providing these services ("Servicing
Agent") may receive a fee from the Fund, computed daily and paid monthly, at an
annual rate of up to 0.25% of the average daily net assets of the Fund allocable
to variable insurance contracts owned by customers of the Servicing Agent. A
Servicing Agent may periodically waive all or a portion of its servicing fees
with respect to the Fund to increase the net income of the Fund available for
distribution as dividends.

TAXATION

The Fund intends to diversify its investments in a manner intended to comply
with tax requirements generally applicable to mutual funds. In addition, the
Fund will diversify its investments so that on the last day of each quarter of a
calendar year, no more than 55% of the value of its total assets is represented
by any one investment, no more than 70% is represented by any two investments,
no more than 80% is represented by any three investments, and no more than 90%
is represented by any four investments. For this purpose, securities of a single
issuer are treated as one investment and each U.S. Government agency or
instrumentality is treated as a separate issuer. Any security issued,
guaranteed, or insured (to the extent so guaranteed or insured) by the U.S.
Government or an agency or instrumentality of the U.S. Government is treated as
a security issued by the U.S. Government or its agency or instrumentality,
whichever is applicable.

If the Fund fails to meet this diversification requirement, income with respect
to variable insurance contracts invested in the Fund at any time during the
calendar quarter in which the failure occurred could become currently taxable to
the owners of the contracts. Similarly, income for prior periods with respect to
such contracts also could be taxable, most likely in the year of the failure to
achieve the required diversification. Other adverse tax consequences could also
ensue.

Since the shareholders of the Fund will be separate accounts, no discussion is
included here as to the federal income tax consequences at the shareholder
level. For information concerning the federal income tax consequences to
purchasers of the variable life insurance policies and variable annuity
contracts, see the prospectus for the relevant variable insurance contract. See
the Statement of Additional Information for more information on taxes.

GENERAL INFORMATION

Description of the Trust and Its Shares

Variable Insurance Funds was organized as a Massachusetts business trust in 1994
and currently consists of nine portfolios. The Board of Trustees of the Trust
may establish additional portfolios in the future. Under Massachusetts law,
shareholders could be held personally liable for the obligations of the Trust
under certain circumstances. However, the Trust's declaration of trust disclaims
liability of its shareholders and provides for indemnification out of Trust
property for all loss and expense of any shareholder held personally liable for
the obligations of the Trust. Accordingly, the risk of a shareholder incurring
financial loss on account of shareholder liability should be considered remote.
<PAGE>

Similar Fund Performance Information

The following table provides information concerning the historical total return
performance of the Trust Shares (formerly Premier Shares) class of the AmSouth
Equity Income Fund (the "Similar Fund"), a series of the AmSouth Mutual Funds.
The Similar Fund's investment objectives, policies and strategies are
substantially similar to those of the Fund, and it is currently managed by the
same portfolio manager. While the investment objectives, policies and risks of
the Similar Fund and the Fund are similar, they are not identical, and the
performance of the Similar Fund and the Fund will vary. The data is provided to
illustrate the past performance of AmSouth and Rockhaven in managing a
substantially similar investment portfolio and does not represent the past
performance of the Fund or the future performance of the Fund or its portfolio
manager. Consequently, potential investors should not consider this performance
data as an indication of the future performance of the Fund or of its portfolio
manager.

The performance data shown below reflects the operating expenses of the Similar
Fund, which are lower than the expenses of the Fund. Performance would have been
lower for the Similar Fund if the Fund's expenses were used. In addition, the
Similar Fund, unlike the Fund, is not sold to insurance company separate
accounts to fund variable insurance contracts. As a result, the performance
results presented below do not take into account charges or deductions against a
separate account or variable insurance contract for cost of insurance charges,
premium loads, administrative fees, maintenance fees, premium taxes, mortality
and expense risk charges, or other charges that may be incurred under a variable
insurance contract for which the Fund serves as an underlying investment
vehicle. By contrast, investors with contract value allocated to the Fund will
be subject to charges and expenses relating to variable insurance contracts and
separate accounts.

The Similar Fund's performance data shown below is calculated in accordance with
standards prescribed by the Securities and Exchange Commission for the
calculation of average annual total return information. The investment results
of the Similar Fund presented below are unaudited and are not intended to
predict or suggest results that might be experienced by the Similar Fund or the
Fund. Share prices and investment returns will fluctuate reflecting market
conditions, as well as changes in company-specific fundamentals of portfolio
securities. The performance data for the benchmark index identified below does
not reflect the fees or expenses of the Similar Fund or the Fund.

Average Annual Total Return for the Similar Fund and for Its Benchmark Index for
Periods Ended December 31, 1999

Since Inception
Similar Fund/Benchmark 1 Year (March 20, 1997)
- ---------------------- ------ ----------------
AmSouth Equity Income Fund 25.15% 20.70%
S&P 500(R) Index* 21.03% 29.16%
- -----------------
* The Standard & Poor's 500 Composite Stock Price Index is an unmanaged
index containing common stocks of 500 industrial, transportation,
utility and financial companies, regarded as generally representative
of the U.S. stock market. The Index reflects income and distributions,
if any, but does not reflect fees, brokerage commissions, or other
expenses of investing.
<PAGE>

Prior Performance of Portfolio Manager

From August 1, 1991 to January 31, 1997, Christopher Wiles, the portfolio
manager of the Fund, was the portfolio manager of the Federated Equity Income
Fund, which had investment objectives, policies and strategies that were
substantially similar to those of the Fund. The cumulative total return for the
Class A Shares of the Federated Equity Income Fund from August 1, 1991 through
January 31, 1997 was 139.82%, absent the imposition of a sales charge. The
cumulative total return for the same period for the S&P 500(R) Index was
135.09%. The cumulative total return for the Class B Shares of the Federated
Equity Income Fund from September 27, 1994 (date of initial public offering)
through January 31, 1997 was 62.64%, absent the imposition of a contingent
deferred sales charge. The cumulative total return for the same period for the
S&P 500(R) Index was 79.69%. At January 31, 1997, the Federated Equity Income
Fund had approximately $970 million in net assets.

The Federated Equity Income Fund, unlike the Fund, is not sold to insurance
company separate accounts to fund variable insurance contracts. As a result, the
performance results presented below do not take into account charges or
deductions against a separate account or variable insurance contract for cost of
insurance charges, premium loads, administrative fees, maintenance fees, premium
taxes, mortality and expense risk charges, or other charges that may be incurred
under a variable insurance contract for which the Fund serves as an underlying
investment vehicle. By contrast, investors with contract value allocated to the
Fund will be subject to charges and expenses relating to variable insurance
contracts and separate accounts.

As portfolio manager of the Federated Equity Income Fund, Mr. Wiles had full
discretionary authority over the selection of investments for that fund. Average
annual total returns for the one-year, three-year, and five-year periods ended
January 31, 1997 and for the entire period during which Mr. Wiles managed the
Class A Shares of the Federated Equity Income Fund and for the one-year and
since inception period for the Class B Shares of the Federated Equity Income
Fund compared with the performance of the S&P 500(R) Index and the Lipper Equity
Income Fund Index were:

<PAGE>

Prior Performance of Class A Shares and Class B Shares of the Federated Equity
Income Fund

Federated Lipper
Equity S&P 500(R) Equity Income Fund
Income Fund+* Index Index #
CLASS A SHARES (absent imposition of sales charge)

One Year 23.26% 26.34% 19.48%

Three Years 17.03% 20.72% 15.09%

Five Years 16.51% 17.02% 14.73%
August 1, 1991 through January 31, 1997 17.25% 16.78% 14.99%

CLASS A SHARES (assuming imposition of the
Federated Equity Income Fund's maximum sales charge)

One Year 16.48%

Three Years 14.85%

Five Years 15.20%

August 1, 1991 through January 31, 1997 16.05%

CLASS B SHARES (absent imposition of contingent deferred sales charge)

One Year 22.26% 26.34% 19.48%

September 27, 1994 through January 31, 1997 23.15% 28.44% 20.65%

CLASS B SHARES (assuming imposition of the Federated Equity Income Fund's
maximum contingent deferred sales charge)

One Year 16.76%

September 27, 1994 through January 31, 1997 22.79%
</TABLE>

- -------------------
+ Average annual total return reflects changes in share prices and reinvestment
of dividends and distributions and is net of fund expenses.

* During the period from August 1, 1991 through January 31, 1997, the operating
expense ratio of the Class A Shares (the shares most similar to the shares of
the Fund) of the Federated Equity Income Fund ranged from 0.95% to 1.05% of the
fund's average daily net assets. During the period from September 27, 1994
through January 31, 1997 the operating expense ratio for the Class B Shares of
the Federated Equity Income Fund ranged from 1.80% to 1.87% of the fund's
average daily net assets. The operating expenses of the Class A Shares and Class
B Shares of the Federated Equity Income Fund were lower and higher,
respectively, than the operating expenses of the Fund. If the operating expenses
of the Fund are higher than the historical operating expenses of the Federated
Equity Income Fund, this could negatively affect performance of a similar
investment program.

# The Lipper Equity Income Fund Index is composed of managed funds that seek
relatively high current income and growth of income through investing 60% of
more of their portfolios in equities.

The Federated Equity Income Fund is a separate fund and its historical
performance is not indicative of the potential performance of the Fund. Share
prices and investment returns will fluctuate reflecting market conditions, as
well as changes in company-specific fundamentals of portfolio securities.

Miscellaneous

No person has been authorized to give any information or to make any
representations not contained in this prospectus in connection with the offering
made by this prospectus. If given or made, such information or representations
must not be relied upon as having been authorized by the Fund or its
distributor. This prospectus does not constitute an offering by the Fund or its
distributor in any jurisdiction in which such offering may not be lawfully made.

<PAGE>

For more information about the Fund, the following documents are available free
upon request:

Annual/Semi-Annual Reports:
The Fund's annual and semi-annual reports to shareholders contain additional
information on the Fund's investments. In the annual report, an investor will
find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.

Statement of Additional Information (SAI): The SAI provides more detailed
information about the Fund, including its operations and investment policies. It
is incorporated by reference and is legally considered a part of this
prospectus.

- --------------------------------------------------------------------------------
An investor can get free copies of reports and the SAI, or request other
information and discuss any questions about the Fund, by contacting a broker or
bank that sells an insurance contract that offers the Fund as an investment
option. Or contact the Fund at:

Variable Insurance Funds
3435 Stelzer Road
Columbus, Ohio 43219-3035
Telephone: 1-800-451-8382
- --------------------------------------------------------------------------------
Investors can review and copy the SAI and other information about the Fund at
the Public Reference Room of the Securities and Exchange Commission. Investors
may call 1-202-942-8090 for more information about the Public Reference Room.
Investors can get text-only copies of information about the Fund:

o For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-0102 or by
electronic request at [email protected].

o Free from the Commission's Website at http://www.sec.gov.

Investment Company Act file no. 811-8644.

<PAGE>

AmSouth Select Equity Fund

Variable Insurance Funds
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-451-8382

The AmSouth Select Equity Fund seeks to provide long-term growth of capital by
investing primarily in common stocks and securities convertible into common
stocks, such as convertible bonds and convertible preferred stocks. The Fund's
goals and investment program are described in more detail inside. AmSouth Bank
("AmSouth") serves as the Fund's investment adviser, and OakBrook Investments,
LLC ("OakBrook") serves as the investment sub-adviser of the Fund.

This prospectus should be read in conjunction with the separate account's
prospectus describing the variable insurance contract. Please read both
prospectuses and retain them for future reference.

The Securities and Exchange Commission has not approved the Fund's shares or
determined whether this prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.

The date of this prospectus is May 1, 2000.

TABLE OF CONTENTS
<TABLE>
<S> <C>

RISK/RETURN SUMMARY AND FUND EXPENSES PURCHASING AND REDEEMING SHARES
Investment Objectives MANAGEMENT OF THE FUND
Principal Investment Strategies Investment Adviser
Principal Investment Risks Administrator and Distributor
Fund Performance Servicing Agents
FINANCIAL HIGHLIGHTS TAXATION
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS GENERAL INFORMATION
VALUATION OF SHARES Description of the Trust and Its Shares
Similar Fund Performance Information
Miscellaneous

</TABLE>

<PAGE>

RISK/RETURN SUMMARY AND FUND EXPENSES

Investment Objective

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

Principal Investment Strategies

Under normal market conditions, the Fund will invest at least 65% of its total
assets in common stocks and securities convertible into common stocks, such as
convertible bonds and convertible preferred stocks, of companies with market
capitalizations that are greater than $2 billion at the time of purchase. The
portfolio manager does not currently intend to purchase convertible securities.

Principal Investment Risks

An investment in the Fund entails investment risk, including possible loss of
the principal amount invested. The Fund is subject to market risk, which is the
risk that the market value of a portfolio security may move up and down,
sometimes rapidly and unpredictably. This risk may be greatest for the Fund's
investments in common stocks, although the Fund's investment strategies seek out
stocks that tend to be less volatile than many common stocks over the long term.
The Fund also is subject to interest rate risk, which is the risk that changes
in interest rates will affect the value of the Fund's investments. In
particular, the Fund's investments in fixed income securities generally will
change in value inversely with changes in interest rates. Also, an investment by
the Fund in fixed income securities generally will expose the Fund to credit
risk, which is the risk that the issuer of a security will default or not be
able to meet its financial obligations. Because the Fund may concentrate its
investments in a relatively small number of issuers, it may be exposed to risks
caused by events that affect particular companies to a greater extent than more
broadly diversified mutual funds.

An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.

Fund Performance

Because the Fund recently began operations, it does not have a calendar year of
performance information to compare against other mutual funds or a broad measure
of securities market performance, such as an index.

<PAGE>

FINANCIAL HIGHLIGHTS

The following table is included to assist investors in evaluating the financial
performance of the Fund since its commencement of operations through December
31, 1999. Certain information reflects financial results of a single share.
"Total Return" represents how much an investment in the Fund would have earned
(or lost) during the period. This information has been audited by
PricewaterhouseCoopers LLP, the Fund's independent auditors, whose report on the
Fund's financial statements, along with the Fund's financial statements, are
included in the Fund's annual report, which may be obtained without charge upon
request.

May 3, 1999 through
For a share outstanding throughout the period: December 31, 1999(a)
- --------------------------------------------- ---------------------------

Net Asset Value, Beginning of Period $ 10.00
---------------------------

Income From Investment Operations:
Net investment income 0.04
Net gains or losses on securities (realized (1.49)
and unrealized)
---------------------------

Total from investment operations (1.45)
---------------------------

Less Distributions:
Dividends (from net investment income) (0.04)
---------------------------

Total distributions (0.04)
---------------------------

Net Asset Value, End of Period $ 8.51
===========================

Total Return (14.51)%(b)

Ratios/Supplementary Data:
Net assets, end of period (000's) $ 2,881
Ratio of expenses to average net assets 1.23%(c)
Ratio of net income to average net assets 0.69%(c)
Ratio of expenses to average net assets* 3.50%(c)
Ratio of net income to average net assets* -1.58%(c)
Portfolio turnover rate 18.21%

- -----------------------------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
* During the period, certain fees were reimbursed and voluntarily reduced. If
such reimbursements and voluntary fee reductions had not occurred, the
ratios would have been as indicated.

<PAGE>

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

Investors should be aware that the investments made by the Fund at any given
time are not expected to be the same as those made by other mutual funds for
which AmSouth or OakBrook acts as investment adviser, including mutual funds
with names, investment objectives and policies similar to the Fund. Investors
should carefully consider their investment goals and willingness to tolerate
investment risk before allocating their investment to the Fund.

The Fund seeks to provide long-term growth of capital. The Fund seeks to obtain
its investment objective by investing primarily in companies that possess a
dominant market share and have a barrier, such as a patent or well-known brand
name, that shields its market share and profits from competitors. These
companies typically have long records of stable earnings growth. OakBrook
continuously monitors this universe of companies looking for opportunities to
purchase such stocks at reasonable prices.

In managing the investment portfolio for the Fund, OakBrook may focus on a
relatively limited number of stocks (generally 25 or less). OakBrook believes
that this investment strategy has the potential for higher total returns than an
investment strategy calling for investment in a larger number of securities.

In addition to its principal strategies discussed above, the Fund may invest in
securities issued by companies with market capitalizations below $2 billion, or
invest in futures and options contracts for purposes of hedging the Fund's
portfolio or maintaining its exposure to the equity markets. The Fund has the
flexibility to make portfolio investments and engage in other investment
techniques that are different than the strategies mentioned here. More
information on the Fund's investment strategies may be found in the Statement of
Additional Information (see back cover).

The Fund's investment strategies may subject it to a number of risks, including
the following.

Market Risk

Although common stocks historically have outperformed other asset classes over
the long term, their prices tend to fluctuate more dramatically over the shorter
term. These movements may result from factors affecting individual companies, or
from broader influences like changes in interest rates, market conditions,
investor confidence or announcements of economic, political or financial
information. While potentially offering greater opportunities for capital growth
than larger, more established companies, the common stocks of smaller companies
may be particularly volatile, especially during periods of economic uncertainty.
These companies may face less certain growth prospects, or depend heavily on a
limited line of products and services or the efforts of a small number of key
management personnel.
<PAGE>

The Fund may invest in securities issued by foreign companies. The securities of
foreign companies may pose risks in addition to, or to a greater degree than,
the risks described above. Foreign companies may be subject to disclosure,
accounting, auditing and financial reporting standards and practices that are
different from those to which U.S. issuers are subject. Accordingly, the Fund
may not have access to adequate or reliable company information. In addition,
political, economic and social developments in foreign countries and
fluctuations in currency exchange rates may affect the operations of foreign
companies or the value of their securities.

Interest Rate Risk

The Fund may invest in debt securities and other types of fixed income
securities, such as convertible preferred stock and convertible bonds.
Generally, the value of these securities will change inversely with changes in
interest rates. In addition, changes in interest rates may affect the operations
of the issuers of stocks in which the Fund invests. Rising interest rates, which
may be expected to lower the value of fixed income instruments and negatively
impact the operations of many issuers, generally exist during periods of
inflation or strong economic growth.

Credit Risk

The Fund may invest in lower rated convertible securities and debt obligations.
To a greater extent than more highly rated securities, lower rated securities
tend to reflect short-term corporate, economic and market developments, as well
as investor perceptions of the issuer's credit quality. Lower rated securities
may be especially susceptible to real or perceived adverse economic and
competitive industry conditions. In addition, lower rated securities may be less
liquid than higher quality investments. Reduced liquidity may prevent the Fund
from selling a security at the time and price that would be most beneficial to
the Fund.

Diversification

The Fund is a non-diversified fund, which means it may concentrate its
investments in the securities of a limited number of issuers. However, the Fund
will be subject to certain diversification requirements imposed by the Internal
Revenue Code. The use of a focused investment strategy may increase the
volatility of the Fund's investment performance, as the Fund may be more
susceptible to risks associated with a single economic, political or regulatory
event than a diversified portfolio. If the securities in which the Fund invests
perform poorly, the Fund could incur greater losses than it would have had it
been invested in a greater number of securities.

<PAGE>

Temporary Investments

OakBrook may temporarily invest up to 100% of the Fund's assets in high quality,
short-term money market instruments if it believes adverse economic or market
conditions, such as excessive volatility or sharp market declines, justify
taking a defensive investment posture. If the Fund attempts to limit investment
risk by temporarily taking a defensive investment position, it may be unable to
pursue its investment objective during that time, and it may miss out on some or
all of an upswing in the securities markets.

Please see the Statement of Additional Information for more detailed information
about the Fund, its investment strategies, and its risks.

VALUATION OF SHARES

PURCHASING AND REDEEMING SHARES

Shares of the Fund are available for purchase by insurance company separate
accounts to serve as an investment medium for variable insurance contracts, and
by qualified pension and retirement plans, certain insurance companies, AmSouth
and OakBrook. Shares of the Fund are purchased or redeemed at the net asset
value per share next determined after receipt by the Fund's distributor (or
other agent) of a purchase order or redemption request. Transactions in shares
of the Fund will be effected only on a Business Day of the Fund.

MANAGEMENT OF THE FUND

Investment Adviser and Sub-Adviser

AmSouth. AmSouth Bank, 1901 Sixth Avenue North, Birmingham, Alabama 35203, is
the investment adviser of the Fund. AmSouth is the principal bank affiliate of
AmSouth Bancorporation, one of the largest banking institutions headquartered in
the mid-south region. AmSouth Bancorporation reported assets as of December 31,
1999 of $43.4 billion and operated more than 660 banking offices and 1,300 ATM
locations in Alabama, Florida, Georgia, Louisiana, Kentucky, Virginia and
Tennessee. AmSouth has provided investment management services through its Trust
Investment Department since 1915. As of December 31, 1999, AmSouth and its
affiliates had over $9 billion in assets under discretionary management. AmSouth
is the largest provider of trust services in Alabama, and its Trust Natural
Resources and Real Estate Department is a major manager of timberland, mineral,
oil and gas properties and other real estate interests.

Under an investment advisory agreement between the Trust and AmSouth, the fee
payable to AmSouth by the Trust for investment advisory services is the lesser
of (a) a fee computed daily and paid monthly at the annual rate of 0.80% of the
Fund's daily net assets or (b) such fee as may from time to time be agreed upon
in writing by the Trust and AmSouth. For services provided and expenses assumed
during the fiscal year ended December 31, 1999, AmSouth received an investment
advisory fee equal to 0.70% of the Fund's average daily net assets, out of which
it paid a sub-advisory fee to OakBrook equal to 0.50% of the Fund's average
daily net assets.
<PAGE>

OakBrook. OakBrook serves as investment sub-adviser of the Fund in accordance
with a sub-advisory agreement with AmSouth. OakBrook makes the day-to-day
investment decisions for the Fund and continuously reviews, supervises and
administers the Fund's investment program, subject to the general supervision of
the Board of Trustees and AmSouth in accordance with the Fund's investment
objective, policies and restrictions. For its services and expenses incurred
under the sub-advisory agreement, OakBrook is entitled to a fee payable by
AmSouth.

OakBrook is 50% owned by AmSouth and 50% owned by Neil Wright, Janna Sampson and
Peter Jankovskis. OakBrook was organized in February, 1998 to perform advisory
services for investment companies and other institutional clients and has its
principal offices at 701 Warrenville Road, Suite 135, Lisle, Illinois 60532.

The Fund is managed by a team from OakBrook. Dr. Neil Wright, Ms. Janna Sampson
and Dr. Peter Jankovskis are the portfolio managers for the Fund and have the
primary responsibility for the day-to-day portfolio management of the Fund. Dr.
Wright is OakBrook's President and the Chief Investment Officer. He holds a
doctorate in economics. From 1993 to 1997, Dr. Wright was the Chief Investment
Officer of ANB Investment Management & Trust Co. ("ANB"). He managed ANB's Large
Cap Growth Fund and other equity funds starting in 1981. Ms. Sampson is
OakBrook's Director of Portfolio Management. She holds a master of arts degree
in economics. From 1993 to 1997, Ms. Sampson was Senior Portfolio Manager for
ANB. She has worked in the investment field since 1981 and was a portfolio
manager at ANB from 1987 to 1997. Dr. Jankovskis is OakBrook's Director of
Research. He holds a doctorate in economics. He has conducted economic research
since 1988. From August, 1992 to July, 1996, Dr. Jankovskis was an Investment
Strategist for ANB, and from July, 1996 to December, 1997, he was the Manager of
Research for ANB.

Administrator and Distributor

See the Statement of Additional Information for further information about the
Fund's service providers.

<PAGE>

Servicing Agents

TAXATION

<PAGE>

GENERAL INFORMATION

Description of the Trust and Its Shares

Miscellaneous

<PAGE>

For more information about the Fund, the following documents are available free
upon request:

Variable Insurance Funds
3435 Stelzer Road
Columbus, Ohio 43219-3035
Telephone: 1-800-451-8382

- --------------------------------------------------------------------------------

Investors can review and copy the SAI and other information about the Fund at
the Public Reference Room of the Securities and Exchange Commission. Investors
may call 1-202-942-8090 for more information about the Public Reference Room.
Investors can get text-only copies of information about the Fund:

o For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-0102 or by electronic request at [email protected].

o Free from the Commission's Website at http://www.sec.gov.

Investment Company file no. 811-8644.

<PAGE>
BB&T Growth and Income Fund

Variable Insurance Funds
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-288-1872

The BB&T Growth and Income Fund seeks capital growth, current income, or both by
investing primarily in stocks. The Fund's goals and investment program are
described in more detail inside. Branch Banking and Trust Company ("BB&T")
serves as the Fund's investment adviser.

This prospectus should be read in conjunction with the separate account's
prospectus describing the variable insurance contract. Please read both
prospectuses and retain them for future reference.

The Securities and Exchange Commission has not approved the Fund's shares or
determined whether this prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.

The date of this prospectus is May 1, 2000.

TABLE OF CONTENTS

RISK/RETURN SUMMARY AND FUND EXPENSES MANAGEMENT OF THE FUND
Investment Objectives Investment Adviser
Principal Investment Strategies Administrator and Distributor
Principal Investment Risks Servicing Agents
Fund Performance TAXATION
FINANCIAL HIGHLIGHTS GENERAL INFORMATION
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS Description of the Trust and Its Shares
VALUATION OF SHARES Similar Fund Performance Information
PURCHASING AND REDEEMING SHARES Miscellaneous

</TABLE>

<PAGE>

RISK/RETURN SUMMARY AND FUND EXPENSES

Investment Objective

The Fund seeks capital growth, current income, or both.

Principal Investment Strategies

Under normal market conditions, the Fund will invest at least 65% of its total
assets in stocks, which may include common stock, preferred stock, warrants, or
debt instruments that are convertible into common stock.

Principal Investment Risks

An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.

Fund Performance

<PAGE>

Calendar Year Total Returns*

[Bar Chart] -3.85% 13.36%
1998 1999

Best Quarter: 17.32% 12/31/98
Worst Quarter: -11.17% 9/30/99

Average Annual Total Return* (for the periods ended December 31, 1999)

Since Inception
Past Year (June 3, 1997)

Fund -3.85% 10.96%
S&P 500 (R) Index 21.03% 25.71%

- ------------------
* Assumes reinvestment of dividends and distributions.

<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<S> <C> <C> <C>
Year ended December 31, June 3, 1997 through
For a share outstanding throughout the period: 1999 1998 December 31, 1997 (a)
- --------------------------------------------- ------------------------ ---------------------- -----------------------

Net Asset Value, Beginning of Period $ 13.30 $ 11.88 $ 10.00
------------------------ ---------------------- -----------------------

Income From Investment Operations:
Net investment income 0.18 0.16 0.10
Net gains or losses on securities (realized and (0.69) 1.42 1.89
unrealized)
------------------------ ---------------------- -----------------------

Total from investment operations (0.51) 1.58 1.99
------------------------ ---------------------- -----------------------

Less Distributions:
Dividends (from net investment income) (0.15) (0.16) (0.10)
----------------------- ---------------------- -----------------------
Dividends (in excess of net investment income) -- -- (0.01)
------------------------ ---------------------- -----------------------
Net realized gains (0.18) -- --
------------------------ ---------------------- -----------------------

Total distributions (0.33) (0.16) (0.11)
------------------------ ---------------------- -----------------------

Net Asset Value, End of Period $ 12.46 $ 13.30 $ 11.88
======================== ====================== =======================

Total Return (3.85)% 13.36% 19.96%(b)

Ratios/Supplementary Data:
Net assets, end of period (000's) $ 52,525 $ 49,062 $ 28,829
Ratio of expenses to average net assets 0.87% 0.91% 0.91%(c)
Ratio of net investment income to average 1.43% 1.37% 1.68%(c)
net assets
Ratio of expenses to average net assets* 1.16% 1.24% 2.31%(c)
Ratio of net investment income to average 1.14% 1.04% 0.28%(c)
net assets*
Portfolio turnover rate 11.98% 2.77% 7.75%

</TABLE>

- --------------------------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
* During the period, certain fees were reimbursed and voluntarily reduced. If
such reimbursements and voluntary fee reductions had not occurred, the
ratios would have been as indicated.

<PAGE>

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

Investors should be aware that the investments made by the Fund at any given
time are not expected to be the same as those made by other mutual funds for
which BB&T acts as investment adviser, including mutual funds with names,
investment objectives and policies similar to the Fund. Investors should
carefully consider their investment goals and willingness to tolerate investment
risk before allocating their investment to the Fund.

The Fund's investment objective is to seek capital growth, current income, or
both. Equity securities purchased by the Fund will be either traded on a
domestic securities exchange or quoted in the NASDAQ/NYSE system. While some
stocks may be purchased primarily to achieve the Fund's investment objective for
income, most stocks will be purchased by the Fund primarily in pursuit of its
investment objective for growth.

BB&T uses a value-oriented investment approach that focuses on stocks of issuers
which over a five year period have achieved cumulative income in excess of the
cumulative dividends paid to shareholders. In evaluating prospective
investments, BB&T may consider factors such as the market price of a company's
securities relative to its evaluation of the company's long-term earnings, asset
value and cash flow potential, as well as historical value measures such as
price-earnings ratios, profit margins and liquidation values. The Fund may
invest in companies of any size, although most stocks purchased will be issued
by companies whose market capitalizations are large relative to the entirety of
the U.S. securities markets, but not as large as many of the stocks represented
in such broad market indexes as the S&P 500(R) Index.

The Fund's investment strategies may subject it to a number of risks, including
the following.

Market Risk

Although stocks historically have outperformed other asset classes over the long
term, their prices tend to fluctuate more dramatically over the shorter term.
These movements may result from factors affecting individual companies, or from
broader influences like changes in interest rates, market conditions, investor
confidence or announcements of economic, political or financial information.
While potentially offering greater opportunities for capital growth than larger,
more established companies, the stocks of smaller companies may be particularly
volatile, especially during periods of economic uncertainty. These companies may
face less certain growth prospects, or depend heavily on a limited line of
products and services or the efforts of a small number of key management
personnel.

<PAGE>

The Fund may invest in stocks issued by foreign companies, although it will do
so only if the stocks are traded in the U.S. The stocks of foreign companies may
pose risks in addition to, or to a greater degree than, the risks described
above. Foreign companies may be subject to disclosure, accounting, auditing and
financial reporting standards and practices that are different from those to
which U.S. issuers are subject. Accordingly, the Fund may not have access to
adequate or reliable company information. In addition, political, economic and
social developments in foreign countries and fluctuations in currency exchange
rates may affect the operations of foreign companies or the value of their
stocks.

BB&T tries to manage market risk by primarily investing in relatively large
capitalization "value" stocks of U.S. issuers. Stocks of larger companies tend
to be less volatile than those of smaller companies, and value stocks in theory
limit downside risk because they are underpriced. Of course, BB&T's success in
moderating market risk cannot be assured. In addition, the Fund may produce more
modest gains than stock funds with more aggressive investment profiles.

Interest Rate Risk

Although the Fund's primary investment focus is stocks, it may invest in debt
securities and other types of fixed income securities. Generally, the value of
these securities will change inversely with changes in interest rates. In
addition, changes in interest rates may affect the operations of the issuers of
stocks in which the Fund invests. Rising interest rates, which may be expected
to lower the value of fixed income instruments and negatively impact the
operations of many issuers, generally exist during periods of inflation or
strong economic growth.

Credit Risk

The Fund's investments, and particularly investments in debt securities, may be
affected by the creditworthiness of issuers in which the Fund invests. Changes
in the financial strength, or perceived financial strength, of a company may
affect the value of its securities and, therefore, impact the value of the
Fund's shares.

Temporary Investments

BB&T may temporarily invest up to 100% of the Fund's assets in high quality,
short-term money market instruments if it believes adverse economic or market
conditions, such as excessive volatility or sharp market declines, justify
taking a defensive investment posture. If the Fund attempts to limit investment
risk by temporarily taking a defensive investment position, it may be unable to
pursue its investment objective during that time, and it may miss out on some or
all of an upswing in the securities markets.

Please see the Statement of Additional Information for more detailed information
about the Fund, its investment strategies, and its risks.

<PAGE>

VALUATION OF SHARES

PURCHASING AND REDEEMING SHARES

Shares of the Fund are available for purchase by insurance company separate
accounts to serve as an investment medium for variable insurance contracts, and
by qualified pension and retirement plans, certain insurance companies, and
BB&T. Shares of the Fund are purchased or redeemed at the net asset value per
share next determined after receipt by the Fund's distributor (or other agent)
of a purchase order or redemption request. Transactions in shares of the Fund
will be effected only on a Business Day of the Fund.

<PAGE>

MANAGEMENT OF THE FUND

Investment Adviser

Branch Banking and Trust Company, 434 Fayetteville Street Mall, Raleigh, N.C.
27601, is the investment adviser of the Fund. Through its portfolio management
team, BB&T makes the day-to-day investment decisions for the Fund and
continuously reviews, supervises and administers the Fund's investment program.

BB&T is the oldest bank in North Carolina. It is the principal bank affiliate of
BB&T Corporation, a bank holding company that is a North Carolina corporation
headquartered in Winston-Salem, North Carolina. As of December 31, 1999, BB&T
Corporation had assets in excess of $43.5 billion. Through its subsidiaries,
BB&T Corporation operates over 655 banking offices in North Carolina, South
Carolina, Virginia, Maryland and Washington, D.C., providing a broad range of
financial services to individuals and businesses. In addition to general
commercial, mortgage and retail banking services, BB&T also provides trust,
investment, insurance and travel services. BB&T has provided investment
management services through its Trust and Investment Services Division since
1912. BB&T employs an experienced staff of professional portfolio managers and
traders who use a disciplined investment process that focuses on maximization of
risk-adjusted investment returns. BB&T has managed common and collective
investment funds for its fiduciary accounts for more than 17 years.

Under an investment advisory agreement between the Trust and BB&T, the Trust
pays BB&T an investment advisory fee, computed daily and payable monthly, at an
annual rate equal to the lesser of: (a) 0.74% of the Fund's average daily net
assets; or (b) such amount as may from time to time be agreed upon in writing by
the Trust and BB&T. For services provided and expenses assumed during the fiscal
year ended December 31, 1999, BB&T received an investment advisory fee equal to
an annual rate of 0.60% of the Fund's average daily net assets.
<PAGE>

During the first half of 2000, BB&T intends to reorganize its investment
advisory division as a separate, wholly owned subsidiary of BB&T to be called
BB&T Asset Management, Inc. ("BB&T Asset Management"). Once organized and
registered with the Securities and Exchange Commission, BB&T Asset Management
will replace BB&T as the investment adviser of the BB&T Funds. Following the
reorganization, the management and investment advisory personnel of BB&T that
are currently providing investment management services to the Fund will continue
to do so as the personnel of BB&T Asset Management. Additionally, BB&T Asset
Management will be wholly owned and otherwise fully controlled by BB&T. As a
result, this transaction will not be an "assignment" of the investment advisory
contract for purposes of the Investment Company Act of 1940 and, therefore, a
shareholder vote will not be required.

Richard B. Jones is the person who has been primarily responsible for the
management of the Fund since its inception. Mr. Jones has been a portfolio
manager in the BB&T Trust Division since 1987. He holds a B.S. in Business
Administration from Miami (Ohio) University and an M.B.A. from The Ohio State
University.

Administrator and Distributor

See the Statement of Additional Information for further information about the
Fund's service providers.

Servicing Agents

<PAGE>

TAXATION

GENERAL INFORMATION

Description of the Trust and Its Shares

<PAGE>

Similar Fund Performance Information

The following table provides information concerning the historical total return
performance of the Trust Shares class of the BB&T Growth and Income Stock Fund
(the "Similar Fund"), a series of BB&T Funds. The Similar Fund's investment
objectives, policies and strategies are substantially similar to those of the
Fund, and it is currently managed by the same portfolio manager. While the
investment objectives, policies and risks of the Similar Fund and the Fund are
similar, they are not identical, and the performance of the Similar Fund and the
Fund will vary. The data is provided to illustrate the past performance of BB&T
in managing a substantially similar investment portfolio and does not represent
the past performance of the Fund or the future performance of the Fund or its
portfolio manager. Consequently, potential investors should not consider this
performance data as an indication of the future performance of the Fund or of
its portfolio manager.

Average Annual Total Return for the Similar Fund and for Its Benchmark Index for
Periods Ended December 31, 1999

Since Inception
Similar Fund/Benchmark 1 Year 3 Years 5 Years (October 9, 1992)
- ---------------------- ------ ------- ------- ----------------
BB&T Growth and Income Stock Fund -2.22% 13.77% 18.87% 15.27%
S&P 500(R) Index* 21.03% 27.56% 28.54% 21.53%

</TABLE>

- -----------------
* The Standard & Poor's 500 Composite Stock Price Index is an unmanaged
index containing common stocks of 500 industrial, transportation,
utility and financial companies, regarded as generally representative
of the U.S. stock market. The Index reflects income and distributions,
if any, but does not reflect fees, brokerage commissions, or other
expenses of investing.

Miscellaneous

<PAGE>

For more information about the Fund, the following documents are available free
upon request:

Variable Insurance Funds
3435 Stelzer Road
Columbus, Ohio 43219-3035
Telephone: 1-800-228-1872
- --------------------------------------------------------------------------------

o For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-0102 or by electronic request at [email protected].

o Free from the Commission's Website at http://www.sec.gov.

Investment Company Act file no. 811-8644.