<PAGE> 1
<TABLE>
<S> <C>
SECURITIES AND EXCHANGE COMMISSION --------------------------
WASHINGTON, D.C. 20549 OMB Approval
FORM N-17f-2 --------------------------
OMB Number: 3235-0360
Certificate of Accounting of Securities and Similar Expires: July 31, 1994
Investment in the Custody of Estimated average burden
Management Investment Companies hours per response... 0.05
Pursuant to Rule 17f-2 [17 CFR 270.17f-2]
----------------------------------------------------------------------------------------------------------------------------------
1. Investment Company Act File Number: Date examination completed
811-8644 May 31, 2000
----------------------------------------------------------------------------------------------------------------------------------
2. State identification Number: N/A
----------------------------------------------------------------------------------------------------------------------------
AL AK AZ AR CA CO
----------------------------------------------------------------------------------------------------------------------------
CT DE DC FL GA HI
----------------------------------------------------------------------------------------------------------------------------
ID IL IN IA KS KY
----------------------------------------------------------------------------------------------------------------------------
LA ME MD MA MI MN
----------------------------------------------------------------------------------------------------------------------------
MS MO MT NE NV NH
----------------------------------------------------------------------------------------------------------------------------
NJ NM NY NC ND OH
----------------------------------------------------------------------------------------------------------------------------
OK OR PA RI SC SD
----------------------------------------------------------------------------------------------------------------------------
TN TX UT VT VA WA
----------------------------------------------------------------------------------------------------------------------------
WV WI WY PUERTO RICO
----------------------------------------------------------------------------------------------------------------------------
Other (specify):
----------------------------------------------------------------------------------------------------------------------------------
3. Exact name of investment company as specified in representation statement:
Variable Insurance Funds
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
4. Address of principal executive office (number, street, city, state, zip code):
3435 Stelzer Road, Columbus, Ohio 43219
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
Report of Independent Accountants
To the Board of Trustees of
Variable Insurance Funds
We have examined management's assertion, included in the accompanying "Report of
Management on Compliance with Rule 17f-2 of the Investment Company Act of 1940,"
that AmSouth Equity Income Fund and AmSouth Select Equity Fund of Variable
Insurance Funds (collectively, the "Funds") complied with the requirements of
subsections (b) and (c) of Rule 17f-2 of the Investment Company Act of 1940 (the
"Act") as of May 31, 2000 with respect to securities and similar investments
reflected in the investment account of the Funds. Management is responsible for
the Funds' compliance with those requirements. Our responsibility is to express
an opinion on the 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 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 May 31, 2000, and with respect to agreement
of security and similar investments purchases and sales, for the period from
November 30, 1999 (the date of last examination) through May 31, 2000;
o Count and inspection of all securities and similar investments located in
the vault of AmSouth Bank in Birmingham, Alabama, without prior notice to
management;
o Confirmation of all securities and similar investments held by institutions
in book entry form with The Bank of New York and Depository Trust Company;
o Confirmation of all securities and similar investments hypothecated,
pledged, placed in escrow, or out for transfer with brokers, pledgees
and/or transfer agents;
o Reconciliation of confirmation results as to all such securities and
investments to the books and records of the Funds and the Custodian;
o Confirmation of all repurchase agreements with brokers and agreement of
underlying collateral with The Bank of New York or Chase Manhattan Bank
records; and
o Agreement of 2 security and/or investment sales or maturities since the
last examination from the books and records of the Funds to broker
confirmations.
<PAGE> 3
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Funds' compliance with
specified requirements.
In our opinion, management's assertion that Variable Insurance Funds complied
with the requirements of subsections (b) and (c) of Rule 17f-2 of the Investment
Company Act of 1940 as of May 31, 2000, with respect to securities and similar
investments reflected in the investment account of the Funds, is fairly stated,
in all material respects.
This report is intended solely for the information and use of the board of
trustees and management of 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.
Ernst & Young LLP
December 5, 2000
<PAGE> 4
REPORT OF MANAGEMENT ON COMPLIANCE WITH RULE 17f-2 OF THE
INVESTMENT COMPANY ACT OF 1940
December 5, 2000
We, as members of management of AmSouth Equity Income Fund and AmSouth Select
Equity Fund of Variable Insurance Funds (the "Funds"), are responsible for
complying with the requirements of subsections (b) and (c) of Rule 17f-2,
"Custody of Investments by Registered Management Investment Companies," of the
Investment Company Act of 1940. We also are responsible for establishing and
maintaining effective internal control over compliance with those requirements.
We have performed an evaluation of the Funds' compliance with the requirements
of subsections (b) and (c) of Rule 17f-2 as of May 31, 2000.
Based on this evaluation, we assert that the 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 May 31, 2000 with respect to securities and similar
investments reflected in the investment accounts of the Funds.
/s/ Walter B. Grimm
----------------------------------
Walter B. Grimm, President
/s/ Charles L. Booth
----------------------------------
Charles L. Booth, Vice President
/s/ Gary Tenkman
----------------------------------
Gary R. Tenkman, Treasurer
