FORM OF INVESTMENT ADVISORY AGREEMENT

FORM OF
INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 30th of June, 2004, between VARIABLE INSURANCE FUNDS (the "Trust"), a Massachusetts business trust having its principal place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000-0000, and ACTION FUND MANAGEMENT, LLC (the "Investment Adviser"), a registered investment adviser having its principal place of business at 00000 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000 .

WHEREAS, the Trust is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Trust desires to retain the Investment Adviser to furnish investment advisory and administrative services to newly-created investment portfolios of the Trust and may retain the Investment Adviser to serve in such capacity with respect to certain additional investment portfolios of the Trust, all as now or hereafter may be identified in Schedule A hereto as such Schedule may be amended from time to time (individually referred to herein as a "Fund" and collectively referred to herein as the "Funds") and the Investment Adviser represents that it is willing and possesses legal authority to so furnish such services without violation of applicable laws and regulations;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed between the parties hereto as follows:

1.	Appointment. The Trust hereby appoints the Investment Adviser to act as investment adviser to the Funds for the period and on the terms set forth in this Agreement. The Investment Adviser accepts such appointment and agrees to furnish the services herein set forth for the compensation herein provided. Additional investment portfolios may from time to time be added to those covered by this Agreement by the parties executing a new Schedule A which shall become effective upon its execution and shall supersede any Schedule A having an earlier date.
2.	Delivery of Documents. The Trust has furnished the Investment Adviser with access to copies properly certified or authenticated of each of the following:
	(a)	the Trust's Amended and Restated Agreement and Declaration of Trust, dated as of July 20, 1994 and amended and restated, and any and all amendments thereto or restatements thereof (such Declaration, as presently in effect and as it shall from time to time be amended or restated, is herein called the "Declaration of Trust");
	(b)	the Trust's By-Laws and any amendments thereto;
	(c)	resolutions of the Trust's Board of Trustees authorizing the appointment of the Investment Adviser and approving this Agreement;
	(d)	the Trust's Notification of Registration on Form N-8A under the 1940 Act as filed with the Securities and Exchange Commission (the "Commission") on July 20, 1994, and all amendments thereto;
	(e)	the Trust's Registration Statement on Form N-1A under the Securities Act of 1933, as amended (the "1933 Act"), and under the 1940 Act as filed with the Commission and all amendments thereto (the "Registration Statement"); and
	(f)	the most recent Prospectus and Statement of Additional Information of each of the Funds (such Prospectus and Statement of Additional Information, as presently in effect, and all amendments and supplements thereto, are herein collectively called the "Prospectus").
	Upon request, the Trust will furnish the Investment Adviser from time to time with copies of all amendments of or supplements to the foregoing.
3.	Management. Subject to the supervision of the Trust's Board of Trustees, the Investment Adviser will, either directly or pursuant to an Investment Subadvisory Agreement approved by the Board of Trustees, provide a continuous investment program for the Funds, including investment research and management with respect to all securities and investments and cash equivalents in the Funds. The Investment Adviser will determine from time to time what securities and other investments will be purchased, retained or sold by the Trust with respect to the Funds. The Investment Adviser will provide the services under this Agreement in accordance with each of the Fund's investment objectives, policies, and restrictions as stated in the Prospectus and resolutions of the Trust's Board of Trustees. The Investment Adviser further agrees that, to the extent applicable, it:
	(a)	will use the same skill and care in providing such services as it uses in providing services to other fiduciary accounts, if any, for which it has investment responsibilities;
	(b)	will conform with all applicable Rules and Regulations of the Commission under the 1940 Act and in addition will conduct its activities under this Agreement in accordance with any applicable regulations of any governmental authority pertaining to the investment advisory activities of the Investment Adviser;
	(c)	will place or cause to be placed orders for the Funds either directly with the issuer or with any broker or dealer, or as otherwise appropriate under the circumstances. In placing orders with brokers and dealers, the Investment Adviser will seek best execution of orders. Consistent with this obligation and to the extent permitted by the 1940 Act, when the execution and price offered by two or more brokers or dealers are comparable, the Investment Adviser may, in its discretion, purchase and sell portfolio securities using the services of brokers and dealers that provide the Investment Adviser with research advice and other services. In no instance will portfolio securities be purchased from or sold to BISYS Fund Services, the Investment Adviser, or any affiliated person of the Trust, BISYS Fund Services or the Investment Adviser, except to the extent permitted by applicable law, interpretation or ruling and disclosed as required;
	(d)	will maintain all books and records with respect to the securities transactions of the Funds and will furnish the Trust's Board of Trustees, either directly or via a service provider, with such periodic and special reports as the Board may request;
	(e)	will treat confidentially and as proprietary information of the Trust all records and other information relative to the Trust and the Funds and prior, present, or potential shareholders, and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Trust, which approval shall not be unreasonably withheld and may not be withheld where the Investment Adviser may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Trust;
	(f)	will maintain its policy and practice of conducting its fiduciary functions independently. In making investment recommendations for the Funds, the Investment Adviser's personnel will not inquire or take into consideration whether the issuers of securities proposed for purchase or sale for the Trust's account are customers of the Investment Adviser or of its parent or its subsidiaries or affiliates. In dealing with such customers, the Investment Adviser and its parent, subsidiaries, and affiliates will not inquire or take into consideration whether securities of those customers are held by the Trust;
	(g)	will promptly review all (1) current security reports, (2) summary reports of transactions and (3) current cash position reports upon receipt thereof from the Trust and will report any errors or discrepancies in such reports to the Trust or its designee within three (3) business days; and
	(h)	will use its best efforts to obtain and provide to the Trust, its fund accountant or any other relevant party, upon request, pricing information relating to fair value when there is no readily available market price provided to the Trust by its pricing service. The Investment Adviser also undertakes to review prices provided by the Trust's pricing service and to report to the Trust or its relevant service provider any disagreement the Investment Adviser may have with respect to the pricing service's valuation due to the Investment Adviser's special knowledge about the company in which the Fund is a shareholder.
4.	Services Not Exclusive. The investment management services furnished by the Investment Adviser hereunder are not to be deemed exclusive, and the Investment Adviser shall be free to furnish similar services to others so long as its services under this Agreement are not impaired thereby.
5.	Books and Records. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all records which it maintains for the Funds are the property of the Trust and further agrees to surrender promptly to the Trust any of such records upon the Trust's request. Under such circumstances, the Trust agrees to permit the Investment Adviser a reasonable opportunity to copy the records at the Investment Adviser's expense to the extent necessary for the Investment Adviser to comply with its own recordkeeping obligations. The Investment Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the following records: (a) completed trade tickets for all portfolio transactions, (b) broker confirmations for individual and block trades, (c) credit files relating to (i) money market securities and their issuers, (ii) repurchase agreement counterparties and (iii) letter of credit providers, (d) transaction records indicating the method of allocation with respect to the selection of brokers, and (e) such other records that may be deemed necessary and appropriate by the parties to this Agreement.
6.	Expenses. Except for expenses that the Investment Adviser expressly assumes pursuant to this Agreement or any other agreement, the Investment Adviser shall not be responsible for bearing any expenses associated with a Fund's operations and activities, including without limitation:
	(a)	fees and expenses paid to the Investment Adviser as provided pursuant to this Agreement;
	(b)	expenses of all audits by independent public accountants;
	(c)	expenses of transfer or dividend disbursing agent, registrar, custodian, or depository appointed for safekeeping of each Fund's cash, securities, and other property, and shareholder recordkeeping services, including the expenses of issuing, repurchasing or redeeming Fund shares;
	(d)	expenses of obtaining quotations for calculating the value of the net assets of each Fund;
	(e)	salaries and other compensation of executive officers of the Trust who are not directors, officers, stockholders or employees of the Investment Adviser or its affiliates;
	(f)	all taxes levied against the Fund, including issuance and transfer taxes, and corporate fees payable by the Fund to federal, state or other governmental agencies;
	(g)	brokerage fees and commissions in connection with the purchase and sale of securities for each Fund, and similar fees and charges for the acquisition, disposition, lending or borrowing of such securities;
	(h)	costs, including the interest expense, of borrowing money;
	(i)	costs incident to meetings of the Board and shareholders of the Fund, (exclusive of costs of those Trustees and officers of the Fund who are "interested persons" of the Fund within the meaning of the Act);
	(j)	fees and expenses of Trustees who are not "interested persons" of the Fund within the meaning of the Act;
	(k)	legal fees, including the legal fees related to the registration and continued qualification of the shares of each Fund for sale;
	(l)	costs and expense of registering and maintaining the registration of the Fund and the shares of each Portfolio under federal law, and making and maintaining any notice filings and fees required under any applicable State laws;
	(m)	the preparation, setting in type, printing in quantity and distribution of materials distributed to then-current shareholders of each Portfolio of such materials as prospectuses, statements of additional information, supplements to prospectuses and statements of additional information, periodic reports, communications, and proxy materials (including proxy statements and proxy cards) relating to the Fund or the Trust and the processing, including tabulation, of the results of voting instruction and proxy solicitations;
	(n)	the fees and expenses involved in the preparation of all reports as required by federal or state law;
	(o)	postage;
	(p)	extraordinary or non-recurring expenses, such as legal claims and liabilities and litigation costs and indemnification payments by the Trust in connection therewith;
	(q)	trade association dues for the Investment Company Institute or similar organizations; and
	(r)	the cost of the fidelity bond required by Rule 17g-1 under the Act, and any errors and omissions or other liability insurance premiums covering the Trustees, officers, and employees.
	The Investment Adviser will pay all other expenses incurred by it in connection with its activities under this Agreement, except those reasonably assumable by the Fund. The Investment Adviser will pay all costs associated with advocacy on behalf of the Fund.
7.	Compensation. For the services provided and the expenses assumed pursuant to this Agreement, each of the Funds will pay the Investment Adviser and the Investment Adviser will accept as full compensation therefor a fee as set forth on Schedule A hereto, which will be accrued by the Fund daily and will be payable monthly in arrears. The obligation of each Fund to pay the above-described fee to the Investment Adviser will begin as of the date of the initial public sale of shares in such Fund. The fee attributable to each Fund shall be the obligation of that Fund and not of any other Fund.
	If in any fiscal year the aggregate expenses of any of the Funds exceed any applicable expense limitation, the Investment Adviser will reimburse the Fund for a portion of such excess expenses equal to such excess times the ratio of the fees otherwise payable by the Fund to the Investment Adviser hereunder to the aggregate fees otherwise payable by the Fund to the Investment Adviser hereunder and to BISYS Fund Services under the Management and Administration Agreement between BISYS Fund Services and the Trust. The obligation of the Investment Adviser to reimburse the Funds hereunder is limited in any fiscal year to the amount of its fee hereunder for such fiscal year; provided, however, that notwithstanding the foregoing, the Investment Adviser shall reimburse the Funds for such proportion of such excess expenses regardless of the amount of fees paid to it during such fiscal year to the extent required by any applicable regulation. Such expense reimbursement, if any, will be estimated daily and reconciled and paid on a monthly basis.
8.	Limitation of Liability. The Investment Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Funds in connection with the performance of this Agreement, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Adviser in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement. It is further agreed that the Investment Adviser shall have no responsibility or liability for the accuracy or completeness of the Trust's Registration Statement under the 1940 Act and the 1933 Act, except for information supplied by the Investment Adviser for inclusion therein or information known by the Investment Adviser to be false or misleading. The Trust agrees to indemnify the Investment Adviser to the full extent permitted by the Trust's Declaration of Trust.
9.	Duration and Termination. This Agreement will become effective with respect to each Fund listed on Schedule A as of the date first written above (or, if a particular Fund is not in existence on that date, on the date a registration statement under the 1933 Act relating to that Fund becomes effective with the Commission), provided that it shall have been approved by vote of a majority of the outstanding voting securities of such Fund, in accordance with the requirements under the 1940 Act, and, unless sooner terminated as provided herein, shall continue in effect for an initial period of up to two years. Thereafter, if not terminated, this Agreement shall continue in effect as to a particular Fund for successive one-year terms, only so long as such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Trust's Board of Trustees who are not parties to this Agreement or interested persons of any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the vote of a majority of the Trust's Board of Trustees or by the vote of a majority of the outstanding voting securities of such Fund. Notwithstanding the foregoing, this Agreement may be terminated as to a particular Fund at any time on sixty days' written notice, without the payment of any penalty, by the Trust (by vote of the Trust's Board of Trustees or by vote of a majority of the outstanding voting securities of such Fund) or by the Investment Adviser. This Agreement will immediately terminate in the event of its assignment. (As used in this Agreement, the terms "majority of the outstanding voting securities," "interested persons" and "assignment" shall have the same meanings as ascribed to such terms in the 1940 Act.)
10.	Investment Adviser's Representations. The Investment Adviser hereby represents and warrants as follows:
	(a) it is willing and possesses all requisite legal authority to provide the services contemplated by this Agreement without violation of applicable laws and regulations;
	(b) it will manage each Fund so that each Fund will qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. The Investment Adviser will use its reasonable best efforts to obtain from all appropriate Trusts service providers, all relevant information needed to make a determination about Subchapter M compliance;
	(c) it shall immediately notify the Trust in the event (1) that the Commission or any other regulatory authority has censured the Investment Adviser; placed limitations upon its activities, functions or operations; or has commenced proceedings or an investigation that may result in any of these actions, or (2) upon having a reasonable basis for believing that any Fund has ceased to qualify or might not qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. The Investment Adviser further agrees to notify the Trust immediately of any material fact known to the Investment Adviser respecting or relating to the Investment Adviser that is not contained in the Registration Statement or Prospectus for the Trust, or any amendment or supplement thereto, or of any statement contained therein that becomes untrue; and
	(d) it shall be responsible for making inquiries and for reasonably ensuring that any employee of the Investment Adviser, any person or firm that the Investment Adviser has employed or with which it has associated, or any employee thereof has not, to the best of the Investment Adviser's knowledge, in any material connection with the handling of Trust assets: (i) been convicted, in the last ten (10) years, of any felony or misdemeanor arising out of conduct involving embezzlement, fraudulent conversion, or misappropriation of funds or securities, or involving violations of Sections 1341, 1342, or 1343 of Xxxxx 00, Xxxxxx Xxxxxx Code; or (ii) been found by any federal or state regulatory authorities, within the last ten (10) years, to have violated or to have acknowledged violation of any provisions of federal or state securities laws involving fraud, deceit or knowing misrepresentation.
11.	Amendment of this Agreement. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.
12.	Governing Law. This Agreement shall be governed by and its provisions shall be construed in accordance with the laws of the Commonwealth of Massachusetts, notwithstanding the conflict of law provisions of that state, and shall be construed to promote the operation of the Trust as an open-end management investment company..
13.	Miscellaneous. It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but shall bind only the trust property of the Trust. The execution and delivery of this Agreement have been authorized by the Trustees, and this Agreement has been signed and delivered by an authorized officer of the Trust, acting as such, and neither such authorization by the Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of the Trust as provided in the Trust's Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written.

VARIABLE INSURANCE FUNDS

By:_____________________________________

Title:____________________________________

ACTION FUND MANAGEMENT, LLC

By:____________________________________
Xxxxxx X. Xxxxxx

Title: Member-Manager

Dated: June 30 2004

Schedule A
to the Investment Advisory Agreement
between Variable Insurance Funds and
Action Fund Management, LLC

NAME OF FUND	COMPENSATION	EFFECTIVE DATE
Free Enterprise Action Fund	Annual rate of 1.25 %) of the average daily net assets of such Fund, subject to the breakpoints identified below.	June 30, 2004

Breakpoints:

Assets Under Management	Advisory Fee
Up to $250 million	1.25%
$250 million to $500 million	1.00%
$500 million to $750 million	0.87%
$750 million to $1 billion	0.75%
Over $1 billion	0.625%

All fees are computed and accrued daily and paid monthly.

VARIABLE INSURANCE FUNDS

By:______________________________
Name: ____________________________
Title:_____________________________

ACTION FUND MANAGEMENT, LLC

By: ______________________________
Name: Xxxxxx X. Xxxxxx
Title: Member-Manager