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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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<PAGE> PAGE 17
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<PAGE> PAGE 18
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<PAGE> PAGE 19
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<PAGE> PAGE 20
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<PAGE> PAGE 21
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<PAGE> PAGE 22
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<PAGE> PAGE 23
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<PAGE> PAGE 24
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<PAGE> PAGE 25
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<PAGE> PAGE 26
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<PAGE> PAGE 27
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<PAGE> PAGE 28
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<PAGE> PAGE 29
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<PAGE> PAGE 30
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<PAGE> PAGE 31
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<PAGE> PAGE 32
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<PAGE> PAGE 33
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<PAGE> PAGE 34
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<PAGE> PAGE 35
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<PAGE> PAGE 36
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<PAGE> PAGE 37
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<PAGE> PAGE 38
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SIGNATURE WENDY SWONGER
TITLE FIN REPTG SUPERVISOR
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<S> <C>
<PERIOD-TYPE> YEAR
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<FN>
<F1>Class B Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 013
<NAME> BB&T U.S.TREASURY MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
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<FN>
<F1>Trust Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 021
<NAME> BB&T SHORT INTERMEDIATE U.S. GOV. INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
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<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 023
<NAME> BB&T SHORT INTERMEDIATE U.S. GOV. INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
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<FN>
<F1>TRUST SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 031
<NAME> BB&T INTERMEDIATE U.S. GOVERNMENT BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
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<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 032
<NAME> BB&T INTERMEDIATE U.S. GOVERNMENT BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
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<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 033
<NAME> BB&T INTERMEDIATE U.S. GOVERNMENT BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
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<FN>
<F1>TRUST SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 041
<NAME> BB&T N.C. INTERMEDIATE TAX-FREE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
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<FN>
<F1>CLASS A SHARES
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 042
<NAME> BB&T N.C. INTERMEDIATE TAX-FREE FUND
<S> <C>
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<NUMBER-OF-SHARES-SOLD> 1171335
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<SHARES-REINVESTED> 26506
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<GROSS-EXPENSE> 444512
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<EXPENSE-RATIO> .96<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>TRUST SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 051
<NAME> BB&T GROWTH & INCOME STOCK FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 182180043
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<GROSS-EXPENSE> 2294228
<AVERAGE-NET-ASSETS> 14646556<F1>
<PER-SHARE-NAV-BEGIN> 12.97<F1>
<PER-SHARE-NII> .26<F1>
<PER-SHARE-GAIN-APPREC> 2.43<F1>
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<EXPENSE-RATIO> 1.11<F1>
<AVG-DEBT-OUTSTANDING> 0
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<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 052
<NAME> BB&T GROWTH & INCOME STOCK FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
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<INVESTMENTS-AT-COST> 182180043
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2294228
<AVERAGE-NET-ASSETS> 1995907<F1>
<PER-SHARE-NAV-BEGIN> 13.78<F1>
<PER-SHARE-NII> .13<F1>
<PER-SHARE-GAIN-APPREC> 1.52<F1>
<PER-SHARE-DIVIDEND> .14<F1>
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<EXPENSE-RATIO> 1.85<F1>
<AVG-DEBT-OUTSTANDING> 0
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<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 053
<NAME> BB&T GROWTH & INCOME STOCK FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
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<GROSS-EXPENSE> 2294228
<AVERAGE-NET-ASSETS> 185290584<F1>
<PER-SHARE-NAV-BEGIN> 12.99<F1>
<PER-SHARE-NII> .29<F1>
<PER-SHARE-GAIN-APPREC> 2.44<F1>
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<PER-SHARE-NAV-END> 15.34<F1>
<EXPENSE-RATIO> .86<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>TRUST SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 061
<NAME> BB&T BALANCED FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 75172426
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<ACCUMULATED-NET-GAINS> 1814370
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<EXPENSE-RATIO> 1.20<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 062
<NAME> BB&T BALANCED FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
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<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 063
<NAME> BB&T BALANCED FUND
<S> <C>
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<FN>
<F1>TRUST SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 071
<NAME> BB&T SMALL COMPANY GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
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<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 072
<NAME> BB&T SMALL COMPANY GROWTH FUND
<S> <C>
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<NET-ASSETS> 46985400
<DIVIDEND-INCOME> 9282
<INTEREST-INCOME> 233058
<OTHER-INCOME> 0
<EXPENSES-NET> 571159
<NET-INVESTMENT-INCOME> (328819)
<REALIZED-GAINS-CURRENT> 90971
<APPREC-INCREASE-CURRENT> 12148737
<NET-CHANGE-FROM-OPS> 11910889
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1298090
<NUMBER-OF-SHARES-REDEEMED> 315568
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 28927768
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 92263
<OVERDIST-NET-GAINS-PRIOR> 264517
<GROSS-ADVISORY-FEES> 308711
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 581385
<AVERAGE-NET-ASSETS> 1495198<F1>
<PER-SHARE-NAV-BEGIN> 15.24<F1>
<PER-SHARE-NII> (.21)<F1>
<PER-SHARE-GAIN-APPREC> 5.89<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.92<F1>
<EXPENSE-RATIO> 2.72<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000889284
<NAME> BB&T MUTUAL FUNDS GROUP
<SERIES>
<NUMBER> 073
<NAME> BB&T SMALL COMPANY GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 31600228
<INVESTMENTS-AT-VALUE> 47530175
<RECEIVABLES> 165255
<ASSETS-OTHER> 23964
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 47719394
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 733994
<TOTAL-LIABILITIES> 733994
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31650081
<SHARES-COMMON-STOCK> 1717398<F1>
<SHARES-COMMON-PRIOR> 1164384<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 421082
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 173546
<ACCUM-APPREC-OR-DEPREC> 15929947
<NET-ASSETS> 46985400
<DIVIDEND-INCOME> 9282
<INTEREST-INCOME> 233058
<OTHER-INCOME> 0
<EXPENSES-NET> 571159
<NET-INVESTMENT-INCOME> (328819)
<REALIZED-GAINS-CURRENT> 90971
<APPREC-INCREASE-CURRENT> 12148737
<NET-CHANGE-FROM-OPS> 11910889
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1298090
<NUMBER-OF-SHARES-REDEEMED> 315568
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 28927768
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 92263
<OVERDIST-NET-GAINS-PRIOR> 264517
<GROSS-ADVISORY-FEES> 308711
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 581385
<AVERAGE-NET-ASSETS> 26059744<F1>
<PER-SHARE-NAV-BEGIN> 14.57<F1>
<PER-SHARE-NII> (.17)<F1>
<PER-SHARE-GAIN-APPREC> 6.78<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.18<F1>
<EXPENSE-RATIO> 1.79<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>TRUST SHARES
</FN>
</TABLE>
The Board of Trustees
of BB&T Mutual Funds Group:
In planning and performing our audit of the financial
statements of BB&T Mutual Funds Group for the year
ended September 30, 1996, we considered its
internal controls, including procedures for safeguarding
securities, in order to determine our auditing procedures
for the purpose of expressing our opinion on the
financial statements and to comply with the requirements
of Form N-SAR, not to provide assurance on the
internal controls.
The management of BB&T Mutual Funds Group is
responsible for establishing and maintaining internal
controls. In fulfilling this responsibility, estimates and
judgments by management are required to assess the
expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives
of internal controls are to provide management with
reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or
disposition and that transactions are executed in accordance
with management's authorization and recorded properly
to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal controls,
errors or irregularities may occur and not be detected.
Also, projection of any evaluation of internal controls
to future periods is subject to the risk that it may
become inadequate because of changes in conditions
or that the effectiveness of the design and operation
may deteriorate.
Our consideration of the internal controls would not
necessarily disclose all matters in the internal controls
that might be material weaknesses under standards
established by the American Institute of Certified
Public Accountants. A material weakness is a condition
in which the design or operation of the specific internal
controls does not reduce to a relatively low level the
risk that errors or irregularities in amounts that would
be material in relation to the financial statements
being audited may occur and not be detected within a
timely period by employees in the normal course of
performing their assigned functions. However, we
noted no matters involving the internal controls,
including procedures for safeguarding securities, that
we consider to be material weaknesses as defined
above as of September 30, 1996.
This report is intended solely for the information and
use of management and the Securities and Exchange
Commission.
/s/ KPMG Peat Marwick LLP
Columbus, Ohio
November 8, 1996