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Annual Report
To Shareholders
September 30, 1998
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TABLE OF CONTENTS
Letter from the Chairman and the Investment Advisor
Page 2
Performance Report
Page 4
Independent Auditors' Report
Page 23
Statements of Assets and Liabilities
Page 24
Statements of Operations
Page 29
Statements of Changes in Net Assets
Page 33
Schedules of Portfolio Investments
Page 38
Notes to Financial Statements
Page 66
Financial Highlights
Page 85
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LETTER FROM THE CHAIRMAN AND THE INVESTMENT ADVISOR
Dear Shareholders:
We are pleased to send you this annual report for the 12 months ended September
30, 1998.
A year ago, when we wrote our last annual report to you, we were just getting
wind of a crisis in Asia that would adversely impact many of that region's
financial institutions and ignite a global economic decline. A year ago, many
observers still thought Russia's fledgling free-market experiment might
succeed. A year ago, the United States was floating blissfully through the
friendly climes of a "Goldilocks economy," seemingly immune to the realities of
historical economic cycles. A year ago, we had never seen the Dow Jones
Industrial Average (Dow) lose 554 points in a single day, as it proceeded to do
on October 27, 1997. A year ago, only a handful of people had ever heard of
Long-Term Capital Management; no one could suspect that the problems of a
single hedge fund could threaten the entire world's financial stability.
STOCKS: WEIGHED DOWN BY THE INEVITABLE
It has been said that nothing is certain but death and taxes. Nothing, we might
add, but the certainty that stocks do not always go up. After gaining more than
20% a year (as measured by the Dow) in 1995, 1996 and 1997, the stock market
finally yielded to a host of pressures--not the least of which were high
valuations that could not be supported in an environment of stagnant earnings.
During the 12-month period, stocks showed surprising resiliency, rebounding
from at least two downturns and reaching new highs in July. But by the end of
September, stocks had retreated once again, to the point where most indices
were virtually flat, or lower, for the period.
Still, as we write this letter in the middle of October, the Federal Reserve
has just delighted the financial world with a surprise interest-rate cut. (This
was the first time in nearly five years that the Fed changed rates outside of a
scheduled policy meeting.) Stocks immediately responded by pushing the Dow up
more than 330 points.
BONDS: THE YEAR'S BIG WINNERS
Although stocks have had a rough time of it during the last 12 months, bonds
have positively reveled in the bad news. Early in the period, concerns in Asia
and elsewhere drove investors from around the world to seek shelter in ultra-
safe U.S. Treasury bonds. The extraordinary demand pushed long-term interest
rates lower, and propelled bond prices higher. (Interest rates and bond prices
typically move inversely to one another.) After taking a breather for much of
1998, bonds again surged higher at the end of summer, proving that seemingly
stodgy, fixed-income securities could be more than a match for their equity
cousins.
LOOKING AHEAD: THE NEWS IS NOT ALL BAD
Of course, last year is now in the past, and you are expecting us to manage
your money in the months and years to come. Despite the near-panic being felt
in many parts of the world, the economic outlook here in the United States is
positive. When we consider the unemployment rate, the pace of orders for
factory goods and retail sales, and the stubbornly low rate of inflation, we
see an economy that continues to grow--albeit at a slower pace than in recent
years. It is still the consumer who makes the domestic economic engine hum, and
consumer confidence may be put to a stern test during the upcoming holiday
season. Nevertheless, we approach the coming year with cautious optimism about
the U. S. markets.
The outlook abroad is somewhat murkier. Although Japan recently embraced modest
reforms that could bring that country out of its deep recession, many foreign
economies are still shaky. Recent events have proven that no nation, not even
the United States, is immune to the problems of its global neighbors--even if
those neighbors are halfway around the world.
All of which takes us to the subject of volatility in the stock market. We
understand that many investors feel that recent fluctuations in the stock
market have been abnormal, that volatility has been excessive. On the contrary,
we
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believe that the standard deviation, or volatility, of the market over the last
12 months was right in line with historical levels. The volatility of the
previous four out of five years was abnormally low, and was masked further by
the fact that most of the market's movement was straight up. In recent months,
we have simply moved back to a period of average volatility. Remember, with
volatility comes opportunity, and we continue to employ every measure to take
advantage of volatile situations.
The swirl of global economic pressures can be fascinating to observe. Many
investors also find it important to understand the factors that shape the
direction of the world's economy, and the consequences these factors might have
on their investments. At the same time, experienced investors understand that
if they have a long-term investment horizon, and a sound financial plan, their
interests will be better served by not letting world events push them into
making impulsive decisions.
Finally, we would like to address the Year 2000 issue--the so-called "Millenium
Bug."
Back in the early days of mainframe computers, hard-disk storage was costly. To
save precious space, programmers deleted the first two digits from every date.
Thus, "1968" became "68", and so on. Now, as we approach the Year 2000, we face
the question: What will happen when today's computer systems read the year
"00"? Will they interpret the date as 1900 rather than 2000? Experts say that's
just what could happen. And, the "Millenium Bug" could cause some computers to
reject input, yield faulty results, or even shut down.
Please be assured that we at BB&T, along with the distributor of our funds,
BISYS Fund Services, and other third-party service providers, are committed to
making sure that our critical systems operate smoothly so that we will continue
to deliver superior client service.
We plan to provide updated information on our Year 2000 Project within the next
quarter. As your financial investment partner, it is our responsibility to
ensure that your money is managed wisely. We thank you for your continued
support.
Sincerely,
/s/ Walter B. Grimm
Walter B. Grimm
Chairman
BB&T Mutual Funds Group
/s/ David C. McMahon
David C. McMahon
Executive Vice President and Chief Investment Officer
Branch Banking and Trust Company
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This report is authorized for distribution only when preceded or accompanied by
a prospectus. Please read the prospectus carefully before investing or sending
money. The BB&T Mutual Funds are distributed by BISYS Fund Services LP.
The BB&T Mutual Funds are NOT FDIC INSURED and are not deposits or obligations
of, or guaranteed or endorsed by, Branch Banking and Trust Company or its
affiliates. Investment products involve investment risk, including the possible
loss of principal.
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THE BB&T INTERNATIONAL EQUITY FUND/1/
With a total return of -9.60% (A shares without load)/2/ for the 12 months
ended September 30, 1998, the Fund outperformed the Lipper International Fund
Average,/3/ which lost 10.65% for the same period. The Fund's benchmark, the
Morgan Stanley Capital International EAFE Index, produced a 12-month return of
- -8.08%. The best regions in our portfolio, in terms of absolute returns, were
Continental Europe and Great Britain. Our performance could be attributed to
the fact that we had roughly 70% of the Fund's net assets invested in these two
regions.
The Fund's relatively strong performance, compared to the Lipper International
Fund Average, benefited from our having no investments in Russia during the
period, and from our prudent decision to liquidate our holdings in Malaysia
before that country's government effectively froze all equity investments.
During the last 12 months, in an environment of declining stock prices
throughout much of the world, we successfully preserved much of our
shareholders' capital.
CURRENCY FLUCTUATIONS ROILED WORLD MARKETS
The period was marked by a great deal of volatility, both positive and
negative, in the world's equity and currency markets. Currency fluctuations,
which receive relatively little attention in the United States press, are of
special concern in many countries. During the last 12 months, the dollar
produced painful trade imbalances in particularly vulnerable foreign markets. A
number of countries also suffered from currency crunches as the rising dollar
further weakened these nations' already tenuous financial circumstances.
Additionally, for American shareholders, the value of the dollar relative to
other currencies can be as important as the rise or fall of foreign stocks.
When the dollar strengthens, for example, the value of foreign shares owned by
American investors falls when share prices are converted into dollars--even if
those stocks do not decline in their own markets. When the dollar weakens, the
opposite is true. Investing abroad can be complicated, and we take all relevant
factors into account before we buy or sell foreign securities. Of course, we
also consider the merits of each potential investment on its own terms.
The past year was challenging, with the malaise emanating from the meltdown in
Asia spreading to other countries and regions as diverse and discrete as Russia
and Latin America. Even the relatively robust economies of Europe and the
United States were not immune. However, while the world crisis is not yet
behind us, many concerns are being addressed by the International Monetary
Fund, with appropriate reforms being undertaken. Trade deficits in a number of
Asian countries have been reversed, and fresh capital is again flowing into
markets that were parched only a few months ago.
As of September 30, 1998, approximately 54.0% of the Fund's holdings were
invested in Continental Europe, 26.0% in Great Britain, 14.0% in Japan, 2.0% in
other Pacific Basin countries and 4.0% in the world's emerging markets.*
The top five equity holdings in the Fund were Nestle SA (approximately 2.4% of
the Fund's net assets), Total SA (2.3%), Volkswagen (2.1%), Glaxo Wellcome
(2.1%) and VNU (2.0%).*
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/1/International investing involves increased risk and volatility.
/2/With a maximum sales charge of 4.50%, the Fund's total return for period
would have been -13.67%.
/3/The Lipper International Fund Average consists of funds that invest their
assets in securities whose primary trading markets are outside of the United
States.
* The composition of the Fund's holdings is subject to change.
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BB&T International Equity Fund
Average Annual Total Return
As of 9/30/98
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Inception Since
Class Date 1 Year Inception
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Class A Shares* 1/2/97 -13.67 -1.48%
Class B Shares** 1/2/97 -13.80 -1.74%
Trust Shares 1/2/97 -9.45 1.50%
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*Reflects 4.50% Maximum Sales Charge
**Reflects applicable deferred sales charge.
Value of $10,000 Investment
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Date Trust Shares Class A Shares* Class B Shares* Morgan Stanley EAFE
1/2/97 10,000 9,551 10,000 10,000
9/30/97 11,334 10,778 10,751 11,043
9/30/98 10,264 9,743 9,699 10,151
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PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF SHARES IN THE BB&T MUTUAL FUNDS WILL FLUCTUATE, SO THAT
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
A portion of the Fund's fees has been voluntarily waived. If the fees had not
been waived, the Fund's total return for the period would have been lower.
The performance of the BB&T International Equity Fund is measured against the
Morgan Stanley Capital International Europe, Australia and Far East Index
(EAFE), which is unmanaged and is generally representative of the performance
of stock markets in those regions.
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THE BB&T SMALL COMPANY GROWTH FUND/1/
The year just ended was a particularly challenging time for the type of small-
company growth stocks the Fund favors. For most of the period, small-cap stocks
lagged their large-cap cousins by a significant margin. These circumstances
were driven by a number of factors. First, there were tremendous inflows into
the equity market for much of the year, which forced money managers to focus on
the largest, most liquid stocks. Also, many investors entered the stock market
for the first time, and these newcomers were more comfortable buying the big,
familiar names. In this environment, the Fund produced a total return of -
23.81% (A shares without load)/2/ compared to its benchmark, the Russell 2000
Index, with a return of -19.02% for the same time period.
THE FUND IS POSITIONED FOR A RECOVERY
It is not our style to chase after "hot" sectors or stocks; we are bottom-up
investors who carefully consider each potential investment on its own merits.
The four major areas we tend to invest in are technology, consumer goods,
health care, and business services. We are always looking to find companies in
those sectors, because that is where we tend to find the greatest growth
potential.
As we enter fiscal year 1999, every segment of the market has been going down.
This has been a true bear market. The global economic slowdown has impacted
just about every type of stock. Even smaller companies with no direct
international exposure, such as restaurants and retailers, have been adversely
affected. Also, in our small-cap universe, investors have not been the least
bit forgiving; if a particular stock has stumbled even a little, the market has
punished it immediately.
Having said all this, we remain very optimistic about small-cap stocks going
forward. Valuations in the small-company growth sector are even more attractive
today than they were a year ago, and the opportunities are more abundant.
Historically, small stocks do very well over the long term. Therefore, we would
expect small-cap stocks to outperform when the overall market comes out of this
corrective phase.
Investors should realize that with the greater potential for long-term capital
appreciation that small-cap stocks offer, comes the increased risk of short-
term volatility. A fund such as ours is for investors who have long investment
horizons, and the willingness to withstand significant fluctuations.
As of September 30, 1998, the top five equity holdings in the Fund were Aspect
Development (3.2% of the Fund's net assets), Legato Systems (3.0%),
International Network Services (2.6%), VERITAS Software Corp. (2.2%) and
Eastern Environmental Services (2.0%).*
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/1/Small-capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure and, historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
/2/With a maximum sales charge of 4.50%, the Fund's total return for the one-
year period would have been -27.24%.
* The composition of the Fund's holdings is subject to change.
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BB&T Small Company Growth Fund
Average Annual Total Return
As of 9/30/98
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Inception Since
Class Date 1 Year Inception
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Class A Shares* 12/7/94 -27.24% 14.92%
Class B Shares** 1/1/96 -27.38% 3.65%
Trust Shares 12/7/94 -23.62% 16.64%
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*Reflects 4.50% Maximum Sales Charge
**Reflects applicable deferred sales charge.
Value of $10,000 Investment
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Date Trust Shares Class A Shares* Russell 2000 Index
---- ------------ --------------- ------------------
12/7/94 10,000 9,551 10,000
9/30/95 14,570 13,878 12,923
9/30/96 21,180 20,115 14,620
9/30/97 23,545 22,307 19,472
9/30/98 17,985 16,995 15,768
Value of $10,000 Investment
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Date Class B Shares** Russell 2000 Index
---- ---------------- ------------------
1/1/96 10,000 10,000
9/30/96 13,576 11,073
9/30/97 14,954 14,748
9/30/98 11,006 11,943
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PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF SHARES IN THE BB&T MUTUAL FUNDS WILL FLUCTUATE, SO THAT
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
A portion of the Fund's fees has been voluntarily waived. If the fees had not
been waived, the Fund's total return for the period would have been lower.
The performance of the BB&T Small Company Growth Fund is measured against the
Russell 2000, an unmanaged index generally representative of the performance of
small-capitalization stocks. The index is unmanaged and does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services.
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THE BB&T LARGE COMPANY GROWTH FUND
The BB&T Large Company Growth Fund was opened to investors on October 3, 1997.
The Fund follows a quantitative approach to investing, mostly in large-
capitalization stocks that have led the market in recent years. The Fund is
most appropriate for long-term investors whose primary goal is capital
appreciation, with less concern about current income. For the period ended
September 30, 1998, the Fund produced a total return of -2.54% (A shares
without load)/1/, compared to 9.05% for its benchmark, the S&P 500 Stock Index.
BIGGER WAS BETTER
During the period, large-cap stocks have been the market winners; more
specifically, a handful of the very largest companies have produced the
greatest performance. As long as we continue to have the turmoil we have seen
in recent months, we believe larger companies will perform reasonably well,
simply because they tend to act as a safe haven for equity investors looking
for some measure of stability. We believe many of these investors feel more
comfortable owning the largest of large-cap stocks. We own a number of these
companies, such as Pfizer (2.2% of the Fund's net assets) and Microsoft
(2.3%).* However, in line with our growth orientation, we will not follow the
current market trend to focus disproportionately on the largest of large-cap
stocks.
The core portion of our Fund remains relatively static. We will attempt to
maintain at least two thirds of the Fund invested in stocks with
capitalizations larger than the mean capitalization of the S&P 500. Outside of
that group, we hold stocks that we can identify as having outstanding growth
potential, based on the companies' return on equity, earnings momentum, price
momentum and earnings surprises. At the same time, we qualify our stock buys by
examining a company's price-to-sales ratio and then feeling comfortable that
this particular valuation measure is reasonable.
We do not try to time the market; we stay as fully invested as possible at all
times. Also, we avoid trying to rotate into specific sectors--a risky strategy
that can mean significant losses when decisions prove wrong. Instead, we adhere
to a strategy of adding to our core positions when certain stocks become less
expensive, trimming back positions when they become too large, and looking for
those stocks on the periphery that can add value to the Fund.
As of September 30, 1998, the top five equity holdings in the Fund were Johnson
& Johnson (2.8% of the Fund's net assets), Cisco Systems (2.4%), Schering-
Plough Corp. (2.4%), Merck & Co. (2.4%) and Microsoft (2.3%).*
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/1/With the maximum sales charge of 4.50%, the Fund's total return would have
been -6.91% since inception.
* The composition of the Fund's holdings is subject to change.
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BB&T Large Company Growth Fund
Aggregate Total Return
As of 9/30/98
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Inception Since
Class Date Inception+
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Class A Shares* 10/3/97 -6.91%
Class B Shares** 10/3/97 -6.96%
Trust Shares 10/3/97 -2.33%
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*Reflects 4.50% Maximum Sales Charge
**Reflects applicable deferred sales charge. Total returns of less than 1 year
are aggregate.
+ Aggregate Total Return
Value of $10,000 Investment
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Date Trust Shares Class A Shares* S & P 500 Stock Index
10/3/97 10,000 9,550 10,000
9/30/98 9,767 9,309 10,905
Value of $10,000 Investment
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Date Class B Shares** S & P 500 Stock Index
---- ---------------- ---------------------
10/3/97 10,000 10,000
9/30/98 9,304 10,905
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PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF SHARES IN THE BB&T MUTUAL FUNDS WILL FLUCTUATE, SO THAT
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
A portion of the Fund's fees has been voluntarily waived. If the fees had not
been waived, the Fund's total return for the period would have been lower.
The performance of the BB&T Large Company Growth Fund is measured against the
S&P 500 Stock Index, an unmanaged index generally considered to be
representative of the performance of the stock market as a whole. The index is
unmanaged and does not reflect the deduction of expenses associated with a
mutual fund, such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for these value-added services.
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THE BB&T GROWTH AND INCOME STOCK FUND
The year ended September 30, 1998, was a challenging one. The BB&T Growth and
Income Stock Fund produced a total return of 0.10% (A shares without load)/2/
compared to its benchmark, the S&P 500, which returned 9.05%. During the third
quarter of 1998, we held our own in an extremely tough market environment.
Throughout the three-month period, the Lipper Growth and Income Fund Average/1/
was down roughly 12.47%. In contrast, the Fund fell just 8.54% (A shares
without load)./2/ It is important to note that, during the market's turbulent
times, we outperformed our Lipper peer group average.
WE CONTINUED TO FOLLOW OUR TIME-PROVEN STRATEGY
For the year as a whole, the stock market was characterized by a strict, large-
cap bias. There was very narrow leadership throughout the period, with most of
the overall market's gain coming from a handful of large-cap growth stocks. As
the year progressed, this leadership became even narrower. Generally speaking,
these are not the types of stocks that fit our criteria.
However, we did not change our investment strategy in an attempt to conform to
a short-term trend. Careful evaluation of each security's potential risk, as
well as its potential return, continues to be an important part of our
investment process. We also continued to follow our long-term strategy of
remaining fully invested and diversified across economic sectors, and of
staying true to our value orientation. As always, we bought reasonably priced
stocks of companies that we felt were financially strong. It is our belief
that, over time, this approach can produce competitive returns with less
volatility than the market as a whole.
When investing for the long term, we believe it is important to fully
understand the risks, and potential rewards, of equities. One of those risks is
the normal market volatility that all investors will experience from time to
time, and when the market does correct itself, long-term investors can take
advantage.
As of September 30, 1998, the top five equity holdings in the Fund were
SUPERVALU, Inc. (3.0% of the Fund's net assets), Anheuser-Busch Co. (3.0%),
Johnson & Johnson (2.8%), SBC Communications (2.7%) and Abbott Labs (2.4%).*
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/1/The Lipper Growth and Income Fund Average consists of funds that combine a
growth-of-earnings orientation and an income requirement for level and/or
rising dividends.
/2/With a maximum sales charge of 4.50%, the Fund's total return for the one-
year period would have been -4.39%, and for the three-month period, it would
have been -12.68%.
* The composition of the Fund's holdings is subject to change.
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BB&T Growth and Income Stock Fund
Average Annual Total Return
As of 9/30/98
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Inception Since
Class Date 1 Year 5 Year Inception
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Class A Shares* 10/09/92 -4.39% 14.71% 14.95%
Class B Shares** 1/1/96 -4.37% ----- 15.88%
Trust Shares 10/9/92 0.35% 16.06% 16.13%
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*Reflects 4.50% Maximum Sales Charge
**Reflects applicable deferred sales charge.
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
Date Trust Shares Class A Shares* S&P 500 Stock Index
10/9/92 10,000 9,551 10,000
9/30/93 11,606 11,052 11,714
9/30/94 12,021 11,420 12,147
9/30/95 14,531 13,775 15,759
9/30/96 17,628 16,664 18,949
9/30/97 24,350 22,963 26,610
9/30/98 24,434 22,987 29,018
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
Date Class B Shares** S&P 500 Stock Index
1/1/96 10,000 10,000
9/30/96 11,267 11,357
9/30/97 15,403 15,955
9/30/98 14,999 17,399
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PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF SHARES IN THE BB&T MUTUAL FUNDS WILL FLUCTUATE, SO THAT
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
A portion of the Fund's fees has been voluntarily waived. If the fees had not
been waived, the Fund's total return for the period would have been lower.
The performance of the BB&T Growth and Income Stock Fund is measured against
the S&P 500 Stock Index, an unmanaged index generally considered to be
representative of the performance of the stock market as a whole. The index is
unmanaged and does not reflect the deduction of expenses associated with a
mutual fund, such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for these value-added services.
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THE BB&T BALANCED FUND
With a total return of 6.89% (Class A Shares without load)/1/ for the 12 months
ended September 30, 1998, we solidly outperformed the Lipper Balanced Fund
Average,/2/ which returned 3.26% for the same period. The Fund's benchmarks,
the S&P 500 Stock Index and the Lehman Brothers Intermediate Government Bond
Index, produced returns of 9.05% and 10.60%, respectively. In keeping with our
investment philosophy, we achieved these results with a lot less risk.
FLEXIBILITY AND LIQUIDITY SERVED US WELL
This recent period demonstrated how our balanced and commonsense approach to
investing can work in an uncertain environment. Unlike stock or bond funds,
which generally invest in a single asset class, we have the opportunity to use
volatility to our advantage. When the markets are out of balance, we have the
liquidity to buy stocks or bonds when they are inexpensive, and the flexibility
to sell our holdings when valuations rise too high.
Stocks and bonds do not always move in lockstep. Often, when one asset class is
down, the other is up. For example, during the latter part of our fiscal year,
stocks retreated, while investors stampeded to the quality of long-term U.S.
Treasury bonds. We held a solid position in Treasuries for some time, so when
market sentiment shifted from stocks to bonds, our shareholders benefited.
Then, when this almost-panic buying of Treasuries created wide spreads
(premiums) for government agency bonds, we were able to sell some of our
Treasuries and buy agency bonds at very attractive prices. We provided a higher
yield to our shareholders while maintaining the quality and safety of
government issues.
As of September 30, 1998, approximately 56.6% of the Fund's holdings were
invested in stocks, 41.1% in fixed-income holdings and 2.3% in cash and cash
equivalents. The Fund's top five equity holdings were SBC Communications (1.5%
of the Fund's net assets), IBM (1.5%), Anheuser-Busch (1.4%), American General
Corp. (1.4%) and Albertson's (1.3%). The Fund's fixed-income holdings were
invested in U.S. Treasury, government agency and mortgage-backed securities.
The average maturity of the fixed-income portfolio was approximately 6.4 years;
the average credit quality was AAA.*
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/1/With the maximum sales charge of 4.50%, the total return for the one-year
period would have been 2.10%.
/2/The Lipper Balanced Fund Average's primary objective is to conserve
principal by maintaining at all times a balanced portfolio of both stocks and
bonds. Typically, the Fund's stock/bond ratio is around 60%/40%.
* The composition of the Fund's holdings is subject to change.
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BB&T Balanced Fund
Average Annual Total Return
As of 9/30/98
- --------------------------------------------------------------------------------
Inception Since
Class Date 1 Year 5 Year Inception
- --------------------------------------------------------------------------------
Class A Shares* 7/1/93 2.10% 10.38% 10.46%
Class B Shares** 1/1/96 2.16% ----- 10.95%
Trust Shares 7/1/93 7.18% 11.68% 11.67%
- --------------------------------------------------------------------------------
*Reflects 4.50% Maximum Sales Charge
**Reflects applicable deferred sales charge.
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
S&P 500 Lehman Bros. Int.
Date Trust Shares Class A Shares* Stock Index Govt. Bond Index
---- ------------ --------------- ----------- -----------------
7/1/93 10,000 9,551 10,000 10,000
9/30/93 10,274 9,826 10,257 10,211
9/30/94 10,231 9,763 10,637 10,058
9/30/95 12,095 11,521 13,800 11,124
9/30/96 13,637 12,853 16,593 11,691
9/30/97 16,652 15,771 23,302 12,606
9/30/98 17,847 16,858 25,410 13,942
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
Lehman Bros. Int.
Date Class B Shares** S&P 500 Stock Index Govt. Bond Index
---- ---------------- ------------------- ----------------
1/1/96 10,000 10,000 10,000
9/30/96 10,604 11,357 10,170
9/30/97 12,820 15,955 10,966
9/30/98 13,310 17,399 12,128
- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF SHARES IN THE BB&T MUTUAL FUNDS WILL FLUCTUATE, SO THAT
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
A portion of the Fund's fees has been voluntarily waived. If the fees had not
been waived, the Fund's total return for the period would have been lower.
The performance of the BB&T Balanced Fund is measured against the S&P 500 Stock
Index, an unmanaged index generally considered to be representative of the
performance of the stock market as a whole, and against the Lehman Brothers
Intermediate Government Bond Index, widely used as a broad measure of the
performance of U.S. Government bonds with maturities of less than 10 years. The
indices are unmanaged and do not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services.
-13-
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THE BB&T CAPITAL MANAGER FUNDS
CONSERVATIVE GROWTH FUND
MODERATE GROWTH FUND
GROWTH FUND
The BB&T Capital Manager Funds were opened to investors on October 2, 1997. The
three Funds--Conservative Growth Fund, Moderate Growth Fund and Growth Fund--
invest in underlying funds from the BB&T family. The Capital Manager Funds seek
varying degrees of capital appreciation and income, based on each Fund's
specific and separate asset allocation mix.
OUR ASSET ALLOCATION FUNDS PERFORMED AS THEY SHOULD HAVE
As the equity markets turned down in the latter part of the period, the more
conservative components of our funds--which had greater exposure to growth-and-
income and bond shares--performed better than the more aggressive components,
which held larger proportions of shares in small-company and international
portfolios. Since Class A's inception on January 29, 1998, the Conservative
Growth Fund returned 1.89% (A Shares without load)/1/; the Moderate Growth Fund
returned 0.10% (A Shares without load)/1/; and the Growth Fund returned -1.45%
(A Shares without load)/1/, for the period ended September 30, 1998. In
comparison, the Funds' benchmarks, the S&P 500 Stock Index and the Lehman
Brothers Intermediate Government Bond Index, produced returns of 4.84% and
6.81%, respectively. These results are in line with the expectations we would
have for the Funds' respective asset allocation mixes, which blend varying
levels of stock, bond and money market fund shares.
While the period was a difficult one for virtually all equity funds, we were
able to take advantage of market volatility. A key feature of the Capital
Manager Funds is that we actively manage each portfolio based on specific asset
targets; we adjust each Fund's equity, fixed-income and cash allocations to
conform to pre-established ranges. For example, when small-company and
international shares underperformed during the period, we increased our
exposure to those sectors, bringing each Fund's weightings back up to target.*
This discipline led us to buy shares of specific sectors when they were
relatively cheap, and sell those shares that were relatively expensive. We
believe that, in the long run, this asset allocation strategy helps us reduce
volatility for our shareholders, while providing competitive returns.
As of September 30, 1998, each Fund's asset allocation mix was in line with its
respective target exposures. Despite volatility in many markets, we believe it
is appropriate to take the "target" amount of risk as determined for each Fund.
This offers shareholders a range of risk/reward scenarios from which they can
choose the one most appropriate to their individual time horizons and
investment objectives.
- --------------------------------------------------------------------------------
/1/With the maximum sales charge of 4.50%, the total return since inception for
the Conservative Growth Fund would have been -2.65%; for the Moderate Growth
Fund, it would have been -.4.40%; and for the Growth Fund, it would have been
-5.91%.
* The composition of the Funds' holdings is subject to change.
-14-
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The BB&T Capital Manager
Moderate Growth Fund
Aggregate Total Return
As of 9/30/98
- --------------------------------------------------------------------------------
Inception Since
Class Date Inception+
- --------------------------------------------------------------------------------
Class A Shares* 1/29/98 -4.40%
Trust Shares 10/2/97 0.68%
- --------------------------------------------------------------------------------
*Reflects 4.50% Maximum Sales Charge
+ Aggregate Total Return
The BB&T Capital Manager
Conservative Growth Fund
Aggregate Total Return
As of 9/30/98
- --------------------------------------------------------------------------------
Inception Since
Class Date Inception+
- --------------------------------------------------------------------------------
Class A Shares* 1/29/98 -2.65%
Trust Shares 10/2/97 3.95%
- --------------------------------------------------------------------------------
*Reflects 4.50% Maximum Sales Charge
+ Aggregate Total Return
The BB&T Capital Manager
Growth Fund
Aggregate Total Return
As of 9/30/98
- --------------------------------------------------------------------------------
Inception Since
Class Date Inception+
- --------------------------------------------------------------------------------
Class A Shares* 1/29/98 -5.91%
Trust Shares 10/2/97 -1.72%
- --------------------------------------------------------------------------------
*Reflects 4.50% Maximum Sales Charge
+ Aggregate Total Return
BB&T Capital Manager Trust Shares
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
S&P 500 Lehman Bros. Int.
Date Moderate Conservative Growth Stock Index Govt. Bond Index
---- -------- ------------ ------ ----------- ----------------
10/2/97 10,000 10,000 10,000 10,000 10,000
9/30/98 10,068 10,395 9,828 10,905 11,059
BB&T Capital Manager A Shares
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Date Moderate Conservative Growth S&P 500 Stock Index Lehman Bros. Int. Govt. Bond Index
<S> <C> <C> <C> <C> <C>
1/29/98 9,550 9,550 9,550 10,000 10,000
9/30/98 9,559 9,731 9,411 10,484 10,681
</TABLE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF SHARES IN THE BB&T MUTUAL FUNDS WILL FLUCTUATE, SO SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
A portion of the Funds' fees has been voluntarily waived. If the fees had not
been waived, the Funds' total returns for the period would have been lower.
The performance of the BB&T Capital Manager Funds is measured against the S&P
500 Stock Index, an unmanaged index generally considered to be representative
of the performance of the stock market as a whole, and against the Lehman
Brothers Intermediate Government Bond Index, widely used as a broad measure of
the performance of U.S. Government bonds with maturities of less than 10 years.
The indices are unmanaged and do not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund
accounting fees. The Funds' performance reflects the deduction of fees for
these value-added services.
-15-
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THE BB&T NORTH CAROLINA INTERMEDIATE TAX-FREE FUND/1/,/2/
During a period that saw tremendous volatility in the equity markets, the Fund
provided fixed-income shareholders with outstanding returns. The total return
for the period ended September 30, 1998, was 6.63% (A shares without load)/3/.
The Fund's benchmark, the Lehman Brothers 5-Year General Obligations Index,
produced a total return of 6.94% for the same period. The Fund's performance
was further enhanced by its yield's tax-free status, and the fact that in an
unusually benign inflationary environment, returns provided additional
purchasing power. We believe that municipal bond funds in general, and actively
managed funds like ours in particular, can add valuable diversification to a
shareholder's portfolio.
A FAVORABLE ENVIRONMENT FOR MUNICIPAL BONDS
After a bond rally last autumn, the fixed-income market remained generally
stable for a time. However, anticipating a further decline in interest rates,
we began to lengthen the Fund's effective maturity. This strategy served us
exceedingly well in the latter part of the Fund's fiscal year. Uncertainty in
equity markets throughout the world drove investors to the safety and stability
of U.S. Treasury securities. At first, this "flight to quality" did not extend
to the municipal bond market, which caused spreads (the difference between
yields for issues of comparable maturities) to widen between Treasuries and
muni bonds. As a result, the yields for muni bonds became more attractive and
gave shareholders greater tax-free income. In time, money started flowing into
muni bonds, which helped drive their prices up and provided significant capital
gains.
The Federal Reserve Board (Fed) lowered the fed funds rate to 5.25% on
September 29, 1998. We anticipate another rate cut in November, and perhaps
even one more as early as December. We expect the level and timing of these
prospective cuts will depend, to a large extent, on how effectively Japan
addresses its banking problem, and how the financial crisis in Eastern Europe
unfolds. It would concern us if the Fed decided not to take further action this
year; we believe the bond market has already discounted a quarter-point cut
into current prices.
Throughout the period, the Fund's holdings were mostly concentrated in the city
of Charlotte and in the Charlotte/Mecklenburg area. As the period wound down,
however, we affected a more diverse geographic spread across the state of North
Carolina.
As of September 30, 1998, virtually the entire Fund's portfolio was invested in
debt instruments issued by government entities in the state of North Carolina.
Approximately 68% of our holdings were general obligation bonds; 31% were
revenue bonds; and 1% was in cash and cash equivalents. The effective maturity
of our portfolio was 7.3 years, and the average credit quality was AAA.*
- --------------------------------------------------------------------------------
/1/The Fund's income may be subject to certain state and local taxes and,
depending on your tax status, to the federal alternative minimum tax.
/2/Regional investing may incur additional risks since investments are limited
to one geographical area.
/3/With the maximum sales charge of 2.00%, the total return for the North
Carolina Intermediate Tax-Free Fund would have been 4.50%.
* The composition of the Fund's holdings is subject to change.
-16-
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BB&T North Carolina Intermediate Tax-Free Fund
Average Annual Total Return
As of 9/30/98
- --------------------------------------------------------------------------------
Inception Since
Class Date 1 Year 5 Year Inception
- --------------------------------------------------------------------------------
Class A Shares* 10/16/92 4.50% 3.89% 4.37%
Trust Shares 10/16/92 6.90% 4.48% 4.87%
- --------------------------------------------------------------------------------
*Reflects 2.00% Maximum Sales Charge
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
Lehman Bros. 5-Year
Date Trust Shares Class A Shares* General Oblig. Index
10/16/92 10,000 9,804 10,000
9/30/93 10,662 10,451 10,833
9/30/94 10,537 10,313 10,850
9/30/95 11,355 11,097 11,856
9/30/96 11,669 11,386 12,366
9/30/97 12,420 12,101 13,213
9/30/98 13,277 12,904 14,130
- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF SHARES IN THE BB&T MUTUAL FUNDS WILL FLUCTUATE, SO SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
A portion of the Fund's fees has been voluntarily waived. If the fees had not
been waived, the Fund's total return for the period would have been lower.
The performance of the BB&T North Carolina Intermediate Tax-Free Fund is
measured against the Lehman Brothers 5-Year General Obligations Index, widely
used as a broad measure of the performance of tax-exempt municipal securities
with an average maturity of five years. The index is unmanaged and does not
reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for these value-added services.
-17-
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THE BB&T SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND/1/,/2/
The BB&T South Carolina Intermediate Tax-Free Fund was opened to investors on
October 20, 1997. With a total return of 7.91% (A Shares without load)/3/ for
the nearly 12 months ended September 30, 1998, the Fund solidly outperformed
the Lipper Intermediate Municipal Bond Fund Index,/4/ which returned 6.77% from
10/30/97 to 9/30/98. The Fund also posted returns higher than the Lehman
Brothers 5-Year General Obligations Index, which posted returns of 6.29% for
the 11-month period ending 9/30/98, and also outpaced the Merrill Lynch 1-3-
Year Government Index/5/, which gained 7.93% during the same 11-month period.
During a period that saw tremendous volatility in the equity markets, the Fund
provided fixed-income shareholders with attractive returns. The Fund's
performance was further enhanced by its yield's tax-free status, and by the
fact that, in an unusually benign inflationary environment, returns provided
additional purchasing power.
A FAVORABLE ENVIRONMENT FOR MUNICIPAL BONDS
After a bond rally last autumn, the fixed-income market remained generally
stable for a time. However, anticipating a further decline in interest rates,
we began to lengthen the Fund's effective maturity. This strategy served us
exceedingly well in the latter part of the Fund's fiscal year. Uncertainty in
equity markets throughout the world drove investors to the safety and stability
of U.S. Treasury securities. At first, this "flight to quality" did not extend
to the municipal bond market, which caused spreads (the difference between
yields for issues of comparable maturities) to widen between Treasuries and
muni bonds. As a result, the yields for muni bonds became more attractive and
gave shareholders greater tax-free income. In time, money started flowing into
muni bonds, which helped drive their prices up and provided significant capital
gains.
The Federal Reserve Board (Fed) lowered the fed funds rate to 5.25% on
September 29, 1998. We anticipate another rate cut in November, and perhaps
even one more as early as December. We expect the level and timing of these
prospective cuts will depend, to a large extent, on how effectively Japan
addresses its banking problem, and how the financial crisis in Eastern Europe
unfolds. It would concern us if the Fed decided not to take further action this
year; we believe the bond market has already discounted a quarter-point cut
into current prices.
As of September 30, 1998, virtually the entire Fund's portfolio was invested in
debt instruments issued by government entities in the state of South Carolina.
Approximately 35.1% of our holdings were general obligation bonds; 62.1% were
revenue bonds; and 2.8% was in cash and cash equivalents. The effective
maturity of our holdings was 7.5 years, and the average credit quality was
AAA.*
- --------------------------------------------------------------------------------
/1/The Fund's income may be subject to certain state and local taxes and,
depending on your tax status, to the federal alternative minimum tax.
/2/Regional investing may incur additional risks since investments are limited
to one geographical area.
/3/With the maximum sales charge of 2.00%, the total return for the South
Carolina Intermediate Tax-Free Fund would have been 5.79%.
/4/The Lipper Intermediate Municipal Bond Fund Index invests in municipal debt
issues with dollar-weighted average maturities of one to five years.
/5/The Merrill Lynch 1-3-Year Government Index is widely used as a measure of
the performance of the U.S. Government Bonds in that maturity range. The
index is unmanaged and does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees.
The Fund's performance reflects the deduction of fees for these value-added
services.
* The composition of the Fund's holdings is subject to change.
-18-
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BB&T South Carolina Intermediate Tax-Free Fund
Aggregate Total Return
As of 9/30/98
- --------------------------------------------------------------------------------
Inception Since
Class Date Inception+
- --------------------------------------------------------------------------------
Class A Shares* 10/20/97 5.79%
Trust Shares 10/20/97 8.02%
- --------------------------------------------------------------------------------
*Reflects 2.00% Maximum Sales Charge
+ Aggregate Total Return
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
Date Trust Shares Lehman Bros. 5-Year General Oblig. Index
---- ------------ ----------------------------------------
10/19/97 10,000 10,000
9/30/98 10,802 10,629
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
Date Class A Shares Lehman Bros. 5-Year General Oblig. Index
---- -------------- ----------------------------------------
12/10/97 9,800 10,000
9/30/98 10,579 10,629
- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF SHARES IN THE BB&T MUTUAL FUNDS WILL FLUCTUATE, SO SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
A portion of the Fund's fees has been voluntarily waived and reimbursed. If the
fees had not been waived and reimbursed, the Fund's total return for the period
would have been lower.
The performance of the BB&T South Carolina Intermediate Tax-Free Fund is
measured against the Lehman Brothers 5-Year General Obligations Index, widely
used as a broad measure of the performance of tax-exempt municipal securities
with an average maturity of five years. The index is unmanaged and does not
reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for these value-added services.
-19-
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THE BB&T INTERMEDIATE U.S. GOVERNMENT BOND FUND
THE BB&T SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
Both funds outperformed their respective benchmarks for the 12 months ended
September 30, 1998. With a total return of 13.07% (A Shares without load)/1/
for the period, the INTERMEDIATE U.S. GOVERNMENT BOND FUND beat its benchmark,
the Lehman Brothers Intermediate Government Bond Index, which returned 10.60%.
It also outperformed the Lipper Intermediate U.S. Government Bond Fund
Average,/2/ which rose 10.53%. THE SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME
FUND, which returned 8.50% (A Shares without load)/1/, also beat its benchmark,
the Merrill Lynch 1-3-Year Government Index, which posted returns of 7.93%, and
outpaced the Lipper Short-Intermediate U.S. Government Bond Fund Average,/3/
which gained 8.25% for the 12 months ended September 30, 1998.
LONGER MATURITIES AND EMPHASIS ON QUALITY PRODUCED HANDSOME RETURNS
The Funds benefited from a "flight to quality" by investors seeking the safety
of U.S. Treasury securities. The resulting fall in interest rates produced
handsome capital gains for both Funds--especially the more interest-rate-
sensitive Intermediate Fund--which maintained large positions in longer
maturity Treasuries throughout the year. Throughout the period, we felt that
interest rates would move lower, and we positioned the Funds to take advantage
of such a move. When rates did fall, both Funds enjoyed significant price
appreciation.
The core in both Funds was, and continues to be, U.S. Treasury securities. The
turmoil in Asia, and uncertainty in markets throughout the world, placed a
premium on the unimpeachable quality of Treasuries. However, we are looking at
reducing Treasury holdings in favor of corporate and mortgage securities, as
recent market volatility has created value in these bonds.
Looking ahead to the next six to 12 months, we remain positive on bonds as
worldwide economic conditions slow and inflation remains contained. Given this
favorable environment, we expect to keep the Funds' respective maturities at
least neutral to their benchmarks, and perhaps longer.
As of September 30, 1998, the estimated average maturity of the INTERMEDIATE
U.S. GOVERNMENT BOND FUND was 9.25 years. Approximately 50.0% of the Fund was
invested in securities issued by the U.S. Treasury, 23.0% in corporate debt,
21.0% in mortgage-backed securities and 6.0% in U.S. Government agency
securities. The Fund's average credit quality was AAA.+
BB&T Short-Intermediate U.S. Government Income Fund
Average Annual Total Return
As of 9/30/98
- --------------------------------------------------------------------------------
Inception Since
Class Date 1 Year 5 Year Inception
- --------------------------------------------------------------------------------
Class A Shares** 11/30/92 6.32% 4.61% 5.30%
Trust Shares 11/30/92 8.77% 5.29% 5.90%
- --------------------------------------------------------------------------------
*Reflects 2.00% Maximum Sales Charge
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
Merrill Lynch 1-3
Date Trust Shares Class A Shares* Year Govt. Index
---- ------------ --------------- ----------------
11/30/92 10,000 9,804 10,000
9/30/93 10,801 10,569 10,579
9/30/94 10,622 10,373 10,702
9/30/95 11,579 11,280 11,588
9/30/96 12,083 11,741 12,238
9/30/97 12,848 12,454 12,937
9/30/98 13,974 13,511 13,963
- --------------------------------------------------------------------------------
/1/With the maximum sales charge of 4.50% for the Intermediate U.S. Government
Bond Fund and 2.00% for the Short-Intermediate U.S. Government Income Fund,
the total return for the Intermediate U.S. Government Bond Fund would have
been 8.02%, and the return for the Short-Intermediate U.S. Government Income
Fund would have been 6.32%.
/2/The Lipper Intermediate U.S. Government Bond Fund Index invests at least 65%
of its assets in bonds issued or guaranteed by the U.S. government, its
agencies, or its instrumentalities, with dollar-weighted average maturities
of five to ten years.
/3/The Lipper Short-Intermediate U.S. Government Bond Fund Index invests at
least 65% of its assets in bonds issued or guaranteed by the U.S. government,
its agencies, or its instrumentalities, with dollar-weighted average
maturities of one to five years.
+ The composition of the Funds' holdings is subject to change.
-20-
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As of September 30, 1998, the estimated average maturity of the SHORT-
INTERMEDIATE U.S. GOVERNMENT INCOME FUND was 4.03 years. Approximately 56.0% of
the Fund was invested in securities issued by the U.S. Treasury, 25.0% in
mortgage-backed securities, 12.0% in corporate debt, 6.0% in U.S. Government
agency securities, and 1.0% in cash and cash equivalents. The portfolio's
average credit quality was AAA.+
BB&T Intermediate U.S. Government Bond Fund
Average Annual Total Return
As of 9/30/98
- --------------------------------------------------------------------------------
Inception Since
Class Date 1 Year 5 Year Inception
- --------------------------------------------------------------------------------
Class A Shares* 10/9/92 8.02% 5.28% 6.17%
Class B Shares** 1/1/96 8.26% ---- 4.98%
Trust Shares 10/9/92 13.46% 6.54% 7.27%
- --------------------------------------------------------------------------------
*Reflects 4.50% Maximum Sales Charge
**Reflects applicable deferred sales charge.
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
Date Trust Shares Class A Shares* Lehman Bros. Int. Govt. Bond Index
---- ------------ --------------- ----------------------------------
10/9/92 10,000 9,551 10,000
9/30/93 11,076 10,557 10,823
9/30/94 10,607 10,083 10,661
9/30/95 11,976 11,357 11,791
9/30/96 12,386 11,717 12,392
9/30/97 13,402 12,647 13,362
9/30/98 15,206 14,300 14,778
Value of $10,000 Investment
[LINE GRAPH APPEARS HERE]
Date Class B Shares** Lehman Bros. Int. Govt. Bond Index
1/1/96 10,000 10,000
9/30/96 9,752 10,170
9/30/97 10,448 10,966
9/30/98 11,429 12,128
- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF SHARES IN THE BB&T MUTUAL FUNDS WILL FLUCTUATE, SO THAT
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
A portion of the Funds' fees has been voluntarily waived. If the fees had not
been waived, the Funds' total returns for the period would have been lower.
The performance of the BB&T Intermediate U.S. Government Bond Fund is measured
against the Lehman Brothers Intermediate Government Bond Index, widely used as
a broad measure of the performance of the U.S. Government bonds with maturities
of less than 10 years. The performance of the BB&T Short-Intermediate U.S.
Government Income Fund was previously measured against the Lehman Brothers 1-3
Year Government Bond Index. Due to the discontinuation of this index, the Fund
is now measured against the Merrill Lynch 1-3 Year Government Index, widely
used as a measure of the performance of the U.S. Government bonds in that
maturity range. The indices are unmanaged and do not reflect the deduction of
expenses associated with a mutual fund, such as investment management and fund
accounting fees. The Fund's performance reflects the deduction of fees for
these value-added services.
-21-
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THE BB&T PRIME MONEY MARKET FUND/1/
THE BB&T U.S. TREASURY MONEY MARKET FUND/1/
The BB&T PRIME MONEY MARKET FUND was opened to investors on October 1, 1997.
For most of the nearly 12 months since, the Federal Reserve Board (Fed) kept
the fed funds rate at 5.50%, which helped produce short-term yields that were
relatively high, especially in light of the low inflation rate. The Fed's
decision to lower the fed funds rate to 5.25% on September 29, 1998, presented
us with the challenge to maintain competitive yields in the months to come; in
response, we have extended our average maturity to lock in the best yields we
could find.
At the same time, we have continued to focus on buying only high-quality,
short-term debt instruments for the Fund. With a credit crunch affecting many
foreign markets, our focus on quality served us well over the past year, and
should offer continued relative safety going forward. We avoided a great deal
of paper issued by banks and other financial institutions; we believe these
institutions are particularly vulnerable to deteriorating financial conditions
throughout the world.
The BB&T U.S. TREASURY MONEY MARKET FUND also responded to falling rates by
structuring a higher-than-average maturity. We made a conscious effort to keep
as much cash as possible in repurchase agreements ("repos") for as long as
possible, and not in T-bills. With the rates on Treasury paper falling so
rapidly, the overnight rates on repos were more attractive for our
shareholders.
As of September 30, 1998, approximately 66.0% (of the net assets) of the PRIME
MONEY MARKET FUND'S portfolio was invested in commercial paper, 29.0% in
variable rate notes, and 5.0% in asset-backed securities. The average maturity
of the Fund's holdings was 47 days, and the average credit quality was AAA.*
As of September 30, 1998, approximately 68.0% (of the net assets) of the U.S.
TREASURY MONEY MARKET FUND'S portfolio was invested in repurchase agreements
and 32.0% in U.S. Treasury securities. The average maturity of the Fund's
holdings was 39 days, and the average credit quality was AAA.*
- --------------------------------------------------------------------------------
/1/An investment in the Funds is not insured nor guaranteed by the FDIC or any
other government agency. Although the Funds seek to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing
in the funds.
* The composition of the Funds' portfolios is subject to change.
Shares in the Funds involve investment risks, including possible loss of
principal, so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Fund shares are not deposits or obligations of,
or guaranteed or endorsed by, the Branch Banking and Trust Company or its
affiliates, nor are they insured by the FDIC or any other agency.
A portion of the Funds' fees has been voluntarily waived and reimbursed. If the
fees had not been waived and reimbursed, the Funds' total returns for the
period would have been lower.
-22-
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<PAGE>
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INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of
BB&T Mutual Funds Group:
We have audited the accompanying statements of assets and liabilities of the
BB&T Mutual Funds Group--Prime Money Market Fund, U.S. Treasury Money Market
Fund, Short-Intermediate U.S. Government Income Fund, Intermediate U.S.
Government Bond Fund, North Carolina Intermediate Tax-Free Fund, South Carolina
Intermediate Tax-Free Fund, Growth and Income Stock Fund, Balanced Fund, Large
Company Growth Fund, Small Company Growth Fund, International Equity Fund,
Capital Manager Conservative Growth Fund, Capital Manager Moderate Growth Fund
and Capital Manager Growth Fund, including the schedules of portfolio
investments, as of September 30, 1998, and the related statements of
operations, statements of changes in net assets and the financial highlights
for each of the periods indicated herein. These financial statements and the
financial highlights are the responsibility of the BB&T Mutual Funds Group's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
September 30, 1998, by confirmation with the custodian, brokers and other
appropriate audit procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds comprising the BB&T Mutual Funds Group as of
September 30, 1998, the results of their operations, the changes in their net
assets and the financial highlights for each of the periods indicated herein,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
November 13, 1998
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STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHORT-
PRIME U.S. TREASURY INTERMEDIATE INTERMEDIATE U.S.
MONEY MARKET MONEY MARKET U.S. GOVERNMENT GOVERNMENT
FUND FUND INCOME FUND BOND FUND
------------ ------------- --------------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Amortized cost
$41,404,016;
$88,874,423;
$155,763,596; and
$178,261,581,
respectively)........... $41,404,016 $ 88,874,423 $160,456,731 $190,957,883
Repurchase agreements,
at cost................. -- 189,896,389 -- --
----------- ------------ ------------ ------------
Total investments.... 41,404,016 278,770,812 160,456,731 190,957,883
Cash.................... 735 -- -- --
Interest and dividends
receivable.............. 123,710 1,010,393 2,138,912 2,086,678
Unamortized organization
costs................... 2,351 -- -- --
Receivable for expense
reimbursement........... 3,228 -- -- --
Prepaid expenses and
other................... 3,752 -- -- --
----------- ------------ ------------ ------------
Total Assets......... 41,537,792 279,781,205 162,595,643 193,044,561
----------- ------------ ------------ ------------
LIABILITIES:
Dividends payable....... 176,167 1,140,396 687,688 797,545
Accrued expenses and
other payables:
Investment advisory
fees................... 6,978 71,143 65,938 77,862
Administration fees.... 170 3,416 1,986 3,134
Distribution fees--
Class A................ 603 8,467 913 911
Distribution fees--
Class B................ 175 1,010 -- 999
Other.................. 21,853 27,677 34,043 31,689
----------- ------------ ------------ ------------
Total Liabilities.... 205,946 1,252,109 790,568 912,140
----------- ------------ ------------ ------------
NET ASSETS:
Capital................. 41,331,482 278,528,850 158,567,418 179,268,959
Undistributed
(distributions in excess
of) net investment
income.................. 4,810 246 157,106 45,613
Net unrealized
appreciation
(depreciation) on
investments............. -- -- 4,693,135 12,696,302
Accumulated
undistributed net
realized gains (losses)
on investment
transactions............ (4,446) -- (1,612,584) 121,547
----------- ------------ ------------ ------------
Net Assets........... $41,331,846 $278,529,096 $161,805,075 $192,132,421
=========== ============ ============ ============
Net Assets
Class A................ $ 3,262,433 $ 41,477,558 $ 4,475,662 $ 4,562,316
Class B................ 300,010 1,255,164 -- 1,313,814
Trust Class............ 37,769,403 235,796,374 157,329,413 186,256,291
----------- ------------ ------------ ------------
Total................ $41,331,846 $278,529,096 $161,805,075 $192,132,421
=========== ============ ============ ============
Outstanding units of
beneficial interest
(shares)
Class A................ 3,262,524 41,477,621 444,684 431,488
Class B................ 300,010 1,255,162 -- 124,650
Trust Class............ 37,773,759 235,796,160 15,619,359 17,591,562
----------- ------------ ------------ ------------
Total................ 41,336,293 278,528,943 16,064,043 18,147,700
=========== ============ ============ ============
Net asset value
Class A--redemption
price per share........ $ 1.00 $ 1.00 $ 10.06 $ 10.57
Class B--offering
price per share........ $ 1.00 $ 1.00 $ -- $ 10.54
Trust Class--offering
and redemption price
per share.............. $ 1.00 $ 1.00 $ 10.07 $ 10.59
=========== ============ ============ ============
Maximum Sales Charge--
Class A................. N/A N/A 2.00% 4.50%
=========== ============ ============ ============
Maximum Offering Price
(100%/(100%-Maximum
Sales Charge) of net
asset value adjusted to
nearest cent) per
share--Class A.......... $ 1.00 $ 1.00 $ 10.27 $ 11.07
=========== ============ ============ ============
Maximum Redemption Price
(100%/(100%-Maximum
Redemption Charge) of
net asset value adjusted
to nearest cent) per
share--Class B*......... $ 1.00 $ 1.00 N/A $ 11.09
=========== ============ ============ ============
</TABLE>
- ----
* Redemption price per share (Class B) varies by length of time shares are
held. (See note 1)
See notes to financial statements
-24-
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STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NORTH CAROLINA SOUTH CAROLINA GROWTH AND
INTERMEDIATE INTERMEDIATE INCOME BALANCED
TAX-FREE FUND TAX-FREE FUND STOCK FUND FUND
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $78,974,987;
$17,864,756;
$319,630,687; and
$126,024,456,
respectively)........... $83,099,662 $18,616,369 $420,983,380 $145,518,496
Investments in
affiliates, at value
(Cost $1,029,138)....... 1,029,138 -- -- --
----------- ----------- ------------ ------------
Total investments.... 84,128,800 18,616,369 420,983,380 145,518,496
Interest and dividends
receivable.............. 1,245,183 221,466 721,006 1,016,422
Receivable for
investments sold........ -- -- 374,512 --
Unamortized organization
costs................... -- 12,643 -- --
Receivable for expense
reimbursement........... -- 12,103 -- --
----------- ----------- ------------ ------------
Total Assets......... 85,373,983 18,862,581 422,078,898 146,534,918
----------- ----------- ------------ ------------
LIABILITIES:
Dividends payable....... 276,778 58,684 575,387 353,971
Payable for capital
shares redeemed......... -- -- -- 700
Payable for investments
purchased............... -- 251,875 330,419 --
Accrued expenses and
other payables:
Investment advisory
fees................... 34,555 4,546 171,887 59,452
Administration fees.... 1,044 76 7,061 2,427
Distribution fees--
Class A................ 1,354 36 8,128 4,644
Distribution fees--
Class B................ -- -- 26,373 12,153
Other.................. 14,181 8,400 74,560 28,735
----------- ----------- ------------ ------------
Total Liabilities.... 327,912 323,617 1,193,815 462,082
----------- ----------- ------------ ------------
NET ASSETS:
Capital................. 80,368,265 17,676,087 301,704,933 121,801,193
Undistributed
(distributions in excess
of) net investment
income.................. 28,296 1,008 -- 15,592
Net unrealized
appreciation
(depreciation) on
investments............. 4,124,675 751,613 101,352,693 19,494,040
Accumulated
undistributed net
realized gains (losses)
on investment
transactions............ 524,835 110,256 17,827,457 4,762,011
----------- ----------- ------------ ------------
Net Assets........... $85,046,071 $18,538,964 $420,885,083 $146,072,836
=========== =========== ============ ============
Net Assets
Class A................ $11,592,260 $ 296,667 $ 39,817,373 $ 21,947,524
Class B................ -- -- 32,454,927 15,182,541
Trust Class............ 73,453,811 18,242,297 348,612,783 108,942,771
----------- ----------- ------------ ------------
Total................ $85,046,071 $18,538,964 $420,885,083 $146,072,836
=========== =========== ============ ============
Outstanding units of
beneficial interest
(shares)
Class A................ 1,101,484 28,331 2,154,476 1,587,536
Class B................ -- -- 1,761,670 1,103,665
Trust Class............ 6,978,063 1,752,234 18,822,658 7,897,302
----------- ----------- ------------ ------------
Total................ 8,079,547 1,780,565 22,738,804 10,588,503
=========== =========== ============ ============
Net asset value
Class A--redemption
price per share........ $ 10.52 $ 10.47 $ 18.48 $ 13.82
Class B--offering
price per share........ $ -- $ -- $ 18.42 $ 13.76
Trust Class--offering
and redemption price
per share.............. $ 10.53 $ 10.41 $ 18.52 $ 13.79
=========== =========== ============ ============
Maximum Sales Charge--
Class A................. 2.00% 2.00% 4.50% 4.50%
=========== =========== ============ ============
Maximum Offering Price
(100%/(100%-Maximum
Sales Charge) of net
asset value adjusted to
nearest cent) per
share--Class A.......... $ 10.73 $ 10.68 $ 19.35 $ 14.47
=========== =========== ============ ============
Maximum Redemption Price
(100%/(100%-Maximum
Redemption Charge) of
net asset value adjusted
to nearest cent) per
share--Class B*......... N/A N/A $ 19.39 $ 14.48
=========== =========== ============ ============
</TABLE>
- ----
* Redemption price per share (Class B) varies by length of time shares are
held. (See note 1)
See notes to financial statements
-25-
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STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
LARGE COMPANY SMALL COMPANY INTERNATIONAL CAPITAL MANAGER
GROWTH GROWTH EQUITY CONSERVATIVE GROWTH
FUND FUND FUND FUND
------------- ------------- ------------- -------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $49,558,337;
$77,253,392;
$72,752,105; and $0
respectively)........... $56,884,717 $82,437,135 $66,408,017 $ --
Investments in
affiliates, at value
(Cost $24,195,703)...... -- -- -- 23,991,193
Repurchase agreements,
at cost................. -- 2,011,100 -- --
----------- ----------- ----------- -----------
Total investments.... 56,884,717 84,448,235 66,408,017 23,991,193
Cash.................... -- 33,114 9,526,504 --
Interest and dividends
receivable.............. 59,655 -- 145,508 70,339
Receivable for
investments sold........ -- 2,191,624 295,101 --
Receivable for closed
currency contracts...... -- -- 472,856 --
Tax reclaim receivable.. -- -- 60,448 --
Unamortized organization
costs................... 12,280 -- -- 7,137
Foreign currency (Cost
$120,751)............... -- -- 120,901 --
Unrealized foreign
currency gains.......... -- -- 1,180 --
----------- ----------- ----------- -----------
Total Assets......... 56,956,652 86,672,973 77,030,515 24,068,669
----------- ----------- ----------- -----------
LIABILITIES:
Dividends payable....... 6,413 -- -- 164,920
Payable for investments
purchased............... -- 1,324,297 3,340,581 --
Payable for collateral
received on loaned
securities.............. -- 2,011,100 -- --
Unrealized foreign
currency losses......... -- -- 3,150 --
Accrued expenses and
other payables:
Investment advisory
fees................... 23,332 66,300 60,590 978
Administration fees.... 962 1,401 1,226 99
Distribution fees--
Class A................ 390 1,983 277 14
Distribution fees--
Class B................ 3,155 6,991 1,614 --
Other.................. 24,596 15,860 29,408 10,586
----------- ----------- ----------- -----------
Total Liabilities.... 58,848 3,427,932 3,436,846 176,597
----------- ----------- ----------- -----------
NET ASSETS:
Capital................. 46,010,918 80,421,809 78,301,209 23,726,521
Undistributed
(distributions in excess
of) net investment
income (loss)........... 17,596 (5,595) 275,508 39,004
Net unrealized
appreciation
(depreciation) on
investments and foreign
currency transactions... 7,326,380 5,183,743 (6,329,348) (204,510)
Accumulated
undistributed net
realized gains (losses)
on investment
transactions and foreign
currency transactions... 3,542,910 (2,354,916) 1,346,300 331,057
----------- ----------- ----------- -----------
Net Assets........... $56,897,804 $83,245,041 $73,593,669 $23,892,072
=========== =========== =========== ===========
</TABLE>
Continued
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STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
LARGE COMPANY SMALL COMPANY INTERNATIONAL CAPITAL MANAGER
GROWTH GROWTH EQUITY CONSERVATIVE
FUND FUND FUND GROWTH FUND
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Net Assets
Class A................ $ 1,937,972 $ 9,456,038 $ 1,314,499 $ 118,576
Class B................ 3,984,568 8,609,014 1,922,787 --
Trust Class............ 50,975,264 65,179,989 70,356,383 23,773,496
----------- ----------- ----------- -----------
Total................ $56,897,804 $83,245,041 $73,593,669 $23,892,072
=========== =========== =========== ===========
Outstanding units of
beneficial interest
(shares)
Class A................ 201,547 540,314 132,681 11,797
Class B................ 416,002 502,489 195,285 --
Trust Class............ 5,292,498 3,684,228 7,069,721 2,357,386
----------- ----------- ----------- -----------
Total................ 5,910,047 4,727,031 7,397,687 2,369,183
=========== =========== =========== ===========
Net asset value
Class A--redemption
price per share........ $ 9.62 $ 17.50 $ 9.91 $ 10.05
Class B--offering
price per share........ $ 9.58 $ 17.13 $ 9.85 $ --
Trust Class--offering
and redemption price
per share.............. $ 9.63 $ 17.69 $ 9.95 $ 10.08
=========== =========== =========== ===========
Maximum Sales Charge--
Class A................. 4.50% 4.50% 4.50% 4.50%
=========== =========== =========== ===========
Maximum Offering Price
(100%/(100%-Maximum
Sales Charge) of net
asset value adjusted to
nearest cent) per
share--Class A.......... $ 10.07 $ 18.33 $ 10.38 $ 10.52
=========== =========== =========== ===========
Maximum Redemption Price
(100%/(100%-Maximum
Redemption Charge) of
net asset value adjusted
to nearest cent) per
share--Class B*......... $ 10.08 $ 18.03 $ 10.37 N/A
=========== =========== =========== ===========
</TABLE>
- ----
* Redemption price per share (Class B) varies by length of time shares are
held. (See note 1)
See notes to financial statements
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STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CAPITAL MANAGER
MODERATE GROWTH CAPITAL MANAGER
FUND GROWTH FUND
--------------- ---------------
<S> <C> <C>
ASSETS:
Investments in affiliates, at value (Cost
$23,833,469 and $23,151,994, respectively).... $22,890,771 $21,681,278
Interest and dividends receivable............. 51,049 36,592
Unamortized organization costs................ 7,137 7,137
----------- -----------
Total Assets............................... 22,948,957 21,725,007
----------- -----------
LIABILITIES:
Dividends payable............................. 109,547 66,956
Accrued expenses and other payables:
Investment advisory fees..................... 934 889
Administration fees.......................... 95 91
Distribution fees--Class A................... 220 57
Other........................................ 10,491 10,620
----------- -----------
Total Liabilities.......................... 121,287 78,613
----------- -----------
NET ASSETS:
Capital....................................... 23,209,595 22,390,730
Undistributed (distributions in excess of) net
investment income (loss)...................... 68,801 87,793
Net unrealized appreciation (depreciation) on
investments................................... (942,698) (1,470,716)
Accumulated undistributed net realized gains
(losses) on investment transactions........... 491,972 638,587
----------- -----------
Net Assets................................. $22,827,670 $21,646,394
=========== ===========
Net Assets
Class A...................................... $ 1,145,610 $ 276,281
Trust Class.................................. 21,682,060 21,370,113
----------- -----------
Total...................................... $22,827,670 $21,646,394
=========== ===========
Outstanding units of beneficial interest
(shares)
Class A...................................... 116,277 28,572
Trust Class.................................. 2,200,159 2,208,738
----------- -----------
Total...................................... 2,316,436 2,237,310
=========== ===========
Net asset value
Class A--redemption price per share.......... $ 9.85 $ 9.67
Trust Class--offering and redemption price
per share.................................... $ 9.85 $ 9.68
=========== ===========
Maximum Sales Charge--Class A................. 4.50% 4.50%
=========== ===========
Maximum Offering Price (100%/(100%-Maximum
Sales Charge) of net asset value adjusted
to nearest cent) per share--Class A........... $ 10.31 $ 10.13
=========== ===========
</TABLE>
See notes to financial statements
-28-
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STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SHORT-
PRIME U.S. TREASURY INTERMEDIATE INTERMEDIATE U.S.
MONEY MARKET MONEY MARKET U.S. GOVERNMENT GOVERNMENT
FUND FUND INCOME FUND BOND FUND
------------- ------------- --------------- -----------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998(A)(B) 1998 1998 1998
------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.......... $2,918,752 $15,914,344 $ 9,481,501 $11,128,031
Dividend income.......... -- -- 83,600 94,331
---------- ----------- ----------- -----------
Total Income.......... 2,918,752 15,914,344 9,565,101 11,222,362
---------- ----------- ----------- -----------
EXPENSES:
Investment advisory
fees..................... 206,135 1,155,223 924,919 1,088,878
Administration fees...... 103,067 577,611 308,306 362,963
Distribution fees--Class
A........................ 5,909 188,385 22,957 21,178
Distribution fees--Class
B........................ 175 12,359 -- 8,701
Custodian fees........... 12,748 14,528 9,686 8,640
Accounting fees.......... 43,016 109,415 64,055 81,585
Legal fees............... 5,551 28,185 17,402 14,299
Audit fees............... 8,526 15,963 10,534 11,318
Organization costs....... 17,865 -- -- --
Trustees' fees and
expenses................. 1,464 8,991 5,236 5,509
Transfer agent fees...... 31,561 126,090 45,624 68,685
Registration and filing
fees..................... 21,084 13,942 21,579 10,952
Printing costs........... 17,815 102,852 32,784 43,754
Other.................... 1,827 28,384 3,659 1,153
---------- ----------- ----------- -----------
Gross Expenses........ 476,743 2,381,928 1,466,741 1,727,615
Expenses waived....... (123,697) (501,891) (207,201) (192,071)
Expenses voluntarily
reimbursed............ (65,024) -- -- --
---------- ----------- ----------- -----------
Total Expenses........ 288,022 1,880,037 1,259,540 1,535,544
---------- ----------- ----------- -----------
Net Investment Income.... 2,630,730 14,034,307 8,305,561 9,686,818
---------- ----------- ----------- -----------
REALIZED/UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:
Net realized gains
(losses) on investment
transactions............. (4,446) -- (29,919) 2,329,818
Net change in unrealized
appreciation/depreciation
on investments........... -- -- 4,916,929 11,098,366
---------- ----------- ----------- -----------
Net realized/unrealized
gains (losses) on
investments.............. (4,446) -- 4,887,010 13,428,184
---------- ----------- ----------- -----------
Change in net assets
resulting from
operations............... $2,626,284 $14,034,307 $13,192,571 $23,115,002
========== =========== =========== ===========
</TABLE>
- ----
(a) The Fund commenced operations on October 1, 1997.
(b) The Fund commenced offering Class B Shares on September 2, 1998.
See notes to financial statements
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STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NORTH CAROLINA SOUTH CAROLINA GROWTH AND
INTERMEDIATE INTERMEDIATE INCOME BALANCED
TAX-FREE FUND TAX-FREE FUND STOCK FUND FUND
-------------- -------------- ------------- -------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1998 (A) 1998 1998
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.......... $4,120,986 $ 841,936 $ 468,783 $3,437,105
Dividend income.......... -- 24,734 9,105,240 2,004,958
Dividend income from
affiliates............... 40,441 -- -- --
---------- ---------- ------------ ----------
Total Income.......... 4,161,427 866,670 9,574,023 5,442,063
---------- ---------- ------------ ----------
EXPENSES:
Investment advisory
fees..................... 500,038 108,701 3,100,849 1,027,601
Administration fees...... 166,679 36,234 838,105 277,746
Distribution fees--Class
A........................ 49,850 1,041 197,900 111,291
Distribution fees--Class
B........................ -- -- 261,070 109,512
Custodian fees........... 7,905 7,577 10,062 9,921
Accounting fees.......... 59,910 46,783 151,458 69,883
Legal fees............... 8,095 2,168 46,445 11,712
Audit fees............... 10,235 2,398 19,225 9,350
Organization costs....... -- 5,964 -- --
Trustees' fees and
expenses................. 3,013 540 15,043 4,943
Transfer agent fees...... 38,114 28,214 237,113 145,274
Registration and filing
fees..................... 6,545 8,967 48,642 20,746
Printing costs........... 17,959 5,381 91,389 30,815
Other.................... 2,517 772 8,977 4,173
---------- ---------- ------------ ----------
Gross Expenses........ 870,860 254,740 5,026,278 1,832,967
Expenses waived....... (179,911) (82,310) (1,104,554) (388,887)
Expenses voluntarily
reimbursed............ -- (12,103) -- --
---------- ---------- ------------ ----------
Total Expenses........ 690,949 160,327 3,921,724 1,444,080
---------- ---------- ------------ ----------
Net Investment Income.... 3,470,478 706,343 5,652,299 3,997,983
---------- ---------- ------------ ----------
REALIZED/UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:
Net realized gains
(losses) on investment
transactions............. 618,990 114,696 21,641,916 5,078,608
Net change in unrealized
appreciation/depreciation
on investments........... 1,532,666 712,599 (29,688,415) (685,286)
---------- ---------- ------------ ----------
Net realized/unrealized
gains (losses) on
investments.............. 2,151,656 827,295 (8,046,499) 4,393,322
---------- ---------- ------------ ----------
Change in net assets
resulting from
operations............... $5,622,134 $1,533,638 $ (2,394,200) $8,391,305
========== ========== ============ ==========
</TABLE>
- ----
(a) For the period from October 20, 1997 (commencement of operations) through
September 30, 1998.
See notes to financial statements
-30-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
LARGE COMPANY SMALL COMPANY INTERNATIONAL CAPITAL MANAGER
GROWTH GROWTH EQUITY CONSERVATIVE GROWTH
FUND FUND FUND FUND
------------- ------------- ------------- -------------------
FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 (A) 1998 1998 1998 (B) (C)
------------- ------------- ------------- -------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.......... $ 35,363 $ 422,304 $ 220,108 $ 3,361
Dividend income.......... 722,498 19,322 1,338,513 --
Dividend income from
affiliates............... -- -- -- 808,144
Foreign tax withholding.. -- -- (143,163) --
----------- ------------ ----------- --------
Total Income.......... 757,861 441,626 1,415,458 811,505
----------- ------------ ----------- --------
EXPENSES:
Investment advisory
fees..................... 381,944 890,569 710,172 56,553
Administration fees...... 103,228 178,115 142,036 11,311
Distribution fees--Class
A........................ 4,155 57,751 5,828 111
Distribution fees--Class
B........................ 15,480 93,005 17,346 --
Custodian fees........... 12,051 64,072 10,918 6,174
Accounting fees.......... 54,029 59,486 79,656 20,091
Legal fees............... 5,699 7,251 3,784 2,505
Audit fees............... 4,548 6,532 4,554 2,421
Organization costs....... 6,327 -- 2,170 4,100
Trustees' fees and
expenses................. 1,658 3,408 2,678 653
Transfer agent fees...... 62,369 173,882 67,465 26,778
Registration and filing
fees..................... 25,834 11,407 20,419 13,644
Printing costs........... 14,368 33,326 25,350 5,363
Other.................... 1,603 3,289 2,760 943
----------- ------------ ----------- --------
Gross Expenses........ 693,293 1,582,093 1,095,136 150,647
Expenses waived....... (125,950) (28,876) (12,915) (45,372)
----------- ------------ ----------- --------
Total Expenses........ 567,343 1,553,217 1,082,221 105,275
----------- ------------ ----------- --------
Net Investment Income
(Loss)................... 190,518 (1,111,591) 333,237 706,230
----------- ------------ ----------- --------
REALIZED/UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:
Net realized gains
(losses) on investment
transactions............. 4,017,265 (671,786) 1,366,614 --
Net realized gains
(losses) on investment
transactions with
affiliates............... -- -- -- 17,727
Net realized gains
(losses) from foreign
currency transactions.... -- -- 285,241 --
Net realized gain
distributions from
underlying funds......... -- -- -- 351,578
Net change in unrealized
appreciation/depreciation
on investments........... (5,752,976) (21,630,763) (9,964,825) (204,510)
Net change in unrealized
appreciation/depreciation
from translation of
assets and liabilities in
foreign currency......... -- -- 10,789 --
----------- ------------ ----------- --------
Net realized/unrealized
gains (losses) on
investments.............. (1,735,711) (22,302,549) (8,302,181) 164,795
----------- ------------ ----------- --------
Change in net assets
resulting from
operations............... $(1,545,193) $(23,414,140) $(7,968,944) $871,025
=========== ============ =========== ========
</TABLE>
- ----
(a) For the period from October 3, 1997 (commencement of operations) through
September 30, 1998.
(b) For the period from October 2, 1997 (commencement of operations) through
September 30, 1998.
(c) The Fund commenced offering Class A Shares on January 29, 1998.
See notes to financial statements
-31-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CAPITAL MANAGER
MODERATE GROWTH CAPITAL MANAGER
FUND GROWTH FUND
--------------- ---------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 (A) (B) 1998 (A) (B)
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income............................... $ 3,361 $ 3,361
Dividend income from affiliates............... 600,972 446,467
--------- -----------
Total Income............................... 604,333 449,828
--------- -----------
EXPENSES:
Investment advisory fees...................... 56,437 56,201
Administration fees........................... 11,287 11,240
Distribution fees--Class A.................... 956 500
Custodian fees................................ 6,268 6,414
Accounting fees............................... 20,091 20,091
Legal fees.................................... 2,197 2,109
Audit fees.................................... 2,421 2,421
Organization costs............................ 4,100 4,100
Trustees' fees and expenses................... 653 697
Transfer agent fees........................... 26,778 26,822
Registration and filing fees.................. 13,820 13,981
Printing costs................................ 5,389 5,436
Other......................................... 916 868
--------- -----------
Gross Expenses............................. 151,313 150,880
Expenses waived............................ (45,701) (45,301)
--------- -----------
Total Expenses............................. 105,612 105,579
--------- -----------
Net Investment Income......................... 498,721 344,249
--------- -----------
REALIZED/UNREALIZED GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains (losses) on investment
transactions with affiliates.................. 31,966 62,410
Net realized gain distributions from
underlying funds.............................. 528,051 663,214
Net change in unrealized appreciation/
depreciation on investments................... (942,698) (1,470,716)
--------- -----------
Net realized/unrealized gains (losses) on
investments................................... (382,681) (745,092)
--------- -----------
Change in net assets resulting from
operations.................................... $ 116,040 $ (400,843)
========= ===========
</TABLE>
- ----
(a) For the period from October 2, 1997 (commencement of operations) through
September 30, 1998.
(b) The Fund commenced offering Class A Shares on January 29, 1998.
See notes to financial statements
-32-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. TREASURY SHORT-INTERMEDIATE
PRIME MONEY MONEY MARKET U.S. GOVERNMENT
MARKET FUND FUND INCOME FUND
------------- ---------------------------- ----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 (A) (B) 1998 1997 1998 1997
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES: OPERATIONS:
Net investment income.... $ 2,630,730 $ 14,034,307 $ 10,765,763 $ 8,305,561 $ 5,475,151
Net realized gains
(losses) on investment
transactions............. (4,446) -- 246 (29,919) 36,735
Net change in unrealized
appreciation/depreciation
on investments........... -- -- -- 4,916,929 312,560
------------- ------------- ------------- ------------ ------------
Change in net assets
resulting from
operations................ 2,626,284 14,034,307 10,766,009 13,192,571 5,824,446
------------- ------------- ------------- ------------ ------------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment
income................... (57,024) (1,750,905) (1,278,099) (236,423) (323,078)
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment
income................... (697) (48,142) (55,272) -- --
DISTRIBUTIONS TO TRUST
CLASS SHAREHOLDERS:
From net investment
income................... (2,573,009) (12,235,260) (9,432,392) (8,069,138) (5,152,073)
------------- ------------- ------------- ------------ ------------
Change in net assets from
shareholder
distributions............. (2,630,730) (14,034,307) (10,765,763) (8,305,561) (5,475,151)
------------- ------------- ------------- ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................... 200,254,241 487,187,835 477,597,555 73,721,908 54,649,047
Dividends reinvested..... 48,575 4,337,585 2,984,920 545,311 1,090,543
Cost of shares redeemed.. (158,966,524) (513,879,583) (414,910,057) (26,023,271) (16,392,254)
------------- ------------- ------------- ------------ ------------
Change in net assets from
capital transactions...... 41,336,292 (22,354,163) 65,672,418 48,243,948 39,347,336
------------- ------------- ------------- ------------ ------------
Change in net assets...... 41,331,846 (22,354,163) 65,672,664 53,130,958 39,696,631
NET ASSETS:
Beginning of period...... -- 300,883,259 235,210,595 108,674,117 68,977,486
------------- ------------- ------------- ------------ ------------
End of period............ $ 41,331,846 $ 278,529,096 $ 300,883,259 $161,805,075 $108,674,117
============= ============= ============= ============ ============
SHARE TRANSACTIONS:
Issued................... 200,254,242 487,187,834 477,597,555 7,530,796 5,613,734
Reinvested............... 48,575 4,337,585 2,984,920 55,526 111,753
Redeemed................. (158,966,524) (513,879,582) (414,909,964) (2,646,733) (1,684,651)
------------- ------------- ------------- ------------ ------------
Change in shares.......... 41,336,293 (22,354,163) 65,672,511 4,939,589 4,040,836
============= ============= ============= ============ ============
</TABLE>
- ----
(a) The Fund commenced operations on October 1, 1997.
(b) The Fund commenced offering Class B Shares on September 2, 1998.
See notes to financial statements
-33-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE U.S. NORTH CAROLINA SOUTH CAROLINA
GOVERNMENT BOND INTERMEDIATE TAX-FREE INTERMEDIATE
FUND FUND TAX-FREE FUND
---------------------------- ---------------------------- --------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997 1998 (A)
------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES: OPERATIONS:
Net investment income.. $ 9,686,818 $ 7,760,619 $ 3,470,478 $ 2,490,880 $ 706,343
Net realized gains
(losses) on investment
transactions........... 2,329,818 (124,190) 618,990 59,163 114,696
Net change in
unrealized
appreciation/
depreciation on
investments............ 11,098,366 3,189,400 1,532,666 1,337,500 712,599
------------ ------------ ------------ ------------ -----------
Change in net assets
resulting from
operations.............. 23,115,002 10,825,829 5,622,134 3,887,543 1,533,638
------------ ------------ ------------ ------------ -----------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment
income................. (218,025) (237,636) (402,433) (364,471) (7,750)
In excess of net
investment income...... (217) -- -- -- --
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment
income................. (38,128) (23,493) -- -- --
In excess of net
investment income...... (25) -- -- -- --
DISTRIBUTIONS TO TRUST
CLASS SHAREHOLDERS:
From net investment
income................. (9,522,727) (7,499,490) (3,068,045) (2,126,409) (698,593)
From net realized gains
from investment
transactions........... -- -- -- -- (4,440)
In excess of net
investment income...... (9,865) -- -- -- --
------------ ------------ ------------ ------------ -----------
Change in net assets
from shareholder
distributions........... (9,788,987) (7,760,619) (3,470,478) (2,490,880) (710,783)
------------ ------------ ------------ ------------ -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................. 77,526,507 45,662,151 35,765,794 44,964,506 25,741,437
Dividends reinvested... 3,081,065 4,043,560 364,565 297,458 9,639
Cost of shares
redeemed............... (49,180,401) (29,036,797) (23,775,790) (13,823,035) (8,034,967)
------------ ------------ ------------ ------------ -----------
Change in net assets
from capital
transactions............ 31,427,171 20,668,914 12,354,569 31,438,929 17,716,109
------------ ------------ ------------ ------------ -----------
Change in net assets.... 44,753,186 23,734,124 14,506,225 32,835,592 18,538,964
NET ASSETS:
Beginning of period.... 147,379,235 123,645,111 70,539,846 37,704,254 --
------------ ------------ ------------ ------------ -----------
End of period.......... $192,132,421 $147,379,235 $ 85,046,071 $ 70,539,846 $18,538,964
============ ============ ============ ============ ===========
SHARE TRANSACTIONS:
Issued................. 7,760,028 4,698,844 3,473,673 4,443,543 2,562,664
Reinvested............. 306,797 415,863 35,317 29,323 951
Redeemed............... (4,876,621) (2,985,297) (2,295,775) (1,359,225) (783,050)
------------ ------------ ------------ ------------ -----------
Change in shares........ 3,190,204 2,129,410 1,213,215 3,113,641 1,780,565
============ ============ ============ ============ ===========
</TABLE>
- ----
(a) For the period from October 20, 1997 (commencement of operations) through
September 30, 1998.
See notes to financial statements
-34-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH AND INCOME BALANCED LARGE COMPANY
STOCK FUND FUND GROWTH FUND
---------------------------- ---------------------------- -------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997 1998 (A)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES: OPERATIONS:
Net investment income.. $ 5,652,299 $ 4,981,914 $ 3,997,983 $ 3,628,963 $ 190,518
Net realized gains
(losses) on investment
transactions........... 21,641,916 21,222,568 5,078,608 3,823,461 4,017,265
Net change in
unrealized
appreciation/
depreciation on
investments............ (29,688,415) 68,548,798 (685,286) 11,630,206 (5,752,976)
------------ ------------ ------------ ------------ ------------
Change in net assets
resulting from
operations.............. (2,394,200) 94,753,280 8,391,305 19,082,630 (1,545,193)
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment
income................. (469,768) (406,746) (610,172) (532,096) (1,120)
From net realized gains
from investment
transactions........... (2,344,787) (886,255) (488,936) (398,078) (1,053)
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment
income................. (125,661) (75,802) (227,269) (125,357) (382)
From net realized gains
from investment
transactions........... (1,273,210) (206,225) (195,167) (88,738) (2,298)
DISTRIBUTIONS TO TRUST
CLASS SHAREHOLDERS:
From net investment
income................. (5,052,761) (4,503,475) (3,171,488) (2,972,191) (189,016)
From net realized gains
from investment
transactions........... (20,939,456) (8,604,815) (2,542,690) (2,213,599) (471,004)
------------ ------------ ------------ ------------ ------------
Change in net assets
from shareholder
distributions........... (30,205,643) (14,683,318) (7,235,722) (6,330,059) (664,873)
------------ ------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................. 164,375,541 123,241,859 53,945,233 34,516,341 95,063,688
Dividends reinvested... 15,611,037 9,323,443 5,439,685 5,447,735 13,188
Cost of shares
redeemed............... (86,854,516) (81,770,389) (26,585,285) (24,767,622) (35,969,006)
------------ ------------ ------------ ------------ ------------
Change in net assets
from capital
transactions............ 93,132,062 50,794,913 32,799,633 15,196,454 59,107,870
------------ ------------ ------------ ------------ ------------
Change in net assets.... 60,532,219 130,864,875 33,955,216 27,949,025 56,897,804
NET ASSETS:
Beginning of period.... 360,352,864 229,487,989 112,117,620 84,168,595 --
------------ ------------ ------------ ------------ ------------
End of period.......... $420,885,083 $360,352,864 $146,072,836 $112,117,620 $ 56,897,804
============ ============ ============ ============ ============
SHARE TRANSACTIONS:
Issued................. 8,269,791 7,276,447 3,856,203 2,754,247 9,532,115
Reinvested............. 807,285 580,100 394,306 444,651 1,324
Redeemed............... (4,346,118) (4,808,625) (1,905,688) (2,005,976) (3,623,392)
------------ ------------ ------------ ------------ ------------
Change in shares........ 4,730,958 3,047,922 2,344,821 1,192,922 5,910,047
============ ============ ============ ============ ============
</TABLE>
- ----
(a) For the period from October 3, 1997 (commencement of operations) through
September 30, 1998.
See notes to financial statements
-35-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAPITAL MANAGER
SMALL COMPANY INTERNATIONAL CONSERVATIVE GROWTH
GROWTH FUND EQUITY FUND FUND
--------------------------- --------------------------- -------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997 (A) 1998 (B)
------------- ------------- ------------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES: OPERATIONS:
Net investment income
(loss)................... $(1,111,591) $ (648,459) $ 333,237 $ 100,321 $ 706,230
Net realized gains
(losses) on investment
transactions............. (671,786) (226,983) 1,366,614 1,278,028 --
Net realized gains
(losses) on investment
transactions with
affiliates............... -- -- -- -- 17,727
Net realized gains
(losses) from foreign
currency transactions.... -- -- 285,241 114,474 --
Net realized gain
distributions from
underlying funds......... -- -- -- -- 351,578
Net change in unrealized
appreciation/depreciation
on investments........... (21,630,763) 10,884,559 (9,964,825) 3,620,737 (204,510)
Net change in unrealized
appreciation/depreciation
from translation of
assets and liabilities in
foreign currency......... -- -- 10,789 3,951 --
----------- ----------- ----------- ----------- -----------
Change in net assets
resulting from
operations................ (23,414,140) 10,009,117 (7,968,944) 5,117,511 871,025
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment
income................... -- -- (3,734) (489) (1,053)
From net realized gains
from investment
transactions............. -- -- (18,552) -- --
In excess of net
investment income........ -- -- (1,175) (559) --
In excess of net realized
gains from investment
transactions............. (166,425) (8,888) -- -- --
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment
income................... -- -- -- (251) --
From net realized gains
from investment
transactions............. -- -- (29,878) -- --
In excess of net
investment income........ -- -- (2,052) (286) --
In excess of net realized
gains from investment
transactions............. (128,891) (4,428) -- -- --
DISTRIBUTIONS TO TRUST
CLASS SHAREHOLDERS:
From net investment
income................... -- -- (342,214) (99,581) (705,177)
From net realized gains
from investment
transactions............. -- -- (1,229,598) -- --
In excess of net
investment income........ -- -- (17,843) (113,629) --
In excess of net realized
gains from investment
transactions............. (933,116) (40,858) -- -- --
----------- ----------- ----------- ----------- -----------
Change in net assets from
shareholder
distributions............. (1,228,432) (54,174) (1,645,046) (214,795) (706,230)
----------- ----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................... 90,705,910 48,655,648 37,976,546 51,911,874 23,734,446
Dividends reinvested..... 743,235 40,212 576,374 89,459 319
Cost of shares redeemed.. (63,766,251) (25,431,484) (9,730,326) (2,518,984) (7,488)
----------- ----------- ----------- ----------- -----------
Change in net assets from
capital transactions...... 27,682,894 23,264,376 28,822,594 49,482,349 23,727,277
----------- ----------- ----------- ----------- -----------
Change in net assets...... 3,040,322 33,219,319 19,208,604 54,385,065 23,892,072
NET ASSETS:
Beginning of period...... 80,204,719 46,985,400 54,385,065 -- --
----------- ----------- ----------- ----------- -----------
End of period............ $83,245,041 $80,204,719 $73,593,669 $54,385,065 $23,892,072
=========== =========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued................... 4,350,347 2,498,285 3,389,581 5,042,411 2,369,887
Reinvested............... 35,920 2,036 53,679 8,292 31
Redeemed................. (3,081,871) (1,300,018) (868,492) (227,784) (735)
----------- ----------- ----------- ----------- -----------
Change in shares.......... 1,304,396 1,200,303 2,574,768 4,822,919 2,369,183
=========== =========== =========== =========== ===========
</TABLE>
- ----
(a) From January 2, 1997 (commencement of operations) through September 30,
1997.
(b) The Fund commenced offering Trust Shares on October 2, 1997 and Class A
Shares on January 29, 1998.
See notes to financial statements
-36-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAPITAL MANAGER
MODERATE GROWTH CAPITAL MANAGER
FUND GROWTH FUND
--------------- ---------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 (A) 1998 (A)
--------------- ---------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income......................... $ 498,721 $ 344,249
Net realized gains (losses) on investment
transactions with affiliates.................. 31,966 62,410
Net realized gain distributions from
underlying funds.............................. 528,051 663,214
Net change in unrealized
appreciation/depreciation on investments...... (942,698) (1,470,716)
----------- -----------
Change in net assets resulting from
operations..................................... 116,040 (400,843)
----------- -----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.................... (5,356) (1,661)
DISTRIBUTIONS TO TRUST CLASS SHAREHOLDERS:
From net investment income.................... (493,365) (342,588)
----------- -----------
Change in net assets from shareholder
distributions.................................. (498,721) (344,249)
----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................... 23,215,874 22,390,339
Dividends reinvested.......................... 310 1,147
Cost of shares redeemed....................... (5,833) --
----------- -----------
Change in net assets from capital
transactions................................... 23,210,351 22,391,486
----------- -----------
Change in net assets........................... 22,827,670 21,646,394
NET ASSETS:
Beginning of period........................... -- --
----------- -----------
End of period................................. $22,827,670 $21,646,394
=========== ===========
SHARE TRANSACTIONS:
Issued........................................ 2,316,995 2,237,201
Reinvested.................................... 30 109
Redeemed...................................... (589) --
----------- -----------
Change in shares............................... 2,316,436 2,237,310
=========== ===========
</TABLE>
- ----
(a) The Fund commenced offering Trust Shares on October 2, 1997 and Class A
Shares on January 29, 1998.
See notes to financial statements
-37-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
PRIME MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------------------------------- -----------
<C> <S> <C>
ASSET BACKED SECURITIES (4.6%):
Industrial Goods & Services (4.6%):
$1,900,000 SMM Co. NV, 5.58%*, 10/13/98 (b)..................... $ 1,900,000
-----------
Total Asset Backed Securities 1,900,000
-----------
COMMERCIAL PAPER (66.3%):
Banks (9.6%):
2,000,000 Nationsbank Corp., 5.62%, 12/4/98.................... 1,980,409
2,000,000 Unifunding Inc., 5.51%, 11/4/98...................... 1,989,592
-----------
3,970,001
-----------
Consumer Goods & Services (8.8%):
2,000,000 Gillette Co., 5.78%, 10/1/98 (b)..................... 2,000,000
1,649,000 Nestle Capital Corp., 5.50%, 10/1/98................. 1,649,000
-----------
3,649,000
-----------
Electronic Instruments (4.8%):
2,000,000 Emerson Electric Corp., 5.75%, 10/1/98............... 2,000,000
-----------
Financial Services (27.6%):
2,000,000 American Express Credit Corp., 5.19%, 3/15/99........ 1,952,425
2,500,000 Cc (USA) Inc., 5.63%,
10/16/98 (b)......................................... 2,494,291
2,000,000 CIT Group Holdings, Inc., 5.45%, 12/29/98............ 1,973,053
1,000,000 CS First Boston, 5.51%, 11/24/98 (b)................. 991,735
2,000,000 General Electric Capital Corp., 5.42%, 3/12/99....... 1,951,220
2,000,000 Lehman Brothers Holdings, Inc., Series 3-A-3, 5.68%,
11/25/98............................................. 1,983,041
-----------
11,345,765
-----------
Industrial Goods & Services (4.7%):
2,000,000 John Deere Capital Corp., 5.33%, 2/26/99............. 1,956,176
-----------
Industrial Materials (4.8%):
2,000,000 Cooper Industries Corp., 6.05%, 10/1/98.............. 2,000,000
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ---------------------------------------------------- -----------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
Insurance (6.0%):
$2,500,000 Prudential Funding Corp., Series 3-A-3, 5.63%,
11/19/98............................................ $ 2,481,251
-----------
Total Commercial Paper 27,402,193
-----------
VARIABLE RATE NOTES (29.3%):
Banks (11.1%):
1,600,000 Corestates Capital Corp., 5.55%*, 10/28/98.......... 1,600,718
3,000,000 Key Bank New York, 5.72%*, 10/1/98.................. 3,000,001
-----------
4,600,719
-----------
Financial Services (18.2%):
2,000,000 American Honda Finance, 5.66%*, 10/9/98 (b)......... 2,000,000
3,000,000 Bear Stearns Cos., Inc., 5.76%*, 11/10/98........... 3,001,230
2,500,000 Beneficial Corp., 5.63%*, 11/4/98................... 2,499,874
-----------
7,501,104
-----------
Total Variable Rate Notes 12,101,823
-----------
Total Investments (Amortized Cost $41,404,016) (a)--100.2% 41,404,016
Liabilities in excess of other assets--(0.2)% (72,170)
-----------
TOTAL NET ASSETS--100.0% $41,331,846
===========
</TABLE>
- ----
* The rate reflected is the rate in effect at September 30, 1998. The maturity
reflected is the next rate change date.
(a) Cost for federal income tax and financial reporting purposes are the same.
(b) Rule 144A, Section 4(2) or other security which is restricted as to resale
to institutional investors. The board of trustees has deemed these
securities to be liquid.
See notes to financial statements
-38-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
U.S. TREASURY MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY BILLS (2.5%):
$ 7,000,000 4/1/99............................................... $ 6,841,812
-----------
Total U.S. Treasury Bills 6,841,812
-----------
U.S. TREASURY NOTES (29.5%):
15,000,000 4.75%, 10/31/98...................................... 14,993,474
15,000,000 5.50%, 11/15/98...................................... 14,997,482
15,000,000 5.00%, 1/31/99....................................... 14,973,946
15,000,000 5.00%, 2/15/99....................................... 14,975,984
15,000,000 6.25%, 3/31/99....................................... 15,056,898
7,000,000 6.25%, 5/31/99....................................... 7,034,827
-----------
Total U.S. Treasury Notes 82,032,611
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS (68.1%):
$50,000,000 First Boston, 5.45%, 10/1/98 (Collateralized by
$50,007,569 U.S. Treasury Note, 5.50%, 2/28/99,
market value--$51,502,678)........................ $ 50,000,000
50,000,000 HSBC, 5.40%, 10/1/98 (Collateralized by
$48,057,000 U.S. Treasury Note, 6.25%, 1/31/02,
market value--$51,000,491)........................ 50,000,000
50,000,000 Lehman Brothers, 5.50%, 10/1/98 (Collateralized by
$34,625,000 U.S. Treasury Bonds, 9.25%, 2/15/16,
market value--$51,004,248)........................ 50,000,000
39,896,389 Nationsbank, 5.55%, 10/1/98 (Collateralized by
$38,375,000 U.S. Treasury Note, 6.00%, 7/31/02,
market value--$41,450,468)........................ 39,896,389
------------
Total Repurchase Agreements 189,896,389
------------
Total Investments (Amortized Cost $278,770,812) (a)--100.1% 278,770,812
Liabilities in excess of other assets--(0.1)% (241,716)
------------
TOTAL NET ASSETS--100.0% $278,529,096
============
</TABLE>
- ----
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements
-39-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ----------
<C> <S> <C>
CORPORATE BONDS (11.8%):
Banks (3.9%):
$ 3,000,000 Nationsbank Corp., 6.13%, 7/15/04..................... $3,142,500
3,000,000 SunTrust Banks, 7.38%, 7/1/02......................... 3,228,750
----------
6,371,250
----------
Financial Services (4.6%):
3,000,000 Ford Motor Credit Co., 6.55%, 9/10/02................. 3,161,250
4,000,000 Sears Roebuck Acceptance, 6.00%, 3/20/03.............. 4,120,000
----------
7,281,250
----------
Industrial Goods & Services (3.3%):
5,000,000 IBM Corp., 6.22%, 8/1/27, Putable 8/1/04 @ 100........ 5,375,000
----------
Total Corporate Bonds 19,027,500
----------
PASS-THROUGH MORTGAGE SECURITIES (23.9%):
Federal Home Loan Mortgage Corp. (5.1%):
2,145,788 6.00%, 11/1/02, Pool # G40168......................... 2,177,975
1,379,850 6.50%, 2/1/11, Pool # G10473.......................... 1,415,202
1,746,584 6.00%, 3/1/11, Pool # E20228.......................... 1,774,407
2,760,505 6.50%, 12/1/12, Gold Pool # E00523.................... 2,820,020
----------
8,187,604
----------
Federal National Mortgage Assoc. (18.8%):
1,923,239 6.50%, 4/1/03, Pool # 303863.......................... 1,952,088
1,430,081 7.00%, 6/1/08, Pool # 50751........................... 1,478,790
1,967,870 7.50%, 12/1/08, Pool # 190611......................... 2,031,825
1,871,419 6.00%, 3/1/09, Pool # 50986........................... 1,898,891
1,993,008 6.00%, 4/1/09, Pool # 190759.......................... 2,022,266
1,794,295 6.50%, 4/1/09, Pool # 250009.......................... 1,839,709
5,762,006 6.00%, 12/1/09, Pool # 313658......................... 5,844,805
2,902,486 6.00%, 4/1/13, Pool #251656........................... 2,930,582
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------- ------------
<C> <S> <C>
PASS-THROUGH MORTGAGE SECURITIES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 5,000,000 6.25%, 7/18/13, Pool #1998-36, CMO.................. $ 5,198,750
5,000,000 6.00%, 11/18/22, Pool #1998-36, CMO................. 5,199,950
------------
30,397,656
------------
Total Pass-through Mortgage Securities 38,585,260
------------
U.S. GOVERNMENT AGENCIES (6.6%):
Federal Home Loan Bank (5.3%):
3,000,000 6.17%, 3/8/01....................................... 3,098,880
3,000,000 6.41%, 10/11/05..................................... 3,266,520
2,000,000 6.79%, 2/5/07....................................... 2,248,760
------------
8,614,160
------------
Federal Home Loan Mortgage Corp. (1.3%):
2,000,000 5.75%, 4/15/08...................................... 2,125,120
------------
Total U.S. Government Agencies 10,739,280
------------
U.S. TREASURY NOTES (55.9%):
7,000,000 5.75%, 12/31/98..................................... 7,022,540
14,500,000 6.50%, 4/30/99...................................... 14,652,250
9,500,000 8.00%, 8/15/99...................................... 9,773,125
8,500,000 5.63%, 10/31/99..................................... 8,592,310
12,000,000 6.75%, 4/30/00...................................... 12,408,960
12,000,000 5.63%, 2/28/01...................................... 12,335,400
5,000,000 5.88%, 11/30/01..................................... 5,216,750
8,000,000 6.38%, 8/15/02...................................... 8,556,400
11,000,000 5.88%, 11/15/05..................................... 11,982,300
------------
Total U.S. Treasury Notes 90,540,035
------------
INVESTMENT COMPANIES (1.0%):
1,564,656 Provident Federal Fund.............................. 1,564,656
------------
Total Investment Companies 1,564,656
------------
Total Investments (Cost $155,763,596)(a)--99.2% 160,456,731
Other assets in excess of liabilities--0.8% 1,348,344
------------
TOTAL NET ASSETS--100.0% $161,805,075
============
</TABLE>
- ----
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$29,765. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.. $4,955,143
Unrealized depreciation.. 291,773
----------
Net unrealized apprecia-
tion..................... $4,663,370
==========
</TABLE>
CMO--Collateralized Mortgage Obligation.
See notes to financial statements
-40-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
INTERMEDIATE U.S. GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
----------- ----------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS (22.6%):
Banks (4.4%):
$ 3,000,000 AmSouth Bank, 6.45%, 2/1/18, Callable 2/1/08 @ 100... $ 3,116,250
5,000,000 SunTrust Banks, 7.38%, 7/1/02........................ 5,381,250
-----------
8,497,500
-----------
Consumer Goods & Services (1.6%):
3,000,000 Kimberly-Clark Corp., 6.25%, 7/15/18................. 3,112,500
-----------
Financial Services (8.2%):
5,000,000 Ford Motor Credit Co., 6.55%, 9/10/02................ 5,268,750
5,000,000 Morgan Stanley Dean Witter, 6.38%, 8/1/02............ 5,206,250
5,000,000 Sears Roebuck Acceptance, 6.00%, 3/20/03............. 5,150,000
-----------
15,625,000
-----------
Industrial Goods & Services (5.5%):
3,000,000 Honeywell, Inc., 6.63%, 6/15/28...................... 3,135,000
7,000,000 IBM Corp., 6.22%, 8/1/27, Putable 8/1/04 @ 100....... 7,525,000
-----------
10,660,000
-----------
Leisure Time Industries (2.9%):
5,000,000 The Walt Disney Co., 6.75%, 3/30/06.................. 5,512,500
-----------
Total Corporate Bonds 43,407,500
-----------
PASS-THROUGH MORTGAGE SECURITIES (19.3%):
Federal Home Loan Mortgage Corp. (6.2%):
1,712,008 7.50%, 7/1/07, Pool # E00108......................... 1,770,319
1,642,475 6.50%, 2/1/11, Pool # G10473......................... 1,684,555
1,746,584 6.00%, 3/1/11, Pool # E20228......................... 1,774,407
3,008,605 6.50%, 4/1/11, Pool # E20235......................... 3,088,514
3,680,673 6.50%, 12/1/12, Gold Pool # E00523................... 3,760,027
-----------
12,077,822
-----------
Federal National Mortgage Assoc. (11.2%):
3,935,213 6.00%, 6/1/08, Pool # 124885......................... 4,015,138
2,655,865 7.00%, 6/1/08, Pool # 50751.......................... 2,746,324
2,469,431 6.00%, 12/1/09, Pool # 313658........................ 2,504,917
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
----------- ---------------------------------------------------- ------------
<C> <S> <C>
PASS-THROUGHS MORTGAGE SECURITIES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 3,869,981 6.00%, 4/1/13, Pool #251656......................... $ 3,907,443
5,000,000 6.00%, 11/18/22, Pool #1998-36, CMO................. 5,199,950
2,907,582 7.00%, 4/1/24, Pool # 250005........................ 2,998,444
------------
21,372,216
------------
Government National Mortgage Assoc. (1.9%):
3,537,574 7.00%, 8/15/23, Pool # 354627....................... 3,668,005
------------
Total Pass-throughs Mortgage Securities 37,118,043
------------
U.S. GOVERNMENT AGENCIES (8.0%):
Federal Home Loan Bank (6.3%):
3,000,000 7.36%, 7/1/04....................................... 3,391,230
3,000,000 6.41%, 10/11/05..................................... 3,266,520
2,000,000 6.79%, 2/5/07....................................... 2,248,760
3,000,000 5.84%, 7/14/08...................................... 3,197,670
------------
12,104,180
------------
Federal Home Loan Mortgage Corp. (1.7%):
3,000,000 5.75%, 4/15/08...................................... 3,187,680
------------
Total U.S. Government Agencies 15,291,860
------------
U.S. TREASURY BONDS (10.7%):
6,500,000 7.50%, 11/15/16..................................... 8,281,065
11,000,000 6.00%, 2/15/26...................................... 12,286,670
------------
Total U.S. Treasury Bonds 20,567,735
------------
U.S. TREASURY NOTES (38.5%):
9,000,000 6.38%, 8/15/02...................................... 9,625,950
13,250,000 6.25%, 2/15/03...................................... 14,238,847
10,500,000 7.25%, 8/15/04...................................... 12,038,145
9,500,000 5.88%, 11/15/05..................................... 10,348,350
12,500,000 6.50%, 10/15/06..................................... 14,180,500
12,000,000 6.25%, 2/15/07...................................... 13,469,880
------------
Total U.S. Treasury Notes 73,901,672
------------
INVESTMENT COMPANIES (0.3%):
671,073 Provident Federal Fund.............................. 671,073
------------
Total Investment Companies 671,073
------------
Total Investments (Cost $178,261,581)(a)--99.4% 190,957,883
Other assets in excess of liabilities--0.6% 1,174,538
------------
TOTAL NET ASSETS--100.0% $192,132,421
============
</TABLE>
- ----
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$43,125. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized apprecia-
tion.................... $12,653,177
Unrealized deprecia-
tion.................... 0
-----------
Net unrealized apprecia-
tion.................... $12,653,177
===========
</TABLE>
CMO--Collateralized Mortgage Obligation.
See notes to financial statements
-41-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- -----------
<C> <S> <C>
MUNICIPAL BONDS (97.7%):
Education Bonds (2.2%):
$ 500,000 North Carolina Educational Facilities, 5.00%,
10/1/17, Callable 10/1/06 @ 102...................... $ 505,890
550,000 University of North Carolina, Asheville Revenue,
5.15%, 6/1/18, Callable 6/1/07 @ 102, AMBAC.......... 559,449
250,000 University of North Carolina, University Revenues,
4.90%, 8/1/03, Callable 8/1/02 @ 102................. 262,370
500,000 University of North Carolina, University Revenues,
5.20%, 5/15/05....................................... 537,305
-----------
1,865,014
-----------
General Obligation Bonds (67.6%):
600,000 Asheville, North Carolina, 6.00%, 3/1/01............. 632,490
250,000 Asheville, North Carolina, 5.00%, 6/1/09, Callable
6/1/07 @ 101, MBIA................................... 266,138
500,000 Buncombe County, North Carolina, 5.00%, 3/1/01....... 515,715
500,000 Buncombe County, North Carolina, 5.00%, 3/1/03....... 525,015
350,000 Buncombe County, North Carolina, 5.10%, 3/1/04....... 372,085
500,000 Buncombe County, North Carolina, 5.80%, 2/1/05,
Callable 2/1/04 @ 100.5.............................. 548,385
1,000,000 Buncombe County, North Carolina, 5.10%, 3/1/07....... 1,080,910
500,000 Buncombe County, North Carolina, 5.30%, 3/1/08, FSA.. 543,750
750,000 Burke County, North Carolina, 6.25%, 3/1/99, MBIA.... 759,225
500,000 Burke County, North Carolina, 6.30%, 3/1/01, MBIA.... 530,520
400,000 Burlington, North Carolina, 5.10%, 2/1/07............ 430,616
500,000 Cabarrus County, North Carolina, 5.30%, 2/1/11,
Callable 2/1/07 @ 102, MBIA.......................... 542,435
1,500,000 Cabarrus County, North Carolina, 5.30%, 2/1/13,
Callable 2/1/07 @ 102, MBIA.......................... 1,610,864
500,000 Cary, North Carolina, 5.50%, 2/1/01.................. 520,735
500,000 Catawba County, North Carolina, 5.70%, 6/1/06,
Callable 6/1/04 @ 101................................ 548,835
250,000 Charlotte, North Carolina, 6.40%, 2/1/99............. 252,603
250,000 Charlotte, North Carolina, 5.20%, 7/1/01............. 260,313
1,000,000 Charlotte, North Carolina, Water & Sewer, 6.20%,
6/1/01............................................... 1,064,760
500,000 Charlotte, North Carolina, Series A, 5.50%, 7/1/06,
Callable 7/1/02 @ 102................................ 536,480
500,000 Chatham County, North Carolina, 5.40%, 4/1/11,
Callable 4/1/06 @102................................. 544,040
600,000 Cleveland County, North Carolina, 5.10%, 6/1/03,
FGIC................................................. 634,104
1,000,000 Craven County, North Carolina, 5.50%, 6/1/07,
Callable 6/1/06 @ 100.5, MBIA........................ 1,101,169
500,000 Craven County, North Carolina, 5.50%, 6/1/09,
Callable 6/1/06 @ 102, MBIA.......................... 550,090
1,000,000 Craven County, North Carolina, 5.50%, 6/1/16,
Callable 6/1/06 @ 102, MBIA.......................... 1,077,050
500,000 Cumberland County, North Carolina, Certificate of
Participation, Civic Center Project-Series A, 5.80%,
12/1/03,AMBAC........................................ 545,770
400,000 Davidson County, North Carolina, Certificate of
Participation, 5.00%, 6/1/18, Callable 6/1/08 @ 101,
MBIA................................................. 404,916
500,000 Durham & Wake Counties, North Carolina, 5.75%,
4/1/02............................................... 533,555
500,000 Durham County, North Carolina, 5.40%, 2/1/02......... 526,580
250,000 Durham County, North Carolina, 5.20%, 3/1/03,
Callable 3/1/02 @ 100.5.............................. 262,708
340,000 Durham County, North Carolina, 5.20%, 3/1/05,
Callable 3/1/02 @ 101.5.............................. 359,152
500,000 Durham County, North Carolina, Certificate of
Participation, 5.00%, 5/1/14, Callable 5/1/08 @ 102.. 516,880
750,000 Durham, North Carolina, 4.90%, 2/1/04................ 790,215
500,000 Durham, North Carolina, 5.00%, 2/1/05................ 532,320
500,000 Fayetteville, North Carolina, 6.50%, 3/1/14, FGIC.... 529,570
500,000 Forsyth County, North Carolina, 6.20%, 3/1/04,
Callable 3/1/01 @ 101.5.............................. 536,400
1,000,000 Forsyth County, North Carolina, 5.20%, 6/1/02........ 1,051,330
500,000 Forsyth County, North Carolina, 5.60%, 8/1/03,
Callable 8/1/02 @ 100.5.............................. 535,090
</TABLE>
Continued
-42-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
General Obligation Bonds, continued:
$ 265,000 Forsyth County, North Carolina, 5.40%, 6/1/04,
Callable 6/1/02 @101................................. $ 281,875
500,000 Forsyth County, North Carolina, 5.10%, 8/1/04........ 534,250
500,000 Forsyth County, North Carolina, 4.75%, 2/1/12,
Callable 2/1/06 @ 102................................ 514,935
500,000 Gaston County, North Carolina, 5.00%, 3/1/08,
Callable 3/1/06 @ 101, AMBAC......................... 532,220
1,000,000 Gaston County, North Carolina, 5.50%, 5/1/09,
Callable 5/1/07 @ 101, FGIC.......................... 1,108,709
500,000 Gaston County, North Carolina, 5.00%, 3/1/14, FGIC... 522,430
500,000 Goldsboro, North Carolina, 4.90%, 6/1/01............. 515,995
500,000 Greensboro, North Carolina, 5.40%, 4/1/02............ 527,515
500,000 Greensboro, North Carolina, 4.70%, 4/1/12, Callable
4/1/08 @ 102......................................... 511,770
500,000 Greensboro, North Carolina, 5.20%, 6/1/12, Callable
6/1/07 @ 102......................................... 534,090
300,000 Guilford County, North Carolina, 4.50%, 2/1/15,
Callable 2/1/08 @ 102................................ 295,887
890,000 Henderson County, North Carolina, 6.50%, 6/1/01...... 954,142
600,000 Hickory, North Carolina, 6.50%, 5/1/01............... 641,964
500,000 Iredell County, North Carolina, 4.75%, 2/1/15,
Callable 2/1/07 @ 102................................ 502,230
500,000 Johnston County, North Carolina, 5.00%, 5/1/09,
Callable 5/1/07 @ 101, FGIC.......................... 533,185
500,000 Johnston County, North Carolina, 5.00%, 5/1/17,
Callable 5/1/07 @ 102, FGIC.......................... 515,750
500,000 Lee County, North Carolina, 5.50%, 2/1/00............ 512,785
250,000 Lee County, North Carolina, 5.60%, 2/1/03, Callable
2/1/02 @ 100.5....................................... 265,388
500,000 Lincoln County, North Carolina, 4.70%, 6/1/01, FGIC.. 513,470
750,000 Lincoln County, North Carolina, 4.80%, 6/1/04, FGIC.. 787,110
700,000 Mecklenburg County, North Carolina, 5.75%, 3/1/03,
Callable 3/1/02 @ 100.5.............................. 747,831
1,000,000 Mecklenburg County, North Carolina, 5.40%, 4/1/03.... 1,068,210
1,500,000 Mecklenburg County, North Carolina, 5.50%, 4/1/11,
Callable 4/1/04 @ 102................................ 1,621,094
1,000,000 Moore County, North Carolina, 4.60%, 6/1/12, Callable
6/1/08 @ 102, MBIA................................... 1,012,320
625,000 New Hanover County, North Carolina, 5.30%, 5/1/09,
Callable 5/1/06 @ 101.5.............................. 678,638
250,000 New Hanover County, North Carolina, 4.80%, 2/1/12,
Callable 2/1/08 @ 102................................ 257,040
500,000 New Hanover County, North Carolina, 5.30%, 5/1/13,
Callable 5/1/06 @ 102................................ 534,920
500,000 North Carolina State, 5.60%, 4/1/00.................. 515,095
500,000 North Carolina State, 4.70%, 2/1/01.................. 512,310
250,000 North Carolina State, 6.10%, 3/1/03, Callable 3/1/02
@ 100.5.............................................. 270,033
500,000 North Carolina State, 5.10%, 3/1/05.................. 536,410
1,000,000 North Carolina State, 5.10%, 6/1/09, Callable 6/1/06
@ 101.5.............................................. 1,078,780
500,000 North Carolina State, 4.75%, 4/1/12, Callable 4/1/08
@ 102................................................ 516,645
500,000 Onslow County, North Carolina, 5.30%, 5/1/05......... 540,595
500,000 Orange County, North Carolina, 5.10%, 6/1/00......... 512,265
500,000 Orange County, North Carolina, 5.10%, 6/1/06,
Callable 6/1/03 @ 101.5.............................. 531,180
500,000 Orange County, North Carolina, 5.10%, 6/1/07,
Callable 6/1/03 @ 102................................ 532,160
465,000 Raleigh, North Carolina, 6.30%, 3/1/99............... 470,864
500,000 Rocky Mount, North Carolina, 6.10%, 5/1/03, Callable
5/1/02 @ 100.5....................................... 543,795
625,000 Rowan County, North Carolina, 5.50%, 4/1/04, MBIA.... 676,669
700,000 Rowan County, North Carolina, 5.50%, 4/1/05, MBIA.... 764,204
225,000 Rowan County, North Carolina, 5.50%, 2/1/07, Callable
2/1/06 @ 100.5, MBIA................................. 246,953
250,000 Stokes County, North Carolina, 4.80%, 6/1/00, FGIC... 255,050
650,000 Stokes County, North Carolina, 4.80%, 6/1/08, FGIC... 689,722
500,000 Stokes County, North Carolina, 5.00%, 6/1/13,
Callable 6/1/08 @ 102, FGIC.......................... 527,515
</TABLE>
Continued
-43-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
General Obligation Bonds, continued:
$1,000,000 Surry County, North Carolina, 6.25%, 4/1/00, AMBAC... $ 1,038,730
500,000 Surry County, North Carolina, 6.25%, 4/1/01, AMBAC... 531,070
500,000 Union County, North Carolina, 5.20%, 6/1/13, Callable
6/1/05 @ 102, MBIA................................... 528,415
800,000 Wake County, North Carolina, 4.50%, 3/1/10, Callable
3/1/08 @ 101......................................... 819,376
500,000 Wake County, North Carolina, 4.90%, 2/1/11, Callable
2/1/04 @ 102......................................... 521,330
250,000 Wayne County, North Carolina, 4.80%, 4/1/02.......... 258,790
500,000 Wayne County, North Carolina, 4.80%, 4/1/03.......... 521,145
500,000 Wilkes County, North Carolina, 5.00%, 6/1/01, AMBAC.. 517,255
500,000 Wilkes County, North Carolina, 5.00%, 6/1/02, AMBAC.. 521,910
500,000 Wilkes County, North Carolina, 5.30%, 6/1/08,
Callable 6/1/03 @ 102................................ 533,065
850,000 Wilmington, North Carolina, 5.00%, 4/1/10, FGIC...... 911,532
600,000 Winston Salem, North Carolina, Public Improvement,
4.80%, 6/1/17, Callable 6/1/08 @ 102................. 605,430
250,000 Winston-Salem, North Carolina, 6.50%, 6/1/99......... 255,323
200,000 Winston-Salem, North Carolina, 6.40%, 6/1/02,
Callable 6/1/01 @ 102................................ 217,542
350,000 Winston-Salem, North Carolina, 6.25%, 4/1/07,
Callable 4/1/02 @ 102................................ 385,469
-----------
57,485,193
-----------
Health Care Bonds (10.6%):
245,000 Charlotte-Mecklenberg Hospital Authority, North
Carolina, Health Care System Revenue, 5.70%, 1/1/01.. 255,861
405,000 Charlotte-Mecklenburg Hospital Authority, North
Carolina, Health Care System Revenue, 5.70%, 1/1/01.. 422,775
185,000 Charlotte-Mecklenburg Hospital Authority, North
Carolina, Health Care System Revenue, 5.90%, 1/1/02.. 197,179
315,000 Charlotte-Mecklenburg Hospital Authority, North
Carolina, Health Care System Revenue, 5.90%,
1/1/02............................................... 335,736
110,000 Charlotte-Mecklenburg Hospital Authority, North
Carolina, Health Care System Revenue, 6.00%, 1/1/03,
Pre-Refunded 1/1/02 @ 102............................ 119,526
190,000 Charlotte-Mecklenburg Hospital Authority, North
Carolina, Health Care System Revenue, 6.00%, 1/1/03,
Callable 1/1/02 @ 102................................ 206,148
500,000 Charlotte-Mecklenberg Hospital Authority, North
Carolina, Health Care System Revenue, 4.90%, 1/15/11,
Callable 1/15/07 @102................................ 519,640
500,000 North Carolina Health Care, Duke University, Health
Care System Revenue, 4.70%, 6/1/10, Callable 6/1/08 @
101.................................................. 510,890
1,000,000 North Carolina Health Care, Duke University, Health
Care System Revenue, 5.00%, 6/1/18, Callable 6/1/08
@101................................................. 1,002,560
900,000 North Carolina Medical Care Community, Hospital
Revenue, 4.63%, 6/1/09, Callable 6/1/08 @ 101,
AMBAC................................................ 914,742
500,000 North Carolina Medical Care Community, Hospital
Revenue, 5.10%, 11/1/09, Callable 11/1/07 @ 100,
AMBAC................................................ 533,995
500,000 North Carolina Medical Care Community, Hospital
Revenue, 6.13%, 6/1/10, Callable 6/1/03 @ 102........ 557,210
1,000,000 North Carolina Medical Care Community, Hospital
Revenue, 5.00%, 10/1/10, Callable 10/1/07 @ 102,
MBIA................................................. 1,064,460
500,000 North Carolina Medical Care, Common Health Care
Revenue, 5.00%, 10/1/08.............................. 533,660
500,000 Pitt County, North Carolina, Memorial Hospital
Revenue, 4.40%, 12/1/08.............................. 502,175
1,000,000 Pitt County, North Carolina, Memorial Hospital
Revenue, 5.50%, 12/1/15, Callable 12/1/05 @ 102...... 1,058,970
250,000 University of North Carolina, Chapel Hill Hospital
Revenue, 5.05%, 2/15/09, Callable 2/15/06 @ 102...... 264,330
-----------
8,999,857
-----------
</TABLE>
Continued
-44-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Housing Bonds (1.4%):
$ 250,000 Centennial Authority, North Carolina, Hotel, Tax
Revenue Arena, 5.00%, 9/1/12, Callable 9/1/07 @ 102,
FSA.................................................. $ 260,243
500,000 Centennial Authority, North Carolina, Hotel, Tax
Revenue Arena, 5.00%, 9/1/11, Callable 9/1/07 @ 102,
FSA.................................................. 520,924
265,000 North Carolina Housing Finance Agency, 5.65%,
9/1/02............................................... 277,553
150,000 North Carolina Housing Finance Agency, 6.35%, 9/1/04,
Callable 9/1/02 @ 102................................ 159,719
-----------
1,218,439
-----------
Utility Bonds (15.9%):
500,000 Asheville, North Carolina, Water System Revenue,
5.30%, 8/1/09, Callable 8/1/06 @ 102, FGIC........... 545,700
1,500,000 Asheville, North Carolina, Water System Revenue,
5.63%, 8/1/16, Callable 8/1/06 @ 102, FGIC........... 1,629,389
600,000 Charlotte, North Carolina, Water & Sewer, 5.70%,
2/1/06, Callable 2/1/04 @ 101........................ 657,942
500,000 Charlotte, North Carolina, Water & Sewer, 5.60%,
5/1/17, Callable 5/1/06 @ 102........................ 561,040
1,000,000 Charlotte, North Carolina, Water & Sewer, 5.60%,
5/1/21, Callable 5/1/06 @ 102........................ 1,122,080
1,000,000 Charlotte, North Carolina, Water & Sewer, 5.25%,
12/1/21, Callable 12/1/06 @ 102...................... 1,034,990
500,000 Concord, North Carolina, Utilities Revenue, 4.45%,
12/1/07, MBIA........................................ 515,940
500,000 Concord, North Carolina, Utilities Revenue, 5.00%,
12/1/22, Callable 12/1/08 @ 101, MBIA................ 501,775
500,000 Durham, North Carolina, Water & Sewer Utilities
Revenue, 4.90%, 6/1/13, Callable 6/1/08 @ 101........ 513,900
500,000 Gastonia County, North Carolina, Utilities Revenue,
4.75%, 5/1/15, Callable 5/1/08 @ 102, MBIA........... 501,305
305,000 Gastonia, North Carolina, Comb Utilities Revenue,
5.00%, 5/1/08, MBIA.................................. 325,569
500,000 Greensboro, North Carolina, Enterprise System
Revenue, Water Utility Improvements, 5.38%, 6/1/19,
Callable 6/1/05 @ 102................................ 525,225
500,000 Lincolnton, North Carolina, Enterprise System
Revenue, Water & Sewer Improvement, 5.10%, 5/1/09,
Callable 11/1/06 @ 102, MBIA......................... 538,290
500,000 North Carolina Municipal Power Agency, No 1, Catawba
Electric Revenue, 5.25%, 1/1/09...................... 529,230
1,000,000 North Carolina Municipal Power Agency, No 1, Catawba
Electric Revenue, 5.13%, 1/1/17...................... 1,021,120
325,000 North Carolina Municipal Power Agency, No. 1, Catawba
Electric Revenue, 5.00%, 1/1/20...................... 331,744
500,000 Raleigh, North Carolina, Comb Enterprise System,
Water & Sewer Improvement, 5.13%, 3/1/10, Callable
3/1/07 @ 102......................................... 536,550
1,000,000 Shelby, North Carolina, Combined Enterprise System
Revenue, 5.63%, 5/1/14, Callable 5/1/05 @ 102........ 1,070,520
1,025,000 Winston-Salem, North Carolina, Water & Sewer, 5.00%,
6/1/12, Callable 6/1/07 @ 102........................ 1,068,850
-----------
13,531,159
-----------
Total Municipal Bonds 83,099,662
-----------
INVESTMENT COMPANIES (1.2%):
1,029,138 Blackrock North Carolina Municipal Money Market Fund
(b) ................................................. 1,029,138
-----------
Total Investment Companies 1,029,138
-----------
Total Investments (Cost $80,004,125) (a)--98.9% 84,128,800
Other assets in excess of liabilities--1.1% 917,271
-----------
TOTAL NET ASSETS--100.0% $85,046,071
===========
</TABLE>
- ----
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation.. $4,124,675
Unrealized depreciation.. 0
----------
Net unrealized apprecia-
tion..................... $4,124,675
==========
</TABLE>
(b) Investment in affiliate.
AMBAC--Insured by AMBAC Indemnity Corporation.
FGIC--Insured by Financial Guaranty Insurance Corporation.
FSA--Insured by Financial Security Assurance.
MBIA--Municipal Bond Insurance Association.
See notes to financial statements
-45-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
MUNICIPAL BONDS (97.5%):
Education Bonds (29.8%):
$350,000 Beaufort County, South Carolina, School District,
6.75%, 3/1/00........................................ $ 365,257
100,000 Beaufort County, South Carolina, School District,
7.00%, 2/1/00, Callable 11/25/98 @ 101, MBIA ........ 101,156
250,000 Beaufort County, South Carolina, School District,
Series B, 5.00%, 3/1/06, Callable 3/1/04 @ 101 ...... 264,313
500,000 Brookland Cayce, South Carolina, School District,
5.00%, 3/1/11, Callable 3/1/05 @ 101................. 522,095
250,000 Cherokee County, South Carolina, School District No.
1, 5.00%, 3/1/09, Callable 3/1/07 @ 101 ............. 265,818
250,000 Cherokee County, South Carolina, School District No.
1, 5.00%, 3/1/01 .................................... 257,915
500,000 Citadel Military College, South Carolina, 5.13%,
4/1/12, Callable 4/1/06 @ 102........................ 524,815
500,000 Dorchester County, South Carolina, School District,
5.15%, 7/1/08, Callable 7/1/03 @ 102................. 529,815
250,000 Horry County, South Carolina, School District, 5.60%,
1/1/16, Callable 1/1/05 @ 100........................ 264,490
250,000 Horry County, South Carolina, School District, 5.13%,
3/1/08, Callable 3/1/03 @ 101........................ 262,033
250,000 Horry County, South Carolina, School District, Series
A, 5.10%, 3/1/09, Callable 3/1/05 @ 101 ............. 264,338
300,000 Lexington County, South Carolina, School District No.
1, 6.30%, 2/1/00..................................... 310,776
250,000 Richland County, Educational Facilities Revenue,
5.13%, 1/1/18, Callable 1/1/08 @ 102 ................ 252,645
500,000 South Carolina, Educational Facilities Authority,
Private Nonprofit Institutions, Furman University,
Project Revenue-Series A, 5.50%, 10/1/16, Callable
10/1/06 @ 102, MBIA ................................. 536,584
500,000 University of South Carolina, University Revenues,
5.65%, 6/1/12, Callable 6/1/06 @ 101, MBIA .......... 545,974
250,000 York County, South Carolina, School District, 5.00%,
7/1/14, Callable 7/1/05 @ 102 ....................... 256,395
-----------
5,524,419
-----------
General Obligation Bonds (35.3%):
500,000 Charleston County, South Carolina, 5.00%, 2/1/08,
Callable 2/1/05 @ 102................................ 531,474
200,000 Charleston County, South Carolina, 5.50%, 6/1/06,
Callable 6/1/04 @102 ................................ 218,694
250,000 Columbia, South Carolina, 4.80%, 2/1/12, Callable
2/1/06 @ 101 ........................................ 256,095
250,000 Georgetown County, South Carolina, School District,
4.80%, 3/1/11, Callable 3/1/09 @ 100, MBIA .......... 257,728
250,000 Hilton Head Island, 4.90%, 12/1/10, Callable 12/1/06
@ 101, FGIC ......................................... 260,675
500,000 Hilton Head Island, 4.70%, 12/1/08, Callable 12/1/06
@ 101, FGIC ......................................... 522,710
250,000 Horry County, South Carolina, 5.55%, 1/1/13, Callable
1/1/05 @ 100, FGIC .................................. 267,055
175,000 Irmo-Chapin, South Carolina, Recreation lmprovements,
5.00%, 2/1/16, Callable 2/1/08 @ 100, FGIC .......... 181,330
250,000 Irmo-Chapin, South Carolina, Recreation lmprovements,
5.00%, 2/1/15, Callable 2/1/08 @ 100, FGIC .......... 260,008
250,000 Lancaster County, South Carolina, School District,
4.80%, 7/1/11, Callable 7/1/08 @ 101 ................ 257,915
300,000 Myrtle Beach, South Carolina, Cops, 5.00%, 7/1/13,
Callable 7/1/08 @ 101 ............................... 308,307
250,000 Myrtle Beach, South Carolina, Water & Sewer, 5.10%,
3/1/08, Callable 3/1/05 @ 102 ....................... 267,053
250,000 Richland County, South Carolina, Recreation District,
4.70%, 3/1/09 ....................................... 262,393
500,000 South Carolina State, 5.75%, 3/1/01.................. 524,680
500,000 South Carolina State, State Highway-Series B, 5.65%,
7/1/19............................................... 541,239
300,000 South Carolina State, State Highway-Series B, 5.63%,
7/1/13, Callable 1/1/06 @ 102 ....................... 330,474
250,000 South Carolina, Capital Improvements, Series A,
3.50%, 8/1/12, Callable 8/1/08 @ 102 ................ 225,408
500,000 South Carolina, State Highway, 5.63%, 7/1/09,
Callable 7/1/06 @ 102 ............................... 558,179
500,000 York County, South Carolina, 5.00%, 6/1/11, Callable
6/1/01 @ 102, AMBAC ................................. 512,295
-----------
6,543,712
-----------
Health Care Bonds (4.2%):
250,000 Greenville Hospital System, South Carolina, Hospital
Facilities Revenue, Series A, 5.75%, 5/1/14,
Callable 5/1/06 @ 102 ............................... 268,863
300,000 Lexington County, South Carolina, Health Services,
5.00%, 11/1/10, Callable 11/1/08 @ 102 .............. 313,283
195,000 South Carolina, Economic Development Hospital
Revenue, 4.40%, 11/1/06, AMBAC ...................... 200,203
-----------
782,349
-----------
</TABLE>
Continued
-46-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Pollution Control Bonds (4.4%):
$500,000 Charleston County, South
Carolina, Solid Waste,
5.60%, 1/1/04 .......... $ 540,975
250,000 Oconee County, South
Carolina, Pollution
Revenue, 5.80%, 4/1/14,
Callable 4/1/03 @ 102... 266,340
-----------
807,315
-----------
Utility Bonds (23.8%):
500,000 Beaufort-Jasper, South
Carolina, Water & Sewer
Authority, Waterworks &
Sewer System Revenue,
6.50%, 3/1/13, Callable
3/1/02 @ 102............ 548,630
500,000 Berkeley County, South
Carolina, Water & Sewer,
7.00%, 6/1/16 .......... 551,550
200,000 Camden, South Carolina,
Public Utility Revenue,
5.50%, 3/1/22, Callable
3/1/07 @ 102 ........... 213,224
500,000 Columbia, South
Carolina, Water & Sewer,
5.50%, 2/1/09........... 554,904
500,000 Greenville, South
Carolina, Water Works,
5.30%, 2/1/14, Callable
2/1/07 @ 102 ........... 532,145
250,000 Greenwood, South
Carolina, Utility
Revenue, 4.50%, 12/1/08,
FSA .................... 257,395
250,000 Mount Pleasant, South
Carolina, Water & Sewer,
6.00%, 12/1/20, Callable
12/1/02 @ 102........... 273,148
200,000 Piedmont, Municipal
Power Revenue, 5.50%,
1/1/13, MBIA............ 221,304
250,000 South Carolina State,
Public Service Authority
Revenue, 5.13%, 1/1/21,
Callable 1/1/03 @ 102,
AMBAC................... 251,508
250,000 South Carolina State, 266,720
Public Service Authority
Revenue, 5.20%, 7/1/04,
Callable 1/1/03 @ 102,
MBIA ...................
500,000 South Carolina, State 503,430
Publishing Service
Authority Revenue,
5.00%, 1/1/18, Callable
1/1/03 @ 102, FGIC .....
250,000 Spartanburg, South 254,958
Carolina, Water Works,
5.00%, 6/1/17, Callable
6/1/07 @ 101 ...........
-----------
4,428,916
-----------
Total Municipal Bonds 18,086,711
-----------
INVESTMENT COMPANIES (2.9%):
529,658 Federated Municipal
Obligations Fund........ 529,658
-----------
Total Investment Companies 529,658
-----------
Total Investments (Cost
$17,864,756) (a)--100.4% 18,616,369
Liabilities in excess of other as-
sets--(0.4)% (77,405)
-----------
TOTAL NET ASSETS--100.0% $18,538,964
===========
</TABLE>
- ----
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation... $ 751,980
Unrealized depreciation... (367)
---------
Net unrealized apprecia-
tion...................... $ 751,613
=========
</TABLE>
AMBAC--Insured by AMBAC Indemnity Corporation.
FGIC--Insured by Financial Guaranty Insurance Corporation.
FSA--Insured by Financial Security Assurance.
MBIA--Insured by Municipal Bond Insurance Association.
See notes to financial statements
-47-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
GROWTH AND INCOME STOCK FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS (95.4%):
Aerospace/Defense (5.3%):
80,800 Lockheed Martin Corp. ................................ $ 8,145,649
139,000 Parker Hannifin Corp.................................. 4,126,563
37,500 Raytheon Co.--Class A................................. 1,942,969
149,000 Raytheon Co.--Class B................................. 8,036,688
------------
22,251,869
------------
Apparel (0.8%):
93,200 V. F. Corp............................................ 3,460,050
------------
Automobiles & Trucks (1.0%):
89,815 Ford Motor Co......................................... 4,215,692
------------
Banks (5.2%):
69,560 J.P. Morgan & Co. .................................... 5,886,515
142,222 Old Kent Financial Corp. ............................. 4,213,327
179,700 Pacific Century Financial Corp. ...................... 2,998,744
101,400 Wachovia Corp. ....................................... 8,644,350
------------
21,742,936
------------
Beverages (3.0%):
231,305 Anheuser-Busch Cos. .................................. 12,490,470
------------
Business Equipment & Services (3.1%):
230,400 Harris Corp........................................... 7,372,800
110,300 Pitney Bowes, Inc..................................... 5,797,644
------------
13,170,444
------------
Chemicals (2.2%):
98,600 Air Products & Chemicals, Inc......................... 2,933,350
58,600 Great Lakes Chemical Corp............................. 2,278,075
41,100 Vulcan Materials Co................................... 4,158,806
------------
9,370,231
------------
Computer Software (1.2%):
143,000 Adobe Systems, Inc.................................... 4,960,313
------------
Computers (3.4%):
133,000 Hewlett-Packard Co.................................... 7,040,688
57,400 IBM Corp.............................................. 7,347,200
------------
14,387,888
------------
Consumer Goods & Services (2.9%):
145,500 American Greetings Corp............................... 5,756,344
158,000 Kimberly-Clark Corp................................... 6,399,000
------------
12,155,344
------------
Containers (0.7%):
123,725 Sonoco Products Co. .................................. 2,969,400
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Electrical Equipment (2.1%):
144,370 Emerson Electric...................................... $ 8,987,033
------------
Electronic Components (1.5%):
124,100 Avnet, Inc. .......................................... 4,568,431
48,300 Varian Associates, Inc................................ 1,702,575
------------
6,271,006
------------
Electronic Instruments (0.4%):
120,050 Tektronix, Inc. ...................................... 1,860,775
------------
Engineering (0.6%):
62,000 Fluor Corp............................................ 2,545,875
------------
Financial Services (0.4%):
28,780 Associates First Capital Corp......................... 1,877,895
------------
Food & Related (6.1%):
217,000 Bob Evans Farms....................................... 4,326,438
105,900 Dean Foods Co......................................... 4,659,599
547,400 SUPERVALU, Inc. ...................................... 12,761,262
185,000 Universal Foods Corp.................................. 3,861,875
------------
25,609,174
------------
Forest & Paper Products (1.2%):
120,900 Weyerhaeuser Co....................................... 5,100,469
------------
Household--Major Appliances (0.8%):
74,200 Whirlpool Corp........................................ 3,487,400
------------
Household Products/Wares (1.6%):
111,000 Unilever NV, New York Shares.......................... 6,798,750
------------
Insurance (7.1%):
20,000 Aetna Services, Inc................................... 1,390,000
75,175 AON Corp.............................................. 4,848,788
104,700 Lincoln National Corp................................. 8,611,574
221,800 SAFECO Corp........................................... 9,246,287
163,000 St. Paul Cos., Inc.................................... 5,297,500
------------
29,394,149
------------
Leisure Time Industries (1.5%):
216,350 Hasbro, Inc........................................... 6,382,325
------------
Machinery & Equipment (1.1%):
148,500 Trinity Industries.................................... 4,816,969
------------
Materials (0.9%):
124,700 Corning, Inc.......................................... 3,670,856
------------
</TABLE>
Continued
-48-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
GROWTH AND INCOME STOCK FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Media (2.8%):
211,000 Banta Corp............................................ $ 5,749,750
151,400 Media General, Inc.................................... 5,866,750
------------
11,616,500
------------
Medical Equipment & Supplies (5.6%):
152,000 Bausch & Lomb......................................... 5,985,000
148,300 Johnson & Johnson..................................... 11,604,475
291,000 Mallinckrodt, Inc..................................... 5,910,938
------------
23,500,413
------------
Petroleum (6.6%):
117,500 Ashland, Inc.......................................... 5,434,375
89,030 Chevron Corp. ........................................ 7,484,084
67,200 Mobil Corp. .......................................... 5,103,000
207,200 Phillips Petroleum Co. ............................... 9,349,899
------------
27,371,358
------------
Petroleum--International (1.0%):
92,600 Royal Dutch Petroleum Co.-NY Shares................... 4,410,075
------------
Pharmaceuticals (5.6%):
236,000 Abbott Laboratories................................... 10,251,249
79,740 Bristol-Myers Squibb Co. ............................. 8,282,992
50,200 Schering-Plough Corp. ................................ 5,198,838
------------
23,733,079
------------
Publishing (0.8%):
110,000 Houghton Mifflin Co................................... 3,410,000
------------
Railroad (0.4%):
41,000 CSX Corp. ............................................ 1,724,563
------------
Retail (1.3%):
108,500 May Department Stores Co.............................. 5,587,750
------------
Retail--Food Stores (1.5%):
194,000 American Stores Co. .................................. 6,244,375
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
----------- --------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Security Brokers & Dealers (1.6%):
217,762 Edwards (A.G.), Inc. .............................. $ 6,600,911
------------
Tobacco (2.3%):
114,290 Philip Morris Inc.................................. 5,264,483
152,600 UST, Inc. ......................................... 4,511,238
------------
9,775,721
------------
Transportation--Marine (0.6%):
131,500 Alexander & Baldwin................................ 2,613,563
------------
Utilities--Electric (3.1%):
96,400 New Century Energies, Inc.......................... 4,693,475
206,000 Western Resources, Inc............................. 8,523,250
------------
13,216,725
------------
Utilities--Gas & Pipeline (1.8%):
60,400 Consolidated Natural Gas Co........................ 3,291,800
100,800 NICOR, Inc. ....................................... 4,176,900
------------
7,468,700
------------
Utilities--Telephone (6.3%):
169,415 AT&T Corp.......................................... 9,900,189
254,400 SBC Communications, Inc............................ 11,304,899
68,200 Sprint Corp........................................ 4,910,400
------------
26,115,488
------------
Total Common Stocks 401,366,534
------------
U.S. GOVERNMENT AGENCIES (2.8%):
Federal Farm Credit Bank (2.8%):
$12,000,000 0.00%, 11/6/98*.................................... 11,938,560
------------
Total U.S. Government Agencies 11,938,560
------------
INVESTMENT COMPANIES (1.8%):
7,678,286 Provident Federal Fund............................. 7,678,286
------------
Total Investment Companies 7,678,286
------------
Total Investments (Cost $319,630,687) (a)--100.0% 420,983,380
Liabilities in excess of other assets--0.0% (98,297)
------------
TOTAL NET ASSETS--100.0% $420,885,083
============
</TABLE>
- ----
* Represents Discount Note.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$7,375. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized apprecia-
tion................... $119,840,555
Unrealized deprecia-
tion................... (18,495,237)
------------
Net unrealized appreci-
ation.................. $101,345,318
============
</TABLE>
See notes to financial statements
-49-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS (56.4%):
Aerospace/Defense (2.0%):
13,000 Lockheed Martin Corp................................. $ 1,310,562
25,000 Parker Hannifin Corp. ............................... 742,188
6,000 Raytheon Co.--Class A................................ 310,875
10,000 Raytheon Co.--Class B................................ 539,375
------------
2,903,000
------------
Apparel (0.7%):
27,500 V. F. Corp........................................... 1,020,938
------------
Automobiles & Trucks (0.8%):
25,000 Ford Motor Co........................................ 1,173,438
------------
Banks (3.1%):
35,000 Banc One Corp........................................ 1,491,875
15,000 J.P. Morgan & Co. ................................... 1,269,375
20,000 Wachovia Corp........................................ 1,705,000
------------
4,466,250
------------
Beverages (1.4%):
37,500 Anheuser-Busch Cos................................... 2,025,000
------------
Business Equipment & Services (1.8%):
44,200 Harris Corp.......................................... 1,414,400
24,000 Pitney Bowes, Inc.................................... 1,261,500
------------
2,675,900
------------
Chemicals (0.9%):
18,500 Air Products & Chemicals, Inc........................ 550,375
8,000 Vulcan Materials Co.................................. 809,500
------------
1,359,875
------------
Chemicals--Plastics (0.3%):
30,000 Schulman (A.), Inc................................... 423,750
------------
Computer Software (1.1%):
44,300 Adobe Systems, Inc................................... 1,536,656
------------
Computers (2.1%):
17,000 Hewlett-Packard Co. ................................. 899,938
17,000 IBM Corp. ........................................... 2,176,000
------------
3,075,938
------------
Containers (0.5%):
30,000 Sonoco Products Co................................... 720,000
------------
Diversified Products (0.4%):
10,000 E.I. duPont de Nemours Co............................ 561,250
------------
Electrical & Electronic (0.4%):
10,000 Honeywell, Inc. ..................................... 640,625
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Electrical Equipment (0.7%):
17,500 Emerson Electric..................................... $ 1,089,375
------------
Electronic Components (0.6%):
24,000 Avnet, Inc........................................... 883,500
------------
Electronic Instruments (0.5%):
45,500 Tektronix, Inc....................................... 705,250
------------
Food & Related (3.9%):
32,000 Dean Foods Co........................................ 1,408,000
18,000 Dole Food Co......................................... 650,250
16,000 Sara Lee Corp........................................ 864,000
78,000 SUPERVALU, Inc. ..................................... 1,818,375
46,000 Universal Foods Corp................................. 960,250
------------
5,700,875
------------
Forest & Paper Products (0.6%):
21,000 Weyerhaeuser Co. .................................... 885,938
------------
Household--Major Appliances (0.7%):
22,000 Whirlpool Corp....................................... 1,034,000
------------
Household Products/Wares (0.4%):
9,500 Unilever NV, New York Shares......................... 581,875
------------
Insurance (5.4%):
31,000 American General Corp. .............................. 1,980,124
25,000 Cigna Corp. ......................................... 1,653,125
15,000 Lincoln National Corp................................ 1,233,750
24,000 SAFECO Corp.......................................... 1,000,500
27,000 St. Paul Cos., Inc................................... 877,500
29,000 Torchmark Corp....................................... 1,042,188
------------
7,787,187
------------
Machinery & Equipment (1.2%):
28,000 Ingersoll-Rand Co. .................................. 1,062,250
21,000 Trinity Industries................................... 681,188
------------
1,743,438
------------
Manufacturing--Capital Goods (0.2%):
11,000 Aeroquip-Vickers, Inc................................ 316,250
------------
Media (1.4%):
32,000 Banta Corp. ......................................... 872,000
13,500 Gannett Co., Inc. ................................... 723,094
10,000 Media General, Inc................................... 387,500
------------
1,982,594
------------
</TABLE>
Continued
-50-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Medical Equipment & Supplies (2.3%):
16,750 Bausch & Lomb........................................ $ 659,531
22,500 Johnson & Johnson.................................... 1,760,625
47,500 Mallinckrodt, Inc.................................... 964,844
------------
3,385,000
------------
Medical Instruments (0.8%):
30,000 Becton Dickinson & Co................................ 1,233,750
------------
Office Equipment & Services (1.2%):
21,000 Xerox Corp........................................... 1,779,750
------------
Petroleum (4.4%):
25,000 Ashland, Inc......................................... 1,156,250
13,000 Atlantic Richfield Co................................ 922,188
10,000 Chevron Corp......................................... 840,625
14,000 Mobil Corp........................................... 1,063,125
30,000 Phillips Petroleum Co. .............................. 1,353,749
7,500 Schlumberger Ltd..................................... 377,344
12,000 Texaco, Inc.......................................... 752,250
------------
6,465,531
------------
Pharmaceuticals (3.9%):
41,300 Abbott Laboratories.................................. 1,793,968
12,000 Bristol-Myers Squibb Co. ............................ 1,246,500
9,000 Merck & Co., Inc. ................................... 1,166,063
14,000 Schering-Plough Corp................................. 1,449,875
------------
5,656,406
------------
Railroad (0.3%):
12,000 CSX Corp............................................. 504,750
------------
Retail (1.6%):
23,000 Dayton Hudson Corp................................... 822,250
12,000 J. C. Penney, Inc.................................... 539,250
20,000 May Department Stores Co............................. 1,030,000
------------
2,391,500
------------
Retail--Drug Stores (0.6%):
24,000 Rite-Aid Corp........................................ 852,000
------------
Retail--Food Stores (1.3%):
35,000 Albertson's, Inc..................................... 1,894,375
------------
Security Brokers & Dealers (0.5%):
24,000 Edwards (A.G.), Inc. ................................ 727,500
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Tobacco (1.6%):
32,500 Philip Morris, Inc................................... $ 1,497,031
26,000 UST, Inc. ........................................... 768,625
------------
2,265,656
------------
Transportation--Marine (0.2%):
11,750 Alexander & Baldwin.................................. 233,531
------------
Utilities--Electric (1.9%):
11,500 FPL Group, Inc....................................... 801,406
36,000 Scana Corp........................................... 1,208,250
20,000 Western Resources, Inc............................... 827,500
------------
2,837,156
------------
Utilities--Gas & Pipeline (0.6%):
22,000 NICOR, Inc. ......................................... 911,625
------------
Utilities--Telephone (4.1%):
17,000 Ameritech Corp....................................... 805,375
30,000 AT&T Corp............................................ 1,753,125
50,000 SBC Communications, Inc.............................. 2,221,875
16,000 Sprint Corp.......................................... 1,152,000
------------
5,932,375
------------
Total Common Stocks 82,363,807
------------
PASS-THROUGH MORTGAGE SECURITIES (8.9%):
Federal Home Loan Mortgage Corp. (4.8%):
$ 603,978 7.50%, 7/1/07, Pool # E00108......................... 624,550
4,858,239 6.00%, 3/1/13, Pool # 1728........................... 4,911,340
1,479,026 6.00%, 6/1/13, Pool #E00553.......................... 1,495,191
------------
7,031,081
------------
Federal National Mortgage Assoc. (4.1%):
1,659,983 6.00%, 6/1/03, Pool # 250581......................... 1,676,052
1,035,397 6.50%, 1/1/09, Pool # 50974.......................... 1,061,603
1,196,197 6.50%, 4/1/09, Pool # 250009......................... 1,226,472
1,081,271 7.00%, 5/1/09, Pool # 250055......................... 1,113,709
843,879 7.00%, 4/1/24, Pool # 250005......................... 870,250
------------
5,948,086
------------
Total Pass-through Mortgage Securities 12,979,167
------------
U.S. GOVERNMENT AGENCIES (10.2%):
Federal Farm Credit Bank (2.2%):
3,000,000 5.92%, 12/29/04...................................... 3,189,150
------------
</TABLE>
Continued
-51-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal Home Loan Bank (5.1%):
$2,000,000 5.13%, 9/15/03....................................... $ 2,037,140
2,000,000 5.80%, 9/2/08........................................ 2,127,040
3,000,000 5.84%, 7/14/08....................................... 3,197,670
------------
7,361,850
------------
Federal National Mortgage Assoc. (2.9%):
4,000,000 6.00%, 5/15/08....................................... 4,334,080
------------
Total U.S. Government Agencies 14,885,080
------------
U.S. TREASURY NOTES (21.9%):
2,000,000 7.50%, 5/15/02....................................... 2,205,360
4,000,000 7.25%, 5/15/04....................................... 4,563,840
3,000,000 7.88%, 11/15/04...................................... 3,553,860
4,000,000 7.50%, 2/15/05....................................... 4,682,160
5,000,000 6.50%, 10/15/06...................................... 5,672,200
5,000,000 6.63%, 5/15/07....................................... 5,752,750
5,000,000 6.13%, 8/15/07....................................... 5,593,250
------------
Total U.S. Treasury Notes 32,023,420
------------
INVESTMENT COMPANIES (2.2%):
3,267,022 Provident Federal Fund............................... 3,267,022
------------
Total Investment Companies 3,267,022
------------
Total Investments
(Cost $126,024,456) (a)--99.6% 145,518,496
Other assets in excess of liabilities--0.4% 554,340
------------
TOTAL NET ASSETS--100.0% $146,072,836
============
</TABLE>
- ----
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation........ $25,178,219
Unrealized depreciation........ (5,684,179)
-----------
Net unrealized appreciation.... $19,494,040
===========
</TABLE>
See notes to financial statements
-52-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
LARGE COMPANY GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (95.6%):
Apparel (0.6%):
10,000 Nike, Inc.............................................. $ 368,125
-----------
Banks (4.4%):
10,000 Chase Manhattan Corp................................... 432,500
10,500 Mellon Bank Corp....................................... 578,156
10,000 State Street Corp. .................................... 545,625
27,000 U.S. Bancorp .......................................... 960,188
-----------
2,516,469
-----------
Beverages (2.9%):
18,000 Coca-Cola Co........................................... 1,037,250
20,000 PepsiCo, Inc. ......................................... 588,750
-----------
1,626,000
-----------
Chemicals (0.7%):
15,000 Ecolab, Inc............................................ 426,563
-----------
Computer Software (7.2%):
20,000 Analyst International Corp............................. 600,000
22,500 Cisco Systems, Inc. (b)................................ 1,390,780
13,000 Keane, Inc. (b)........................................ 456,625
12,000 Microsoft Corp. (b).................................... 1,320,750
10,000 PeopleSoft, Inc. (b)................................... 326,250
-----------
4,094,405
-----------
Computers (6.0%):
20,000 Dell Computer Corp. (b)................................ 1,315,000
15,000 Hewlett-Packard Co. ................................... 794,063
10,000 IBM Corp. ............................................. 1,280,000
-----------
3,389,063
-----------
Cosmetics/Personal Care (0.5%):
10,000 Avon Products, Inc..................................... 280,625
-----------
Diversified Products (6.2%):
11,500 Colgate-Palmolive Co. ................................. 787,750
11,000 E.I. duPont de Nemours Co.............................. 617,375
15,000 General Electric Co.................................... 1,193,438
25,000 Gillette Co. .......................................... 956,250
-----------
3,554,813
-----------
Electronic Components (3.9%):
15,000 Intel Corp............................................. 1,286,250
10,000 Johnson Controls, Inc.................................. 465,000
10,000 Solectron Corp. (b).................................... 480,000
-----------
2,231,250
-----------
Electronic Instruments (0.4%):
15,000 Tektronix, Inc......................................... 232,500
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services (3.1%):
7,000 American Express Co.................................... $ 543,375
10,000 AmeriCredit Corp. (b).................................. 243,750
8,000 Bear Stearns Cos., Inc................................. 247,500
10,000 Merrill Lynch & Co., Inc............................... 473,750
5,500 Morgan Stanley Dean Witter............................. 236,844
-----------
1,745,219
-----------
Food & Related (2.9%):
10,000 Bestfoods.............................................. 484,375
10,000 Dean Foods Co.......................................... 440,000
14,000 Heinz (H.J.) Co. ...................................... 715,750
-----------
1,640,125
-----------
Household Products/Wares (2.6%):
5,000 Clorox Co.............................................. 412,500
15,000 Procter & Gamble Co. .................................. 1,064,063
-----------
1,476,563
-----------
Insurance (4.7%):
15,000 American International Group, Inc...................... 1,155,000
10,000 EXEL Limited........................................... 630,000
15,000 SunAmerica, Inc........................................ 915,000
-----------
2,700,000
-----------
Manufacturing (1.1%):
11,200 Illinois Tool Works, Inc............................... 610,400
-----------
Medical Equipment & Supplies (2.8%):
20,000 Johnson & Johnson...................................... 1,565,000
-----------
Medical Information Systems (1.0%):
20,000 HBO & Co. ............................................. 577,500
-----------
Medical Instruments (2.0%):
20,000 Medtronic, Inc......................................... 1,157,500
-----------
Office Equipment & Services (1.8%):
12,000 Xerox Corp............................................. 1,017,000
-----------
Petroleum (4.0%):
10,000 Amoco Corp............................................. 538,750
10,000 Enron Corp............................................. 528,125
7,500 Mobil Corp............................................. 569,531
10,400 Texaco, Inc............................................ 651,950
-----------
2,288,356
-----------
Pharmaceuticals (16.4%):
20,000 American Home Products Corp............................ 1,047,500
11,000 Bristol-Myers Squibb Co. .............................. 1,142,625
30,000 Jones Pharma, Inc. .................................... 862,500
</TABLE>
Continued
-53-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
LARGE COMPANY GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals, continued:
15,000 Lilly (Eli) & Co. ..................................... $ 1,174,688
10,300 Merck & Co., Inc. ..................................... 1,334,493
12,000 Pfizer, Inc. .......................................... 1,271,250
13,000 Schering-Plough Corp. ................................. 1,346,312
15,000 Warner Lambert Co. .................................... 1,132,500
-----------
9,311,868
-----------
Retail (5.1%):
15,000 Gap, Inc............................................... 791,250
22,000 Wal-Mart Stores, Inc................................... 1,201,750
20,000 Walgreen Co............................................ 881,250
-----------
2,874,250
-----------
Retail--General Merchandise (0.4%):
8,000 Dollar Tree Stores, Inc. (b)........................... 250,500
-----------
Retail--Speciality Stores (5.9%):
16,000 Best Buy Inc. (b)...................................... 664,000
32,000 Home Depot, Inc........................................ 1,264,000
20,000 Lowe's Cos., Inc. ..................................... 636,250
18,000 Office Depot, Inc. (b)................................. 403,875
22,000 TJX Cos., Inc. ........................................ 391,875
-----------
3,360,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Telecommunication--Equipment (1.8%):
15,000 Lucent Technologies, Inc............................... $ 1,035,938
-----------
Utilities--Telephone (7.2%):
21,000 Ameritech Corp......................................... 994,875
17,000 BellSouth Corp......................................... 1,279,249
12,000 MCI Worldcom, Inc. (b)................................. 586,500
27,200 SBC Communications, Inc................................ 1,208,700
-----------
4,069,324
-----------
Total Common Stocks 54,399,356
-----------
INVESTMENT COMPANIES (4.4%):
86,230 Federated Short Term U.S. Government Fund.............. 86,230
2,399,131 Provident Federal Fund................................. 2,399,131
-----------
Total Investment Companies 2,485,361
-----------
Total Investments (Cost $49,558,337)(a)--100.0% 56,884,717
Other assets in excess of liabilities--0.0% 13,087
-----------
TOTAL NET ASSETS--100.0% $56,897,804
===========
</TABLE>
- ----
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$64,380. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized apprecia-
tion.................... $10,616,713
Unrealized deprecia-
tion.................... (3,354,713)
-----------
Net unrealized apprecia-
tion.................... $ 7,262,000
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements
-54-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SMALL COMPANY GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCKS (83.8%):
Advertising (0.3%):
7,200 TMP Worldwide, Inc. (b)............................... $ 236,250
-----------
Aerospace/Defense (0.1%):
3,700 Kellstrom Industries, Inc. (b)........................ 51,338
-----------
Beverages (0.3%):
6,467 Beringer Wine Estates (b)............................. 247,767
-----------
Business Services (1.4%):
27,000 Robert Half International, Inc. (b)................... 1,166,063
-----------
Collectibles (0.7%):
21,000 Action Performance Cos., Inc. (b) (c)................. 567,000
-----------
Commercial Services (4.3%):
7,700 First Consulting Group, Inc. (b)...................... 131,863
6,700 Kroll-O'Gara Co. (b).................................. 156,613
25,100 Lason, Inc. (b)....................................... 1,286,374
20,100 Metzler Group, Inc. (b)............................... 688,424
11,000 National Computer Systems, Inc. ...................... 324,500
14,850 NCO Group, Inc. (b)................................... 413,016
19,700 Nova Corp-Georgia (b)................................. 604,543
-----------
3,605,333
-----------
Communications Equipment (2.1%):
17,100 Abacus Direct Corp. (b)............................... 872,100
29,900 International Telecommunication Data Systems, Inc.
(b)................................................... 867,100
-----------
1,739,200
-----------
Computer Services (2.7%):
10,000 Affiliated Computer Services, Inc. (b)................ 305,000
21,400 Ciber, Inc. (b)....................................... 432,013
13,800 Mastech Corp. (b)..................................... 332,063
4,000 Sapient Corp. (b) (c)................................. 136,500
57,300 Whittman-Hart, Inc. (b)............................... 1,052,887
-----------
2,258,463
-----------
Computer Software (23.1%):
67,200 Aspect Development, Inc. (b).......................... 2,645,999
28,000 Concord Communications, Inc. (b)...................... 1,113,000
36,500 Dendrite International, Inc. (b)...................... 871,438
14,650 Engineering Animation, Inc. (b)....................... 699,538
3,500 Great Plains Software, Inc. (b)....................... 165,375
32,300 INSpire Insurance Solutions, Inc. (b)................. 763,088
51,100 International Network Services (b).................... 2,120,649
48,700 Legato Systems, Inc. (b).............................. 2,501,962
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Computer Software, continued:
12,900 Macromedia, Inc. (b)................................... $ 209,625
37,100 Mercury Interactive Corp. (b).......................... 1,472,406
15,500 Microstrategy, Inc. (b)................................ 581,250
9,000 New Era of Networks, Inc. (b).......................... 366,750
35,400 Peregrine Systems, Inc. (b)............................ 1,424,850
53,000 Performance Systems International (b).................. 738,688
24,900 Progress Software Corp. (b)............................ 644,288
32,850 VERITAS Software Corp. (b)............................. 1,814,962
24,900 Wind River Systems, Inc. (b)........................... 1,176,525
-----------
19,310,393
-----------
Computers-Integrated Systems (2.8%):
28,600 Henry (Jack) & Associates, Inc. ....................... 1,365,649
33,100 Micros Systems, Inc. (b)............................... 993,000
-----------
2,358,649
-----------
Consumer Goods & Services (1.3%):
20,900 Fossil, Inc. (b)....................................... 284,763
26,400 Prepaid Legal Services, Inc. (b)....................... 674,850
8,350 Steiner Leisure Ltd. (b)............................... 130,469
-----------
1,090,082
-----------
Cosmetics/Personal Care (0.5%):
19,817 Helen of Troy Ltd. (b)................................. 383,954
-----------
Distribution Services (0.9%):
27,154 Insight Enterprises, Inc. (b).......................... 767,101
-----------
Educational Services (3.1%):
6,770 Apollo Group, Inc. (b)................................. 188,714
7,136 Bright Horizons Family Solutions (b)................... 151,642
45,700 DeVry, Inc. (b)........................................ 1,071,093
17,000 Strayer Education, Inc................................. 444,125
29,450 Sylvan Learning Systems, Inc. (b)...................... 688,394
-----------
2,543,968
-----------
Electronic Components (2.7%):
12,200 QLogic Corp. (b)....................................... 796,050
33,500 Vitesse Semiconductor Corp. (b)........................ 791,438
26,100 Xircom, Inc. (b)....................................... 639,450
-----------
2,226,938
-----------
Entertainment (2.5%):
19,000 Championship Auto Racing (b)........................... 464,313
55,400 Cinar Films, Inc. (b).................................. 993,737
</TABLE>
Continued
-55-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SMALL COMPANY GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Entertainment, continued:
20,200 Dover Downs Entertainment, Inc. ....................... $ 255,025
19,600 Speedway Motorsports, Inc. (b)......................... 369,950
-----------
2,083,025
-----------
Environmental Services (2.0%):
55,500 Eastern Environmental Services, Inc. (b)............... 1,678,875
-----------
Food & Related (1.1%):
28,000 American Italian Pasta Co. (b)......................... 735,000
15,100 Gardenburger, Inc. (b) (c)............................. 171,763
-----------
906,763
-----------
Health Care--Hospitals (1.1%):
26,700 Province Healthcare Co. (b)............................ 909,469
-----------
Insurance (0.4%):
16,200 Century Business Services (b).......................... 330,075
-----------
Internet Services (5.6%):
8,100 Broadcast.Com, Inc. (b) (c)............................ 327,038
8,100 CNET, Inc. (b) (c)..................................... 370,575
32,400 Earthlink Network, Inc. (b)............................ 1,336,499
500 Ebay, Inc. (b)......................................... 22,531
16,100 Excite, Inc. (b)....................................... 657,080
17,900 Infoseek Corp. (b) (c)................................. 440,788
4,000 Inktomi Corp. (b) (c).................................. 301,000
14,600 Lycos, Inc. (b)........................................ 493,663
9,300 Mindspring Enterprises, Inc. (b)....................... 385,950
11,400 RealNetworks, Inc. (b) (c)............................. 395,438
-----------
4,730,562
-----------
Machinery & Equipment (0.5%):
24,000 Rental Service Corp. (b)............................... 432,000
-----------
Medical--Biotechnology (2.5%):
24,700 Quintiles Transnational Corp. (b)...................... 1,080,625
38,400 Serologicals Corp. (b)................................. 964,800
1 Sonosight, Inc. (b).................................... 7
-----------
2,045,432
-----------
Medical--Hospital Management & Services (3.9%):
35,100 Medquist, Inc. (b)..................................... 1,110,038
44,000 Orthodontic Centers of America, Inc. (b)............... 734,250
53,250 Renal Care Group, Inc. (b)............................. 1,364,530
-----------
3,208,818
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Medical Equipment & Supplies (1.0%):
23,200 Hanger Orthopedic Group, Inc. (b)...................... $ 432,100
12,300 Safeskin Corp. (b)..................................... 388,219
-----------
820,319
-----------
Medical Information Systems (1.5%):
23,900 IDX Systems Corp. (b).................................. 1,266,700
-----------
Medical Instruments (2.4%):
3,900 Minimed, Inc. (b)...................................... 257,400
44,750 Patterson Dental Co. (b)............................... 1,655,750
4,200 Ventana Medical Systems, Inc. (b)...................... 75,600
-----------
1,988,750
-----------
Pharmaceuticals (3.7%):
16,500 Biomatrix, Inc. (b).................................... 643,500
45,700 Catalytica, Inc. (b)................................... 645,512
21,500 Coulter Pharmaceutical, Inc. (b)....................... 534,813
27,400 Roberts Pharmaceutical Corp. (b)....................... 524,025
33,000 Shire Pharmaceuticals Group PLC (b).................... 721,874
-----------
3,069,724
-----------
Restaurants (0.9%):
19,200 Buffets, Inc. (b)...................................... 207,600
1,700 Cheesecake Factory (The) (b)........................... 26,350
14,825 Papa John's International, Inc. (b).................... 489,225
-----------
723,175
-----------
Retail--Apparel (1.3%):
11,300 American Eagle Outfitters, Inc. (b).................... 391,263
34,800 AnnTaylor Stores Corp. (b)............................. 706,875
-----------
1,098,138
-----------
Retail--General Merchandise (0.8%):
18,600 Duane Reade, Inc. (b).................................. 705,638
-----------
Retail--Speciality Stores (2.4%):
26,600 Eagle Hardware & Garden (b)............................ 576,888
46,800 Linens 'N Things, Inc. (b)............................. 1,287,000
7,400 Trans World Entertainment Corp. (b).................... 135,050
-----------
1,998,938
-----------
Telecommunication--Equipment (1.6%):
24,800 Metromedia Fiber Network (b)........................... 812,200
10,600 Superior Telecom, Inc.................................. 512,775
-----------
1,324,975
-----------
</TABLE>
Continued
-56-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SMALL COMPANY GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Telecommunications (2.3%):
40,700 E. Spire Communications, Inc.(b)..................... $ 366,300
46,100 Geotel Communications Corp.(b)....................... 1,238,937
11,700 Tekelec(b)........................................... 178,425
12,200 Tel-Save Holdings, Inc.(b)(c)........................ 136,488
-----------
1,920,150
-----------
Total Common Stocks 69,794,025
-----------
U.S. GOVERNMENT AGENCIES (15.2%):
Federal Home Loan Mortgage Corp. (15.2%):
$12,645,000 0.00%, 10/1/98*...................................... 12,643,110
-----------
Total U.S. Government Agencies 12,643,110
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- --------------------------------------------------- -----------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.4%):
$ 2,011,100 Lehman Brothers Tri Party Agreement, 6.00%, 10/1/98
(See Significant Accounting Policies, Lending
Portfolio Securities, in the Notes to Financial
Statements for collateral description) (d)......... $ 2,011,100
-----------
Total Repurchase Agreements 2,011,100
-----------
Total Investments (Cost $79,264,492)(a)--101.4% 84,448,235
Liabilities in excess of other assets--(1.4)% (1,203,194)
-----------
TOTAL NET ASSETS--100.0% $83,245,041
===========
</TABLE>
- ----
* Represents Discount Note.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$272,899. Cost for federal income tax purposes differs from market value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized apprecia-
tion.................... $ 9,728,008
Unrealized deprecia-
tion.................... (4,817,164)
-----------
Net unrealized apprecia-
tion.................... $ 4,910,844
===========
</TABLE>
(b) Represents non-income producing securities.
(c) All or part of this security has been loaned at September 30, 1998.
(d) Security from reinvested cash collateral received for loaned securities.
PLC--Public Limited Company
See notes to financial statements
-57-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (89.1%):
ARGENTINA (1.0%):
Banks (1.0%):
38,500 Argentaria Corp. Bancaria
De Espana SA........................................... $ 765,583
-----------
BRAZIL (0.8%):
Banks (0.4%):
24,324 Unibanco GDR........................................... 328,374
-----------
Communication Equipment (0.4%):
5,900,000 Telecomunicacoes Brasileiras (b)....................... 258,850
-----------
587,224
-----------
DENMARK (0.7%):
Telecommunications (0.7%):
5,000 Tele Danmark........................................... 496,459
-----------
FINLAND (1.3%):
Communication Equipment (0.5%):
5,000 Nokia Oyj.............................................. 396,964
-----------
Diversified Products (0.8%):
38,500 Asko Oy-A.............................................. 529,614
-----------
926,578
-----------
FRANCE (12.9%):
Banks (1.6%):
4,150 Dexia France........................................... 523,489
5,700 Societe Generale....................................... 630,531
-----------
1,154,020
-----------
Building & Construction (1.8%):
15,000 Lafarge SA............................................. 1,327,433
-----------
Diversified Products (2.5%):
5,700 Suez Lyonnaise des Eaux................................ 970,204
4,000 Vivendi (Ex-Generale des Eaux)......................... 796,460
-----------
1,766,664
-----------
Electronic Components (0.1%):
2,250 SGS-Thompson Microelectronics NV (b)................... 104,375
-----------
Food & Related (1.4%):
4,000 Groupe Danone.......................................... 1,051,242
-----------
Insurance--Multiline (1.5%):
11,700 Axa.................................................... 1,070,885
-----------
Petroleum (2.3%):
13,500 Total SA-B............................................. 1,700,506
-----------
Retail--General Merchandise (1.2%):
6,250 Pinault Printemps--Redoute SA.......................... 903,243
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
FRANCE, CONTINUED:
Tire & Rubber Products (0.5%):
10,000 Michelin............................................... $ 392,521
-----------
9,470,889
-----------
GERMANY (8.5%):
Automobiles & Trucks (3.4%):
3,000 MAN AG................................................. 965,684
21,380 Volkswagen AG.......................................... 1,541,439
-----------
2,507,123
-----------
Diversified Products (1.7%):
8,000 Siemens AG............................................. 441,797
15,000 VEBA AG................................................ 780,805
-----------
1,222,602
-----------
Insurance--Property & Casualty (1.0%):
2,375 Allianz AG............................................. 736,080
-----------
Machinery & Equipment (1.9%):
8,000 GEA AG................................................. 269,482
12,650 Mannesmann AG.......................................... 1,158,013
-----------
1,427,495
-----------
Telecommunications (0.5%):
12,500 Deutsche Telekom....................................... 388,158
-----------
6,281,458
-----------
GREAT BRITAIN (23.3%):
Aerospace/Defense (0.7%):
84,000 British Aerospace PLC.................................. 506,405
-----------
Banks (3.4%):
34,000 Abbey National PLC..................................... 586,464
42,500 Bank of Ireland........................................ 756,191
24,649 Barclays PLC........................................... 400,874
12,000 HSBC Holdings PLC...................................... 226,564
48,000 Lloyds TSB Group PLC................................... 536,332
-----------
2,506,425
-----------
Building & Construction (0.2%):
120,000 Bryant Group PLC....................................... 169,261
-----------
Business Services (0.3%):
150,000 HW Group PLC (b)....................................... 233,243
-----------
Communication Equipment (1.8%):
87,000 British Telecommunications PLC......................... 1,162,086
108,885 IMS Group PLC.......................................... 147,106
-----------
1,309,192
-----------
</TABLE>
Continued
-58-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GREAT BRITAIN, CONTINUED:
Diversified Products (1.5%):
28,000 BBA Group PLC.......................................... $ 143,702
69,000 General Electric Co. PLC............................... 507,437
35,000 Granada Group PLC...................................... 457,097
-----------
1,108,236
-----------
Food & Related (2.4%):
145,000 Asda Group PLC......................................... 421,367
27,000 Cadbury Schweppes PLC.................................. 351,012
56,072 Diageo PLC............................................. 516,465
50,000 Sainsbury (J) PLC...................................... 478,807
-----------
1,767,651
-----------
Hotel Management & Related Services (0.3%):
115,000 Jarvis Hotels PLC...................................... 209,112
-----------
Household--General Products (0.4%):
215,000 Limelight Group PLC (b)................................ 113,265
25,000 Unilever PLC........................................... 213,488
-----------
326,753
-----------
Insurance--Life (1.5%):
75,000 Norwich Union PLC...................................... 585,656
60,000 Royal & Sun Alliance Insurance Group PLC............... 522,057
-----------
1,107,713
-----------
Petroleum (1.8%):
86,468 British Petroleum Co. PLC.............................. 1,321,026
-----------
Pharmaceuticals (3.5%):
52,000 Glaxo Wellcome PLC..................................... 1,531,434
90,000 SmithKline Beecham PLC................................. 993,386
-----------
2,524,820
-----------
Real Estate (0.4%):
18,000 Land Securities PLC.................................... 280,809
-----------
Restaurants (0.5%):
30,448 Whitbread PLC.......................................... 388,076
-----------
Retail--General Merchandise (1.0%):
23,000 Boots Co. PLC.......................................... 397,507
38,000 Kingfisher PLC......................................... 355,821
-----------
753,328
-----------
Telecommunications (0.9%):
54,000 Vodafone Group PLC..................................... 629,527
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GREAT BRITAIN, CONTINUED:
Transportation (0.5%):
91,875 NFC PLC................................................ $ 161,597
23,200 Peninsular and Oriential Steam Navigation Co........... 223,744
-----------
385,341
-----------
Utilities--Electric (0.5%):
30,000 Southern Electric PLC.................................. 335,325
-----------
Utilities--Gas (1.2%):
128,000 BG PLC................................................. 883,146
-----------
Utilities--Water (0.5%):
41,000 Yorkshire Water PLC.................................... 383,215
-----------
17,128,604
-----------
GREECE (1.6%):
Banks (1.6%):
11,000 Alpha Credit Bank...................................... 817,346
14,643 National Bank of Greece GDR............................ 388,040
-----------
1,205,386
-----------
1,205,386
-----------
HONG KONG (0.2%):
Machinery & Equipment (0.2%):
640,000 First Tractor Co. ..................................... 165,193
-----------
INDIA (0.3%):
Banks (0.3%):
20,000 State Bank of India GDR................................ 213,000
-----------
ITALY (6.4%):
Banks (0.6%):
100,000 Credito Italiano SpA................................... 416,351
-----------
Building & Construction (0.5%):
50,000 Unicem SpA............................................. 366,728
-----------
Insurance--Multiline (1.3%):
370,000 Instituto Naztionale Delle Assicurazioni............... 940,422
-----------
Petroleum (1.2%):
150,000 ENI SpA................................................ 918,636
-----------
Telecommunications (2.8%):
170,000 Telecom Italia Mobile SpA.............................. 989,682
155,000 Telecom Italia SpA..................................... 1,066,976
-----------
2,056,658
-----------
4,698,795
-----------
</TABLE>
Continued
-59-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ --------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN (13.2%):
Automobiles & Trucks (0.8%):
56,000 Suzuki Motor Corp. ................................ $ 565,266
-----------
Banks (0.7%):
60,000 Eighteenth Bank.................................... 264,472
30,000 Sanwa Bank Ltd..................................... 157,582
31,000 Sumitomo Trust & Banking........................... 59,212
-----------
481,266
-----------
Building & Construction (0.5%):
76,000 Nishimatsu Construction............................ 338,899
-----------
Chemicals--Petroleum & Inorganic (1.1%):
92,000 Sekisui Chemical Co. .............................. 350,103
32,000 Shin-Etsu Chemical Co. Ltd. ....................... 508,962
-----------
859,065
-----------
Communication Equipment (0.1%):
40,000 C-Cube Corp. ...................................... 82,280
-----------
Cosmetics & Toiletries (0.3%):
28,000 Shiseido Co. Ltd. ................................. 247,869
-----------
Data Processing (0.8%):
60,000 Ricoh Co. Ltd. .................................... 555,392
-----------
Electrical Equipment (1.1%):
35,000 Matsushita Electric Industrial Co. Ltd. ........... 476,969
5,000 Sony Corp. ........................................ 348,589
-----------
825,558
-----------
Electronic Components (1.3%):
105,000 Hitachi Ltd. ...................................... 462,827
8,500 Mabuchi Motor Co. Ltd. ............................ 533,904
-----------
996,731
-----------
Insurance--Property & Casualty (0.6%):
95,000 Sumitomo Marine & Fire............................. 457,133
-----------
Machinery & Equipment (0.7%):
27,000 Komori Corp........................................ 481,009
-----------
Metals--Diversified (0.3%):
40,000 Tsubaki Nakashima Co. Ltd.......................... 228,916
-----------
Pharmaceuticals (0.7%):
40,000 Eisai Co. Ltd...................................... 486,629
-----------
Photographic Equipment (0.6%):
13,000 Fuji Photo Film.................................... 448,869
-----------
Real Estate (0.4%):
54,000 Mitsui Fudosan..................................... 277,299
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Retail--General Merchandise (0.7%):
11,000 ITO-Yokado Co. Ltd..................................... $ 525,272
-----------
Telecommunications (0.6%):
62 NTT Corp............................................... 453,203
-----------
Textiles (0.7%):
55,000 Kuraray Co. Ltd........................................ 496,988
-----------
Tire & Rubber Products (0.6%):
23,000 Bridgestone Corp....................................... 464,663
-----------
Toys/Games/Hobbies (0.6%):
5,000 Nintendo Company Ltd................................... 471,643
-----------
9,743,950
-----------
MEXICO (0.5%):
Building & Construction (0.5%):
175,100 Cemex.................................................. 384,910
-----------
NETHERLANDS (5.2%):
Banks (0.9%):
14,000 ING Grouep N.V......................................... 630,531
-----------
Business Services (0.7%):
22,641 Vedior N.V............................................. 558,495
-----------
Electronic Components (1.0%):
14,000 Philips Electronics.................................... 753,815
-----------
Publishing (2.0%):
35,000 VNU-Verenigde Nederalndse Uitgeversbedrijven........... 1,444,504
-----------
Retail--General Merchandise (0.6%):
12,000 Vendex N.V............................................. 445,605
-----------
3,832,950
-----------
NORWAY (0.3%):
Petroleum (0.3%):
14,100 Petroleum Geo-Services (b)............................. 230,495
-----------
PERU (0.4%):
Telecommunications (0.4%):
26,200 Telefonica del Peru ADR................................ 320,950
-----------
PHILIPPINES (0.0%):
Multi-Media (0.0%):
500,000 Benpres Holdings Corp. (b)............................. 32,000
-----------
POLAND (0.6%):
Banks (0.6%):
40,000 Bank Handlowy Warszawie................................ 411,976
-----------
</TABLE>
Continued
-60-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ --------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
PORTUGAL (0.5%):
Banks (0.5%):
20,000 Banco Portugues do Atlantico (b)................... $ 340,435
-----------
SINGAPORE (1.4%):
Banks (0.5%):
65,000 Development Bank of Singapore Ltd.................. 262,360
52,000 United Overseas Bank Ltd........................... 151,860
-----------
414,220
-----------
Electrical Equipment (0.3%):
153,000 GP Batteries International......................... 197,980
-----------
Publishing (0.6%):
49,764 Singapore Press Holdings........................... 413,540
-----------
1,025,740
-----------
SOUTH AFRICA (0.7%):
Building & Construction (0.4%):
280,000 Murray & Roberts Holdings Ltd...................... 279,523
-----------
Chemicals (0.3%):
115,000 Aeci Ltd........................................... 202,423
-----------
481,946
-----------
SPAIN (2.4%):
Apparel (0.5%):
13,000 Adolfo Dominguez SA (b)............................ 359,624
-----------
Banks (0.4%):
20,000 Banco Santander SA................................. 309,013
-----------
Communication Equipment (1.5%):
30,200 Telefonica de Espana............................... 1,101,158
-----------
1,769,795
-----------
SWEDEN (0.6%):
Banks (0.6%):
20,000 ForeningsSparbanken AB............................. 459,504
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SWITZERLAND (6.3%):
Banks (1.1%):
2,500 Credit Suisse Group--Registered........................ $ 276,311
2,600 UBS AG--Registered (b)................................. 507,111
-----------
783,422
-----------
Food & Related (2.4%):
900 Nestle SA--Registered.................................. 1,790,492
-----------
Insurance--Multiline (0.8%):
1,250 Zurich Allied AG (b)................................... 620,344
-----------
Pharmaceuticals (2.0%):
600 Novartis AG............................................ 961,778
45 Roche Holding AG--Genussshein.......................... 484,356
-----------
1,446,134
-----------
4,640,392
-----------
Total Common Stocks 65,614,212
-----------
PREFERRED STOCKS (1.1%):
GERMANY (1.1%):
Machinery & Equipment (1.1%):
28,000 GEA AG................................................. 787,385
-----------
Total Preferred Stocks 787,385
-----------
WARRANTS AND RIGHTS (0.0%):
FRANCE (0.0%):
Diversified Products (0.0%):
4,000 Vivendi (Ex-Generale des Eaux) (b)..................... 6,138
-----------
SPAIN (0.0%):
Banks (0.0%):
40,000 Banco Santander SA (b)................................. 282
-----------
Total Warrants and Rights 6,420
-----------
Total Investments (Cost--$72,752,105) (a)--90.2% 66,408,017
Other assets in excess of liabilities--9.8% 7,185,652
-----------
TOTAL NET ASSETS--100.0% $73,593,669
===========
</TABLE>
Continued
-61-
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<PAGE>
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INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
- ----
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized depreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized apprecia-
tion $ 6,017,119
Unrealized deprecia-
tion (12,361,207)
-------------
Net unrealized depre-
ciation $ (6,344,088)
=============
</TABLE>
(b) Represents non-income producing securities.
AB--Aktiebolag (Swedish Stock Co.)
ADR--American Depository Receipt.
AG--Aktiengesellschaft (German Stock Co.).
GDR--Global Depository Receipt.
NV--Naamloze Vennootschap (Dutch Corp.)
PLC--Public Limited Company.
SA--Societe Anonyme (French Corp.).
SpA--Societa per Azioni (Italian Corp.).
At September 30, 1998, the International Equity Fund's open forward foreign
currency exchange contracts were as follows:
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
DELIVERY CONTRACT VALUE MARKET VALUE APPRECIATION/
CURRENCY DATE PRICE** CONTRACT AMOUNT (U.S. DOLLARS) (U.S. DOLLARS) (DEPRECIATION)
- -------- --------- ---------- ---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Long Contracts:
British Pound.......... 10/2/98 .585138 194,094.60 $ 331,708 $ 329,845 $(1,863)
British Pound.......... 10/2/98 .585138 97,356.97 166,383 165,449 (934)
Italian Lira........... 10/2/98 1,655.2999 1,132,551,492.00 684,197 685,377 1,180
Japanese Yen........... 10/1/98 134.3333 3,608,866.00 26,865 26,512 (353)
---------- ---------- -------
Total Long Contracts.......................................... $1,209,153 $1,207,183 $(1,970)
========== ========== =======
</TABLE>
** Contract Price is in local currency.
See notes to financial statements
-62-
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<PAGE>
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CAPITAL MANAGER CONSERVATIVE GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------ -----------
<C> <S> <C>
INVESTMENT COMPANIES (100.4%):
430,050 BB&T Balanced Fund.................................... $ 5,930,383
122,493 BB&T Growth and Income Stock Fund..................... 2,268,579
471,769 BB&T Intermediate U.S. Government Bond Fund........... 4,996,031
131,903 BB&T International Equity Fund........................ 1,312,434
95,015 BB&T Large Company Growth Fund........................ 914,994
608,856 BB&T Short-Intermediate U.S. Government Income Fund... 6,131,182
63,025 BB&T Small Company Growth Fund (b).................... 1,115,540
1,322,050 BB&T U.S. Treasury Money Market Fund.................. 1,322,050
-----------
Total Investment Companies 23,991,193
-----------
Total Investments in affiliates (Cost--$24,195,703) (a)--100.4% 23,991,193
Liabilities in excess of other assets--(0.4)% (99,121)
-----------
TOTAL NET ASSETS--100.0% $23,892,072
===========
</TABLE>
- ----
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$2,657. Cost for federal income tax purposes differs from market value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......... $ 511,535
Unrealized depreciation......... (718,702)
---------
Net unrealized depreciation..... $(207,167)
=========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements
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<PAGE>
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CAPITAL MANAGER MODERATE GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------ -----------
<C> <S> <C>
INVESTMENT COMPANIES (100.3%):
250,629 BB&T Balanced Fund.................................... $ 3,456,174
288,854 BB&T Growth and Income Stock Fund..................... 5,349,569
320,854 BB&T Intermediate U.S. Government Bond Fund........... 3,397,840
213,321 BB&T International Equity Fund........................ 2,122,545
224,035 BB&T Large Company Growth Fund........................ 2,157,454
354,878 BB&T Short-Intermediate U.S. Government Income Fund... 3,573,622
85,585 BB&T Small Company Growth Fund (b).................... 1,514,858
1,318,709 BB&T U.S. Treasury Money Market Fund.................. 1,318,709
-----------
Total Investment Companies 22,890,771
-----------
Total Investments in affiliates (Cost $23,833,469) (a)--100.3% 22,890,771
Liabilities in excess of other assets--(0.3)% (63,101)
-----------
TOTAL NET ASSETS--100.0% $22,827,670
===========
</TABLE>
- ----
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$10,329. Cost for federal income tax purposes differs from market value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....... $ 322,661
Unrealized depreciation....... (1,275,688)
-----------
Net unrealized depreciation... $ (953,027)
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements
-64-
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<PAGE>
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CAPITAL MANAGER GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ------------------------------------------------------ -----------
<C> <S> <C>
INVESTMENT COMPANIES (100.2%):
80,628 BB&T Balanced Fund.................................... $ 1,111,856
418,396 BB&T Growth and Income Stock Fund..................... 7,748,697
287,665 BB&T Intermediate U.S. Government Bond Fund........... 3,046,369
247,242 BB&T International Equity Fund........................ 2,460,055
324,515 BB&T Large Company Growth Fund........................ 3,125,076
114,231 BB&T Short-Intermediate U.S. Government Income Fund... 1,150,307
106,275 BB&T Small Company Growth Fund (b).................... 1,881,075
1,157,843 BB&T U.S. Treasury Money Market Fund.................. 1,157,843
-----------
Total Investment Companies 21,681,278
-----------
Total Investments in affiliates (Cost $23,151,994) (a)--100.2% 21,681,278
Liabilities in excess of other assets--(0.2)% (34,884)
-----------
TOTAL NET ASSETS--100.0% $21,646,394
===========
</TABLE>
- ----
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$5,342. Cost for federal income tax purposes differs from market value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....... $ 219,815
Unrealized depreciation....... (1,695,873)
-----------
Net unrealized depreciation... $(1,476,058)
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements
-65-
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<PAGE>
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NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
1. ORGANIZATION:
The BB&T Mutual Funds Group ("The Group") commenced operations on October 5,
1992 and is registered under the Investment Company Act of 1940, as amended
("the 1940 Act"), as a diversified, open-end investment company established
as a Massachusetts business trust.
The Group is authorized to issue an unlimited number of shares without par
value. The Group offers shares of the Prime Money Market Fund, the U.S.
Treasury Money Market Fund, the Short-Intermediate U.S. Government Income
Fund, the Intermediate U.S. Government Bond Fund, the North Carolina
Intermediate Tax-Free Fund, the South Carolina Intermediate Tax-Free Fund,
the Growth and Income Stock Fund, the Balanced Fund, the Large Company Growth
Fund, the Small Company Growth Fund, the International Equity Fund, the
Capital Manager Conservative Growth Fund, the Capital Manager Moderate Growth
Fund, and the Capital Manager Growth Fund (referred to individually as a
"Fund" and collectively as the "Funds"). The Capital Manager Conservative
Growth Fund, the Capital Manager Moderate Growth Fund, and the Capital
Manager Growth Fund are referred to as the "Funds of Funds". The Funds offer
up to three classes of shares: Class A Shares, Class B Shares, and Trust
Shares. Class B Shares are currently only offered in the Prime Money Market
Fund, the U.S. Treasury Money Market Fund, the Intermediate U.S. Government
Bond Fund, the Growth and Income Stock Fund, the Balanced Fund, the Large
Company Growth Fund, the Small Company Growth Fund, and the International
Equity Fund. Class A Shares are offered with a front-end sales charge. Class
B Shares are offered subject to a contingent deferred sales charge which
varies based on the length of time Class B Shares are held. The contingent
deferred sales charges are as follows:
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE PERCENT
-------------------- -------
<S> <C>
0-1.............................................. 5.00%
1-2.............................................. 4.00%
2-4.............................................. 3.00%
4-5.............................................. 2.00%
5-6.............................................. 1.00%
6 or more........................................ none
</TABLE>
Each class of shares has identical rights and privileges except with respect
to the distribution fees borne by the Class A Shares and Class B Shares,
expenses allocable exclusively to each class of shares, voting rights on
matters affecting a single class of shares and the exchange privilege of each
class of shares. Sales of shares of the Group may be made to customers of
Branch Banking & Trust Company ("BB&T") and its affiliates, to all accounts
of correspondent banks of BB&T and to the general public. BB&T serves as
investment advisor to the Group.
The Prime Money Market and the U.S. Treasury Money Market Fund (the "money
market funds") seek current income with liquidity and stability of principal.
The Short-Intermediate U.S. Government Income Fund and the Intermediate U.S.
Government Bond Fund seek current income consistent with the preservation of
capital through investment in obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities. The North Carolina
Intermediate Tax-Free Fund and the South Carolina Intermediate Tax-
Continued
-66-
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
Free Fund seek to produce a high level of current interest income that is
exempt from both federal and North and South Carolina state income tax,
respectively. The Growth and Income Stock Fund seeks capital growth, current
income or both. The Balanced Fund seeks long-term capital growth and current
income. The Large Company Growth Fund and the Small Company Growth Fund seek
long-term capital appreciation through investments primarily in equity
securities of growth companies. The International Equity Fund seeks long-term
capital appreciation through investments primarily in equity securities of
foreign issuers. The Capital Manager Conservative Growth Fund seeks capital
appreciation and income by investing primarily in a group of diversified BB&T
mutual funds which invest primarily in equity and fixed income securities.
The Capital Manager Moderate Growth Fund seeks capital appreciation, and
secondarily, income by investing primarily in a group of diversified BB&T
mutual funds which invest primarily in equity and fixed income securities.
The Capital Manager Growth Fund seeks capital appreciation by investing
primarily in a group of diversified BB&T mutual funds which invest primarily
in equity securities.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Group in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITIES VALUATION:
Investments of the money market funds are valued at amortized cost, which
approximates market value. Under the amortized cost method, discount or
premium is amortized on a constant basis to the maturity of the security.
Investments in common stocks, commercial paper, corporate bonds, municipal
securities, U.S. Government securities, and U.S. Government agency securities
of the Funds, excluding the money market funds, are valued at their market
values determined on the latest available bid prices in the principal market
(closing sales prices if the principal market is an exchange) in which such
securities are normally traded. The Funds, excluding the money market funds,
may also use an independent pricing service approved by the Board of Trustees
to value certain securities. Such prices reflect market values which may be
established through the use of electronic and matrix techniques. Investments
in investment companies are valued at their respective net asset values as
reported by such companies. The differences between cost and market values of
investments are reflected as unrealized appreciation or depreciation.
FOREIGN CURRENCY TRANSLATION:
The market value of investment securities, other assets and liabilities of
the International Equity Fund denominated in a foreign currency are
translated into U.S. dollars at the current exchange rate. Purchases and
sales of securities, income receipts and expense payments are translated into
U.S. dollars at the exchange rate on the dates of the transactions.
Continued
-67-
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
The International Equity Fund isolates that portion of the results of
operations resulting from changes in foreign exchange rates on investments
from the fluctuation arising from changes in market prices of securities
held.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of foreign securities, sales of foreign currencies, currency
exchange fluctuations between the trade and settlement dates on securities
transactions, and the difference between the amount of assets and liabilities
recorded and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in
the value of assets and liabilities, including investments in securities,
resulting from changes in exchange rates.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS:
The International Equity Fund may enter into forward foreign currency
exchange contracts. The purpose of these contracts is to hedge against
fluctuation in the value of the underlying currency of certain portfolio
investments. A forward foreign currency exchange contract is an agreement to
purchase or sell a specified currency at a specified price on a future date.
Risks associated with the contract include changes in the value of the
foreign currency relative to the U.S. dollar and/or the counterparty's
potential inability to perform under the contract.
The forward foreign currency exchange contracts are valued daily using the
current exchange rate of the underlying currency with any fluctuations
recorded as unrealized gains or losses. Realized gains or losses are
recognized when entering a closing or offsetting forward foreign currency
contract with the same settlement date and broker.
RISKS ASSOCIATED WITH FOREIGN SECURITIES AND CURRENCIES:
Investments in securities of foreign issuers carry certain risks not
ordinarily associated with investments in securities of domestic issuers.
Such risks include future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental laws
and restrictions. In addition, with respect to certain countries, there is
the possibility of expropriation of assets, confiscatory taxation, political
or social instability or diplomatic developments which could adversely affect
investments in those countries.
Certain countries may also impose substantial restrictions on investments in
their capital markets by foreign entities, including restrictions on
investments in issuers of industries deemed sensitive to relevant national
interests. These factors may limit the investment opportunities available in
the International Equity Fund and result in a lack of liquidity and a high
price volatility with respect to securities of issuers from developing
countries.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis and includes, where applicable, the pro rata amortization/accretion
Continued
-68-
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
of premium or discount. Dividend income is recorded on the ex-dividend date.
Gains or losses realized from sales of securities are determined by comparing
the identified cost of the security lot sold with the net sales proceeds.
WHEN-ISSUED AND FORWARD COMMITMENTS:
The Funds, with the exception of the U.S. Treasury Money Market Fund, may
purchase securities on a "when-issued" basis. The Prime Money Market Fund,
the Large Company Growth Fund, the Small Company Growth Fund, and the
International Equity Fund may also purchase or sell securities on a forward
commitment basis. The Funds record when-issued securities on the trade date
and maintain security positions such that sufficient liquid assets will be
available to make payment for the securities purchased. The value of the
securities underlying when-issued or forward commitments to purchase
securities, and any subsequent fluctuation in their value, is taken into
account when determining the net asset value of the Funds commencing with the
date the funds agree to purchase the securities. The Funds do not accrue
interest or dividends on "when-issued" securities until the underlying
securities are received. While the Funds purchased securities on a "when-
issued" basis during the year, the Funds held no such securities as of
September 30, 1998.
REPURCHASE AGREEMENTS:
Each Fund may enter into repurchase agreements with member banks of the
Federal Deposit Insurance Corporation and with registered broker/dealers that
BB&T deems creditworthy under guidelines approved by the Board of Trustees,
subject to the seller's agreement to repurchase such securities at a mutually
agreed-upon date and price. The repurchase price generally equals the price
paid by the Fund plus interest negotiated on the basis of current short-term
rates, which may be more or less than the rate on the underlying portfolio
securities. The seller, under a repurchase agreement, is required to maintain
the value of collateral held pursuant to the agreement at not less than the
repurchase price (including accrued interest). Securities subject to
repurchase agreements are held by the Funds' custodian, another qualified
custodian or in the Federal Reserve/Treasury book-entry system. In the event
of counterparty default, the Fund has the right to use the collateral to
offset losses incurred. There is potential for loss to the Fund in the event
the Fund is delayed or prevented from exercising its rights to dispose of the
collateral securities, including the risk of a possible decline in the value
of the underlying securities during the period while the Fund seeks to assert
its rights.
LENDING PORTFOLIO SECURITIES:
To generate additional income, each Fund, except the North Carolina
Intermediate Tax-Free Fund and the South Carolina Intermediate Tax-Free Fund,
may lend up to 33 1/3% of its total assets pursuant to agreements requiring
that the loan be continuously secured by collateral equal at all times to at
least 100% of the market value plus accrued interest on the securities lent.
Collateral for such loans may include cash, securities of the U.S.
Government, or its agencies or instrumentalities, or any combination thereof.
Each Fund continues to earn interest and dividends on securities lent while
simultaneously seeking to earn interest on the investment collateral.
Continued
-69-
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
When cash is received as collateral for securities loaned, each Fund may
invest such cash in short-term U.S. Government securities, repurchase
agreements, or other short-term corporate securities. The cash or subsequent
short-term investments are recorded as assets of the Fund, offset by a
corresponding liability to repay the cash at the termination of the loan. In
addition, the short-term securities purchased with the cash collateral are
included in the accompanying schedules of portfolio investments. Fixed income
securities received as collateral are not recorded as assets or liabilities
of the Fund because the Fund does not have effective control of such
securities.
There may be risks of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by BB&T to
be of good standing and creditworthy under guidelines established by the
Board of Trustees and when, in the judgment of BB&T, the consideration which
can be earned currently from such securities loans justifies the attendant
risks. Loans are subject to termination by the Funds or the borrower at any
time, and are, therefore, not considered to be illiquid investments.
As of September 30, 1998 the Small Company Growth Fund had securities on loan
with a market value of $1,851,956 and collateral with a market value of
$2,011,100. The securities on loan were collateralized by a Lehman Brothers
Tri Party Repurchase Agreement with an interest rate of 6.00% and a maturity
date of October 1, 1998. This repurchase agreement was collateralized by the
following securities:
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION MARKET VALUE
--------- ----------- ------------
<C> <S> <C>
$314,663 BA Mortgage Securities, Inc., 0.00%, 6/25/13....... $ 232,320
434,000 BA Mortgage Securities, Inc., 6.50%, 6/25/13....... 446,821
309,000 BA Mortgage Securities, Inc., 6.50%, 6/25/13....... 318,128
102,916 BA Mortgage Securities, Inc., 0.00%, 8/25/28....... 96,601
291,460 BA Mortgage Securities, Inc., 0.00%, 8/25/13....... 277,197
93,027 Capstead Mortgage, 0.00%, 10/25/24................. 52,570
139,540 Capstead Mortgage, 0.00%, 10/25/24................. 91,593
Collateralized Mortgage Securities Corp., 0.00%,
510,000 2/1/15............................................. 25,500
100,000 Prudential Securities, 0.01%, 12/25/21............. 308,527
1,000 Ryland Mortgage, 0.00%, 6/25/23.................... 1,000
1,000 Ryland Mortgage, 0.00%, 5/15/00.................... 900
1,000 Ryland Mortgage, 0.00%, 9/25/22.................... 1,000
1,000 Ryland Mortgage, 0.00%, 12/29/31................... 900
499,118 Saxon Mortgage, 6.25%, 5/25/09..................... 58,217
20,000 Saxon Mortgage, 7.00%, 7/25/09..................... 12,541
347,700 Saxon Mortgage, 7.50%, 7/25/24..................... 129,429
---------
2,053,244
</TABLE>
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly for
the Prime Money Market Fund, the U.S. Treasury Money Market Fund, the Short-
Intermediate U.S. Government Income Fund, the
Continued
-70-
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
Intermediate U.S. Government Bond Fund, the North Carolina Intermediate Tax-
Free Fund, and the South Carolina Intermediate Tax-Free Fund. Dividends from
net investment income are declared and paid monthly for the Growth and Income
Stock Fund and the Balanced Fund. Dividends from net investment income are
declared and paid quarterly for the Large Company Growth Fund, the Small
Company Growth Fund, the International Equity Fund, and the Funds of Funds.
Distributable net realized capital gains, if any, are declared and
distributed at least annually.
The amount of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as dividends in excess of net investment
income or distributions in excess of net realized gains. To the extent they
exceed net investment income and net realized gains for tax purposes, they
are reported as distributions of capital.
As of September 30, 1998, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments made to
capital:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED NET
REALIZED GAIN/(LOSS)
ON INVESTMENTS AND
UNDISTRIBUTED NET FOREIGN CURRENCY
INVESTMENT INCOME TRANSACTIONS
----------------- --------------------
<S> <C> <C>
Prime Money Market Fund............. $ 4,810 $ --
U.S. Treasury Money Market Fund..... 246 (246)
Short-Intermediate U.S. Government
Income Fund........................ 81,814 (81,814)
Intermediate U.S. Government Bond
Fund............................... 55,719 (55,719)
North Carolina Intermediate Tax-Free
Fund............................... 28,296 (28,296)
South Carolina Intermediate Tax-Free
Fund............................... 1,008 --
Balanced Fund....................... 15,592 (15,592)
Large Company Growth Fund........... 17,596 --
Small Company Growth Fund........... 1,116,386 --
International Equity Fund........... 305,555 (305,555)
Capital Manager Conservative Growth
Fund............................... 39,004 (38,248)
Capital Manager Moderate Growth
Fund............................... 68,801 (68,045)
Capital Manager Growth Fund......... 87,793 (87,037)
</TABLE>
FEDERAL INCOME TAXES:
It is the policy of each Fund of the Group to qualify or continue to qualify
as a regulated investment company by complying with the provisions available
to certain investment companies, as defined in applicable sections
Continued
-71-
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
of the Internal Revenue Code, and to make distributions of net investment
income and net realized capital gains sufficient to relieve it from all, or
substantially all, federal income taxes.
OTHER:
Expenses that are directly related to one of the Funds are charged directly
to that Fund. Other operating expenses for the Group are prorated to the
Funds on the basis of relative net assets. Expenses of the Funds of Funds do
not reflect the expenses of the underlying funds. All expenses in connection
with the Prime Money Market Fund, the South Carolina Intermediate Tax-Free
Fund, the Large Company Growth Fund, the International Equity Fund, the
Capital Manager Conservative Growth Fund, the Capital Manager Moderate Growth
Fund, and the Capital Manager Growth Fund's organization and registration
under the 1940 Act and the Securities Act of 1933 were paid by the respective
Fund. Such expenses are being capitalized and amortized over a period of two
years commencing with the initial public offering.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended September 30, 1998 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Short-Intermediate U.S. Government Income Fund... $129,521,565 $ 78,220,943
Intermediate U.S. Government Bond Fund........... 139,045,509 107,832,053
North Carolina Intermediate Tax-Free Fund........ 39,436,059 26,541,263
South Carolina Intermediate Tax-Free Fund (a).... 28,105,488 10,756,734
Growth and Income Stock Fund..................... 109,807,283 51,938,512
Balanced Fund.................................... 74,223,592 41,694,822
Large Company Growth Fund (b).................... 93,339,496 50,283,360
Small Company Growth Fund........................ 139,871,483 125,929,132
International Equity Fund........................ 57,351,737 34,854,898
Capital Manager Conservative Growth Fund (c)..... 23,770,463 914,537
Capital Manager Moderate Growth Fund (c)......... 23,516,934 1,034,139
Capital Manager Growth Fund (c).................. 23,561,096 1,629,355
</TABLE>
(a)For the period from October 20, 1997 (commencement of operations) to
September 30, 1998.
(b)For the period from October 3, 1997 (commencement of operations) to
September 30, 1998.
(c)For the period from October 2, 1997 (commencement of operations) to
September 30, 1998.
4. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Group by BB&T. Under the
terms of the investment advisory agreement, BB&T is entitled to receive fees
based on a percentage of the average net assets of each of the Funds.
Pursuant to a Sub-Advisory Agreement with BB&T, BlackRock Financial
Management, Inc., an indirect wholly-owned subsidiary of PNC Bank, National
Association ("PNC Bank") manages the Small Company Growth Fund subject to the
general supervision of the Group's Board of Trustees and BB&T. For
Continued
-72-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
its services, BlackRock Financial Management Inc. is entitled to a fee,
payable by BB&T, at the following annual rates as a percentage of the Small
Company Growth Fund's average daily net assets: (1) 0.50% of net assets up to
$50 million, (2) 0.45% of the next $50 million in net assets, and (3) 0.40%
of net assets in excess of $100 million. Pursuant to a Sub-Advisory agreement
with BB&T, BlackRock International, Ltd. serves as the Sub-Advisor to the
International Equity Fund. Under the agreement, BlackRock International, Ltd.
manages the International Equity Fund subject to the general supervision of
the Group's Board of Trustees and BB&T. For its services, BlackRock
International, Ltd. is entitled to a fee, payable by BB&T, at the following
annual rates as a percentage of the International Equity Fund's average daily
net assets: (1) 0.50% of net assets up to $50 million, (2) 0.45% of the next
$50 million in net assets, and (3) 0.40% of the net assets over $100 million.
Pursuant to a Sub-Advisory agreement with BB&T, BlackRock Institutional
Management Corporation serves as the Sub-Advisor to the Prime Money Market
Fund. Under the agreement, BlackRock Institutional Management Corporation
manages the Prime Money Market Fund subject to the general supervision of the
Group's Board of Trustees and BB&T. For its services, BlackRock Institutional
Management Corporation is entitled to a fee, payable by BB&T at 0.09% of the
Prime Money Market Fund's average daily net assets.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"),
an Ohio Limited Partnership, and BISYS Fund Services Ohio, Inc. ("BISYS
Ohio") are subsidiaries of the BISYS Group, Inc. BISYS, with whom certain
trustees and officers of the Funds are affiliated, serves the Funds as
administrator and distributor. Such officers and trustees are paid no fees
directly by the Funds for serving as officers of the Funds. Fees payable to
BISYS for administration services are established under terms of the
administration contract at the annual rate of 0.20% of the average daily net
assets of each Fund with the exception of the Funds of Funds which are
charged a fee of 0.05% of the average daily net assets. BISYS Ohio serves the
Funds as transfer agent and fund accountant.
The Funds have adopted a Distribution and Shareholder Services Plan (the
"Plan") in accordance with Rule 12b-1 under the 1940 Act. The Plan provides
for payments to the distributor of up to 0.50% and 1.00% of the average daily
net assets of the Class A Shares and Class B Shares, respectively. The fees
may be used by BISYS to pay banks, including the advisor, broker dealers and
other institutions. As distributor, BISYS is entitled to receive commissions
on sales of shares of the Funds, excluding the money market funds. For the
year ended September 30, 1998, BISYS received $1,559,219 from commissions
earned on sales of shares of which $1,538,342 was allowed to affiliated
broker/dealers of the Group.
BB&T, BISYS, and BISYS Ohio may voluntarily reduce or reimburse fees to
assist the Funds in maintaining competitive expense ratios. BB&T reimbursed
the Prime Money Market Fund and the South Carolina Intermediate Tax-Free Fund
$65,024 and $12,103, respectively.
Continued
-73-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
Information regarding these transactions is as follows for the year ended
September 30, 1998:
<TABLE>
<CAPTION>
FUND
INVESTMENT ADVISORY ADMINISTRATION DISTRIBUTION ACCOUNTING
FEES FEES FEES CLASS A FEES
--------------------- -------------- ------------ ----------
AS A
PERCENTAGE VOLUNTARY VOLUNTARY VOLUNTARY
OF AVERAGE FEE VOLUNTARY FEE FEE
NET ASSETS REDUCTIONS FEE REDUCTIONS REDUCTIONS REDUCTIONS
---------- ---------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Prime Money Market
Fund................... .40% $ 73,260 $ 47,495 $ 2,942 $ --
U.S. Treasury Money
Market Fund............ .40% 271,649 135,824 94,418 --
Short-Intermediate U.S.
Government Income
Fund................... .60% 154,167 41,555 11,479 --
Intermediate U.S.
Government Bond Fund... .60% 181,482 -- 10,589 --
North Carolina
Intermediate Tax-Free
Fund................... .60% 83,340 41,670 34,895 20,006
South Carolina
Intermediate Tax-Free
Fund (a)............... .60% 43,717 16,821 729 21,043
Growth and Income Stock
Fund................... .74% 1,005,608 -- 98,946 --
Balanced Fund........... .74% 333,244 -- 55,643 --
Large Company Growth
Fund (b)............... .74% 123,874 -- 2,076 --
Small Company Growth
Fund................... 1.00% -- -- 28,876 --
International Equity
Fund................... 1.00% -- -- 2,914 10,001
Capital Manager
Conservative Growth
Fund (c)............... .25% 45,273 31 68 --
Capital Manager Moderate
Growth Fund (c)........ .25% 45,181 31 489 --
Captial Manager Growth
Fund (c)............... .25% 44,992 31 278 --
</TABLE>
(a)For the period October 20, 1997 (commencement of operations) to September
30, 1998.
(b)For the period October 3, 1997 (commencement of operations) to September
30, 1998.
(c)For the period October 2, 1997 (commencement of operations) to September
30, 1998.
5. CONCENTRATION OF CREDIT RISK
The North Carolina Intermediate Tax-Free Fund and the South Carolina
Intermediate Tax-Free Fund invest in debt instruments of municipal issuers.
The issuers' abilities to meet their obligations may be affected by economic
developments in a specific state or region.
Continued
-74-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
These funds invest in securities which include revenue bonds, tax exempt
commercial paper, tax and revenue anticipation notes, and general obligation
bonds. At September 30, 1998, the percentage of portfolio investments by each
revenue source were as follows:
<TABLE>
<CAPTION>
NORTH SOUTH
CAROLINA CAROLINA
INTERMEDIATE INTERMEDIATE
TAX-FREE TAX-FREE
FUND FUND
------------ ------------
<S> <C> <C>
Revenue Bonds:
Education Bonds.................................. 2.2% 29.7%
Health Care Bonds................................ 10.7% 4.2%
Housing Bonds.................................... 1.4% --
Pollution Control Bonds.......................... -- 4.4%
Utility Bonds.................................... 16.2% 23.8%
General Obligation Bonds.......................... 68.3% 35.1%
Investment Companies.............................. 1.2% 2.8%
</TABLE>
Continued
-75-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
6. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Funds were as follows:
<TABLE>
<CAPTION>
PRIME MONEY U.S. TREASURY SHORT-INTERMEDIATE
MARKET FUND MONEY MARKET FUND U.S. GOVERNMENT INCOME FUND
------------- ---------------------------- ----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 (A) (B) 1998 1997 1998 1997
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares
issued................. $ 6,606,837 $ 88,087,627 $ 70,989,333 $ 192,328 $ 885,456
Dividends reinvested... 45,693 1,697,458 1,246,105 177,946 256,211
Cost of shares re-
deemed................. (3,390,007) (80,848,886) (67,625,463) (1,181,875) (2,362,962)
------------- ------------- ------------- ------------ ------------
Change in net assets
from Class A Share
transactions........... $ 3,262,523 $ 8,936,199 $ 4,609,975 $ (811,601) $ (1,221,295)
============= ============= ============= ============ ============
CLASS B SHARES:
Proceeds from shares
issued................. $ 300,010 $ 1,533,442 $ 2,616,434
Dividends reinvested... -- 48,607 52,966
Cost of shares re-
deemed................. -- (1,828,809) (2,472,263)
------------- ------------- -------------
Change in net assets
from Class B Share
transactions........... $ 300,010 $ (246,760) $ 197,137
============= ============= =============
TRUST SHARES:
Proceeds from shares
issued................. $ 193,347,394 $ 397,566,766 $ 403,991,788 $ 73,529,580 $ 53,763,591
Dividends reinvested... 2,882 2,591,520 1,685,849 367,365 834,332
Cost of shares re-
deemed................. (155,576,517) (431,201,888) (344,812,331) (24,841,396) (14,029,292)
------------- ------------- ------------- ------------ ------------
Change in net assets
from Trust Share
transactions........... $ 37,773,759 $ (31,043,602) $ 60,865,306 $ 49,055,549 $ 40,568,631
============= ============= ============= ============ ============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued................. 6,606,838 88,087,627 70,989,333 19,489 91,005
Reinvested............. 45,693 1,697,458 1,246,105 18,128 26,322
Redeemed............... (3,390,007) (80,848,885) (67,625,371) (120,560) (242,739)
------------- ------------- ------------- ------------ ------------
Change in Class A
Shares................. 3,262,524 8,936,200 4,610,067 (82,943) (125,412)
============= ============= ============= ============ ============
CLASS B SHARES:
Issued................. 300,010 1,533,441 2,616,434
Reinvested............. -- 48,607 52,966
Redeemed............... -- (1,828,809) (2,472,262)
------------- ------------- -------------
Change in Class B
Shares................. 300,010 (246,761) 197,138
============= ============= =============
TRUST SHARES:
Issued................. 193,347,394 397,566,766 403,991,788 7,511,307 5,522,729
Reinvested............. 2,882 2,591,520 1,685,849 37,398 85,431
Redeemed............... (155,576,517) (431,201,888) (344,812,331) (2,526,173) (1,441,912)
------------- ------------- ------------- ------------ ------------
Change in Trust
Shares................. 37,773,759 (31,043,602) 60,865,306 5,022,532 4,166,248
============= ============= ============= ============ ============
</TABLE>
- ----
(a) The Fund commenced operations on October 1, 1997.
(b) The Fund commenced offering Class B Shares on September 2, 1998.
Continued
-76-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NORTH CAROLINA SOUTH CAROLINA
INTERMEDIATE INTERMEDIATE INTERMEDIATE
U.S. GOVERNMENT BOND FUND TAX-FREE FUND TAX-FREE FUND
---------------------------- ---------------------------- --------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997 1998 (A)
------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares
issued................. $ 950,380 $ 1,310,434 $ 3,137,339 $ 1,088,682 $ 291,303
Dividends reinvested... 164,571 180,302 327,585 297,458 3,952
Cost of shares re-
deemed................. (1,072,325) (1,022,240) (1,548,708) (1,432,371) (5,000)
------------ ------------ ------------ ------------ -----------
Change in net assets
from Class A Share
transactions........... $ 42,626 $ 468,496 $ 1,916,216 $ (46,231) $ 290,255
============ ============ ============ ============ ===========
CLASS B SHARES:
Proceeds from shares
issued................. $ 694,364 $ 335,144
Dividends reinvested... 31,042 20,305
Cost of shares re-
deemed................. (107,776) (97,593)
------------ ------------
Change in net assets
from Class B Share
transactions........... $ 617,630 $ 257,856
============ ============
TRUST SHARES:
Proceeds from shares
issued................. $ 75,881,763 $ 44,016,573 $ 32,628,455 $ 43,875,824 $25,450,134
Dividends reinvested... 2,885,452 3,842,953 36,980 -- 5,687
Cost of shares re-
deemed................. (48,000,300) (27,916,964) (22,227,082) (12,390,664) (8,029,967)
------------ ------------ ------------ ------------ -----------
Change in net assets
from Trust Share
transactions........... $ 30,766,915 $ 19,942,562 $ 10,438,353 $ 31,485,160 $17,425,854
============ ============ ============ ============ ===========
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued................. 93,931 134,656 302,092 106,962 28,435
Reinvested............. 16,400 18,586 31,718 29,323 385
Redeemed............... (106,747) (105,409) (149,421) (141,088) (489)
------------ ------------ ------------ ------------ -----------
Change in Class A
Shares................. 3,584 47,833 184,389 (4,803) 28,331
============ ============ ============ ============ ===========
CLASS B SHARES:
Issued................. 68,849 34,677
Reinvested............. 3,099 2,100
Redeemed............... (10,797) (10,069)
------------ ------------
Change in Class B
Shares................. 61,151 26,708
============ ============
TRUST SHARES:
Issued................. 7,597,248 4,529,511 3,171,581 4,336,581 2,534,229
Reinvested............. 287,298 395,177 3,599 -- 566
Redeemed............... (4,759,077) (2,869,819) (2,146,354) (1,218,137) (782,561)
------------ ------------ ------------ ------------ -----------
Change in Trust
Shares................. 3,125,469 2,054,869 1,028,826 3,118,444 1,752,234
============ ============ ============ ============ ===========
</TABLE>
- ----
(a) For the period from October 20, 1997 (commencement of operations) through
September 30, 1998.
Continued
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK LARGE COMPANY
FUND BALANCED FUND GROWTH FUND
---------------------------- ---------------------------- -------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997 1998 (A)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares
issued................. $ 11,309,607 $ 10,205,516 $ 7,590,706 $ 3,940,696 $ 2,203,499
Dividends reinvested... 2,764,969 1,262,092 1,073,391 903,966 2,142
Cost of shares re-
deemed................. (5,601,439) (3,145,887) (4,132,034) (2,046,437) (90,348)
------------- ------------- ------------ ------------ ------------
Change in net assets
from
Class A Share transac-
tions.................. $ 8,473,137 $ 8,321,721 $ 4,532,063 $ 2,798,225 $ 2,115,293
============= ============= ============ ============ ============
CLASS B SHARES:
Proceeds from shares
issued................. $ 19,294,501 $ 10,402,303 $ 9,624,926 $ 3,538,410 $ 4,439,304
Dividends reinvested... 1,383,073 269,261 407,643 204,283 2,680
Cost of shares re-
deemed................. (2,045,175) (596,414) (1,109,354) (344,991) (119,504)
------------- ------------- ------------ ------------ ------------
Change in net assets
from
Class B Share transac-
tions.................. $ 18,632,399 $ 10,075,150 $ 8,923,215 $ 3,397,702 $ 4,322,480
============= ============= ============ ============ ============
TRUST SHARES:
Proceeds from shares
issued................. $ 133,771,433 $ 102,634,040 $ 36,729,601 $ 27,037,235 $ 88,420,885
Dividends reinvested... 11,462,995 7,792,090 3,958,651 4,339,486 8,366
Cost of shares re-
deemed................. (79,207,902) (78,028,088) (21,343,897) (22,376,194) (35,759,154)
------------- ------------- ------------ ------------ ------------
Change in net assets
from
Trust Share transac-
tions.................. $ 66,026,526 $ 32,398,042 $ 19,344,355 $ 9,000,527 $ 52,670,097
============= ============= ============ ============ ============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued................. 557,701 603,380 542,438 311,695 210,050
Reinvested............. 143,264 78,513 77,637 73,556 210
Redeemed............... (282,239) (183,421) (297,325) (162,113) (8,713)
------------- ------------- ------------ ------------ ------------
Change in Class A
Shares................. 418,726 498,472 322,750 223,138 201,547
============= ============= ============ ============ ============
CLASS B SHARES:
Issued................. 956,590 601,095 684,576 282,902 427,380
Reinvested............. 72,036 16,806 29,651 16,642 272
Redeemed............... (104,546) (33,998) (79,403) (27,001) (11,650)
------------- ------------- ------------ ------------ ------------
Change in Class B
Shares................. 924,080 583,903 634,824 272,543 416,002
============= ============= ============ ============ ============
TRUST SHARES:
Issued................. 6,755,500 6,071,972 2,629,189 2,159,650 8,894,685
Reinvested............. 591,985 484,781 287,018 354,453 842
Redeemed............... (3,959,333) (4,591,206) (1,528,960) (1,816,862) (3,603,029)
------------- ------------- ------------ ------------ ------------
Change in Trust
Shares................. 3,388,152 1,965,547 1,387,247 697,241 5,292,498
============= ============= ============ ============ ============
</TABLE>
- ----
(a) For the period from October 3, 1997 (commencement of operations) through
September 30, 1998.
Continued
-78-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CAPITAL MANAGER
CONSERVATIVE GROWTH
SMALL COMPANY GROWTH FUND INTERNATIONAL EQUITY FUND FUND
---------------------------- ---------------------------- -------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997 (A) 1998 (B)
------------- ------------- ------------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares
issued................. $ 38,525,136 $ 14,389,954 $ 722,522 $ 827,829 $ 120,882
Dividends reinvested... 166,111 8,868 21,801 1,006 294
Cost of shares re-
deemed................. (38,915,077) (10,695,064) (72,663) (18,193) --
------------ ------------ ------------ ------------ ------------
Change in net assets
from Class A Share
transactions........... $ (223,830) $ 3,703,758 $ 671,660 $ 810,642 $ 121,176
============ ============ ============ ============ ============
CLASS B SHARES:
Proceeds from shares
issued................. $ 3,614,978 $ 4,994,141 $ 1,222,446 $ 1,177,260
Dividends reinvested... 128,534 4,428 31,847 542
Cost of shares re-
deemed................. (1,255,729) (584,820) (225,132) (35,486)
------------ ------------ ------------ ------------
Change in net assets
from Class B Share
transactions........... $ 2,487,783 $ 4,413,749 $ 1,029,161 $ 1,142,316
============ ============ ============ ============
TRUST SHARES:
Proceeds from shares
issued................. $ 48,565,796 $ 29,271,553 $ 36,031,578 $ 49,906,785 $ 23,613,564
Dividends reinvested... 448,590 26,916 522,726 87,911 25
Cost of shares re-
deemed................. (23,595,445) (14,151,600) (9,432,531) (2,465,305) (7,488)
------------ ------------ ------------ ------------ ------------
Change in net assets
from Trust Share trans-
actions................ $ 25,418,941 $ 15,146,869 $ 27,121,773 $ 47,529,391 $ 23,606,101
============ ============ ============ ============ ============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued................. 1,884,457 727,199 63,018 75,712 11,769
Reinvested............. 8,052 450 2,033 92 28
Redeemed............... (1,895,528) (536,287) (6,464) (1,710) --
------------ ------------ ------------ ------------ ------------
Change in Class A
Shares................. (3,019) 191,362 58,587 74,094 11,797
============ ============ ============ ============ ============
CLASS B SHARES:
Issued................. 172,660 263,521 108,028 108,207
Reinvested............. 6,322 227 3,026 51
Redeemed............... (61,803) (31,401) (20,736) (3,291)
------------ ------------ ------------ ------------
Change in Class B
Shares................. 117,179 232,347 90,318 104,967
============ ============ ============ ============
TRUST SHARES:
Issued................. 2,293,230 1,507,565 3,218,535 4,858,492 2,358,118
Reinvested............. 21,546 1,359 48,620 8,149 3
Redeemed............... (1,124,540) (732,330) (841,292) (222,783) (735)
------------ ------------ ------------ ------------ ------------
Change in Trust
Shares................. 1,190,236 776,594 2,425,863 4,643,858 2,357,386
============ ============ ============ ============ ============
</TABLE>
- ----
(a) From January 2, 1997 (commencement of operations) through September 30,
1997.
(b) The Fund commenced offering Trust Shares on October 2, 1997 and Class A
Shares on January 29, 1998.
Continued
-79-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CAPITAL MANAGER
MODERATE GROWTH CAPITAL MANAGER
FUND GROWTH FUND
--------------- ---------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 (A) 1998 (A)
--------------- ---------------
<S> <C> <C>
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued................... $ 1,214,302 $ 298,699
Dividends reinvested.......................... 292 979
Cost of shares redeemed....................... (5,833) --
------------ ------------
Change in net assets from Class A Share
transactions.................................. $ 1,208,761 $ 299,678
============ ============
TRUST SHARES:
Proceeds from shares issued................... $ 22,001,572 $ 22,091,640
Dividends reinvested.......................... 18 168
Cost of shares redeemed....................... -- --
------------ ------------
Change in net assets from Trust Share
transactions.................................. $ 22,001,590 $ 22,091,808
============ ============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued........................................ 116,838 28,479
Reinvested.................................... 28 93
Redeemed...................................... (589) --
------------ ------------
Change in Class A Shares...................... 116,277 28,572
============ ============
TRUST SHARES:
Issued........................................ 2,200,157 2,208,722
Reinvested.................................... 2 16
Redeemed...................................... -- --
------------ ------------
Change in Trust Shares........................ 2,200,159 2,208,738
============ ============
</TABLE>
- ----
(a) The Fund commenced offering Trust Shares on October 2, 1997 and Class A
Shares on January 29, 1998.
7. FEDERAL INCOME TAXES:
At September 30, 1998, the following Fund had net capital loss carryforwards
to offset future net capital gains, if any:
<TABLE>
<CAPTION>
AMOUNT EXPIRES
-------- -------
<S> <C> <C>
Short-Intermediate U.S. Government Income Fund.............. $312,074 2003
Short-Intermediate U.S. Government Income Fund.............. 990,728 2004
Short-Intermediate U.S. Government Income Fund.............. 126,693 2005
Short-Intermediate U.S. Government Income Fund.............. 20,229 2006
</TABLE>
To the extent that these carryforwards are used to offset future capital
gains, it is probable that the gains so offset will not be distributed to
shareholders.
Continued
-80-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
During the fiscal year ended September 30, 1998, the Funds declared long-term
capital gain distributions as follows:
<TABLE>
<CAPTION>
AMOUNT
-----------
<S> <C>
Growth and Income Stock Fund.................................... $22,967,066
Balanced Fund................................................... 3,194,622
Large Company Growth Fund (a)................................... 474,355
Small Company Growth Fund....................................... 1,228,432
</TABLE>
For corporate shareholders, the following percentage of the total ordinary
income distributions paid during the fiscal year ended September 30, 1998
qualify for the corporate dividends received deduction for the following
funds:
<TABLE>
<CAPTION>
PERCENTAGE
(UNAUDITED)
-----------
<S> <C>
Growth and Income Stock Fund..................................... 100.00%
Balanced Fund.................................................... 35.56%
Large Company Growth Fund (a).................................... 100.00%
</TABLE>
During the fiscal year ended September 30, 1998, the following funds declared
tax-exempt income distributions:
<TABLE>
<CAPTION>
TAX-EXEMPT
DISTRIBUTION
(UNAUDITED)
------------
<S> <C>
North Carolina Intermediate Tax-Free Fund....................... $3,411,416
South Carolina Intermediate Tax-Free Fund (b)................... 647,659
</TABLE>
Capital and foreign currency losses incurred after October 31st, within a
Fund's fiscal year, are deemed to arise on the first business day of the
following fiscal year for tax purposes. The following Funds have incurred and
will elect to defer such capital losses and foreign currency losses:
<TABLE>
<CAPTION>
POST-
OCTOBER
LOSSES
(UNAUDITED)
-----------
<S> <C>
Prime Money Market Fund.......................................... $ 4,446
Short-Intermediate U.S. Government Income Fund................... 133,095
Small Company Growth Fund........................................ 2,082,016
</TABLE>
----
(a)For the period from October 3, 1997 (commencement of operations) to
September 30, 1998.
(b)For the period from October 20, 1997 (commencement of operations) to
September 30, 1998.
8.CONVERSION OF COMMON TRUST FUNDS:
On January 30, 1998, the BB&T Growth and Income Stock Fund issued Trust
shares in a tax-free conversion to acquire the assets and liabilities of the
United Carolina Bank ("UCB") Income Equity Common Trust
Continued
-81-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
Fund. The following is a summary of the Trust shares issued, net assets
acquired, net asset value per share and unrealized appreciation as of the
date acquired:
<TABLE>
<S> <C>
Trust Shares................................................... 1,683,452
Net assets of Mutual Fund before the acquisition............... $374,067,318
Net assets acquired............................................ $ 32,339,119
Net asset value of shares issued............................... $ 19.21
Unrealized appreciation........................................ $ 3,887,382
</TABLE>
On October 20, 1997, the BB&T Large Company Growth Fund issued Trust shares
in a tax-free conversion to acquire the assets and liabilities of the UCB
Growth Equity Common Trust Fund. The following is a summary of the Trust
shares issued, net assets acquired, net asset value per share and unrealized
appreciation as of the date acquired:
<TABLE>
<S> <C>
Trust Shares.................................................... 631,185
Net assets of Mutual Fund before the acquisition................ $42,616,928
Net assets acquired............................................. $ 6,116,182
Net asset value of shares issued................................ $ 9.69
Unrealized appreciation......................................... $ 1,118,105
</TABLE>
On October 20, 1997, the BB&T Short-Intermediate U.S. Government Income Fund
issued Trust shares in a tax-free conversion to acquire the assets and
liabilities of the UCB Short Term Government Common Trust Fund. The following
is a summary of the Trust shares issued, net assets acquired, net asset value
per share and unrealized depreciation as of the date acquired:
<TABLE>
<S> <C>
Trust Shares.................................................. 228,909
Net assets of Mutual Fund before the acquisition.............. $118,874,568
Net assets acquired........................................... $ 2,231,860
Net asset value of shares issued.............................. $ 9.75
Unrealized depreciation....................................... $ (3,347)
</TABLE>
On October 20, 1997, the BB&T Short-Intermediate U.S. Government Income Fund
issued Trust shares in a tax-free conversion to acquire the assets and
liabilities of the UCB Intermediate Income Common Trust Fund. The following
is a summary of the Trust shares issued, net assets acquired, net asset value
per share and unrealized depreciation as of the date acquired:
<TABLE>
<S> <C>
Trust Shares.................................................. 3,107,064
Net assets of Mutual Fund before the acquisition.............. $118,874,568
Net assets acquired........................................... $ 30,293,877
Net asset value of shares issued.............................. $ 9.75
Unrealized depreciation....................................... $ (104,207)
</TABLE>
Continued
-82-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
On October 20, 1997, the BB&T North Carolina Intermediate Tax-Free Fund
issued Trust shares in a tax-free conversion to acquire the assets and
liabilities of the UCB North Carolina Tax Free Common Trust Fund. The
following is a summary of the Trust shares issued, net assets acquired, net
asset value per share and unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Trust Shares.................................................... 1,650,110
Net assets of Mutual Fund before the acquisition................ $69,794,040
Net assets acquired............................................. $16,864,124
Net asset value of shares issued................................ $ 10.22
Unrealized appreciation......................................... $ 130,771
</TABLE>
On October 20, 1997, the BB&T South Carolina Intermediate Tax-Free Fund
issued Trust shares in a tax-free conversion to acquire the assets and
liabilities of the UCB South Carolina Tax Free Common Trust Fund. The
following is a summary of the Trust shares issued, net assets acquired, net
asset value per share and unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Trust Shares.................................................... 1,852,149
Net assets of Mutual Fund before the acquisition................ $ 20
Net assets acquired............................................. $18,521,490
Net asset value of shares issued................................ $ 10.00
Unrealized appreciation......................................... $ 39,014
</TABLE>
On October 13, 1997, the BB&T Large Company Growth Fund issued Trust shares
in a tax-free conversion to acquire the assets and liabilities of the UCB
Large Cap Common Trust Fund. The following is a summary of the Trust shares
issued, net assets acquired, net asset value per share and unrealized
appreciation as of the date acquired:
<TABLE>
<S> <C>
Trust Shares.................................................... 3,258,797
Net assets of Mutual Fund before the acquisition................ $10,716,817
Net assets acquired............................................. $32,490,210
Net asset value of shares issued................................ $ 9.97
Unrealized appreciation......................................... $11,961,251
</TABLE>
On October 14, 1997, the BB&T Small Company Growth Fund issued Trust shares
in a tax-free conversion to acquire the assets and liabilities of the UCB
Capital Appreciation Common Trust Fund. The following is a summary of the
Trust shares issued, net assets acquired, net asset value per share and
unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Trust Shares.................................................... 201,928
Net assets of Mutual Fund before the acquisition................ $87,127,255
Net assets acquired............................................. $ 4,840,220
Net asset value of shares issued................................ $ 23.97
Unrealized appreciation......................................... $ 0
</TABLE>
Continued
-83-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
On October 13, 1997, the BB&T Intermediate U.S. Government Bond Fund issued
Trust shares in a tax-free conversion to acquire the assets and liabilities
of the UCB Intermediate Government/Corporate Bond Common Trust Fund. The
following is a summary of the Trust shares issued, net assets acquired, net
asset value per share and unrealized depreciation as of the date acquired:
<TABLE>
<S> <C>
Trust Shares.................................................. 2,072,209
Net assets of Mutual Fund before the acquisition.............. $157,431,873
Net assets acquired........................................... $ 20,390,541
Net asset value of shares issued.............................. $ 9.84
Unrealized depreciation....................................... $ (57,184)
</TABLE>
Continued
-84-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
PRIME MONEY MARKET FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 1,
1997 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 1.000
-------
INVESTMENT ACTIVITIES
Net investment income.......................................... 0.048
-------
Total from Investment Activities............................... 0.048
-------
DISTRIBUTIONS
Net investment income.......................................... (0.048)
-------
Total Distributions............................................ (0.048)
-------
NET ASSET VALUE, END OF PERIOD.................................. $ 1.000
=======
Total Return.................................................... 4.93%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................................ $ 3,262
Ratio of expenses to average net assets........................ 0.83%(c)
Ratio of net investment income to average net assets........... 4.83%(c)
Ratio of expenses to average net assets*....................... 1.43%(c)
Ratio of net investment income to average net assets*.......... 4.23%(c)
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced or reimbursed. If
such voluntary fee reductions or reimbursements had not occurred, the ratios
would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-85-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
PRIME MONEY MARKET FUND
Class B Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SEPTEMBER 2,
1998 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 1.000
-------
INVESTMENT ACTIVITIES
Net investment income.......................................... 0.003
-------
Total from Investment Activities............................... 0.003
-------
DISTRIBUTIONS
Net investment income.......................................... (0.003)
-------
Total Distributions............................................ (0.003)
-------
NET ASSET VALUE, END OF PERIOD.................................. $ 1.000
=======
Total Return (excludes redemption charge)....................... 0.32%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................................ $ 300
Ratio of expenses to average net assets........................ 1.64%(c)
Ratio of net investment income to average net assets........... 3.98%(c)
Ratio of expenses to average net assets*....................... 1.99%(c)
Ratio of net investment income to average net assets*.......... 3.63%(c)
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced or reimbursed. If
such voluntary fee reductions or reimbursements had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-86-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
PRIME MONEY MARKET FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 1,
1998 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................. $ 1.000
-------
INVESTMENT ACTIVITIES
Net investment income........................................... 0.051
-------
Total from Investment Activities................................ 0.051
-------
DISTRIBUTIONS
Net investment income........................................... (0.051)
-------
Total Distributions............................................. (0.051)
-------
NET ASSET VALUE, END OF PERIOD................................... $ 1.000
=======
Total Return..................................................... 5.23%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................................. $37,769
Ratio of expenses to average net assets......................... 0.55%
Ratio of net investment income to average net assets............ 5.11%
Ratio of expenses to average net assets*........................ 0.91%
Ratio of net investment income to average net assets*........... 4.75%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced or reimbursed. If
such voluntary fee reductions or reimbursements had not occurred, the ratios
would have been as indicated.
(a) Period from commencement of operations.
See notes to financial statements
-87-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
U.S. TREASURY MONEY MARKET FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------------------
1998 1997 1996 1995 1994
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PE-
RIOD............................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income........... 0.046 0.044 0.044 0.047 0.027
-------- ------- ------- ------- -------
Total from Investment Activi-
ties........................... 0.046 0.044 0.044 0.047 0.027
-------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income........... (0.046) (0.044) (0.044) (0.047) (0.027)
-------- ------- ------- ------- -------
Total Distributions............ (0.046) (0.044) (0.044) (0.047) (0.027)
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======= ======= ======= =======
Total Return..................... 4.75% 4.50% 4.49% 4.81% 2.76%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period
(000)........................... $ 41,478 $32,541 $27,931 $13,948 $ 1,486
Ratio of expenses to average net
assets.......................... 0.86% 0.95% 0.99% 0.98% 0.94%
Ratio of net investment income
to average net assets........... 4.65% 4.41% 4.37% 4.81% 2.89%
Ratio of expenses to average net
assets*......................... 1.26% 1.25% 1.25% 1.24% 1.32%
Ratio of net investment income
to average net assets*.......... 4.25% 4.11% 4.11% 4.55% 2.51%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements
-88-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
U.S. TREASURY MONEY MARKET FUND
Class B Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE JANUARY 1,
YEAR ENDED YEAR ENDED 1996 TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1996 (A)
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERI-
OD.................................. $ 1.000 $ 1.000 $ 1.000
------- ------- -------
INVESTMENT ACTIVITIES
Net investment income.............. 0.039 0.036 0.025
------- ------- -------
Total from Investment Activities... 0.039 0.036 0.025
------- ------- -------
DISTRIBUTIONS
Net investment income.............. (0.039) (0.036) (0.025)
------- ------- -------
Total Distributions................ (0.039) (0.036) (0.025)
------- ------- -------
NET ASSET VALUE, END OF PERIOD...... $ 1.000 $ 1.000 $ 1.000
======= ======= =======
Total Return (excludes redemption
charge)............................. 3.97% 3.67% 2.53%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000).... $ 1,255 $ 1,502 $ 1,305
Ratio of expenses to average net
assets............................. 1.61% 1.75% 1.75%(c)
Ratio of net investment income to
average net assets................. 3.90% 3.61% 3.55%(c)
Ratio of expenses to average net
assets*............................ 1.76% ** **
Ratio of net investment income to
average net assets*................ 3.75% ** **
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** There were no voluntary fee reductions during this period.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-89-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
U.S. TREASURY MONEY MARKET FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
------------------------------------------------
1998 1997 1996 1995 1994
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- -------- -------- -------- -------
INVESTMENT ACTIVITIES
Net investment income....... 0.049 0.046 0.046 0.050 0.030
--------- -------- -------- -------- -------
Total from Investment
Activities................. 0.049 0.046 0.046 0.050 0.030
--------- -------- -------- -------- -------
DISTRIBUTIONS
Net investment income....... (0.049) (0.046) (0.046) (0.050) (0.030)
--------- -------- -------- -------- -------
Total Distributions........ (0.049) (0.046) (0.046) (0.050) (0.030)
--------- -------- -------- -------- -------
NET ASSET VALUE, END OF
PERIOD....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ======== ======== ======== =======
Total Return................. 5.01% 4.71% 4.74% 5.07% 3.01%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period
(000)....................... $ 235,796 $266,840 $205,974 $120,083 $77,464
Ratio of expenses to average
net assets.................. 0.61% 0.75% 0.75% 0.72% 0.67%
Ratio of net investment
income to average net
assets...................... 4.90% 4.61% 4.63% 4.97% 2.97%
Ratio of expenses to average
net assets*................. 0.76% 0.75% 0.75% 0.75% 0.83%
Ratio of net investment
income to average net
assets*..................... 4.75% 4.61% 4.63% 4.95% 2.82%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements
-90-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------
1998 1997 1996 1995 1994
------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................. $ 9.76 $ 9.73 $ 9.88 $ 9.60 $ 10.29
------- ------ ------ ------ -------
INVESTMENT ACTIVITIES
Net investment income.............. 0.51 0.54 0.55 0.53 0.50
Net realized and unrealized gains
(losses) on investments............ 0.30 0.03 (0.15) 0.29 (0.68)
------- ------ ------ ------ -------
Total from Investment Activities.. 0.81 0.57 0.40 0.82 (0.18)
------- ------ ------ ------ -------
DISTRIBUTIONS
Net investment income.............. (0.51) (0.54) (0.55) (0.54) (0.50)
Net realized gains................. -- -- -- -- (0.01)
------- ------ ------ ------ -------
Total Distributions............... (0.51) (0.54) (0.55) (0.54) (0.51)
------- ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD...... $ 10.06 $ 9.76 $ 9.73 $ 9.88 $ 9.60
======= ====== ====== ====== =======
Total Return (excludes sales
charge)............................. 8.50% 6.07% 4.09% 8.74% (1.86%)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000).... $ 4,476 $5,151 $6,356 $7,102 $10,345
Ratio of expenses to average net
assets............................. 1.06% 1.11% 1.19% 1.17% 0.89%
Ratio of net investment income to
average net assets................. 5.15% 5.60% 5.55% 5.50% 5.01%
Ratio of expenses to average net
assets*............................ 1.44% 1.46% 1.54% 1.58% 1.58%
Ratio of net investment income to
average net assets*................ 4.77% 5.25% 5.20% 5.09% 4.32%
Portfolio Turnover (a)............. 53.74% 87.99% 54.82% 106.81% 7.06%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-91-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------
1998 1997 1996 1995 1994
--------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 9.77 $ 9.74 $ 9.89 $ 9.61 $ 10.30
--------- -------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income........ 0.53 0.57 0.57 0.56 0.52
Net realized and unrealized
gains (losses) on
investments.................. 0.30 0.03 (0.15) 0.28 (0.68)
--------- -------- ------- ------- -------
Total from Investment
Activities.................. 0.83 0.60 0.42 0.84 (0.16)
--------- -------- ------- ------- -------
DISTRIBUTIONS
Net investment income........ (0.53) (0.57) (0.57) (0.56) (0.52)
Net realized gains........... -- -- -- -- (0.01)
--------- -------- ------- ------- -------
Total Distributions......... (0.53) (0.57) (0.57) (0.56) (0.53)
--------- -------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 10.07 $ 9.77 $ 9.74 $ 9.89 $ 9.61
========= ======== ======= ======= =======
Total Return.................. 8.77% 6.33% 4.36% 9.01% (1.66%)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period
(000)........................ $ 157,329 $103,523 $62,621 $45,005 $38,208
Ratio of expenses to average
net assets................... 0.81% 0.86% 0.93% 0.93% 0.71%
Ratio of net investment
income to average net
assets....................... 5.40% 5.85% 5.81% 5.78% 5.20%
Ratio of expenses to average
net assets*.................. 0.94% 0.96% 1.03% 1.08% 1.08%
Ratio of net investment
income to average net
assets*...................... 5.27% 5.75% 5.71% 5.64% 4.83%
Portfolio Turnover (a)....... 53.74% 87.99% 54.82% 106.81% 7.06%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-92-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
INTERMEDIATE U.S. GOVERNMENT BOND FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------
1998 1997 1996 1995 1994
------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................. $ 9.84 $ 9.63 $ 9.88 $ 9.33 $ 10.39
------- ------ ------ ------ -------
INVESTMENT ACTIVITIES
Net investment income.............. 0.51 0.53 0.56 0.59 0.59
Net realized and unrealized gains
(losses) on investments............ 0.74 0.21 (0.25) 0.55 (1.04)
------- ------ ------ ------ -------
Total from Investment Activities.. 1.25 0.74 0.31 1.14 (0.45)
------- ------ ------ ------ -------
DISTRIBUTIONS
Net investment income.............. (0.52) (0.53) (0.56) (0.59) (0.59)
Net realized gains................. -- -- -- -- (0.02)
------- ------ ------ ------ -------
Total Distributions............... (0.52) (0.53) (0.56) (0.59) (0.61)
------- ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD...... $ 10.57 $ 9.84 $ 9.63 $ 9.88 $ 9.33
======= ====== ====== ====== =======
Total Return (excludes sales
charge)............................. 13.07% 7.93% 3.17% 12.63% (4.48%)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000).... $ 4,562 $4,211 $3,659 $5,173 $ 6,772
Ratio of expenses to average net
assets............................. 1.09% 1.12% 1.13% 1.09% 0.96%
Ratio of net investment income to
average net assets................. 5.10% 5.49% 5.68% 6.22% 6.03%
Ratio of expenses to average net
assets*............................ 1.44% 1.47% 1.48% 1.50% 1.56%
Ratio of net investment income to
average net assets*................ 4.75% 5.14% 5.33% 5.81% 5.43%
Portfolio Turnover (a)............. 60.98% 62.45% 76.29% 68.91% 0.38%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-93-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
INTERMEDIATE U.S. GOVERNMENT BOND FUND
Class B Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR JANUARY 1,
ENDED ENDED 1996 TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1996 (A)
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 9.81 $ 9.60 $10.17
------ ------ ------
INVESTMENT ACTIVITIES
Net investment income............. 0.43 0.46 0.31
Net realized and unrealized gains
(losses) on investments........... 0.74 0.21 (0.57)
------ ------ ------
Total from Investment
Activities....................... 1.17 0.67 (0.26)
------ ------ ------
DISTRIBUTIONS
Net investment income............. (0.44) (0.46) (0.31)
------ ------ ------
Total Distributions.............. (0.44) (0.46) (0.31)
------ ------ ------
NET ASSET VALUE, END OF PERIOD..... $10.54 $ 9.81 $ 9.60
====== ====== ======
Total Return (excludes redemption
charge)............................ 12.26% 7.14% (2.48%)(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)... $1,314 $ 623 $ 353
Ratio of expenses to average net
assets............................ 1.84% 1.87% 1.85%(c)
Ratio of net investment income to
average net assets................ 4.35% 4.74% 5.01%(c)
Ratio of expenses to average net
assets*........................... 1.94% 1.97% 1.95%(c)
Ratio of net investment income to
average net assets*............... 4.25% 4.64% 4.91%(c)
Portfolio Turnover (d)............ 60.98% 62.45% 76.29%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-94-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
INTERMEDIATE U.S. GOVERNMENT BOND FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 9.85 $ 9.64 $ 9.89 $ 9.34 $ 10.40
-------- -------- -------- ------- -------
INVESTMENT ACTIVITIES
Net investment income........ 0.54 0.56 0.58 0.61 0.62
Net realized and unrealized
gains (losses) on
investments.................. 0.75 0.21 (0.25) 0.55 (1.04)
-------- -------- -------- ------- -------
Total from Investment
Activities................... 1.29 0.77 0.33 1.16 (0.42)
-------- -------- -------- ------- -------
DISTRIBUTIONS
Net investment income........ (0.55) (0.56) (0.58) (0.61) (0.62)
Net realized gains........... -- -- -- -- (0.02)
-------- -------- -------- ------- -------
Total Distributions.......... (0.55) (0.56) (0.58) (0.61) (0.64)
-------- -------- -------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 10.59 $ 9.85 $ 9.64 $ 9.89 $ 9.34
======== ======== ======== ======= =======
Total Return.................. 13.46% 8.20% 3.43% 12.91% (4.23%)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period
(000)........................ $186,256 $142,545 $119,633 $78,578 $68,451
Ratio of expenses to average
net assets................... 0.84% 0.87% 0.87% 0.85% 0.70%
Ratio of net investment
income to average net
assets....................... 5.35% 5.74% 5.94% 6.43% 6.27%
Ratio of expenses to average
net assets*.................. 0.94% 0.97% 0.97% 1.00% 1.06%
Ratio of net investment
income to average net
assets*...................... 5.25% 5.64% 5.84% 6.28% 5.91%
Portfolio Turnover (a)....... 60.98% 62.45% 76.29% 68.91% 0.38%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-95-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
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NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------
1998 1997 1996 1995 1994
------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................. $ 10.27 $10.05 $10.15 $ 9.78 $ 10.29
------- ------ ------ ------ -------
INVESTMENT ACTIVITIES
Net investment income.............. 0.42 0.40 0.36 0.36 0.36
Net realized and unrealized gains
(losses) on investments............ 0.25 0.22 (0.10) 0.37 (0.50)
------- ------ ------ ------ -------
Total from Investment Activities... 0.67 0.62 0.26 0.73 (0.14)
------- ------ ------ ------ -------
DISTRIBUTIONS
Net investment income.............. (0.42) (0.40) (0.36) (0.36) (0.36)
Net realized gains................. -- -- -- -- (0.01)
------- ------ ------ ------ -------
Total Distributions................ (0.42) (0.40) (0.36) (0.36) (0.37)
------- ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD...... $ 10.52 $10.27 $10.05 $10.15 $ 9.78
======= ====== ====== ====== =======
Total Return (excludes sales
charge)............................. 6.63% 6.28% 2.61% 7.61% (1.33%)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000).... $11,592 $9,419 $9,261 $8,717 $11,083
Ratio of expenses to average net
assets............................. 0.96% 1.00% 1.11% 1.05% 0.75%
Ratio of net investment income to
average net assets................. 4.03% 3.94% 3.58% 3.63% 3.63%
Ratio of expenses to average net
assets*............................ 1.48% 1.50% 1.61% 1.63% 1.66%
Ratio of net investment income to
average net assets*................ 3.51% 3.44% 3.08% 3.05% 2.72%
Portfolio Turnover (a)............. 32.63% 16.98% 20.90% 9.38% 0.56%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-96-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
-------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 10.27 $ 10.05 $ 10.15 $ 9.78 $ 10.29
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income........... 0.43 0.41 0.38 0.37 0.38
Net realized and unrealized
gains (losses) on investments... 0.26 0.22 (0.10) 0.37 (0.50)
------- ------- ------- ------- -------
Total from Investment
Activities..................... 0.69 0.63 0.28 0.74 (0.12)
------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income........... (0.43) (0.41) (0.38) (0.37) (0.38)
Net realized gains.............. -- -- -- -- (0.01)
------- ------- ------- ------- -------
Total Distributions............ (0.43) (0.41) (0.38) (0.37) (0.39)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD... $ 10.53 $ 10.27 $ 10.05 $ 10.15 $ 9.78
======= ======= ======= ======= =======
Total Return..................... 6.90% 6.43% 2.77% 7.77% (1.18%)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period
(000)........................... $73,454 $61,120 $28,443 $28,091 $27,770
Ratio of expenses to average net
assets.......................... 0.81% 0.85% 0.96% 0.91% 0.63%
Ratio of net investment income
to average net assets........... 4.18% 4.13% 3.72% 3.78% 3.77%
Ratio of expenses to average net
assets*......................... 0.98% 1.00% 1.11% 1.13% 1.17%
Ratio of net investment income
to average net assets*.......... 4.01% 3.98% 3.57% 3.55% 3.24%
Portfolio Turnover (a).......... 32.63% 16.98% 20.90% 9.38% 0.56%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-97-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 20,
1997 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 10.00
-------
INVESTMENT ACTIVITIES
Net investment income.......................................... 0.31
Net realized and unrealized gains (losses) on investments...... 0.47
-------
Total from Investment Activities.............................. 0.78
DISTRIBUTIONS
Net investment income.......................................... (0.31)
-------
Total Distributions........................................... (0.31)
-------
NET ASSET VALUE, END OF PERIOD.................................. $ 10.47
=======
Total Return (excludes sales charge)............................ 7.91%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................................ $ 297
Ratio of expenses to average net assets........................ 1.04%(c)
Ratio of net investment income to average net assets........... 3.71%(c)
Ratio of expenses to average net assets*....................... 1.97%(c)
Ratio of net investment income to average net assets*.......... 2.78%(c)
Portfolio Turnover (d)......................................... 58.80%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced and reimbursed. If
such voluntary fee reductions and reimbursements had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-98-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 20,
1997 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 10.00
-------
INVESTMENT ACTIVITIES
Net investment income.......................................... 0.38
Net realized and unrealized gains (losses) on investments...... 0.41
-------
Total from Investment Activities.............................. 0.79
-------
DISTRIBUTIONS
Net investment income.......................................... (0.38)
-------
Total Distributions........................................... (0.38)
-------
NET ASSET VALUE, END OF PERIOD.................................. $ 10.41
=======
Total Return.................................................... 8.02%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................................ $18,242
Ratio of expenses to average net assets........................ 0.88%(c)
Ratio of net investment income to average net assets........... 3.88%(c)
Ratio of expenses to average net assets*....................... 1.39%(c)
Ratio of net investment income to average net assets*.......... 3.37%(c)
Portfolio Turnover (d)......................................... 58.80%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced and reimbursed. If
such voluntary fee reductions and reimbursements had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-99-
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<PAGE>
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GROWTH AND INCOME STOCK FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERI-
OD................................. $ 19.98 $ 15.31 $ 12.97 $ 11.26 $11.26
------- ------- ------- ------- ------
INVESTMENT ACTIVITIES
Net investment income............. 0.23 0.26 0.26 0.25 0.25
Net realized and unrealized gains
(losses) on investments........... (0.17) 5.30 2.43 1.98 0.12
------- ------- ------- ------- ------
Total from Investment Activi-
ties............................. 0.06 5.56 2.69 2.23 0.37
------- ------- ------- ------- ------
DISTRIBUTIONS
Net investment income............. (0.23) (0.26) (0.26) (0.25) (0.26)
Net realized gains................ (1.33) (0.63) (0.09) (0.12) (0.11)
In excess of net realized gains... -- -- -- (0.15) --
------- ------- ------- ------- ------
Total Distributions.............. (1.56) (0.89) (0.35) (0.52) (0.37)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD..... $ 18.48 $ 19.98 $ 15.31 $ 12.97 $11.26
======= ======= ======= ======= ======
Total Return (excludes sales
charge)............................ 0.10% 37.80% 20.97% 20.62% 3.33%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)... $39,817 $34,679 $18,949 $10,842 $7,973
Ratio of expenses to average net
assets............................ 1.10% 1.09% 1.11% 1.07% 0.92%
Ratio of net investment income to
average net assets................ 1.18% 1.52% 1.82% 2.15% 2.26%
Ratio of expenses to average net
assets*........................... 1.59% 1.58% 1.60% 1.60% 1.65%
Ratio of net investment income to
average net assets*............... 0.69% 1.03% 1.33% 1.62% 1.52%
Portfolio Turnover (a)............ 13.17% 22.66% 19.82% 8.73% 21.30%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-100-
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<PAGE>
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GROWTH AND INCOME STOCK FUND
Class B Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR JANUARY 1,
ENDED ENDED 1996 TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1996 (A)
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERI-
OD.................................. $ 19.93 $ 15.29 $13.78
------- ------- ------
INVESTMENT ACTIVITIES
Net investment income.............. 0.09 0.13 0.13
Net realized and unrealized gains
(losses) on investments............ (0.18) 5.28 1.52
------- ------- ------
Total from Investment Activities... (0.09) 5.41 1.65
------- ------- ------
DISTRIBUTIONS
Net investment income.............. (0.09) (0.14) (0.14)
Net realized gains................. (1.33) (0.63) --
------- ------- ------
Total Distributions................ (1.42) (0.77) (0.14)
------- ------- ------
NET ASSET VALUE, END OF PERIOD...... $ 18.42 $ 19.93 $15.29
======= ======= ======
Total Return (excludes redemption
charge)............................. (0.67%) 36.70% 12.01%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000).... $32,455 $16,690 $3,880
Ratio of expenses to average net
assets............................. 1.85% 1.84% 1.85%(c)
Ratio of net investment income to
average net assets................. 0.43% 0.77% 1.13%(c)
Ratio of expenses to average net
assets*............................ 2.09% 2.08% 2.09%(c)
Ratio of net investment income to
average net assets*................ 0.19% 0.53% 0.89%(c)
Portfolio Turnover (d)............. 13.17% 22.66% 19.82%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-101-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
GROWTH AND INCOME STOCK FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
-----------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 20.02 $ 15.34 $ 12.99 $ 11.28 $ 11.28
-------- -------- -------- -------- -------
INVESTMENT ACTIVITIES
Net investment income........ 0.28 0.30 0.29 0.28 0.28
Net realized and unrealized
gains (losses) on invest-
ments........................ (0.17) 5.31 2.44 1.98 0.11
-------- -------- -------- -------- -------
Total from Investment Activ-
ities....................... 0.11 5.61 2.73 2.26 0.39
-------- -------- -------- -------- -------
DISTRIBUTIONS
Net investment income........ (0.28) (0.30) (0.29) (0.28) (0.28)
Net realized gains........... (1.33) (0.63) (0.09) (0.12) (0.11)
In excess of net realized
gains........................ -- -- -- (0.15) --
-------- -------- -------- -------- -------
Total Distributions......... (1.61) (0.93) (0.38) (0.55) (0.39)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERI-
OD............................ $ 18.52 $ 20.02 $ 15.34 $ 12.99 $ 11.28
======== ======== ======== ======== =======
Total Return.................. 0.35% 38.13% 21.31% 20.88% 3.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period
(000)........................ $348,613 $308,984 $206,659 $145,603 $89,355
Ratio of expenses to average
net assets................... 0.85% 0.84% 0.86% 0.82% 0.66%
Ratio of net investment in-
come to average net assets... 1.43% 1.77% 2.07% 2.40% 2.51%
Ratio of expenses to average
net assets*.................. 1.09% 1.08% 1.10% 1.10% 1.15%
Ratio of net investment in-
come to average net assets*.. 1.19% 1.53% 1.83% 2.11% 2.02%
Portfolio Turnover (a)....... 13.17% 22.66% 19.82% 8.73% 21.30%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-102-
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<PAGE>
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BALANCED FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERI-
OD................................. $ 13.63 $ 11.96 $ 11.04 $ 9.76 $ 10.20
------- ------- ------- ------ -------
INVESTMENT ACTIVITIES
Net investment income............. 0.39 0.45 0.43 0.44 0.38
Net realized and unrealized gains
(losses) on investments........... 0.54 2.04 0.92 1.27 (0.44)
------- ------- ------- ------ -------
Total from Investment Activi-
ties............................. 0.93 2.49 1.35 1.71 (0.06)
------- ------- ------- ------ -------
DISTRIBUTIONS
Net investment income............. (0.39) (0.45) (0.43) (0.43) (0.38)
Net realized gains................ (0.35) (0.37) -- -- --
------- ------- ------- ------ -------
Total Distributions.............. (0.74) (0.82) (0.43) (0.43) (0.38)
------- ------- ------- ------ -------
NET ASSET VALUE, END OF PERIOD..... $ 13.82 $ 13.63 $ 11.96 $11.04 $ 9.76
======= ======= ======= ====== =======
Total Return (excludes sales
charge)............................ 6.89% 21.76% 12.43% 18.00% (0.64%)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)... $21,948 $17,234 $12,456 $9,257 $ 8,560
Ratio of expenses to average net
assets............................ 1.17% 1.18% 1.20% 1.17% 0.98%
Ratio of net investment income to
average net assets................ 2.75% 3.63% 3.78% 4.27% 4.02%
Ratio of expenses to average net
assets*........................... 1.66% 1.67% 1.69% 1.71% 1.75%
Ratio of net investment income to
average net assets*............... 2.26% 3.14% 3.29% 3.73% 3.25%
Portfolio Turnover (a)............ 31.85% 27.07% 19.87% 23.68% 12.91%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-103-
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
<PAGE>
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BALANCED FUND
Class B Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR JANUARY 1,
ENDED ENDED 1996 TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1996 (A)
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERI-
OD.................................. $ 13.57 $11.91 $11.54
------- ------ ------
INVESTMENT ACTIVITIES
Net investment income.............. 0.28 0.36 0.27
Net realized and unrealized gains
(losses) on investments............ 0.55 2.04 0.37
------- ------ ------
Total from Investment Activities.. 0.83 2.40 0.64
------- ------ ------
DISTRIBUTIONS
Net investment income.............. (0.29) (0.37) (0.27)
Net realized gains................. (0.35) (0.37) --
------- ------ ------
Total Distributions............... (0.64) (0.74) (0.27)
------- ------ ------
NET ASSET VALUE, END OF PERIOD...... $ 13.76 $13.57 $11.91
======= ====== ======
Total Return (excludes redemption
charge)............................. 6.16% 20.90% 5.67%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000).... $15,183 $6,360 $2,339
Ratio of expenses to average net
assets............................. 1.92% 1.93% 1.95%(c)
Ratio of net investment income to
average net assets................. 1.98% 2.88% 3.13%(c)
Ratio of expenses to average net
assets*............................ 2.16% 2.17% 2.18%(c)
Ratio of net investment income to
average net assets*................ 1.74% 2.64% 2.90%(c)
Portfolio Turnover (d)............. 31.85% 27.07% 19.87%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-104-
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<PAGE>
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BALANCED FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------------------
1998 1997 1996 1995 1994
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.......................... $ 13.60 $ 11.93 $ 11.01 $ 9.74 $ 10.18
-------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income.......... 0.42 0.49 0.46 0.46 0.40
Net realized and unrealized
gains (losses) on investments.. 0.54 2.04 0.92 1.27 (0.44)
-------- ------- ------- ------- -------
Total from Investment Activi-
ties.......................... 0.96 2.53 1.38 1.73 (0.04)
-------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income.......... (0.42) (0.49) (0.46) (0.46) (0.40)
Net realized gains............. (0.35) (0.37) -- -- --
-------- ------- ------- ------- -------
Total Distributions........... (0.77) (0.86) (0.46) (0.46) (0.40)
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.. $ 13.79 $ 13.60 $ 11.93 $ 11.01 $ 9.74
======== ======= ======= ======= =======
Total Return.................... 7.18% 22.11% 12.74% 18.23% (0.42%)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period
(000).......................... $108,943 $88,524 $69,374 $49,794 $39,715
Ratio of expenses to average
net assets..................... 0.92% 0.93% 0.95% 0.92% 0.73%
Ratio of net investment income
to average net assets.......... 3.00% 3.88% 4.03% 4.51% 4.22%
Ratio of expenses to average
net assets*.................... 1.16% 1.17% 1.19% 1.21% 1.25%
Ratio of net investment income
to average net assets*......... 2.76% 3.64% 3.79% 4.22% 3.70%
Portfolio Turnover (a)......... 31.85% 27.07% 19.87% 23.68% 12.91%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-105-
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<PAGE>
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LARGE COMPANY GROWTH FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 3,
1997 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $10.00
------
INVESTMENT ACTIVITIES
Net investment income (loss)................................... --
Net realized and unrealized gains (losses) on investments...... (0.25)
------
Total from Investment Activities............................... (0.25)
------
DISTRIBUTIONS
Net investment income.......................................... (0.03)
Net realized gains............................................. (0.10)
------
Total Distributions............................................ (0.13)
------
NET ASSET VALUE, END OF PERIOD.................................. $ 9.62
======
Total Return (excludes sales charge)............................ (2.54%)(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................................ $1,938
Ratio of expenses to average net assets........................ 1.39% (c)
Ratio of net investment income (loss) to average net assets.... (0.04%)(c)
Ratio of expenses to average net assets*....................... 1.87% (c)
Ratio of net investment income (loss) to average net assets*... (0.52%)(c)
Portfolio Turnover (d)......................................... 108.36%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-106-
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
LARGE COMPANY GROWTH FUND
Class B Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 3,
1997 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 10.00
-------
INVESTMENT ACTIVITIES
Net investment income (loss).................................. (0.02)
Net realized and unrealized gains (losses) on investments..... (0.29)
-------
Total from Investment Activities.............................. (0.31)
-------
DISTRIBUTIONS
Net investment income......................................... (0.01)
Net realized gains............................................ (0.10)
-------
Total Distributions........................................... (0.11)
-------
NET ASSET VALUE, END OF PERIOD................................. $ 9.58
=======
Total Return (excludes redemption charge)...................... (3.13%)(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)............................... $ 3,985
Ratio of expenses to average net assets....................... 2.14% (c)
Ratio of net investment income (loss) to average net assets... (0.78%)(c)
Ratio of expenses to average net assets*...................... 2.37% (c)
Ratio of net investment income (loss) to average net assets*.. (1.01%)(c)
Portfolio Turnover (d)........................................ 108.36%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-107-
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<PAGE>
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LARGE COMPANY GROWTH FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 3,
1997 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 10.00
-------
INVESTMENT ACTIVITIES
Net investment income......................................... 0.04
Net realized and unrealized gains (losses) on investments..... (0.27)
-------
Total from Investment Activities.............................. (0.23)
-------
DISTRIBUTIONS
Net investment income......................................... (0.04)
Net realized gains............................................ (0.10)
-------
Total Distributions........................................... (0.14)
-------
NET ASSET VALUE, END OF PERIOD................................. $ 9.63
=======
Total Return................................................... (2.33%)(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)............................... $50,975
Ratio of expenses to average net assets....................... 1.06% (c)
Ratio of net investment income to average net assets.......... 0.41% (c)
Ratio of expenses to average net assets*...................... 1.30% (c)
Ratio of net investment income to average net assets*......... 0.17% (c)
Portfolio Turnover (d)........................................ 108.36%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-108-
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<PAGE>
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SMALL COMPANY GROWTH FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 7,
SEPTEMBER 30, 1994 TO
------------------------- SEPTEMBER 30,
1998 1997 1996 1995 (A)
------ ------- ------ -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $23.33 $ 21.06 $14.53 $10.00
------ ------- ------ ------
INVESTMENT ACTIVITIES
Net investment income (loss)...... (0.29) (0.15) (0.20) (0.08)
Net realized and unrealized gains
(losses) on investments........... (5.23) 2.44 6.73 4.61
------ ------- ------ ------
Total from Investment Activities.. (5.52) 2.29 6.53 4.53
------ ------- ------ ------
DISTRIBUTIONS
In excess of net realized gains... (0.31) (0.02) -- --
------ ------- ------ ------
Total Distributions............... (0.31) (0.02) -- --
------ ------- ------ ------
NET ASSET VALUE, END OF PERIOD..... $17.50 $ 23.33 $21.06 $14.53
====== ======= ====== ======
Total Return (excludes sales
charge)............................ (23.81%) 10.90% 44.94% 45.30% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)... $9,456 $12,676 $7,413 $1,096
Ratio of expenses to average net
assets............................ 1.86% 1.89% 2.01% 2.50% (c)
Ratio of net investment income
(loss) to average net assets...... (1.36%) (1.29%) (1.26%) (1.56%)(c)
Ratio of expenses to average net
assets*........................... 2.11% 2.14% 2.26% 2.84% (c)
Ratio of net investment income
(loss) to average net assets*..... (1.61%) (1.54%) (1.51%) (1.90%)(c)
Portfolio Turnover (d)............ 157.44% 80.66% 71.62% 46.97%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-109-
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<PAGE>
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SMALL COMPANY GROWTH FUND
Class B Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR JANUARY 1,
ENDED ENDED 1996 TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1996 (A)
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 23.02 $ 20.92 $ 15.24
------- ------- -------
INVESTMENT ACTIVITIES
Net investment income (loss)...... (0.39) (0.20) (0.21)
Net realized and unrealized gains
(losses) on investments........... (5.19) 2.32 5.89
------- ------- -------
Total from Investment Activities.. (5.58) 2.12 5.68
------- ------- -------
DISTRIBUTIONS
In excess of net realized gains... (0.31) (0.02) --
------- ------- -------
Total Distributions............... (0.31) (0.02) --
------- ------- -------
NET ASSET VALUE, END OF PERIOD..... $ 17.13 $ 23.02 $ 20.92
======= ======= =======
Total Return (excludes redemption
charge)............................ (24.40%) 10.16% 37.27% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)... $ 8,609 $ 8,869 $ 3,200
Ratio of expenses to average net
assets............................ 2.61% 2.64% 2.72% (c)
Ratio of net investment income
(loss) to average net assets...... (2.11%) (2.04%) (2.01%)(c)
Portfolio Turnover (d)............ 157.44% 80.66% 71.62%
</TABLE>
- ----
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-110-
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<PAGE>
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SMALL COMPANY GROWTH FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 7,
SEPTEMBER 30, 1994 TO
--------------------------- SEPTEMBER 30,
1998 1997 1996 1995 (A)
------- ------- ------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 23.52 $ 21.18 $ 14.57 $ 10.00
------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income (loss).... (0.20) (0.11) (0.17) (0.07)
Net realized and unrealized
gains (losses) on investments... (5.32) 2.47 6.78 4.64
------- ------- ------- -------
Total from Investment
Activities...................... (5.52) 2.36 6.61 4.57
------- ------- ------- -------
DISTRIBUTIONS
In excess of net realized
gains........................... (0.31) (0.02) -- --
------- ------- ------- -------
Total Distributions............. (0.31) (0.02) -- --
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD... $ 17.69 $ 23.52 $ 21.18 $ 14.57
======= ======= ======= =======
Total Return..................... (23.62%) 11.17% 45.37% 45.70% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period
(000)........................... $65,180 $58,660 $36,373 $16,962
Ratio of expenses to average net
assets.......................... 1.61% 1.64% 1.79% 2.33% (c)
Ratio of net investment income
(loss) to average net assets.... (1.11%) (1.04%) (1.00%) (1.34%)(c)
Ratio of expenses to average net
assets*......................... 1.61% 1.64% 1.79% 2.24% (c)
Ratio of net investment income
(loss) to average net assets*... (1.11%) (1.04%) (1.00%) (1.43%)(c)
Portfolio Turnover (d).......... 157.44% 80.66% 71.62% 46.97%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-111-
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<PAGE>
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INTERNATIONAL FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE JANUARY 2,
YEAR ENDED 1997 TO
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 (A)
------------- -------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 11.24 $ 10.00
------- -------
INVESTMENT ACTIVITIES
Net investment income........................... 0.03 0.03
Net realized and unrealized gains (losses) on
investments and foreign currency transactions... (1.09) 1.25
------- -------
Total from Investment Activities................ (1.06) 1.28
------- -------
DISTRIBUTIONS
Net investment income........................... (0.03) (0.02)
Net realized gains.............................. (0.23) --
In excess of net investment income.............. (0.01) (0.02)
------- -------
Total Distributions............................. (0.27) (0.04)
------- -------
NET ASSET VALUE, END OF PERIOD................... $ 9.91 $ 11.24
======= =======
Total Return (excludes sales charge)............. (9.60%) 12.84% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................. $ 1,314 $ 833
Ratio of expenses to average net assets......... 1.75% 1.97% (c)
Ratio of net investment income (loss) to average
net assets...................................... 0.26% 0.14% (c)
Ratio of expenses to average net assets*........ 2.01% 2.24% (c)
Ratio of net investment income (loss) to average
net assets*..................................... 0.00% (0.13%)(c)
Portfolio Turnover (d).......................... 53.27% 41.45%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-112-
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<PAGE>
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INTERNATIONAL EQUITY FUND
Class B Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE JANUARY 2,
YEAR ENDED 1997 TO
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 (A)
------------- -------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 11.23 $ 10.00
------- -------
INVESTMENT ACTIVITIES
Net investment income (loss).................... (0.04) (0.01)
Net realized and unrealized gains (losses) on
investments..................................... (1.10) 1.26
------- -------
Total from Investment Activities................ (1.14) 1.25
------- -------
DISTRIBUTIONS
Net realized gains.............................. (0.23) --
In excess of net investment income.............. (0.01) (0.02)
------- -------
Total Distributions............................. (0.24) (0.02)
------- -------
NET ASSET VALUE, END OF PERIOD................... $ 9.85 $ 11.23
======= =======
Total Return (excludes redemption charge)........ (10.29%) 12.51% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................. $ 1,923 $ 1,179
Ratio of expenses to average net assets......... 2.50% 2.69% (c)
Ratio of net investment income (loss) to average
net assets...................................... (0.50%) (0.62%)(c)
Ratio of expenses to average net assets*........ 2.51% 2.74% (c)
Ratio of net investment income (loss) to average
net assets*..................................... (0.51%) (0.66%)(c)
Portfolio Turnover (d).......................... 53.27% 41.45%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-113-
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<PAGE>
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INTERNATIONAL EQUITY FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR JANUARY 2,
ENDED 1997 TO
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 (A)
------------- -------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 11.28 $ 10.00
------- -------
INVESTMENT ACTIVITIES
Net investment income............................ 0.06 0.03
Net realized and unrealized gains (losses) on
investments...................................... (1.10) 1.30
------- -------
Total from Investment Activities................. (1.04) 1.33
------- -------
DISTRIBUTIONS
Net investment income............................ (0.06) (0.02)
Net realized gains............................... (0.23) --
In excess of net investment income............... -- (0.03)
------- -------
Total Distributions.............................. (0.29) (0.05)
------- -------
NET ASSET VALUE, END OF PERIOD.................... $ 9.95 $ 11.28
======= =======
Total Return...................................... (9.45%) 13.34%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000).................. $70,356 $52,373
Ratio of expenses to average net assets.......... 1.50% 1.79%(c)
Ratio of net investment income to average net
assets........................................... 0.50% 0.32%(c)
Ratio of expenses to average net assets*......... 1.51% 1.81%(c)
Ratio of net investment income to average net
assets*.......................................... 0.49% 0.30%(c)
Portfolio Turnover (d)........................... 53.27% 41.45%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-114-
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<PAGE>
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CAPITAL MANAGER CONSERVATIVE GROWTH FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 29,
1998 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $10.09
------
INVESTMENT ACTIVITIES
Net investment income.......................................... 0.19
Net realized and unrealized gains (losses) on investments with
affiliates..................................................... (0.01)
------
Total from Investment Activities............................... 0.18
------
DISTRIBUTIONS
Net investment income.......................................... (0.22)
------
Total Distributions............................................ (0.22)
------
NET ASSET VALUE, END OF PERIOD.................................. $10.05
======
Total Return (excludes sales charge)............................ 1.89%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................................ $ 119
Ratio of expenses to average net assets........................ 0.83%(c)
Ratio of net investment income to average net assets........... 2.91%(c)
Ratio of expenses to average net assets*....................... 1.33%(c)
Ratio of net investment income to average net assets*.......... 2.41%(c)
Portfolio Turnover (d)......................................... 4.28%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-115-
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<PAGE>
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CAPITAL MANAGER CONSERVATIVE GROWTH FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 2,
1997 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 10.00
--------
INVESTMENT ACTIVITIES
Net investment income......................................... 0.32
Net realized and unrealized gains (losses) on investments with
affiliates.................................................... 0.08
--------
Total from Investment Activities.............................. 0.40
--------
DISTRIBUTIONS
Net investment income......................................... (0.32)
--------
Total Distributions........................................... (0.32)
--------
NET ASSET VALUE, END OF PERIOD................................. $ 10.08
========
Total Return................................................... 3.95%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)............................... $ 23,773
Ratio of expenses to average net assets....................... 0.47%(c)
Ratio of net investment income to average net assets.......... 3.12%(c)
Ratio of expenses to average net assets*...................... 0.67%(c)
Ratio of net investment income to average net assets*......... 2.92%(c)
Portfolio Turnover (d)........................................ 4.28%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-116-
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<PAGE>
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CAPITAL MANAGER MODERATE GROWTH FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 29,
1998 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $10.01
------
INVESTMENT ACTIVITIES
Net investment income.......................................... 0.15
Net realized and unrealized gains (losses) on investments with
affiliates..................................................... (0.15)
------
Total from Investment Activities............................... --
------
DISTRIBUTIONS
Net investment income.......................................... (0.16)
------
Total Distributions............................................ (0.16)
------
NET ASSET VALUE, END OF PERIOD.................................. $ 9.85
======
Total Return (excludes sales charge)............................ 0.10%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................................ $1,146
Ratio of expenses to average net assets........................ 0.93%(c)
Ratio of net investment income to average net assets........... 1.93%(c)
Ratio of expenses to average net assets*....................... 1.39%(c)
Ratio of net investment income to average net assets*.......... 1.47%(c)
Portfolio Turnover (d)......................................... 4.85%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-117-
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<PAGE>
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CAPITAL MANAGER MODERATE GROWTH FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 2,
1997 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 10.00
-------
INVESTMENT ACTIVITIES
Net investment income.......................................... 0.23
Net realized and unrealized gains (losses) on investments with
affiliates..................................................... (0.16)
-------
Total from Investment Activities............................... 0.07
-------
DISTRIBUTIONS
Net investment income.......................................... (0.22)
-------
Total Distributions............................................ (0.22)
-------
NET ASSET VALUE, END OF PERIOD.................................. $ 9.85
=======
Total Return.................................................... 0.68%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)................................ $21,682
Ratio of expenses to average net assets........................ 0.46%(c)
Ratio of net investment income to average net assets........... 2.21%(c)
Ratio of expenses to average net assets*....................... 0.66%(c)
Ratio of net investment income to average net assets*.......... 2.01%(c)
Portfolio Turnover (d)......................................... 4.85%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
-118-
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<PAGE>
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CAPITAL MANAGER GROWTH FUND
Class A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 29,
1998 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 9.93
------
INVESTMENT ACTIVITIES
Net investment income......................................... 0.10
Net realized and unrealized gains (losses) on investments with
affiliates.................................................... (0.26)
------
Total from Investment Activities............................. (0.16)
------
DISTRIBUTIONS
Net investment income......................................... (0.10)
------
Total Distributions.......................................... (0.10)
------
NET ASSET VALUE, END OF PERIOD................................. $ 9.67
======
Total Return (excludes sales charge)........................... (1.45%)(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)............................... $ 276
Ratio of expenses to average net assets....................... 0.90% (c)
Ratio of net investment income to average net assets.......... 1.16% (c)
Ratio of expenses to average net assets*...................... 1.38% (c)
Ratio of net investment income to average net assets*......... 0.68% (c)
Portfolio Turnover (d)........................................ 7.69%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
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<PAGE>
[LOGO FOR SCREEN BOX APPEARS HERE]
CAPITAL MANAGER GROWTH FUND
Trust Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 2,
1997 TO
SEPTEMBER 30,
1998 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 10.00
-------
INVESTMENT ACTIVITIES
Net investment income......................................... 0.16
Net realized and unrealized gains (losses) on investments with
affiliates.................................................... (0.32)
-------
Total from Investment Activities.............................. (0.16)
-------
DISTRIBUTIONS
Net investment income......................................... (0.16)
-------
Total Distributions........................................... (0.16)
-------
NET ASSET VALUE, END OF PERIOD................................. $ 9.68
=======
Total Return................................................... (1.72%)(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)............................... $21,370
Ratio of expenses to average net assets....................... 0.47% (c)
Ratio of net investment income to average net assets.......... 1.53% (c)
Ratio of expenses to average net assets*...................... 0.67% (c)
Ratio of net investment income to average net assets*......... 1.33% (c)
Portfolio Turnover (d)........................................ 7.69%
</TABLE>
- ----
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements
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<PAGE>
[LOGO OF BB&T MUTUAL FUNDS APPEARS HERE]
Annual Report
To Shareholders
INVESTMENT ADVISOR
Branch Banking and Trust Company
434 Fayetteville Street Mall
Raleigh, NC 27601
DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road [PICTURE OF WOODS
Columbus, OH 43219 APPEARS HERE]
LEGAL COUNSEL
Ropes & Gray
1301 K Street, N.W.
Suite 800 E.
Washington D.C. 20005
TRANSFER AGENT
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza, Suite 1600
Columbus, OH 43215
September 30, 1998
11/98
