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[BB&T FUNDS LOGO]
SUPPLEMENT DATED MAY 22, 2000
TO THE MONEY MARKET FUNDS PROSPECTUS DATED
FEBRUARY 1, 2000, THE CLASS A AND CLASS B SHARES
PROSPECTUS DATED FEBRUARY 1, 2000, AND
THE TRUST SHARES PROSPECTUS DATED FEBRUARY 1, 2000
THIS SUPPLEMENT PROVIDES UPDATED INFORMATION REGARDING (1) THE SUB-ADVISER FOR
THE PRIME MONEY MARKET FUND, (2) CHANGES TO THE PRIME MONEY MARKET FUND'S
CONCENTRATION POLICY, (3) INTEREST RATE SENSITIVITY MANAGEMENT OF THE TAXABLE
BOND FUNDS, AND (4) MANAGEMENT OF THE INTERNATIONAL EQUITY FUND. PLEASE KEEP
THIS SUPPLEMENT AND READ IT TOGETHER WITH THE APPLICABLE PROSPECTUSES.
I. SUB-ADVISER FOR THE PRIME MONEY MARKET FUND
Information regarding the current Sub-Adviser for the Prime Money Market Fund
appears on page 19 of the Money Market Funds Prospectus, page 75 of the Class A
and Class B Shares Prospectus, and page 74 of the Trust Shares Prospectus. It is
proposed that the Fund's current Sub-Adviser be replaced with a new Sub-Adviser.
At a meeting held on May 4, 2000, the Board of Trustees of BB&T Funds
unanimously approved, subject to Shareholder approval, an Investment
Sub-Advisory Agreement between Branch Banking and Trust Company ("BB&T") and
Federated Investment Management Company ("Federated") regarding the Prime Money
Market Fund. Under the proposed Investment Sub-Advisory Agreement, Federated
would act as Sub-Adviser to the Prime Money Market Fund. Approval of this
proposed Investment Sub-Advisory Agreement will be submitted to a Shareholder
vote in June 2000.
II. CHANGES TO THE PRIME MONEY MARKET FUND'S CONCENTRATION POLICY
Information regarding the current concentration policy for the Prime Money
Market Fund appears on page 14 of the Money Market Funds Prospectus, on page 66
of the Class A and Class B Shares Prospectus, and on page 65 of the Trust Shares
Prospectus. It is proposed that this policy be revised.
The current policy provides that under normal market conditions, at least 25% of
the Fund's total assets will be invested in obligations of issuers in the
financial services industry and repurchase agreements relating to such
obligations.
The proposed change would prohibit concentration of the Prime Money Market
Fund's investments in any industry, including the financial services industry.
Government securities, municipal securities, and bank instruments would not be
deemed to constitute an industry. To conform to the current view of the SEC
staff that only domestic bank instruments may be excluded from industry
concentration limitations, as a matter of non-fundamental policy, the Fund would
not exclude foreign bank instruments from industry concentration tests as long
as the policy of the SEC remains in effect. Approval of this amendment will be
submitted to a Shareholder vote in June 2000.
III. INTEREST RATE SENSITIVITY MANAGEMENT OF THE TAXABLE BOND FUNDS
The Taxable Bond Funds previously managed fixed income securities subject to
parameters expressed in terms of "average weighted maturity." Average weighted
maturity is a tool used to assess interest rate sensitivity, i.e., the degree of
change in value that will be caused by increases or decreases in interest rates.
The Taxable Bond Funds have stopped using average weighted maturity and are now
using parameters expressed in terms of "duration." Like average weighted
maturity, duration is an indicator of the interest rate sensitivity of fixed
income securities. More specifically, duration is the estimated percentage
change in a security's price that will result from a 1% change in interest
rates. The Adviser has made this change because it believes that duration is a
more accurate measure of interest rate sensitivity. This modification will not
cause the Taxable Bond Funds to experience increased turnover in portfolio
holdings.
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As a result, the following language has been revised to reflect the adjustment
described above:
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
Under the section "Principal Investment Strategies" on page 22 of the Class A
and Class B Shares Prospectus, and on page 24 of the Trust Shares Prospectus,
the last sentence of the first paragraph has been deleted and replaced in its
entirety with the following:
"The duration range of the Fund will be from 1.5 to 3.5."
INTERMEDIATE U.S. GOVERNMENT BOND FUND
Under the section "Principal Investment Strategies" on page 25 of the Class A
and Class B Shares Prospectus, and on page 27 of the Trust Shares Prospectus,
the last sentence of the first paragraph has been deleted and replaced in its
entirety with the following:
"The duration range of the Fund will be from 3.5 to 7.0."
INTERMEDIATE CORPORATE BOND FUND
Under the section "Principal Investment Strategies" on page 28 of the Class A
and B Shares Prospectus, and on page 30 of the Trust Shares Prospectus, the last
sentence of the first paragraph has been deleted and replaced in its entirety
with the following:
"The duration range of the Fund will be from 3.0 to 7.0."
IV. MANAGEMENT OF THE INTERNATIONAL EQUITY FUND
The International Equity Fund is now managed by a team of investment
professionals rather than by an individual portfolio manager. Therefore, under
the section "Portfolio Managers" on page 75 of the Class A and Class B Shares
Prospectus, and on page 74 of the Trust Shares Prospectus, the paragraph
regarding the International Equity Fund has been deleted in its entirety.
SHAREHOLDERS SHOULD RETAIN THIS SUPPLEMENT WITH THE APPLICABLE PROSPECTUS FOR
FUTURE REFERENCE.
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