EXHIBIT 17(iii)
BB&T LARGE CAP GROWTH VIF
BB&T VARIABLE INSURANCE FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
1-800-228-1872
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The BB&T Large Cap Growth VIF (the "Fund") seeks capital growth by
investing in a diversified portfolio of equity securities issued by large
capitalization growth companies. The Fund's goals and investment program are
described in detail inside. BB&T Asset Management, Inc. ("BB&T Asset
Management") serves as the Fund's investment adviser.
The Fund sells its shares to insurance company separate accounts, so that
the Fund may serve as an investment option under variable life insurance
policies and variable annuity contracts issued by insurance companies. The Fund
also may sell its shares to certain other investors, such as qualified pension
and retirement plans, insurance companies, and BB&T Asset Management.
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THIS PROSPECTUS SHOULD BE READ IN CONJUNCTION WITH THE SEPARATE ACCOUNT'S
PROSPECTUS DESCRIBING THE VARIABLE INSURANCE CONTRACT. PLEASE READ BOTH
PROSPECTUSES AND RETAIN THEM FOR FUTURE REFERENCE.
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
FUND'S SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
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THE DATE OF THIS PROSPECTUS IS MAY 1, 2006.
2 BB&T LARGE CAP GROWTH VIF (FORMERLY THE BB&T LARGE COMPANY GROWTH VIF)
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TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
RISK/RETURN SUMMARY AND FUND EXPENSES....................... 3
Investment Objective...................................... 3
Principal Investment Strategies........................... 3
Principal Investment Risks................................ 3
Fund Performance.......................................... 3
Fund Expenses............................................. 3
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS.................. 4
VALUATION OF SHARES......................................... 5
DISCLOSURE OF PORTFOLIO HOLDINGS............................ 5
PURCHASING AND REDEEMING SHARES............................. 5
Market Timing/Short-Term Trading.......................... 6
Servicing Agents.......................................... 6
Shareholder Servicing Arrangements -- Revenue Sharing..... 6
MANAGEMENT OF THE FUND...................................... 7
Investment Adviser........................................ 7
Administrator............................................. 7
TAXATION.................................................... 7
GENERAL INFORMATION......................................... 8
Description of the Trust and Its Shares................... 8
Miscellaneous............................................. 8
FINANCIAL HIGHLIGHTS........................................ 9
</Table>
BB&T LARGE CAP GROWTH VIF (FORMERLY THE BB&T LARGE COMPANY GROWTH VIF) 3
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RISK/RETURN SUMMARY AND FUND EXPENSES
INVESTMENT OBJECTIVE
The Fund seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Fund will invest at least 80% of its
assets in a diversified portfolio of equity securities issued by large
capitalization companies, and will primarily invest in companies that BB&T Asset
Management believes have the potential to provide significant capital growth.
Large capitalization companies are those companies whose market capitalization
is within the range of those companies in the Russell 1000(R) Growth Index (as
of March 31, 2006, $952 million to $368.9 billion). A portion of the Fund's
assets may be invested in preferred stock or bonds convertible into common
stock.
PRINCIPAL INVESTMENT RISKS
An investment in the Fund entails investment risk, including possible loss
of the principal amount invested. The Fund is subject to market risk, which is
the risk that the market value of a portfolio security may move up and down,
sometimes rapidly and unpredictably. This risk may be greatest for the Fund's
investments in common stocks. Large-capitalization growth stocks may fall out of
favor with investors, and may be particularly volatile in the event of earnings
disappointments or other financial difficulties. The market could favor value
stocks to the exclusion of growth stocks, or may not favor equities at all.
The Fund also is subject to interest rate risk, which is the risk that
changes in interest rates will affect the value of the Fund's investments. In
particular, the Fund's investments in fixed income securities, such as
convertible bonds and preferred stocks, generally will change in value inversely
with changes in interest rates. Also, the Fund's investments may expose it to
credit risk, which is the risk that the issuer of a security will default or not
be able to meet its financial obligations.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
FUND PERFORMANCE
The following chart and table show how the Fund has performed. The chart
demonstrates how the Fund's performance varies from year to year, and the table
compares the Fund's performance to that of the Russell 1000(R) Growth Index and
the Standard and Poor's 500(R) Composite Stock Price Index ("S&P 500(R) Index"),
each a widely recognized, unmanaged index of common stocks. The information does
not reflect charges and fees associated with a separate account that invests in
the Fund or an insurance contract for which the Fund is an investment option.
These charges and fees will reduce returns. Absent limitation of the Fund's
expenses, total return would be lower. Investors should be aware that past
performance does not indicate how the Fund will perform in the future.
CALENDAR YEAR TOTAL RETURNS*+
[GRAPH IN%]
<Table>
2002 -30.47
2003 28.02
2004 5.63
2005 1.88
</Table>
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<Table>
Best
Quarter:.... 14.71% 6/30/03
Worst
Quarter:.... -15.74% 6/30/02
</Table>
AVERAGE ANNUAL TOTAL RETURN*+
(for the periods ended December 31, 2005)
<Table>
<Caption>
SINCE INCEPTION
1 YEAR (OCTOBER 15, 2001)
------ ------------------
Fund........................ 1.88% 0.88%
Russell 1000 Growth(R)
Index..................... 5.26% 2.69%
S&P 500(R) Index............ 4.91% 5.38%
</Table>
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+ For periods prior to May 1, 2005, fund performance information appears for
BB&T Large Company Growth Fund, the predecessor fund to BB&T Large Cap Growth
VIF.
* Assumes reinvestment of dividends and distributions.
FUND EXPENSES
The following expense table indicates the expenses that an investor may
incur as a shareholder of the Fund during the current fiscal year. These
expenses are reflected in the share price of the Fund. The table does not
reflect separate account or insurance contract fees and charges. If they had
been included, the expenses would have been higher.
4 BB&T LARGE CAP GROWTH VIF (FORMERLY THE BB&T LARGE COMPANY GROWTH VIF)
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ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<Table>
Management Fees*........................... 0.74%
Other Expenses**........................... 0.29%
----
Total Annual Fund Operating Expenses*...... 1.03%
</Table>
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* BB&T Asset Management currently limits its management fees to 0.50%. Total
annual operating expenses, after fee waivers and expense reimbursements,
currently are limited to 0.79%. Any fee waiver or expense reimbursement is
voluntary and may be terminated at any time.
** Expense information in the table has been restated to reflect changes in the
contractual amounts of current fees.
EXPENSE EXAMPLE
Use the following table to compare fees and expenses of the Fund to other
investment companies. It illustrates the amount of fees and expenses an investor
would pay, assuming (1) a $10,000 investment, (2) 5% annual return, (3)
redemption at the end of each time period, and (4) no changes in the Fund's
total operating expenses. It does not reflect separate account or insurance
contract fees and charges. If they had been included, the fees and expenses
would have been higher. An investor's actual costs may be different.
<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$105 $328 $569 $1,259
</Table>
INVESTMENT OBJECTIVE,
STRATEGIES AND RISKS
Investors should be aware that the investments made by the Fund and the
results achieved by the Fund at any given time are not expected to be the same
as those made by other mutual funds for which BB&T Asset Management acts as
investment adviser, including mutual funds with names, investment objectives and
policies similar to the Fund. Investors should carefully consider their
investment goals and willingness to tolerate investment risk before allocating
their investment to the Fund.
The Fund's investment objective is capital growth. The investment objective
is not fundamental, and may be changed without shareholder approval. Under
normal market conditions, the Fund will invest at least 80% of its assets in a
diversified portfolio of equity securities issued by large capitalization
companies, and will primarily invest in companies that BB&T Asset Management
believes have the potential to provide significant capital growth.
In choosing investments for the Fund, BB&T Asset Management uses a variety
of economic projections, earnings projections, and quantitative analysis.
Quantitative analysis focuses on technical data, such as price and volume
information, and does not apply value judgments or utilize traditional economic
analysis in determining the investment merit of a particular investment. BB&T
Asset Management also identifies companies with a history of above average
growth or companies that are expected to enter periods of above average growth
when choosing investments for the Fund.
In addition to common stock, the Fund also utilizes convertible securities
and preferred stocks, which typically offer higher yields and good potential for
capital appreciation. The Fund also may invest in debt securities. The portion
of the Fund's total assets invested in common stock, preferred stock,
convertible securities, and debt securities varies according to BB&T Asset
Management's assessment of market and economic conditions and outlook.
About the Russell 1000(R) Growth Index. The Russell 1000(R) Growth Index is
an unmanaged index composed of those stocks of in the Russell 1000(R) Index with
higher price-to-book ratios and higher forecasted growth rates.
In addition to the above, the Fund has the flexibility to make other
portfolio investments and engage in other investment techniques. More
information on the Fund's investment strategies may be found in the Statement of
Additional Information (see the back cover).
The Fund's investment strategies may subject it to a number of risks,
including the following:
MARKET RISK
Although equities historically have outperformed other asset classes over
the long term, their prices tend to fluctuate more dramatically over the shorter
term. These movements may result from factors affecting individual companies, or
from broader influences like changes in interest rates, market conditions,
investor confidence or announcements of economic, political or financial
information.
To the extent the Fund concentrates its investments in growth stocks, it
will be subject to the risks particular to growth stocks, as well as the risk
that growth stocks may underperform other types of stocks. Growth stocks may be
particularly susceptible to rapid price swings during periods of economic
uncertainty or in the event of earnings disappointments, and they typically have
less dividend income to cushion the effect of adverse market conditions.
Because industries, companies or countries experiencing economic growth can
change, the Fund's performance could suffer if BB&T Asset Management is slow to
respond to such changes. From time to time, the stock market may not favor the
type of securities in which the
BB&T LARGE CAP GROWTH VIF (FORMERLY THE BB&T LARGE COMPANY GROWTH VIF) 5
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Fund typically invests. Rather, the market could favor other types of
securities, or it may not favor equities at all.
INTEREST RATE RISK
Although the Fund's primary investment focus is equities, the Fund may
invest in fixed income securities, such as convertible bonds, preferred stocks
and debt securities. Generally, the value of these securities will change
inversely with changes in interest rates. In addition, changes in interest rates
may affect the operations of the issuers of stocks in which the Fund invests.
Rising interest rates, which may be expected to lower the value of fixed income
instruments and negatively impact the operations of many issuers, generally
exist during periods of inflation or strong economic growth. Investors should
note that interest rates currently are at or near historic lows.
CREDIT RISK
The Fund's investments, and particularly investments in debt securities,
may be affected by the creditworthiness of issuers in which the Fund invests.
Changes in the financial strength, or perceived financial strength, of a company
may affect the value of its securities and, therefore, impact the value of the
Fund's shares.
ACTIVE TRADING
The Fund will not generally trade in securities for short-term profits.
However, the Fund is actively managed and, under appropriate circumstances, may
purchase and sell securities without regard to the length of time held. A high
portfolio turnover rate may increase transaction costs, which may negatively
impact the Fund's performance.
TEMPORARY INVESTMENTS
BB&T Asset Management may temporarily invest up to 100% of the Fund's
assets in high quality, short-term money market instruments if it believes
adverse economic or market conditions, such as excessive volatility or sharp
market declines, justify taking a defensive investment posture. If the Fund
attempts to limit investment risk by temporarily taking a defensive investment
position, it may be unable to pursue its investment objectives during that time,
and it may miss out on some or all of an upswing in the securities markets.
Please see the Statement of Additional Information for more detailed
information about the Fund, its investment strategies, and its risks.
VALUATION OF SHARES
The Fund prices its shares on the basis of the net asset value of the Fund,
which is determined as of the close of the New York Stock Exchange ("NYSE")
(generally 4:00 p.m., Eastern Time) on each Business Day. A Business Day is a
day on which the NYSE is open for trading. If portfolio investments of the Fund
are traded in markets on days that are not Business Days of the Fund, the Fund's
net asset value may vary on days when investors cannot purchase or redeem
shares.
Net asset value per share for purposes of pricing sales and redemptions is
calculated by dividing the value of all securities and other assets belonging to
the Fund, less the liabilities charged to the Fund and any liabilities allocable
to the Fund, by the number of the Fund's outstanding shares. The net asset value
per share of the Fund will fluctuate as the value of the investment portfolio of
the Fund changes.
The securities in the Fund are generally valued at current market prices.
Portfolio securities listed or traded on domestic securities exchanges or the
NASDAQ/NMS, including American Depositary Receipts (ADR's), are valued at the
closing price on the exchange or system where the security is principally traded
or at the Nasdaq Official Closing Price, if applicable. If there have been no
sales for that day on any exchange or system, a security is valued at the latest
available bid prices on the exchange or system where the security is principally
traded. If market quotations are not readily available (which may include
closing prices which appear to be unreliable due to subsequent events), the
securities will be fair valued using guidelines adopted by the Board of Trustees
of the BB&T Variable Insurance Funds (the "Trust"). For further information
about valuation of investments, see the Statement of Additional Information.
DISCLOSURE OF
PORTFOLIO HOLDINGS
Information regarding the Fund's policies and procedures regarding the
disclosure of portfolio holdings is contained in our Statement of Additional
Information.
PURCHASING AND
REDEEMING SHARES
Shares of the Fund are available for purchase by insurance company separate
accounts to serve as an investment medium for variable insurance contracts, and
by qualified pension and retirement plans, certain insurance companies, and BB&T
Asset Management. Investors do not deal directly with the Fund to purchase or
redeem shares. Please refer to the prospectus for the separate account for
information on the allocation of premiums and on transfers of accumulated value
among sub-accounts of the separate account that invests in the Fund.
6 BB&T LARGE CAP GROWTH VIF (FORMERLY THE BB&T LARGE COMPANY GROWTH VIF)
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Shares of the Fund are purchased or redeemed at the net asset value per
share based on the next determination after receipt and acceptance by the Fund
(or an agent) of a purchase order or receipt of a redemption request. The Fund
reserves the right to reject or refuse, in its discretion, any order for the
purchase of the Fund's shares, in whole or in part. Transactions in shares of
the Fund will be effected only on a Business Day of the Fund.
Payment for shares redeemed normally will be made within seven days. The
Fund intends to pay cash for all shares redeemed, but under abnormal conditions
which make payment in cash unwise, payment may be made wholly or partly in
portfolio securities at their then market value equal to the redemption price. A
shareholder may incur brokerage costs in converting such securities to cash.
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining investors.
The Trust currently does not foresee any disadvantages to investors if the
Fund served as an investment medium for both variable annuity contracts and
variable life insurance policies. However, it is theoretically possible that the
interest of owners of annuity contracts and insurance policies for which the
Fund served as an investment medium might at some time be in conflict due to
differences in tax treatment or other considerations. The Board of Trustees and
each participating insurance company would be required to monitor events to
identify any material conflicts between variable annuity contract owners and
variable life insurance policy owners, and would have to determine what action,
if any, should be taken in the event of such a conflict. If such a conflict
occurred, an insurance company participating in the Fund might be required to
redeem the investment of one or more of its separate accounts from the Fund,
which might force the Fund to sell securities at disadvantageous prices.
The Fund reserves the right to discontinue offering shares at any time, or
to cease investment operations entirely.
MARKET TIMING/SHORT-TERM TRADING
Some investors try to profit from various short-term or frequent trading
strategies commonly known as market timing. Excessive purchases and redemptions
of Fund shares disrupt portfolio management, hurt Fund performance and drive
Fund expenses higher. These costs are borne by all shareholders, including
long-term investors who do not generate these costs.
THE BOARD OF TRUSTEES HAS APPROVED POLICIES INTENDED TO DISCOURAGE MARKET
TIMING OR EXCESSIVE TRADING. THE BOARD OF TRUSTEES DOES NOT ACCOMMODATE SUCH
PRACTICES AND APPLIES ITS POLICIES UNIFORMLY TO ALL FUND SHAREHOLDERS. IF YOU
INTEND TO ENGAGE IN SUCH PRACTICES, DO NOT INVEST IN SHARES OF THE FUND. The
Fund will reject any request to purchase shares which it reasonably determines
to be in connection with market timing or excessive trading by an investor or by
accounts of investors under common control (for example, related contract
owners, or a financial advisor with discretionary trading authority over
multiple accounts). Exchanges between Funds are limited to 12 in any calendar
year with no more than three in any calendar quarter.
While the Fund discourages market timing and excessive short-term trading,
the Fund cannot always know or reasonably detect such trading, particularly if
it is facilitated by financial intermediaries or done through omnibus account
arrangements or insurance company separate accounts. In addition, monitoring and
discouraging market timing and excessive trading may require the cooperation of
insurance companies or other financial intermediaries, which cannot necessarily
be assured. Insurance companies and other financial intermediaries may be unable
to enforce our market timing policies for various reasons, including contract
restrictions. It is our intent that such insurance companies and other financial
intermediaries apply our market timing policies uniformly against underlying
account holders.
SERVICING AGENTS
The Trust has adopted a plan under which up to 0.25% of the Fund's average
daily net assets may be expended for support services to investors, such as
establishing and maintaining accounts and records, providing account
information, arranging for bank wires, responding to routine inquiries,
forwarding investor communications, assisting in the processing of purchase and
redemption requests, and assisting investors in changing account designations
and addresses. For expenses incurred and services provided, a financial
institution (or its affiliate) providing these services ("Servicing Agent") may
receive a fee from the Fund, computed daily and paid monthly, at an annual rate
of up to 0.25% of the average daily net assets of the Fund allocable to variable
insurance contracts owned by customers of the Servicing Agent. A Servicing Agent
may periodically waive all or a portion of its servicing fees with respect to
the Fund to increase the net income of the Fund available for distribution as
dividends.
SHAREHOLDER SERVICING ARRANGEMENTS --
REVENUE SHARING
BB&T Asset Management, Inc. and/or its affiliates may pay out of their own
assets compensation to financial institutions, including insurance companies,
and other persons for distribution and/or servicing of the Fund's shares. These
additional cash incentives, sometimes
BB&T LARGE CAP GROWTH VIF (FORMERLY THE BB&T LARGE COMPANY GROWTH VIF) 7
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referred to as "revenue sharing arrangements," are payments over and above the
service fees paid by the Fund, which are described above. These payments, which
may be different for different financial institutions, will not change the price
an investor will pay for Fund shares, the amount that a Fund will receive for
the sale of Fund shares or the expenses borne by Fund shares.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER
BB&T Asset Management, Inc. ("BB&T Asset Management"), 434 Fayetteville
Street, Raleigh, N.C. 27601, is the Fund's investment adviser. BB&T Asset
Management is a separate wholly-owned subsidiary of BB&T Corporation.
Branch Banking and Trust Company ("BB&T Bank") is the oldest bank in North
Carolina. It is the principal bank affiliate of BB&T Corporation, a bank holding
company that is a North Carolina corporation headquartered in Winston-Salem,
North Carolina. As of December 31, 2005, BB&T Corporation had assets of
approximately $109.2 billion. Through its subsidiaries, BB&T Corporation
operates over 1,400 banking offices in Alabama, Florida, Georgia, Indiana,
Kentucky, Tennessee, West Virginia, North Carolina, South Carolina, Virginia,
Maryland and Washington, D.C., providing a broad range of financial services to
individuals and businesses. In addition to general commercial, mortgage and
retail banking services, BB&T Bank also provides trust, investment, insurance
and travel services. BB&T Bank has provided investment management services
through its Trust and Investment Services Division since 1912.
Under an investment advisory agreement between the Trust and BB&T Asset
Management, the Trust pays BB&T Asset Management an investment advisory fee,
computed daily and payable monthly, at an annual rate equal to the lesser of:
(a) 0.74% of the Fund's average daily net assets; or (b) such amount as may from
time to time be agreed upon in writing by the Trust and BB&T Asset Management.
A discussion regarding the basis for the Board of Trustees approving the
investment advisory agreement with BB&T Asset Management is available in the
Funds' annual report to shareholders for the period ended December 31, 2005.
All investment decisions for the Fund are made by a team of investment
professionals, all of whom take an active part in the decision making process.
PORTFOLIO MANAGER
David Nolan has headed the team that has served as portfolio manager of the
Fund since March 2006. Mr. Nolan is a Senior Vice President and portfolio
manager with the Adviser. He has been with the Adviser and its predecessors
since 1985.
The SAI provides additional information about the Portfolio Manager's
compensation, other accounts managed by the Portfolio Manager, and the Portfolio
Manager's ownership of shares in the Funds he manages.
ADMINISTRATOR
BB&T Asset Management is the administrator for the Fund. BISYS Fund
Services Ohio, Inc. acts as the Fund's sub-administrator. The address of the
sub-administrator is 3435 Stelzer Road, Columbus, Ohio 43219-3035.
See the Statement of Additional Information for further information about
the Fund's service providers.
TAXATION
The Fund intends to qualify and to elect to be taxed as a "regulated
investment company" under the provisions of Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). If the Fund qualifies as a "regulated
investment company" and complies with the appropriate provisions of the Code,
the Fund will not be liable for federal income tax on income it distributes.
The Fund intends to diversify its investments in a manner intended to
comply with tax requirements generally applicable to mutual funds. In addition,
the Fund will diversify its investments so that on the last day of each quarter
of a calendar year, no more than 55% of the value of its total assets is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. For this purpose,
securities of a single issuer are treated as one investment and each U.S.
Government agency or instrumentality is treated as a separate issuer. Any
security issued, guaranteed, or insured (to the extent so guaranteed or insured)
by the U.S. Government or an agency or instrumentality of the U.S. Government is
treated as a security issued by the U.S. Government or its agency or
instrumentality, whichever is applicable.
If the Fund fails to meet this diversification requirement, income with
respect to variable insurance contracts invested in the Fund at any time during
the calendar quarter in which the failure occurred could become currently
taxable to the owners of the contracts. Similarly, income for prior periods with
respect to such contracts also could be taxable, most likely in the year of the
failure
8 BB&T LARGE CAP GROWTH VIF (FORMERLY THE BB&T LARGE COMPANY GROWTH VIF)
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to achieve the required diversification. Other adverse tax consequences could
also ensue.
Since the shareholders of the Fund will be separate accounts, no discussion
is included here as to the federal income tax consequences at the shareholder
level. For information concerning the federal income tax consequences to
purchasers of the variable life insurance policies and variable annuity
contracts, see the prospectus for the relevant variable insurance contract. See
the Statement of Additional Information for more information on taxes.
GENERAL INFORMATION
DESCRIPTION OF THE TRUST AND ITS SHARES
BB&T Variable Insurance Funds was organized as a Massachusetts business
trust in 2004. The Trust currently consists of multiple portfolios. The Board of
Trustees of the Trust may establish additional portfolios in the future and,
unless a policy or procedure is expressly designated as fundamental, may change
the Funds' policies and procedures without shareholder approval. Under
Massachusetts law, shareholders could be held personally liable for the
obligations of the Trust under certain circumstances. However, the Trust's
declaration of trust disclaims liability of its shareholders and provides for
indemnification out of Trust property (to the extent of the assets of the
particular series of shares of which the shareholder is a holder) for all loss
and expense of any shareholder held personally liable for the obligations of the
Trust. Accordingly, the risk of a shareholder incurring financial loss on
account of shareholder liability should be considered remote.
MISCELLANEOUS
No person has been authorized to give any information or to make any
representations not contained in this prospectus in connection with the offering
made by this prospectus. If given or made, such information or representations
must not be relied upon as having been authorized by the Fund. This prospectus
does not constitute an offering by the Fund in any jurisdiction in which such
offering may not be lawfully made.
BB&T LARGE CAP GROWTH VIF (FORMERLY THE BB&T LARGE COMPANY GROWTH VIF) 9
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FINANCIAL HIGHLIGHTS
The following table is included to assist investors in evaluating the
financial performance of the Fund since its commencement of operations through
December 31, 2005. Certain information reflects financial results of a single
share. "Total Return" represents how much an investment in the Fund would have
earned (or lost) during each period. This information has been audited by KPMG
LLP for the fiscal years ended December 31, 2005, December 31, 2004, December
31, 2003 and December 31, 2002, and by other auditors for the fiscal period
ended December 31, 2001. The information does not reflect charges and fees
associated with a separate account that invests in the Fund or any insurance
contract for which the Fund is an investment option. This information, along
with the Fund's financial statements, is included in the annual report, which
may be obtained free of charge upon request.
<Table>
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 15, 2001 TO
DECEMBER 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2003 DECEMBER 31, 2002 DECEMBER 31, 2001(A)
----------------- ----------------- ----------------- ----------------- --------------------
NET ASSET VALUE, BEGINNING
OF PERIOD............... $ 10.14 $ 9.64 $ 7.53 $ 10.83 $ 10.00
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income
(loss)............... 0.04 0.04 (0.02) (0.06) (0.01)
Net realized/unrealized
gains (losses) on
investments.......... 0.15 0.50 2.13 (3.24) 0.84
------- ------- ------- ------- -------
Total from
Investment
Activities...... 0.19 0.54 2.11 (3.30) 0.83
------- ------- ------- ------- -------
DIVIDENDS:
Net investment income... (0.04) (0.04) -- -- --
------- ------- ------- ------- -------
Total dividends.... (0.04) (0.04) -- -- --
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD.................. $ 10.29 $ 10.14 $ 9.64 $ 7.53 $ 10.83
======= ======= ======= ======= =======
TOTAL
RETURN**(b)..... 1.88% 5.63% 28.02% (30.47)% 8.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, End of
Period (000)......... $23,523 $22,300 $18,464 $ 9,328 $10,876
Ratio of net expenses to
average net
assets(c)............ 0.79% 0.86% 1.04% 1.31% 1.19%
Ratio of net investment
income (loss) to
average net
assets(c)............ 0.40% 0.46% (0.32)% (0.73)% (0.32)%
Ratio of expenses to
average net
assets*(c)........... 1.14% 1.26% 1.44% 1.71% 1.59%
Portfolio turnover
rate................. 91.61% 119.90% 90.57% 93.65% 16.20%
</Table>
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* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Total return ratios are based on a share outstanding throughout the period
and assume reinvestment of distributions at a net asset value. Total return
ratios do not reflect charges pursuant to the terms of the insurance
contracts funded by separate accounts that invest in the Fund's shares.
(a) Period from commencement of operations.
(b) Not annualized for periods less than one year.
(c) Annualized for periods less than one year.
For more information about the Fund, the following documents are available free
upon request:
ANNUAL/SEMI-ANNUAL REPORTS:
Annual and semi-annual reports to shareholders contain additional information on
the Fund's investments. In the annual report, an investor will find a discussion
of the market conditions and investment strategies that significantly affected
the Fund's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Fund, including its
operations and investment policies. It is incorporated by reference and is
legally considered a part of this prospectus.
AN INVESTOR CAN GET FREE COPIES OF THE REPORTS AND THE SAI, OR REQUEST OTHER
INFORMATION AND DISCUSS ANY QUESTIONS ABOUT THE FUND, BY CONTACTING A BROKER OR
BANK THAT SELLS AN INSURANCE CONTRACT THAT OFFERS THE FUND AS AN INVESTMENT
OPTION. THE FUND DOES NOT MAINTAIN A WEB SITE. HOWEVER, YOU MAY OBTAIN FREE
COPIES OF THE REPORTS AND THE SAI BY CONTACTING US AT:
BB&T VARIABLE INSURANCE FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
TELEPHONE: 1-800-228-1872
Investors can review and copy the SAI and other information about the Fund at
the Public Reference Room of the Securities and Exchange Commission. Investors
may call 1-202-551-8090 for more information about the Public Reference Room.
Investors can get text-only copies of information about the Fund:
- For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-0102 or by electronic request at publicinfo@sec.gov.
- Free from the EDGAR database on the Commission's Website at
http://www.sec.gov.
Investment Company Act file no. 811-21682.