Exhibit (17)(vii)
BB&T Annual Report to Shareholders
September 30, 2006
(BB&T FUNDS LOGO)
SENSIBLE INVESTING FOR GENERATIONS(R)
BB&T FUNDS
TABLE OF CONTENTS
MANAGEMENT DISCUSSION OF PERFORMANCE
Letter from the President and the Investment Advisor .................. 1
FUND SUMMARY
Large Cap Fund ........................................................ 2
Large Cap Growth Fund ................................................. 4
Mid Cap Value Fund .................................................... 6
Mid Cap Growth Fund ................................................... 8
Small Cap Fund ........................................................ 10
International Equity Fund ............................................. 12
Special Opportunities Equity Fund ..................................... 14
Equity Income Fund .................................................... 16
Short U.S. Government Fund ............................................ 18
Intermediate U.S. Government Fund ..................................... 20
Total Return Bond Fund ................................................ 22
Kentucky Intermediate Tax-Free Fund ................................... 24
Maryland Intermediate Tax-Free Fund ................................... 26
North Carolina Intermediate Tax-Free Fund ............................. 28
South Carolina Intermediate Tax-Free Fund ............................. 30
Virginia Intermediate Tax-Free Fund ................................... 32
West Virginia Intermediate Tax-Free Fund .............................. 34
Prime Money Market Fund ............................................... 36
U.S. Treasury Money Market Fund ....................................... 37
Capital Manager Conservative Growth Fund .............................. 39
Capital Manager Moderate Growth Fund .................................. 40
Capital Manager Growth Fund ........................................... 41
Capital Manager Equity Fund ........................................... 42
SUMMARY OF PORTFOLIO HOLDINGS ............................................ 43
EXPENSE EXAMPLE .......................................................... 46
SCHEDULES OF PORTFOLIO INVESTMENTS
Large Cap Fund ........................................................ 50
Large Cap Growth Fund ................................................. 51
Mid Cap Value Fund .................................................... 52
Mid Cap Growth Fund ................................................... 53
Small Cap Fund ........................................................ 54
International Equity Fund ............................................. 56
Special Opportunities Equity Fund ..................................... 59
Equity Income Fund .................................................... 60
Short U.S. Government Fund ............................................ 61
Intermediate U.S. Government Fund ..................................... 62
Total Return Bond Fund ................................................ 63
Kentucky Intermediate Tax-Free Fund ................................... 66
Maryland Intermediate Tax-Free Fund ................................... 67
North Carolina Intermediate Tax-Free Fund ............................. 68
South Carolina Intermediate Tax-Free Fund ............................. 70
Virginia Intermediate Tax-Free Fund ................................... 72
West Virginia Intermediate Tax-Free Fund .............................. 74
Prime Money Market Fund ............................................... 76
U.S. Treasury Money Market Fund ....................................... 79
National Tax-Free Money Market Fund ................................... 80
Capital Manager Conservative Growth Fund .............................. 82
Capital Manager Moderate Growth Fund .................................. 83
Capital Manager Growth Fund ........................................... 84
Capital Manager Equity Fund ........................................... 85
FINANCIAL STATEMENTS ..................................................... 88
NOTES TO FINANCIAL STATEMENTS ............................................ 144
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM .................. 158
OTHER INFORMATION ........................................................ 161
LETTER FROM THE PRESIDENT AND THE INVESTMENT ADVISOR
DEAR SHAREHOLDERS:
We are pleased to present this annual report for the 12-month period ended
September 30, 2006. The economy generated healthy growth during that time,
despite a number of headwinds. Stocks overcame a spring correction to turn in
solid returns, while the fixed-income markets posted small gains. The S&P 500
Index gained 10.79% during the period under review, while the Russell 2000 Index
of small-cap stocks returned 9.92% and the Lehman Aggregate Bond Index gained
3.67%.
A RESILIENT ECONOMY
Solid consumer and corporate spending helped the economy generate healthy growth
during the 12-month period as a whole, despite a number of negative factors.
The destruction wreaked by Gulf Coast hurricanes during August and September of
2005 contributed to a considerable slowdown in GDP(1) growth during the fourth
quarter of 2005. The economy rebounded strongly in early 2006, however, due in
part to a strong housing market. The housing sector subsequently slowed
dramatically, weighing on the economy during the second half of the period.
High energy prices also dragged on the economy. The price of a barrel of crude
oil climbed steeply to exceed $78 in July, marking an all-time high. Oil prices
declined substantially during the final weeks of the period, to less than $60
per barrel.
The Federal Reserve raised the Fed funds rate six times, to 5.25%--a policy
designed to forestall higher inflation by restraining economic growth.
STOCKS OVERCOME A SPRING SWOON
Equities performed well early in the period. Energy and materials stocks led a
rally, as companies in those sectors benefited from rising commodity prices.
Small caps and foreign stocks also generated strong returns, as investors
favored stocks that were likely to benefit from strong global economic growth.
Stocks fell significantly between May and July. The market subsequently
rebounded, however, led by shares of large, high-quality firms. Energy stocks
fell precipitously after oil prices declined late in the period, causing the
energy sector to lag the broad market for the 12-month period as a whole. Stocks
in the telecommunications, technology, utilities, health care and financials
sectors posted good returns after the spring downturn.
BOND YIELDS RISE, THEN FALL
Bonds generated slight gains during the fiscal year. Tightening by the Federal
Reserve Board and concerns about higher inflation contributed to higher yields
during the first three-quarters of the period. The Fed's inaction at its August
and September meetings then allowed short-term bond yields to fall, as investors
began to anticipate a cut in interest rates during 2007. Meanwhile, relatively
benign inflationary data pushed down yields on the long end of the yield curve.
Corporate bonds modestly outperformed Treasury issues during the fiscal year as
a whole. The spread between yields on Treasury and corporate securities widened
modestly late in the period, however, as investors began to anticipate slower
economic growth.
LOOKING AHEAD
We saw earlier in 2006 that inflation had peaked. We continue to witness further
signs of reduced inflationary pressure, due primarily to lower oil prices and a
slowing housing market. As a result, we think the Federal Reserve has finished
raising interest rates for this cycle. We believe weakening consumer spending
will cause the economy to slow during the coming months, although we expect GDP
growth to remain positive.
That backdrop appears favorable for stocks, which we believe offer greater
potential returns than bonds during the coming months. High-quality large cap
stocks in particular appear attractively valued, especially multi-national
companies that can benefit from a declining dollar. Valuation multiples are
already expanding as the markets discount receding inflationary pressures and
attendant lower interest rates.
Because of the slowing economy, led by the housing correction, we favor sectors
and industries less dependent upon consumer discretionary income, such as
consumer staples, pharmaceuticals and healthcare equipment. Business spending
should remain healthier, so we like communications equipment, data processing,
and energy producers and refiners.
We believe that continued weak economic data, lower inflation and eventually a
more accommodative Federal Reserve policy will lead to a decline in bond yields
and further gains in the bond market. Thus, we would tend to favor portfolio
durations slightly above benchmarks for all fixed-income portfolios. In
addition, we expect short-term rates to decline most when the Fed eases its
policy, benefiting bonds in the two-to-five year maturity range.
Meanwhile, with the Federal Reserve on hold, there may be a period of relative
stability in the bond market. Sectors such as mortgage-backed securities and
agency bonds, which provide an income advantage over their benchmarks, may
provide superior performance in such an environment.
The dynamic nature of the financial markets makes predicting future performance
difficult, however. We therefore recommend maintaining well-balanced portfolios
comprised of funds that invest in various types of stocks, bonds and cash
investments. The BB&T Funds offer a wide variety of investment vehicles with
which you can construct such portfolios. We encourage you to use them as part of
a disciplined, long-term investment strategy designed to maximize your chances
of reaching your unique financial objectives.
We encourage you to call us with any questions at 1-800-228-1872, and we thank
you for your trust in the BB&T Funds.
/s/ Keith F. Karlawish
-------------------------------------
Keith F. Karlawish, CFA
President
BB&T Funds
/s/ Jeffrey J. Schappe
-------------------------------------
Jeffrey J. Schappe, CFA
Chief Investment Officer
BB&T Asset Management, Inc.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
(1) Gross Domestic Product ("GDP") measures the monetary value of all the goods
and services produced by an economy over a specified period. It includes
consumption, government purchases, investments, and exports minus imports.
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY WHEN PRECEDED OR ACCOMPANIED BY
A PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING OR SENDING
MONEY. BB&T ASSET MANAGEMENT, INC., A WHOLLY OWNED SUBSIDIARY OF BB&T
CORPORATION, SERVES AS INVESTMENT ADVISER TO THE BB&T FUNDS AND IS PAID A FEE
FOR ITS SERVICES. SHARES OF THE BB&T FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, BRANCH BANKING AND TRUST COMPANY OR ITS
AFFILIATES. THE FUNDS ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT
AGENCY. THE FUNDS CURRENTLY ARE DISTRIBUTED BY BB&T FUNDS DISTRIBUTOR, INC. THE
DISTRIBUTORS ARE NOT AFFILIATED WITH BRANCH BANKING AND TRUST COMPANY OR ITS
AFFILIATES.
The foregoing information and opinions are for general information only. BB&T
Asset Management, Inc. does not guarantee their accuracy or completeness, nor
assume liability for any loss, which may result from the reliance by any person
upon any such information or opinions. Such information and opinions are subject
to change without notice, are for general information only and are not intended
as an offer or solicitation with respect to the purchase or sale of any security
or offering individual or personalized investment advice.
1
BB&T LARGE CAP FUND (FORMERLY THE LARGE COMPANY VALUE FUND)
PORTFOLIO MANAGER
Ronald T. Rimkus, CFA
The BB&T Large Cap Fund is managed by Ronald T. Rimkus, a chartered
financial analyst and Director of Core Equity at BB&T Asset Management,
Inc. Mr. Rimkus has more than 13 years of investment experience, including
hands on management of both growth and value equity portfolios. Most
recently, he spent six years overseeing large-company core equity
portfolios. Mr. Rimkus holds a BA from Brown University and an MBA from
UCLA. He is supported by the BB&T Large Cap Core Equity Portfolio
Management Team.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as
the value of the securities in the portfolio changes. Value-based
investments are subject to the risk that the broad market may not recognize
their intrinsic value.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 14.59% (Institutional Shares). That compared to a 10.79%
return for its benchmark, the S&P 500 Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. This Fund seeks to invest in under valued shares of companies that have
sustainable competitive advantages, good management and strong returns on
invested capital. Those types of stocks performed well during this fiscal year,
helping the Fund post strong absolute returns. In particular, the health of the
global industrial economy and high commodity prices led to strong demand for
industrial stocks, boosting the Fund's gain.(1)
The Fund's security-selection process helped it outperform its benchmark during
this 12-month period. We held a relatively large position in health care stocks,
and especially in shares of pharmaceutical companies. Shares in that industry
were attractively valued following a long period of weak performance, making
them compelling given the firms' strong businesses, healthy balance sheets and
good cash flows. Large drug stocks performed very well during this period,
boosting returns against the index.(1)
An overweight stake in information technology stocks also lifted relative
performance, as strength in enterprise technology spending buoyed shares of a
number of large software firms. Strong stock selection in the technology sector
also helped the Fund's relative returns. For example, we bought shares of a
large semiconductor maker after they posted large losses, and the Fund's
relative gains benefited from that stock's rebound. (1)
An underweight position in materials stocks weighed on returns versus the Fund's
benchmark. Few materials stocks met our selection criteria, but materials shares
performed well during the period on the strength of high commodity prices.
Selection among utilities stocks also dragged modestly on relative
performance.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
2
BB&T LARGE CAP FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 10
September 30, 2006 Date Year Year Year
------------------ --------- ----- ----- -----
Class A Shares* 10/9/92 7.71% 6.31% 7.84%
Class B Shares** 1/1/96 9.45% 6.61% 7.80%
Class C Shares*** 2/1/01(4) 13.42% 6.76% 8.01%
Institutional Shares 10/9/92 14.59% 7.84% 8.74%
S&P 500 Index N/A 10.79% 6.97% 8.59%
Russell 1000(R) Value Index N/A 14.62% 10.73% 11.20%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
(4) Class C Shares were not in existence prior to 2/1/01. Performance for
periods prior to that is based on the historical performance of the Class A
Shares, and has been adjusted for the maximum CDSC applicable to Class C
Shares, but does not include the Class C Shares 12b-1 fees, which, if
reflected, performance would have been lower.
Effective March 14, 2006, the standardized benchmark performance index for the
Fund was changed from the Russell 1000(R) Value Index to the S&P 500 Index in
order to better represent the Fund's investment strategies for comparison
purposes. The Fund is measured against the S&P 500 Index. The S&P 500 Index is
generally considered to be representative of the performance of the stock market
as a whole. The Russell 1000(R) Value Index consists of 1,000 of the largest
capitalized U.S. domiciled companies. Companies in this index generally have low
price-to-book and price-to-earnings ratios, higher dividend yields, and lower
forecasted growth values. These 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 services. Investors cannot invest directly in an
index, although they can invest in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
3
BB&T LARGE CAP GROWTH FUND (FORMERLY THE LARGE COMPANY GROWTH FUND)
PORTFOLIO MANAGER
David P. Nolan
The BB&T Large Cap Growth Fund is managed by David P. Nolan. A graduate of
Wake Forest University, where he received a BS in Business, Mr. Nolan
managed common and collective trust funds from 1985 to 1993. Mr. Nolan is
supported by the BB&T Growth Equity Portfolio Management Team, which
includes Brian Baker, Brandon Carl and Michele Holmes Van Dyke. The team
brings to the Fund more than six decades of combined investment management
experience, along with a broad range of growth-stock investing skills.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as
the value of the securities in the portfolio changes.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund returned -0.10% (Institutional Shares). That compared to a 6.04%
return for its benchmark, the Russell 1000(R) Growth Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. This Fund invests in stocks of fast-growing firms. Such stocks posted strong
gains early in the period, but performed very poorly between May and September
as investors fled from relatively volatile stocks amid concerns about slower
economic growth. Losses during the second half of the period offset the Fund's
earlier gains, leading to a virtually flat return for the fiscal year as a
whole.(1)
The Fund's emphasis on fast-growing stocks was the primary reason it lagged its
benchmark for the 12-month period. Investors favored defensive shares of
slow-growing firms across the 10 economic sectors. We typically invest in many
of the fastest-growing stocks in each sector, so such stocks' weak performance
led to stock selection that weighed on relative returns.(1)
For example, the Fund had very little exposure to pharmaceutical stocks, because
drug companies generally did not offer the revenue and earnings growth we seek.
Many large pharmaceutical stocks performed extremely well during this period,
however, causing the Fund's small weighting in that group to drag on relative
returns. The Fund's selection within the information technology, industrials and
energy sectors also weighed down performance versus the benchmark.(1)
We maintained an overweight position in the energy sector throughout the period.
That weighting boosted relative returns during the first half of the period, as
high energy prices led to strong gains by energy shares. Investor sentiment
turned against the sector during the second half of the period, however, causing
the Fund's relatively large energy stake to drag on performance against the
benchmark for the fiscal year as a whole.(1)
Certain factors did boost returns relative to the large-cap growth index,
despite investors' bias against fast-growing stocks. Selection among
telecommunications services stocks helped the Fund's performance versus its
benchmark, as did selection within consumer discretionary stocks.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
4
BB&T LARGE CAP GROWTH FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 Since
September 30, 2006 Date Year Year Inception
------------------ --------- ----- ---- ---------
Class A Shares* 10/3/97 -6.07% 0.74% 0.30%
Class B Shares** 10/3/97 -5.13% 0.95% 0.29%
Class C Shares*** 2/1/01(2) -1.18% 1.14% 0.23%
Institutional Shares 10/3/97 -0.10% 2.18% 1.20%
Russell 1000(R) Growth Index 10/3/97 6.04% 4.42% 2.29%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
(2) Class C Shares were not in existence prior to 2/1/01. Performance for
periods prior to that is based on the historical performance of the Class B
Shares, and has been adjusted for the maximum CDSC applicable to Class C
Shares.
The Fund is measured against the Russell 1000(R) Growth Index, an unmanaged
index which is comprised of 1,000 of the largest capitalized U.S. domiciled
companies with higher price-to-book ratios and higher forecasted growth values
whose common stock is traded in the United States on the New York Stock
Exchange, American Stock Exchange and NASDAQ. The index 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 services. Investors cannot invest directly in an
index, although they can invest in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total returns for the period would have been lower.
5
BB&T MID CAP VALUE FUND
PORTFOLIO MANAGER
Timothy P. Beyer, CFA
The BB&T Mid Cap Value Fund is managed by Timothy P. Beyer, CFA, portfolio
manager for Sterling Capital Management LLC, sub-adviser to the Fund. Mr. Beyer,
who joined Sterling in 2004, is a graduate of East Carolina University, where he
received his BSBA in Finance, and has 16 years of investment management
experience. Mr. Beyer is supported by Eduardo Brea, CFA; Robert Bridges, CFA;
Lee D. Houser, CFA; Patrick W. Rau, CFA; and Brian Walton, CFA.
INVESTMENT CONCERNS
Mid-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.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes. Value-based investments are
subject to the risk that the broad market may not recognize their intrinsic
value.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund posted a return of 13.52% (Institutional Shares). That compared to a
12.27% return for its benchmark, the Russell Midcap(R) Value Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Both mid-cap value stocks in general and the Fund in particular generated
strong performance during this period.
The Fund's focus on quality and valuation helped it outperform its benchmark. We
held a relatively large position in financial services stocks, so strong
performance from that sector boosted the Fund's returns against the index. Good
stock selection in the financials sector also helped relative performance.(1)
The Fund maintained a significantly smaller position than the index in shares of
utilities and Real Estate Investment Trusts (REITs), despite the high yields
such shares offered. Those stocks sported very high valuations, in our
estimation, as a result of investors' pursuit of yield rather than fundamental
strength. The underweight position in utilities stocks added to the Fund's
relative gains, but holding a smaller stake than the benchmark in REITs weighed
on relative returns.(1)
We held a significantly underweight position in energy stocks throughout the
period. We believe it is extremely difficult to create durable competitive
advantages in the energy industry. Furthermore, the capital- and
investment-intensive nature of the industry often results in low returns on
investment and poor free cash flow. The Fund's small stake in energy weighed on
relative returns early in the period, but significantly boosted performance
against the benchmark during the second half of the fiscal year. The energy
under-weight had little effect on relative returns for the period as a whole. We
also maintained a much smaller position than the benchmark in commodities
stocks, and that under-weighting boosted relative performance as shares in that
sector posted weak returns.(1)
Stock selection in the producer durables and technology sectors also boosted
performance against the benchmark. We increased the Fund's stakes in several
technology stocks during the year, which added significantly to the funds
returns. We were able to buy shares of what we consider to be high-quality
technology companies with excellent free cash flow at extremely attractive
prices.(1)
Shares of a particular auto-parts maker dragged on relative returns. The stock
performed poorly as investors became concerned about a lack of liquidity and a
generally difficult environment for the industry. We eliminated the Fund's
position in that stock during the period.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
6
BB&T MID CAP VALUE FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 10
September 30, 2006 Date Year Year Year
------------------ --------- ----- ----- -----
Class A Shares* 8/1/96(3) 6.71% 11.31% 10.79%
Class B Shares** 7/25/01(3) 8.38% 11.71% 11.00%
Class C Shares*** 7/25/01(3) 12.38% 11.83% 10.99%
Institutional Shares 8/1/96(3) 13.52% 12.94% 11.73%
Russell Midcap(R) Value Index 8/1/96 12.27% 16.63% 13.66%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
(3) Performance shown for Class A and Institutional Shares includes the
performance of the OVB Equity Income Portfolio for the periods prior to its
consolidation with the BB&T Mid Cap Value Fund on 7/23/01. The performance
shown reflects reinvestment of all dividend and capital gains
distributions. Class B and C Shares were not in existence prior to 7/25/01.
Performance for periods prior to 7/25/01 is based on the historical
performance of the Class A Shares, and has been adjusted for the maximum
CDSC applicable to Class B and C Shares, respectively, but such performance
does not reflect Class B and C Shares' 12b-1 fees and expenses. With those
adjustments, performance would be lower than that shown.
The Fund is measured against the Russell Midcap(R) Value Index, an unmanaged
index which measures the performance of those securities in the Russell 1000
with lower price-to-book ratios or lower forecasted growth values. 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 services. Investors cannot
invest directly in an index, although they can invest in its underlying
securities.
A portion of the Fund's fees has been waived. If fees had not been waived, the
Fund's total return for the period would have been lower.
7
BB&T MID CAP GROWTH FUND
PORTFOLIO MANAGER
David P. Nolan
The BB&T Mid Cap Growth Fund is managed by David P. Nolan. A graduate of Wake
Forest University, where he received a BS in Business, Mr. Nolan managed common
and collective trust funds from 1985 to 1993 and has managed the Mid Cap Growth
Fund since its inception in 1993. He is supported by the BB&T Growth Equity
Portfolio Management Team, which includes Brian Baker, Brandon Carl and Michele
Holmes Van Dyke. The team brings to the Fund six decades of combined investment
management experience, along with a broad range of growth-stock investing
skills.
INVESTMENT CONCERNS
Mid-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.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund posted a return of -0.15% (Institutional Shares). That compared to a
7.03% return for its benchmark, the Russell Midcap(R) Growth Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. We seek to invest in shares of firms that could potentially provide earnings
growth of 20% per year or greater. Such stocks performed well early in this
12-month period, but then declined as investors concerned about slower economic
growth rotated out of fast-growing stocks. That environment caused this Fund to
post a loss for the period as a whole.(1)
During the second half of this period, stocks of firms with earnings-growth
rates faster than 20% dramatically underperformed shares of companies with
slower growth. In fact, stocks of medium-sized companies with the slowest
earnings growth posted the best performance between April and September. The
kinds of fast-growing stocks in which this Fund invests tend to experience
relatively high volatility, so they typically lag their peers during periods
such as this one when investors favor defensive stocks. The weak performance of
stocks with rapid earnings growth was the primary reason that the Fund lagged
its benchmark during this period.(1)
Investors' aversion to high-growth stocks was consistent across various types of
stocks, causing the Fund's security selection to weigh on relative performance
in most sectors. That dynamic was especially acute among information technology
and consumer discretionary stocks. We typically hold a very small weighting in
consumer staples stocks, because companies in that sector rarely produce the
rapid earnings growth we seek. That underweight position also dragged on
performance against the benchmark, as consumer staples stocks posted strong
returns.(1)
The Fund's relative returns did benefit from stock selection in the energy
sector. An overweight stake in telecommunications services shares also boosted
returns as did selection within that sector. Likewise, an underweight position
in consumer discretionary stocks helped the Fund's relative performance.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
8
BB&T MID CAP GROWTH FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 10
September 30, 2006 Date Year Year Year
------------------ --------- ----- ----- ----
Class A Shares* 12/30/93(3) -6.23% 7.40% 7.64%
Class B Shares** 7/25/01(3) -4.78% 7.73% 7.86%
Class C Shares*** 7/25/01(3) -1.15% 7.90% 7.87%
Institutional Shares 12/1/93(3) -0.15% 8.99% 8.57%
Russell Midcap(R)
Growth Index N/A 7.03% 12.01% 8.20%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
(3) Fund performance as shown for Class A and Institutional Shares includes the
performance of the OVB Capital Appreciation Portfolio for the periods prior
to its consolidation with the BB&T Mid Cap Growth Fund on 7/23/01. The
performance shown reflects reinvestment of all dividend and capital gains
distributions. The Class B and C Shares were not in existence prior to
7/25/01. Performance for periods prior to 7/25/01 is based on the
historical performance of the Class A Shares and has been adjusted for the
maximum CDSC applicable to Class B and C Shares, respectively, but such
performance does not reflect Class B and C Shares' 12b-1 fees and expenses.
With those adjustments, performance would be lower.
The Fund is measured against the Russell Midcap(R) Growth Index, an unmanaged
index which measures the performance of those securities in the Russell 1000(R)
Index with higher price-to-book ratios and lower forecasted growth values. The
index 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 services. Investors cannot invest directly in
an index, although they can invest in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total returns for the period would have been lower.
9
BB&T SMALL CAP FUND (FORMERLY THE SMALL COMPANY VALUE FUND)
PORTFOLIO MANAGER
John T. Kvantas, CFA
The BB&T Small Cap Fund is managed by John T. Kvantas, CFA. A graduate of the
University of Illinois Champaign-Urbana, where he received a BS in Accountancy,
Mr. Kvantas also earned an MBA from the Fuqua School of Business at Duke
University, and has been managing investors' money since 1995. He is supported
by the BB&T Small Cap Portfolio Management Team, which includes Dan Kane and
Brian Baker.
INVESTMENT CONCERNS
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.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes. Value-based investments are
subject to the risk that the broad market may not recognize their intrinsic
value.
Diversification does not guarantee a profit nor protect against a loss.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 7.23% (Institutional Shares). That compared to a 9.92% return
for its benchmark, the Russell 2000(R) Index of small-cap stocks.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Small-cap stocks posted solid gains during the period, as strong returns
during the first and third calendar quarters of 2006 more than offset a downturn
in the spring. That environment allowed this Fund and its benchmark to post
healthy returns for the 12-month period.(1)
Strong stock selection in the industrials sector boosted returns relative to the
Fund's benchmark, as shares of particular firms in the machinery manufacturing,
construction and engineering industries benefited from strong economic growth.
Selection in the information technology sector lifted the Fund's relative
returns as well, in part because two of the companies represented in the Fund's
portfolio were acquired at substantial premiums to their market values. A
significantly smaller weighting in health care stocks than the benchmark also
contributed to relative gains, as shares of small health care firms lagged the
index.(1)
The Fund's sector weightings as a whole dragged on performance versus the
benchmark. An overweight position in shares of savings and loan and thrift
stocks weighed on relative returns, as narrowing interest margins hurt profits
at those firms. That said, our stock selection within those industries partially
offset the negative effects of the Fund's overweight position. An underweight
stake in telecommunications stocks also hurt relative performance. Small
telecommunications companies typically do not offer the high-quality financial
characteristics we seek. Shares of such firms performed well during the period,
however.(1)
Finally, security selection within the consumer discretionary sector weighed on
returns against the index, as certain of the Fund's holdings in the restaurant
and clothing industries underperformed the benchmark.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
10
BB&T SMALL CAP FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 Since
September 30, 2006 Date Year Inception
------------------ --------- ----- ---------
Class A Shares* 5/19/03 0.80% 17.73%
Class B Shares** 5/19/03 2.53% 18.30%
Class C Shares*** 5/19/03 6.17% 18.87%
Institutional Shares 5/19/03 7.23% 20.08%
Russell 2000(R) Value Index 5/16/03 14.01% 22.11%
Russell 2000(R) Index 5/16/03 9.92% 19.41%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
The benchmark index for the Fund has changed from the Russell 2000(R) Value
Index to the Russell 2000(R) Index in order to provide a better comparison for
the Fund's investment policies. The Russell 2000(R) Index is a widely recognized
index of common stocks that measure the performance of small- to mid-sized
companies. The Russell 2000(R) Value Index is comprised of the securities found
in the Russell 2000(R) Index with lower price-to-book ratios and lower
forecasted growth values. 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 services. Investors cannot invest directly in an
index, although they can invest in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
11
BB&T INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGER
UBS Global Asset Management
The BB&T International Equity Fund is managed by a team of portfolio managers at
UBS Global Asset Management, subadviser to the Fund. Thomas P. Madsen, CFA,
Managing Director and Global Head of Equities is the lead portfolio manager. Mr.
Madsen earned BBA and MS degrees from the University of Wisconsin-Madison and
has 26 years experience. Mr. Madsen has access to certain members of the
International Equity investment management team, each of whom is allocated a
specified portion of the portfolio over which he or she has independent
responsibility for research, security selection, and portfolio construction. The
team members also have access to additional portfolio managers and analysts
within the various asset classes and markets in which the Fund invests. Mr.
Madsen has responsibility for allocating the portfolio among the various
managers and analysts, occasionally implementing trades on behalf of analysts on
the team and reviewing the overall composition of the portfolio to ensure its
compliance with its stated investment objectives and strategies.
INVESTMENT CONCERNS
There are risks associated with investing in foreign companies, such as erratic
market conditions, economic and political instability and fluctuations in
currency and exchange rates.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 17.38% (Institutional Shares). That compared to a 19.65%
return for its benchmark, the MSCI EAFE (Europe, Australasia and Far East)
Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Stocks in markets outside of the United States posted strong returns during
this 12-month period. Investors encouraged by stronger-than-expected economic
growth in Europe and Japan bid foreign stocks higher, while U.S. investors also
benefited from foreign currencies' appreciation against the dollar. Those
dynamics helped this Fund and its benchmark generate strong gains for the fiscal
year.
We employ a bottom-up approach to stock selection for this Fund, and do not base
investment decisions based on top-down, macroeconomic factors. As a result, the
Fund's geographic allocations reflect the areas where we find attractive
investment opportunities.
The Fund held a larger position than the benchmark in bank stocks during this
12-month period. That relatively large allocation boosted performance against
the index. Shares of banks, particularly those in Europe, had been depressed
leading into this period, but they benefited during the fiscal year from
better-than-expected earnings results. An overweight stake in insurance stocks
also lifted the Fund's relative returns. Like banks, insurance companies posted
stronger-than-expected earnings, due to strong management and better risk
management by firms in that industry.(1)
Selection among pharmaceuticals stocks helped the Fund's relative performance as
well. The Fund's pharmaceuticals holdings benefited from improving sentiment in
that industry. Moreover, the Fund's returns benefited from consolidation in the
industry, as one of the Fund's holdings was acquired by a large European
drug-maker.(1)
The Fund's positions in Japanese consumer finance companies weighed on
performance against the benchmark. Those stocks suffered after Japan enacted
more stringent lending requirements. An underweight position in the metals and
mining industry also weighed on relative returns, as those stocks benefited from
high commodity prices. Selection among telecommunications stocks dragged on
relative performance as well, as poor performance by two large
telecommunications stocks more than offset strong returns among smaller holdings
in that sector.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
12
BB&T INTERNATIONAL EQUITY FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 Since
September 30, 2006 Date Year Year Inception
------------------ --------- ----- ----- ---------
Class A Shares* 1/2/97 10.36% 7.91% 3.77%
Class B Shares** 1/2/97 12.27% 8.23% 3.77%
Class C Shares*** 2/1/01(2) 16.26% 8.35% 3.64%
Institutional Shares 1/2/97 17.38% 9.40% 4.65%
MSCI EAFE Index 12/31/96 19.65% 14.70% 7.19%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
(2) Class C Shares were not in existence prior to 2/1/01. Performance for
periods prior to that is based on the historical performance of the Class B
Shares, and has been adjusted for the maximum CDSC applicable to Class C
Shares.
The Fund is measured against the Morgan Stanley Capital International ("MSCI")
Europe, Australasia and Far East ("EAFE") Index, an unmanaged index which is
generally representative of the performance of stock markets in that region. The
index 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 services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
13
BB&T SPECIAL OPPORTUNITIES EQUITY FUND
PORTFOLIO MANAGER
George F. Shipp, CFA
The BB&T Special Opportunities Equity Fund is managed by George F. Shipp, CFA,
chief investment officer of Scott & Stringfellow, Inc., subadvisor to the Fund.
Mr. Shipp, who joined Scott & Stringfellow in 1982, holds a BA from the
University of Virginia and an MBA from the Darden Graduate School of Business at
the University of Virginia. Mr. Shipp is supported by an investment management
team from Scott & Stringfellow, which includes Meghann A. Cohen; Joshua L.
Haggarty, CFA; R. Griffith Jones, Jr.; and Farley C. Shiner, CPA. The team
brings to the Fund more than four decades of combined investment management
experience, along with a broad range of investing skills.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes. A concentrated portfolio may
add a measure of volatility to performance, as major fluctuations in any one
holding will likely affect the fund more than a fund with greater
diversification.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 11.50% (Institutional Shares). That compared to a 10.79%
return for its benchmark, the S&P 500 Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Stocks posted solid gains during the 12-month period, helping this Fund
generate a strong return. Double-digit corporate profit growth helped convince
investors to buy equities despite a backdrop of global tensions, rising interest
rates and uncertainty about the direction of the economy.(1)
The Fund held a total of 39 different stocks during the 12-month period. Of
those stocks, 20 produced gains that exceeded those of the S&P 500, seven
generated positive but market-lagging returns, and 12 posted losses.(1)
The largest contributor to the Fund's relative gains was favorable stock
selection within the health care sector. Our investments in health care stocks
fared well: Four of the Fund's six best-performing investments were health care
stocks, with each posting returns of at least 30%. Those strong returns came
even as the health care stocks in the benchmark lagged the broad market.(1)
The Fund held a larger position in energy stocks than did the benchmark index.
The S&P energy sector as a whole gained only about 4% during the 12-month
period, despite historically high commodity prices, so the Fund's overweight
stake weighed on returns against the benchmark. We generally maintained the
Fund's energy exposure, due to the industry's exceptional current cash flows and
reasonable valuations that we believed offered the potential for merger or
share-buyback activity.(1)
Late in the period we modestly reduced the Fund's exposure to sectors typically
considered defensive, such as health care, financials and consumer staples,
because rallies in those stocks left them with more-limited upside potential. We
concurrently added positions in technology and industrials stocks, which offered
valuations we found compelling. Such moves reflect the Fund's flexible,
long-term strategy.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
14
BB&T SPECIAL OPPORTUNITIES EQUITY FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 Since
September 30, 2006 Date Year Inception
------------------ --------- ----- ---------
Class A Shares* 6/2/03 4.77% 16.37%
Class B Shares** 6/2/03 6.35% 16.94%
Class C Shares*** 6/2/03 10.34% 17.58%
Institutional Shares 6/2/03 11.50% 18.75%
S&P 500 Index 5/31/03 10.79% 12.30%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark
and represents the reinvestment of dividends and capital gains.
The Fund is measured against the S&P 500 Index, an unmanaged index which is
generally considered to be representative of the performance of the stock market
as a whole. The index 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 services. Investors
cannot invest directly in an index, although they can invest in its underlying
securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
15
BB&T EQUITY INCOME FUND
PORTFOLIO MANAGER
George F. Shipp, CFA
The BB&T Equity Income Fund is managed by George F. Shipp, CFA, Chief Investment
Officer of Scott & Stringfellow, Inc., subadvisor to the Fund. Mr. Shipp, who
joined Scott & Stringfellow in 1982, holds a BA from the University of Virginia
and an MBA from the Darden Graduate School of Business at the University of
Virginia. Mr. Shipp is supported by an investment management team from Scott &
Stringfellow, which includes Meghann A. Cohen; Joshua L. Haggarty, CFA; R.
Griffith Jones, Jr.; and Farley C. Shiner, CPA. The team brings to the Fund more
than four decades of combined investment management experience, along with a
broad range of investing skills.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes. A concentrated portfolio may
add a measure of volatility to performance, as major fluctuations in any one
holding will likely affect the fund more than a fund with greater
diversification.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
The Fund gained 16.04% (Institutional Shares). That compared to a 10.79% return
for its benchmark, the S&P 500 Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
Stocks posted solid gains during the 12-month period, and large-cap value stocks
that pay high dividends performed particularly well. The BB&T Equity Income Fund
seeks stocks with those characteristics, so strong performance by such stocks
boosted the Fund's returns. An environment characterized by global tensions,
rising interest rates, high energy prices and the prospect of a slowing economy
led investors to prize shares of firms that offered reliable earnings growth and
dividend payments. The Fund held a total of 40 stocks during this 12-month
period, of which 31 posted gains. The Fund outperformed its benchmark largely on
the strength of good stock selection across a variety of sectors. The Fund's
top-five performing stocks included shares of firms in the telecommunications,
health care, financial, consumer and energy sectors, highlighting the breadth of
the Fund's positive contributors.(1)
The Fund held a substantially underweight position in information technology
stocks during most of the period, largely because the majority of companies in
that sector do not pay dividends. That relatively small technology stake proved
fortuitous for the Fund's returns against its benchmark, as the S&P Technology
sector gained less than 4% over the 12 months. The Fund tripled its exposure to
technology stocks near the end of the period by purchasing shares of two
well-established, debt-free industry leaders. We cannot know yet whether the
Fund's new positions will prove profitable, but we are pleased to increase the
portfolio's diversification while owning shares of companies that offer
above-average yields, at valuations we believe to be favorable.(1)
The Fund also benefited from an emphasis on financial stocks, including a
significant stake in Real Estate Investment Trusts. Such stocks offer relatively
high dividend payments, which helped make them attractive to this
income-oriented Fund. The S&P Financial sector appreciated by more than 21%
during the 12-month period, so the Fund's overweight stake in financial stocks
boosted its relative returns.(1)
The Fund's return exceeded that of its benchmark despite an overweight position
in energy stocks, which weighed on relative performance. The S&P Energy sector
gained less than 4% for the 12-month period, despite high commodity prices
throughout the fiscal year.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
16
BB&T EQUITY INCOME FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 Since
September 30, 2006 Date Year Inception
------------------ --------- ----- ---------
Class A Shares* 6/30/04 9.11% 14.46%
Class B Shares** 6/30/04 10.84% 15.52%
Class C Shares*** 6/30/04 14.85% 16.62%
Institutional Shares 6/30/04 16.04% 17.79%
S&P 500 Index 6/30/04 10.79% 9.26%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
The Fund is measured against the S&P 500 Index, an unmanaged index which is
generally considered to be representative of the performance of the stock market
as a whole. The index 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 services. Investors
cannot invest directly in an index, although they can invest in its underlying
securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
17
BB&T SHORT U.S. GOVERNMENT FUND
PORTFOLIO MANAGER
Kevin E. McNair, CFA
The BB&T Short U.S. Government Fund is managed by Kevin E. McNair, CFA. Mr.
McNair received a BA in Economics from the University of North Carolina-Chapel
Hill and a Master's of Economics from North Carolina State University, and has
been managing investors' money since 1994. Mr. McNair is supported by the BB&T
Fixed Income Portfolio Management Team, which includes Carrie R. Breswitz; Brad
D. Eppard, CFA; David T. Johnson; Robert F. Millikan, CFA; Justin B. Nicholson;
and Michael D. Nichols, CFA. The team brings to the Fund six decades of combined
investment management experience, along with a broad range of specialized skills
encompassing a cross-section of fixed-income sectors.
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
The Fund is subject to the risk that principal value reacts in opposition to the
movement of interests rates and that a rising interest rate environment
increases the risk of loss of principal.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 3.37% (Institutional Shares). That compared to a 3.70% return
for its benchmark, the Merrill Lynch 1-5 Year U.S. Treasuries/Agencies Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Short-term bonds' yields rose during the 12-month period under review,
causing their prices to fall. The Federal Reserve increased its target
short-term interest rate six times, for a total increase of 1.50 percentage
points. That development led to higher yields on short-term bonds during the
first nine months of the period. Yields on short-term bonds fell between July
and September, causing prices to rise.(1)
The Fund maintained a duration significantly
shorterthanthatofthebenchmarkthroughout the 12-month period. That duration
strategy helped the Fund post positive returns against the index during the
first nine months of the period, because we were able to reinvest maturing
bonds' principal more rapidly as interest rates increased. We lengthened the
Fund's duration late in the period in order to capture additional yield,
although we kept the duration shorter than the benchmark's. However, the Fund's
relatively short duration weighed on relative performance during the last three
months of the fiscal year.(1)
The Fund held an overweight position in agency bonds and mortgage-backed
securities throughout the fiscal year. Low volatility in the fixed-income
markets helped such issues outperform Treasury securities, so the Fund's
investments in those sectors helped returns relative to the Treasury-heavy
index.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
18
BB&T SHORT U.S. GOVERNMENT FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 10
September 30, 2006 Date Year Year Year
------------------ --------- ---- ---- ----
Class A Shares* 11/30/92 0.06% 1.64% 3.82%
Institutional Shares 11/30/92 3.37% 2.50% 4.39%
Merrill Lynch 1-5 Year U.S.
Treasuries/Agencies Index N/A 3.70% 3.18% 5.18%
* Reflects 3.00% maximum sales charge.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
The Fund is measured against the Merrill Lynch 1-5 Year U.S. Treasuries/Agencies
Index an unmanaged index which includes U.S. government and agency bonds that
have a minimum issue size of $150 million and is a widely-recognized,
capitalization weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of U.S. Treasury
securities with maturities of 1 year or greater and no more than 5 years. The
index 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 services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
19
BB&T INTERMEDIATE U.S. GOVERNMENT FUND
PORTFOLIO MANAGER
Brad D. Eppard, CFA
The BB&T Intermediate U.S. Government Fund is managed by Brad D. Eppard, CFA.
Mr. Eppard received a BS in Business Administration/Accounting from Radford
University and has been managing investors' money since 1986. Mr. Eppard is
supported by the BB&T Fixed Income Portfolio Management Team, which includes
Carrie R. Breswitz; David T. Johnson; Kevin E. McNair, CFA; Robert F. Millikan,
CFA; Justin B. Nicholson; and Michael D. Nichols, CFA. The team brings to the
Fund six decades of combined investment management experience, along with a
broad range of specialized skills encompassing a cross-section of fixed-income
sectors.
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
The Fund is subject to the risk that principal value reacts in opposition to the
movement of interests rates and that a rising interest rate environment
increases the risk of loss of principal.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 3.23% (Institutional Shares). That compared to a 3.74% return
for its benchmark, the Lehman Brothers U.S. Government/Mortgage Bond Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Investors concerned about the potential for higher inflation and further
interest rate increases by the Federal Reserve demanded greater income payouts
from new bonds during the first nine months of the period, causing bond yields
to rise. Those rising yields pushed down prices on existing bonds. Bond yields
declined during the last three months of the period, leading to higher prices on
existing bonds. Bond prices fell for the period as a whole, however, causing the
Fund to generate a total return that was lower than its average yield.(1)
The Fund held an average duration slightly longer than that of its benchmark
throughout the 12-month period. That positioning weighed on returns against the
benchmark while yields rose between October and June, and boosted relative
returns when yields fell during the last three months of the period. The strong
relative performance that duration strategy produced during the last quarter of
the fiscal year offset the strategy's negative impact during the first nine
months of the period.(1)
The Fund began the period with relatively large stakes in short- and long-term
bonds and less exposure to intermediate-term bonds--a structure known as a
"barbell". We increased the Fund's stake in intermediate-term bonds as the
period progressed. That change weighed modestly on relative returns for the
period as a whole, as intermediate-term bonds lagged bonds of other durations.
The Fund held larger positions than the benchmark in government agency debt and
mortgage-backed securities, and an underweight stake in Treasury securities.
That positioning boosted the Fund's relative returns, because agency and
mortgage issues generated greater total returns than Treasury securities during
this period.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
20
BB&T INTERMEDIATE U.S. GOVERNMENT FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 10
September 30, 2006 Date 1 Year 5 Year Year
------------------ --------- ------ ------ ----
Class A Shares* 10/9/92 -2.84% 2.32% 4.76%
Class B Shares** 1/1/96 -1.63% 2.60% 4.76%
Class C Shares*** 2/1/01(4) 2.31% 2.77% 4.99%
Institutional Shares 10/9/92 3.23% 3.79% 5.65%
Lehman Brothers U.S.
Government/Mortgage N/A 3.74% 4.42% 6.26%
Bond Index
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark
and represents the reinvestment of dividends and capital gains.
(4) Class C Shares were not in existence prior to 2/1/01. Performance for
periods prior to that is based on the historical performance of the Class A
Shares, and has been adjusted for the maximum CDSC applicable to Class C
Shares, but does not include the Class C Shares 12b-1 fees, which if
reflected, would have lowered performance.
The Fund is measured by the Lehman Brothers U.S. Government/Mortgage Bond Index,
an unmanaged index which is widely used as a broad measure of the performance of
U.S. Government bonds with maturities of less than 10 years, and agency mortgage
backed securities. The index 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 services.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
21
BB&T TOTAL RETURN BOND FUND
PORTFOLIO MANAGER
David M. Ralston
The BB&T Total Return Bond Fund is managed by David M. Ralston, portfolio
manager for Sterling Capital Management LLC, sub-adviser to the Fund. Mr.
Ralston co-founded Trinity Capital Advisors in 1989, which merged into Sterling
Capital Management in 1991. He is a graduate of Appalachian State University
where he received his BSBA in Finance and has 25 years of investment management
experience. Mr. Ralston is supported by Hung Bui, CFA; Howard Buznitsky, CFA;
Neil Grant, CFA; Mitchell Kaczmarek; Mark Montgomery, CFA; and Kevin Stoll, CFA.
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
The Fund is subject to the risk that principal value reacts in opposition to the
movement of interests rates and that a rising interest rate environment
increases the risk of loss of principal.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 3.30% (Institutional Shares). That compared to a 3.67% return
for its benchmark, the Lehman Brothers U.S. Aggregate Bond Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. The Federal Reserve raised its target short-term interest rate six times
during the 12-month period, boosting the federal funds rate from 3.75% to 5.25%.
The increase in interest rates led to higher bond yields, with the yield on the
10-year Treasury bond increasing from 4.33% to 4.63%. Rising yields led to lower
bond prices, which caused the Fund to generate a total return lower than its
yield.
We kept the Fund's duration shorter than that of its benchmark in order to help
preserve shareholders' capital. That duration strategy helped the Fund's
performance relative to the index, as yields across the yield curve rose between
25 and 50 basis points (0.25% and 0.50%) during the 12-month period. The Fund's
relative returns also benefited from an overweight stake in floating-rate notes,
which increased their yield payments as short-term interest rates rose.(1)
The bond market exhibited low volatility during this period. That trend
benefited "spread products" such as asset-backed securities, mortgage-backed
securities and commercial mortgage-backed securities, which typically outperform
Treasury securities during periods of low volatility. The Fund held overweight
positions in those bond sectors, thereby helping the Fund's portfolio generate a
higher yield than the benchmark index. In addition, the Fund maintained an
average credit quality slightly higher than that of the benchmark. This approach
helped the Fund avoid problems related to leveraged transactions among a number
of credit issues, and thus lifted the Fund's performance against the index.(1)
The Fund held an underweight position in corporate bonds, due to our concern
about the risk leveraged buyout offers posed to corporate securities. The
corporate debt sector as a whole modestly outperformed Treasury and agency
securities for this period. As a result, this conservative underweight position
in corporate issues dragged on performance relative to the benchmark.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
22
BB&T TOTAL RETURN BOND FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
Inception 1 5 Since
As of September 30, 2006 Date Year Year Inception
------------------------ --------- ----- ---- ---------
Class A Shares* 12/2/99 -2.97% 3.10% 4.71%
Class B Shares** 12/2/99 -1.66% 3.36% 4.87%
Class C Shares*** 2/1/01(4) 2.18% 3.59% 4.88%
Institutional Shares 12/2/99 3.30% 4.58% 5.88%
Lehman Brothers U. S. Aggregate
Bond Index 11/30/99 3.67% 4.81% 6.35%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
(4) Class C Shares were not in existence prior to 2/1/01. Performance for
periods prior to that is based on the historical performance of the Class B
Shares, and has been adjusted for the maximum CDSC applicable to Class C
Shares.
The Fund is measured against the Lehman Brothers U.S. Aggregate Bond Index, an
unmanaged index which is a market value-weighted performance benchmark for
investment-grade fixed-rate debt issues, including government, corporate,
asset-backed, and mortgage-backed securities, with maturities of at least one
year. 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 services.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
23
BB&T KENTUCKY INTERMEDIATE TAX-FREE FUND
PORTFOLIO MANAGER
Robert F. Millikan, CFA
The BB&T Kentucky Intermediate Tax-Free Fund is managed by Robert F. Millikan,
CFA, Director of Fixed Income Management for BB&T Asset Management, Inc. Mr.
Millikan received a BA in Economics from Wake Forest University, and is a past
president of the North Carolina Society of Financial Analysts and chairman of
the board of directors of the Carolinas Municipal Advisory Council. Mr. Millikan
has been managing investors' money since 1990. He is supported by the BB&T Fixed
Income Portfolio Management Team, which includes Carrie R. Breswitz; Brad D.
Eppard, CFA; David T. Johnson; Kevin E. McNair, CFA; Justin B. Nicholson; and
Michael D. Nichols, CFA. The team brings to the Fund six decades of combined
investment management experience, along with a broad range of specialized skills
encompassing a cross-section of fixed-income sectors.
INVESTMENT CONCERNS
Because the Fund is non-diversified and invests primarily in Kentucky municipal
securities, the Fund is particularly susceptible to any economic, political, or
regulatory developments affecting a particular issuer of Kentucky municipal
securities. Bonds offer a relatively stable level of income, although bond
prices will fluctuate providing the potential for principal gain or loss.
Intermediate-term, higher-quality bonds generally offer less risk than
longer-term bonds and a lower rate of return. The Fund is subject to the risk
that principal value reacts in opposition to the movement of interests rates and
that a rising interest rate environment increases the risk of loss of principal.
The Fund's income may be subject to certain state and local taxes and, depending
on a investors tax status, to the Federal alternative minimum tax.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 4.04% (Institutional Shares). That compared to a 3.81% return
for the Lehman Brothers 7-Year Municipal Bond Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. The Federal Reserve Board's interest rate increases boosted yields on
short-term bonds, while expectations for low inflation depressed yields on
long-term bonds. Those developments caused yields to fall for municipal
securities with maturities of approximately eight years or longer, and to rise
for municipal bonds with shorter maturities. Meanwhile, a combination of low
supply and strong demand also pushed down municipal bond yields. Lower yields
increased the prices of the longer-term securities in the Fund's portfolio.
Those gains combined with the bonds' interest income to generate a strong total
return for Fund shareholders.(1)
The Fund's benchmark holds municipal bonds with an average maturity of seven
years. We kept the Fund's duration longer than that of its benchmark throughout
the period in order to capture higher yield for shareholders. That strategy
boosted the Fund's returns against its benchmark, as securities with longer
durations experienced greater price increases and generated more interest income
than shorter-term issues.(1)
The benchmark index also is restricted to municipal bonds with maturities of
between six- and eight-years. The Fund's portfolio held a number of securities
with maturities of longer than eight years, but also held bonds with maturities
shorter than six years. Those shorter-term bonds performed poorly compared to
the bonds represented in the benchmark, and weighed on relative returns as a
result.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
24
BB&T KENTUCKY INTERMEDIATE TAX-FREE FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
Inception 1 Since
As of September 30, 2006 Date Year Inception
------------------------ --------- ----- ---------
Class A Shares* 2/24/03 0.57% 2.56%
Institutional Shares 2/24/03 4.04% 3.21%
Lehman Brothers 7-Year
Municipal Bond Index 2/28/03 3.81% 3.45%
* Reflects 3.00% maximum sales charge.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
The Fund is measured against the Lehman Brothers 7-Year Municipal Bond Index, an
unmanaged index which is representative of municipal bonds with a minimum credit
rating of at least Baa, have a maturity value of at least $5 million and a
maturity range of 6-8 years. The index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management and fund
accounting fees. The Fund performance reflects the deduction of fees for these
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
25
BB&T MARYLAND INTERMEDIATE TAX-FREE FUND
PORTFOLIO MANAGER
Robert F. Millikan, CFA
The BB&T Maryland Intermediate Tax-Free Fund is managed by Robert F. Millikan,
CFA, Director of Fixed Income Management for BB&T Asset Management, Inc. Mr.
Millikan received a BA in Economics from Wake Forest University, and is a past
president of the North Carolina Society of Financial Analysts and chairman of
the board of directors of the Carolinas Municipal Advisory Council. Mr. Millikan
has been managing investors' money since 1990. He is supported by the BB&T Fixed
Income Portfolio Management Team, which includes Carrie R. Breswitz; Brad D.
Eppard, CFA; David T. Johnson; Kevin E. McNair, CFA; Justin B. Nicholson; and
Michael D. Nichols, CFA. The team brings to the Fund six decades of combined
investment management experience, along with a broad range of specialized skills
encompassing a cross-section of fixed-income sectors.
INVESTMENT CONCERNS
Because the Fund is non-diversified and invests primarily in Maryland municipal
securities, the Fund is particularly susceptible to any economic, political, or
regulatory developments affecting a particular issuer of Maryland municipal
securities. Bonds offer a relatively stable level of income, although bond
prices will fluctuate providing the potential for principal gain or loss.
Intermediate-term, higher-quality bonds generally offer less risk than
longer-term bonds and a lower rate of return. The Fund is subject to the risk
that principal value reacts in opposition to the movement of interests rates and
that a rising interest rate environment increases the risk of loss of principal.
The Fund's income may be subject to certain state and local taxes and, depending
on a investors tax status, to the Federal alternative minimum tax.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 4.10% (Institutional Shares). That compared to a 3.81% return
for the Lehman Brothers 7-Year Municipal Bond Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Federal Reserve interest-rate increases boosted yields on short-term
municipal bonds, while investors' expectations for low inflation depressed
yields on long-term municipal bonds. Yields fell for municipal securities with
maturities of longer than approximately eight years and rose for municipal bonds
with shorter maturities, with the largest increases coming on securities at the
short end of the yield curve. Low supply and strong demand for municipal bonds
also pushed down yields.
Those developments caused prices to rise on the longer-term bonds in which this
Fund invested. Rising prices and the bonds' interest income combined to generate
a strong return for Fund shareholders.
The Fund's benchmark holds municipal bonds with maturities of between six- and
eight-years, with an average maturity of seven years. We held the Fund's
duration longer than that of its benchmark throughout the period in order to
capture higher yield for shareholders. That strategy boosted the Fund's relative
returns, as securities with longer durations generated more interest income and
benefited more from higher prices.(1)
The Fund's portfolio held a number of securities with maturities of longer than
eight years, but also held bonds with maturities of less than six years. Those
shorter-term bonds, which are not represented in the benchmark, performed
relatively poorly. As a result, the shorter-term bonds in the Fund's portfolio
weighed on returns against the benchmark.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
26
BB&T MARYLAND INTERMEDIATE TAX-FREE FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
Inception 1 Since
As of September 30, 2006 Date Year Inception
------------------------ --------- ----- ---------
Class A Shares* 2/24/03 0.83% 2.16%
Institutional Shares 2/24/03 4.10% 3.10%
Lehman Brothers 7-Year
Municipal Bond Index 2/28/03 3.81% 3.45%
* Reflects 3.00% maximum sales charge.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
The Fund is measured against the Lehman Brothers 7-Year Municipal Bond Index, an
unmanaged index which is representative of municipal bonds with a minimum credit
rating of at least Baa, have a maturity value of at least $5 million and a
maturity range of 6-8 years. The index 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
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
27
BB&T NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
PORTFOLIO MANAGER
Robert F. Millikan, CFA
The BB&T North Carolina Intermediate Tax-Free Fund is managed by Robert F.
Millikan, CFA, Director of Fixed Income Management for BB&T Asset Management,
Inc. Mr. Millikan received a BA in Economics from Wake Forest University, and is
a past president of the North Carolina Society of Financial Analysts and
chairman of the board of directors of the Carolinas Municipal Advisory Council.
Mr. Millikan has been managing investors' money since 1990. He is supported by
the BB&T Fixed Income Portfolio Management Team, which includes Carrie R.
Breswitz; Brad D. Eppard, CFA; David T. Johnson; Kevin E. McNair, CFA; Justin B.
Nicholson; and Michael D. Nichols, CFA. The team brings to the Fund six decades
of combined investment management experience, along with a broad range of
specialized skills encompassing a cross-section of fixed-income sectors.
INVESTMENT CONCERNS
Because the Fund is non-diversified and invests primarily in North Carolina
municipal securities, the Fund is particularly susceptible to any economic,
political, or regulatory developments affecting a particular issuer of North
Carolina municipal securities. Bonds offer a relatively stable level of income,
although bond prices will fluctuate providing the potential for principal gain
or loss. Intermediate-term, higher-quality bonds generally offer less risk than
longer-term bonds and a lower rate of return. The Fund is subject to the risk
that principal value reacts in opposition to the movement of interests rates and
that a rising interest rate environment increases the risk of loss of principal.
The Fund's income may be subject to certain state and local taxes and, depending
on a investors tax status, to the Federal alternative minimum tax.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 3.84%. That compared to a 3.81% return for the Lehman
Brothers 7-Year Municipal Bond Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Yields fell for municipal securities with maturities of longer than eight
years and rose for municipal bonds with shorter maturities, with larger yield
increases coming on shorter-term securities. Those developments came about as a
result of two primary factors: The Federal Reserve increased its target
short-term interest rate, boosting yields on short-term municipal bonds, while
investors expecting low inflation bought long-term municipal bonds. Low supply
and strong demand for municipal bonds also pushed down yields on tax-free bonds.
This Fund maintained an average duration longer than that of the benchmark
throughout the period. Lower yields increased the prices of the longer-term
securities in the Fund's portfolio, and together with the bonds' interest income
generated solid returns for Fund shareholders.(1)
The Fund's benchmark includes municipal bonds with maturities of between six-
and eight-years, and an average maturity of seven years. The Fund's average
maturity was longer than that of its benchmark throughout the period, as we
sought to capture the higher yields offered by longer-term municipal bonds. That
strategy boosted the Fund's relative return, as securities with longer durations
generated more interest income and gained in price.(1)
Despite its relatively long duration, the Fund's portfolio held a number of
securities with durations of less than six years. The benchmark does not include
bonds with durations shorter than six years, so the relatively weak performance
of those shorter-term municipal securities weighed on performance versus the
benchmark.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
28
BB&T NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 10
September 30, 2006 Date Year Year Year
------------------ --------- ---- ---- ----
Class A Shares* 10/16/92 0.50% 2.88% 4.02%
Institutional Shares 10/16/92 3.84% 3.70% 4.50%
Lehman Brothers
7-Year Municipal Bond Index N/A 3.81% 4.55% 5.40%
* Reflects 3.00% maximum sales charge.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
The Fund is measured against the Lehman Brothers 7-Year Municipal Bond Index, an
unmanaged index which is representative of municipal bonds with a minimum credit
rating of at least Baa, have a maturity value of at least $5 million and a
maturity range of 6-8 years. The index 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
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
29
BB&T SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
PORTFOLIO MANAGER
Robert F. Millikan, CFA
The BB&T South Carolina Intermediate Tax-Free Fund is managed by Robert F.
Millikan, CFA, Director of Fixed Income Management for BB&T Asset Management,
Inc. Mr. Millikan received a BA in Economics from Wake Forest University, and is
a past president of the North Carolina Society of Financial Analysts and
chairman of the board of directors of the Carolinas Municipal Advisory Council.
Mr. Millikan has been managing investors' money since 1990. He is supported by
the BB&T Fixed Income Portfolio Management Team, which includes Carrie R.
Breswitz; Brad D. Eppard, CFA; David T. Johnson; Kevin E. McNair, CFA; Justin B.
Nicholson; and Michael D. Nichols, CFA. The team brings to the Fund six decades
of combined investment management experience, along with a broad range of
specialized skills encompassing a cross-section of fixed-income sectors.
INVESTMENT CONCERNS
Because the Fund is non-diversified and invests primarily in South Carolina
municipal securities, the Fund is particularly susceptible to any economic,
political, or regulatory developments affecting a particular issuer of South
Carolina municipal securities. Bonds offer a relatively stable level of income,
although bond prices will fluctuate providing the potential for principal gain
or loss. Intermediate-term, higher-quality bonds generally offer less risk than
longer-term bonds and a lower rate of return. The Fund is subject to the risk
that principal value reacts in opposition to the movement of interests rates and
that a rising interest rate environment increases the risk of loss of principal.
The Fund's income may be subject to certain state and local taxes and, depending
on a investors tax status, to the Federal alternative minimum tax.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 3.66%. That compared to a 3.81% return for the Lehman
Brothers 7-Year Municipal Bond Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Interest-rate increases by the Federal Reserve supported higher yields on
short-term municipal bonds, while investor expectations for low inflation pushed
down yields on long-term municipal bonds. As a result, municipal securities with
maturities of longer than approximately eight years experienced falling yields
during the period under review, while yields rose on municipal bonds with
maturities shorter than roughly eight years. Bonds with the shortest maturities
generally experienced the largest yield increases. Meanwhile weak supplies and
strong demand for municipal bonds pushed down yields on tax-free bonds.
That environment caused prices to rise for many of the securities in the Fund's
portfolio. Higher prices combined with the bonds' interest income to produce
solid absolute returns for Fund shareholders.
The Fund's benchmark index includes municipal bonds with maturities of between
six- and eight-years, and an average maturity of seven years. The Fund's
relative returns benefited from holding a duration longer than that of its
benchmark, because municipal bonds with longer durations offered greater yield
and price appreciation.(1)
Despite the Fund's long duration, however, its portfolio held a number of
securities with maturities of less than six years--in part because low supply in
the South Carolina market made it difficult to find as many longer-term
municipal securities as we would have liked. The benchmark does not include
bonds with maturities shorter than six years, so relatively weak performance by
those shorter-term bonds pulled down the Fund's performance against its
benchmark.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
30
BB&T SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 Since
September 30, 2006 Date Year Year Inception
------------------ --------- ---- ---- ---------
Class A Shares* 10/20/97 0.14% 3.00% 3.93%
Institutional Shares 10/20/97 3.66% 3.85% 4.46%
Lehman Brothers
7-Year Municipal Bond Index 10/31/97 3.81% 4.55% 5.10%
* Reflects 3.00% maximum sales charge.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
The Fund is measured against the Lehman Brothers 7-Year Municipal Bond Index, an
unmanaged index which is representative of municipal bonds with a minimum credit
rating of at least Baa, have a maturity value of at least $5 million and a
maturity range of 6-8 years. The index 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
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
31
BB&T VIRGINIA INTERMEDIATE TAX-FREE FUND
PORTFOLIO MANAGER
Robert F. Millikan, CFA
The BB&T Virginia Intermediate Tax-Free Fund is managed by Robert F. Millikan,
CFA, Director of Fixed Income Management for BB&T Asset Management, Inc. Mr.
Millikan received a BA in Economics from Wake Forest University, and is a past
president of the North Carolina Society of Financial Analysts and chairman of
the board of directors of the Carolinas Municipal Advisory Council. Mr. Millikan
has been managing investors' money since 1990. He is supported by the BB&T Fixed
Income Portfolio Management Team, which includes Carrie R. Breswitz; Brad D.
Eppard, CFA; David T. Johnson; Kevin E. McNair, CFA; Justin B. Nicholson; and
Michael D. Nichols, CFA. The team brings to the Fund six decades of combined
investment management experience, along with a broad range of specialized skills
encompassing a cross-section of fixed-income sectors.
INVESTMENT CONCERNS
Because the Fund is non-diversified and invests primarily in Virginia municipal
securities, the Fund is particularly susceptible to any economic, political, or
regulatory developments affecting a particular issuer of Virginia municipal
securities. Bonds offer a relatively stable level of income, although bond
prices will fluctuate providing the potential for principal gain or loss.
Intermediate-term, higher-quality bonds generally offer less risk than
longer-term bonds and a lower rate of return. The Fund is subject to the risk
that principal value reacts in opposition to the movement of interests rates and
that a rising interest rate environment increases the risk of loss of principal.
The Fund's income may be subject to certain state and local taxes and, depending
on a investors tax status, to the Federal alternative minimum tax.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 3.49% (Institutional Shares). That compared to a 3.81% return
for the Lehman Brothers 7-Year Municipal Bond Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. The Federal Reserve increased its target short-term interest rate, which
pushed up yields on short-term municipal bonds. Meanwhile investors expecting
low inflation bought long-term municipal bonds, causing yields on those
securities to fall. In that environment municipal bonds with longer maturities
generated greater price appreciation and interest income than did shorter-term
securities. Demand for municipal bond outstripped supplies during the period,
which put downward pressure on yields across the tax-free bond market. Higher
prices and the strong interest income from the longer-term municipal securities
in the Fund's portfolio combined to produce a solid absolute return.
The Fund's benchmark index has an average maturity of seven years, and includes
only municipal bonds with maturities of between six- and eight-years. We held
the Fund's duration longer than that of the benchmark throughout the period.
Municipal bonds with longer durations paid higher yields and experienced greater
price appreciation, so our duration strategy boosted returns relative to the
index.(1)
That said, the Fund's portfolio did include a number of securities with
maturities shorter than six years. Those holdings in part reflected weak
supplies of longer-term Virginia municipal bonds. The benchmark does not include
any bonds with maturities shorter than six years, so relatively weak performance
by the shorter-term bonds in the Fund's portfolio weighed on returns against its
benchmark.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
32
BB&T VIRGINIA INTERMEDIATE TAX-FREE FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 Since
September 30, 2006 Date Year Year Inception
------------------ --------- ---- ---- ---------
Class A Shares* 5/17/99 0.10% 2.81% 3.79%
Institutional Shares 5/17/99 3.49% 3.63% 4.23%
Lehman Brothers
7-Year Municipal Bond Index 5/31/99 3.81% 4.55% 5.06%
* Reflects 3.00% maximum sales charge.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
The Fund is measured against the Lehman Brothers 7-Year Municipal Bond Index, an
unmanaged index which is representative of municipal bonds with a minimum credit
rating of at least Baa, have a maturity value of at least $5 million and a
maturity range of 6-8 years. The index 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
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
33
BB&T WEST VIRGINIA INTERMEDIATE TAX-FREE FUND
PORTFOLIO MANAGER
Robert F. Millikan, CFA
The BB&T West Virginia Intermediate Tax-Free Fund is managed by Robert F.
Millikan, CFA, Director of Fixed Income Management for BB&T Asset Management,
Inc. Mr. Millikan received a BA in Economics from Wake Forest University, and is
a past president of the North Carolina Society of Financial Analysts and
chairman of the board of directors of the Carolinas Municipal Advisory Council.
Mr. Millikan has been managing investors' money since 1990. He is supported by
the BB&T Fixed Income Portfolio Management Team, which includes Carrie R.
Breswitz; Brad D. Eppard, CFA; David T. Johnson; Kevin E. McNair, CFA; Justin B.
Nicholson; and Michael D. Nichols, CFA. The team brings to the Fund six decades
of combined investment management experience, along with a broad range of
specialized skills encompassing a cross-section of fixed-income sectors.
INVESTMENT CONCERNS
Because the Fund is non-diversified and invests primarily in West Virginia
municipal securities, the Fund is particularly susceptible to any economic,
political, or regulatory developments affecting a particular issuer of West
Virginia municipal securities. Bonds offer a relatively stable level of income,
although bond prices will fluctuate providing the potential for principal gain
or loss. Intermediate-term, higher-quality bonds generally offer less risk than
longer-term bonds and a lower rate of return. The Fund is subject to the risk
that principal value reacts in opposition to the movement of interests rates and
that a rising interest rate environment increases the risk of loss of principal.
The Fund's income may be subject to certain state and local taxes and, depending
on a investors tax status, to the Federal alternative minimum tax.
Q. HOW DID THE FUND PERFORM DURING THE 12-MONTH PERIOD BETWEEN OCTOBER 1, 2005
AND SEPTEMBER 30, 2006?
A. The Fund gained 4.10% (Institutional Shares. That compared to a 3.81% return
for the Lehman Brothers 7-Year Municipal Bond Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Federal Reserve interest-rate increases supported higher yields on short-term
municipal bonds, while investor expectations for low inflation pushed down
yields on long-term municipal bonds. Yields rose furthest on securities with the
shortest maturities, and yields fell on municipal bonds with maturities of
approximately eight years or longer. Supply of municipal bonds was generally
weak, while demand was strong. That supply-demand dynamic put downward pressure
on yields of tax-free bonds.
The environment in the municipal bond market led to higher prices for the
longer-term securities in the Fund's portfolio. Higher prices and the bonds'
interest income combined to produce strong absolute returns for Fund
shareholders.(1)
The Fund's benchmark index includes municipal bonds with maturities of between
six- and eight-years, and an average maturity of seven years. We held the Fund's
duration longer than that of the benchmark throughout the period. Municipal
bonds with longer durations paid higher yields and experienced greater price
appreciation than securities with shorter durations, so that duration strategy
boosted returns relative to the index.(1)
Nevertheless, the Fund's portfolio included a number of securities with
maturities of less than six years. The benchmark does not include any bonds with
maturities shorter than six years, so relatively weak performance by those
shorter-term bonds weighed on the Fund's returns against its benchmark.(1)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Portfolio composition is as of September 30, 2006 and is subject to change.
34
BB&T WEST VIRGINIA INTERMEDIATE TAX-FREE FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
Inception 1 5 10
As of September 30, 2006 Date Year Year Year
------------------------ --------- ---- ---- ----
Class A Shares* 12/17/93(2) 0.78% 3.22% 4.43%
Institutional Shares 12/1/93(2) 4.10% 4.11% 5.01%
Lehman Brothers
7-Year Municipal Bond Index N/A 3.81% 4.55% 5.40%
* Reflects 3.00% maximum sales charge.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
(2) Fund performance as shown for Class A and Institutional Shares includes the
performance of the OVB West Virginia Tax-Exempt Income Portfolio for the
periods prior to its consolidation with the BB&T West Virginia Intermediate
Tax-Free Fund on 7/23/01.
The Fund is measured against the Lehman Brothers 7-Year Municipal Bond Index, an
unmanaged index which is representative of municipal bonds with a minimum credit
rating of at least Baa, have a maturity value of at least $5 million and a
maturity range of 6-8 years. The index 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
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
35
BB&T PRIME MONEY MARKET FUND
PORTFOLIO MANAGER
Federated Investment Management Company
The BB&T Prime Money Market Fund is managed by Deborah A. Cunningham and Paige
Wilhelm, portfolio managers for Federated Investment Management Company
"Federated IMC", subadviser to the Fund. Mrs. Cunningham and Mrs. Wilhelm are
primarily responsible for the day-to-day management of the portfolio. They are
supported by an investment management team from Federated IMC which includes
William Jamison, Natalie F. Metz, Mary Ellen Tesla, Mark F. Weiss, CFA, and a
group of eight money market traders. On average, team members bring more than a
decade of investment management experience to the Fund, with specialization in
money market portfolio management and credit analysis.
INVESTMENT CONCERNS
INVESTMENTS IN THE BB&T PRIME MONEY MARKET FUND ARE NEITHER INSURED NOR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT
AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENTS AT A
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
Q. WHAT FACTORS AFFECTED THE FUND'S YIELD DURING THE 12-MONTH PERIOD BETWEEN
OCTOBER 1, 2005 AND SEPTEMBER 30, 2006?
A. The Federal Reserve increased the federal funds rate six times during the
first nine months of the period. Those actions raised the target short-term
interest rate from 3.75% to 5.25%. The Fed then left rates unchanged at meetings
in August and September. Rising interest rates led to higher yields on money
market securities, allowing this Fund to offer higher yield as the fiscal year
progressed.
This Fund invests in money market securities such as commercial paper and
corporate notes, repurchase agreements, bank instruments and variable-rate
securities. We typically maintain an average maturity of between 20 and 60 days.
We held the Fund's average maturity relatively short between October and August,
at between 30 and 40 days, so that we could reinvest maturing securities'
principal at higher interest rates following Federal Reserve meetings. In August
we extended the Fund's average maturity to between 35 and 45 days, because we
expected the Federal Reserve to stop raising interest rates. Then in early
September we lengthened again, to 40 to 50 days. Lengthening the Fund's average
maturity allowed us to lock in higher yield for shareholders.(1)
We began the period with a relatively large position in variable-rate
securities, which accounted for 35% of assets as of October 1, 2005. Those
securities adjust the yields they pay based on the general level of interest
rates, so they helped boost the Fund's yield as rates rose during the first nine
months of the period. We modestly reduced the Fund's stake in variable-rate
securities late in the period.(1)
As of September 30, 2006, the Fund held approximately 41% of its assets in
commercial paper and corporate notes, 31% in variable-rate securities, 18% in
repurchase agreements and 10% in bank instruments. The Fund's average maturity
was 44 days.(1)
(1) Portfolio composition is as of September 30, 2006, and is subject to
change.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
36
BB&T U.S. TREASURY MONEY MARKET FUND
PORTFOLIO MANAGER
Kevin E. McNair, CFA
The BB&T U.S. Treasury Money Market Fund is managed by Kevin E. McNair, CFA. Mr.
McNair received a BA in Economics from the University of North Carolina at
Chapel Hill and a Master's of Economics from North Carolina State University,
and has been managing investors' money since 1994. Mr. McNair is supported by
the BB&T Fixed Income Portfolio Management Team, which includes Brad D. Eppard,
CFA; David T. Johnson; Robert F. Millikan, CFA; and Michael D. Nichols, CFA. The
team brings to the Fund six decades of combined investment management
experience, along with a broad range of specialized skills encompassing a
cross-section of fixed-income sectors.
INVESTMENT CONCERNS
INVESTMENTS IN THE BB&T U.S. TREASURY MONEY MARKET FUND ARE NEITHER INSURED NOR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT
AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENTS AT A
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
Q. WHAT FACTORS AFFECTED THE FUND'S YIELD DURING THE 12-MONTH PERIOD BETWEEN
OCTOBER 1, 2005 AND SEPTEMBER 30, 2006?
A. The Federal Reserve increased its target short-term interest rate six times
during the first nine months of the period, bringing the federal funds rate from
3.75% to 5.25%, and then left the rate unchanged at meetings in August and
September. The Fed's rate hikes boosted yields on money market securities.
We held the Fund's average maturity shorter than its historical average,
bringing it as low as 22 days. That strategy allowed us to reinvest the
securities' principal more rapidly, which enabled us to capture higher yield as
interest rates increased. We increased the Fund's average maturity late in the
period, as it appeared that the Federal Reserve was nearing the end of its
monetary tightening cycle.(2)
The Fund's yield also benefited from a significant position in repurchase
agreements, which comprised between 60% and 70% of assets during most of the
period. Repurchase agreements offered higher yields than Treasury bills, and
allowed us to reinvest principal on a daily basis.(2)
As of September 30, 2006, the Fund held 67.9% of its assets in repurchase
agreements, 19.9% in Treasury notes and 12.2% in Treasury bills. The Fund's
average maturity was 26 days, and its credit quality as rated by Standard &
Poor's was Aaa.(1, 2)
(1) Moody's Fund Ratings represent an opinion only, not a recommendation to buy
or sell.
(2) Portfolio composition is as of September 30, 2006, and is subject to
change.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
A portion of the Fund's fees has been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
37
BB&T CAPITAL MANAGER FUNDS
PORTFOLIO MANAGER
The BB&T Capital Manager Equity Fund is managed by the BB&T Balanced Portfolio
Management Team, which includes Jeffrey J. Schappe, CFA; Will Gholston, CFA;
Robert F. Millikan, CFA; and Ronald T. Rimkus, CFA. The team brings to the Fund
over eight decades of combined investment management experience, along with
abroad range of specialized skills encompassing value stocks, growth stocks and
fixed-income securities.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
CAPITAL MANAGER CONSERVATIVE GROWTH FUND
CAPITAL MANAGER MODERATE GROWTH FUND
CAPITAL MANAGER GROWTH FUND
CAPITAL MANAGER EQUITY FUND
Q. WHAT FACTORS AFFECTED THE FUNDS' PERFORMANCE?
A. The Capital Manager Funds invest in a combination of the BB&T Large Cap Fund,
the BB&T Large Cap Growth Fund, the BB&T Mid Cap Value Fund, the BB&T Mid Cap
Growth Fund, the BB&T International Equity Fund, the BB&T Small Cap Fund and the
BB&T U.S. Treasury Money Market Fund. The three Capital Manager Funds with
fixed-income allocations also hold exposure to the BB&T Total Return Bond Fund.
The stock and bond markets posted healthy returns during the period under
review, helping all of the Capital Manager Funds generate solid gains.(1, 2)
The Funds' equity sleeves held larger positions in value stocks than did the S&P
500 stock benchmark. Value stocks significantly outperformed growth stocks, so
the Funds' relatively large value allocations boosted returns relative to their
benchmarks. An allocation of 15% of each Fund's equity position to international
equities also contributed to relative gains, as international stocks (as
measured by the MSCI EAFE) outperformed the S&P 500 over the period. The
relative returns of the Capital Manager Growth Fund and the Capital Manager
Moderate Growth Fund also benefited from overweight stakes in stocks, which
outperformed bonds. Those Funds held equity allocations roughly five percentage
points larger than their neutral equity weightings of 75% and 60%,
respectively.(2)
The Funds held approximately 24% of their domestic equity allocations in small-
and mid-cap stocks during this period. Exposure to those stocks weighed on the
Funds' returns against their benchmarks, because small- and mid-cap stocks
trailed the large-cap stocks that make up the S&P 500.(2)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
(1) Prior to February 1, 2006, the BB&T Large Cap Fund and the BB&T Large Cap
Growth Fund were known as the BB&T Large Company Value Fund and the BB&T
Large Company Growth Fund, respectively.
(2) Portfolio composition is as of September 30, 2006, and is subject to
change.
38
BB&T CAPITAL MANAGER CONSERVATIVE GROWTH FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
Inception 1 5 Since
As of September 30, 2006 Date Year Year Inception
------------------------ --------- ----- ---- ---------
A Shares* 1/29/98(2) -0.57% 3.39% 3.33%
B Shares** 1/29/99(3) 0.75% 3.68% 3.44%
C Shares*** 2/1/01(4) 4.75% 3.85% 3.51%
Institutional Shares 10/2/97 5.87% 4.91% 4.30%
S&P 500 Index 10/3/97 10.79% 6.97% 5.31%
Lehman Brothers Int.
Government Bond Index 10/3/97 3.54% 3.70% 5.35%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmarks,
and represents the reinvestment of dividends and capital gains.
(2) Class A Shares were not in existence prior to 1/29/98. Performance for
periods prior to that is based on the historical performance of the
Institutional Shares, and has been adjusted for the maximum sales charge
applicable to the Class A Shares, but does not include the Class A Shares
12b-1 fees, which, if reflected, performance would have been lower.
(3) Class B Shares were not in existence prior to 1/29/99. Performance for
periods prior to that is based on the historical performance of the Class A
Shares, and has been adjusted for the maximum CDSC applicable to the Class
B Shares, but does not include the Class B Shares 12b-1 fees, which, if
reflected, performance would have been lower.
(4) Class C Shares were not in existence prior to 2/1/01. Performance for
periods prior to that is based on the historical performance of the Class A
Shares, and has been adjusted for the maximum CDSC applicable to the Class
C Shares, but does not include the Class C Shares 12b-1 fees, which if
reflected, performance would have been lower.
The Fund is measured against the S&P 500 Index, which is generally considered to
be representative of the performance of the stock market as a whole, and against
the Lehman Brothers Intermediate Government Bond Index, which is 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 services. Investors cannot invest directly in an index, although they can
invest in its underlying securities.
A portion of the Fund's fees have been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
39
BB&T CAPITAL MANAGER MODERATE GROWTH FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
Inception 1 5 Since
As of September 30, 2006 Date Year Year Inception
------------------------ --------- ----- ---- ---------
A Shares* 1/29/98(2) 0.92% 4.11% 3.24%
B Shares** 1/29/99(3) 2.21% 4.44% 3.28%
C Shares*** 2/1/01(4) 6.19% 4.62% 3.46%
Institutional Shares 10/2/97 7.33% 5.64% 4.17%
S&P 500 Index 10/3/97 10.79% 6.97% 5.31%
Lehman Brothers Int.
Government Bond Index 10/3/97 3.54% 3.70% 5.35%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmarks,
and represents the reinvestment of dividends and capital gains.
(2) Class A Shares were not in existence prior to 1/29/98. Performance for
periods prior to that is based on the historical performance of the
Institutional Shares, and has been adjusted for the maximum sales charge
applicable to the Class A Shares, but does not include the Class A Shares
12b-1 fees, which, if reflected, performance would have been lower.
(3) Class B Shares were not in existence prior to 1/29/99. Performance for
periods prior to that is based on the historical performance of the Class A
Shares, and has been adjusted for the maximum CDSC applicable to the Class
B Shares, but does not include the Class B Shares 12b-1 fees, which, if
reflected, performance would have been lower.
(4) Class C Shares were not in existence prior to 2/1/01. Performance for
periods prior to that is based on the historical performance of the Class A
Shares, and has been adjusted for the maximum CDSC applicable to the Class
C Shares, but does not include the Class C Shares 12b-1 fees, which if
reflected, performance would have been lower.
The Fund is measured against the S&P 500 Index, which is generally considered to
be representative of the performance of the stock market as a whole, and against
the Lehman Brothers Intermediate Government Bond Index, which is 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 services. Investors cannot invest directly in an index, although they can
invest in its underlying securities.
A portion of the Fund's fees have been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
40
BB&T CAPITAL MANAGER GROWTH FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 Since
September 30, 2006 Date Year Year Inception
------------------ --------- ----- ---- ---------
A Shares* 1/29/98(2) 1.77% 4.49% 2.87%
B Shares** 1/29/99(3) 3.22% 4.77% 2.95%
C Shares*** 2/1/01(4) 7.19% 4.98% 3.07%
Institutional Shares 10/2/97 8.22% 6.01% 3.77%
S&P 500 Index 10/3/97 10.79% 6.97% 5.31%
Lehman Brothers Int.
Government Bond Index 10/3/97 3.54% 3.70% 5.35%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmarks,
and represents the reinvestment of dividends and capital gains.
(2) Class A Shares were not in existence prior to 1/29/98. Performance for
periods prior to that is based on the historical performance of the
Institutional Shares, and has been adjusted for the maximum sales charge
applicable to the Class A Shares, but does not include the Class A Shares
12b-1 fees, which, if reflected, performance would have been lower.
(3) Class B Shares were not in existence prior to 1/29/99. Performance for
periods prior to that is based on the historical performance of the Class A
Shares, and has been adjusted for the maximum CDSC applicable to the Class
B Shares, but does not include the Class B Shares 12b-1 fees, which, if
reflected, performance would have been lower.
(4) Class C Shares were not in existence prior to 2/1/01. Performance for
periods prior to that is based on the historical performance of the Class A
Shares, and has been adjusted for the maximum CDSC applicable to the Class
C Shares, but does not include the Class C Shares 12b-1 fees, which if
reflected, performance would have been lower.
The Fund is measured against the S&P 500 Index, which is generally considered to
be representative of the performance of the stock market as a whole, and against
the Lehman Brothers Intermediate Government Bond Index, which is 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 services. Investors cannot invest directly in an index, although they can
invest in its underlying securities.
A portion of the Fund's fees have been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
41
BB&T CAPITAL MANAGER EQUITY FUND
VALUE OF A $10,000 INVESTMENT
(PERFORMANCE GRAPH)
AVERAGE ANNUAL TOTAL RETURNS
As of Inception 1 5 Since
September 30, 2006 Date Year Year Inception
------------------ --------- ----- ---- ---------
A Shares* 3/19/01 3.08% 5.02% 2.48%
B Shares** 3/19/01 4.51% 5.32% 2.66%
C Shares*** 3/19/01 8.44% 5.44% 2.76%
Institutional Shares 3/19/01 9.66% 6.54% 3.85%
S&P 500 Index 3/21/01 10.79% 6.97% 4.98%
* Reflects 5.75% maximum sales charge.
** Reflects the applicable contingent deferred sales charge (CDSC), maximum of
5.00%.
*** Reflects the applicable maximum CDSC of 1.00% (applicable only to
redemptions within one year of purchase, and as such, are not reflected in
the Total Return tables since the periods reflected are for a year or
longer).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE VISIT WWW.BBTFUNDS.COM.
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains.
The Fund is measured against the S&P 500 Index, an unmanaged index generally
considered to be representative of the performance of the stock market as a
whole. The index 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 services. Investors cannot
invest directly in an index, although they can invest in its underlying
securities.
A portion of the Fund's fees have been waived. If the fees had not been waived,
the Fund's total return for the period would have been lower.
42
BB&T Funds
SUMMARY OF PORTFOLIO HOLDINGS, (UNAUDITED)
The BB&T Funds invested, as a percentage of net assets, in the following
industry sectors, countries, states, funds or security types, as of September
30, 2006.
PERCENT OF
LARGE CAP FUND NET ASSETS
-------------- ----------
Consumer Discretionary 11.7%
Consumer Staples 5.2
Energy 11.0
Financials 21.8
Health Care 14.5
Industrials 3.3
Information Technology 14.1
Materials 3.7
Telecommunication Services 6.6
Utilities 2.8
Warrants 0.0
Short-Term Investments* 22.8
-----
117.5%
=====
PERCENT OF
LARGE CAP GROWTH FUND NET ASSETS
--------------------- ----------
Consumer Discretionary 12.6%
Consumer Staples 6.3
Energy 3.6
Exchange Traded Funds 4.5
Financials 9.4
Health Care 18.5
Industrials 7.7
Information Technology 24.6
Telecommunication Services 7.0
Utilities 1.5
Short-Term Investments* 47.7
-----
143.4%
=====
PERCENT OF
MID CAP VALUE FUND NET ASSETS
------------------ ----------
Advertising 3.0%
Computer Software 14.9
Consumer Discretionary 11.9
Energy 1.6
Financials 32.3
Health Care 7.2
Industrials 11.4
Information Technology 6.8
Telecommunication Services 5.6
Short-Term Investments* 32.9
-----
127.6%
=====
PERCENT OF
MID CAP GROWTH FUND NET ASSETS
------------------- ----------
Consumer Discretionary 19.5%
Consumer Staples 1.6
Energy 4.4
Exchange Traded Funds 4.0
Financials 16.5
Health Care 14.4
Industrials 7.6
Information Technology 19.9
Materials 2.3
Telecommunication Services 4.8
Utilities 1.7
Short-Term Investments* 39.5
-----
136.2%
=====
PERCENT OF
SMALL CAP FUND NET ASSETS
-------------- ----------
Consumer Discretionary 13.7%
Consumer Staples 1.7
Corporate Bonds 0.1
Energy 5.6
Exchange Traded Funds 4.2
Financials 15.7
Health Care 3.6
Industrials 20.4
Information Technology 21.0
Materials 4.3
Utilities 2.4
Short-Term Investments* 30.4
-----
123.1%
=====
PERCENT OF
INTERNATIONAL EQUITY FUND NET ASSETS
------------------------- ----------
Australia 2.9%
Austria 0.4
Belgium 1.5
Currency Contracts 0.0
Exchange Traded Funds 2.3
Finland 1.6
France 7.6
Germany 7.4
Great Britain 22.4
Hong Kong 1.7
Ireland 2.8
Italy 1.7
Japan 19.9
Netherlands 10.1
Norway 0.5
Singapore 0.1
Spain 3.0
Sweden 1.8
Switzerland 9.7
----
97.4%
====
PERCENT OF
SPECIAL OPPORTUNITIES EQUITY FUND NET ASSETS
--------------------------------- ----------
Consumer Discretionary 18.9%
Consumer Staples 3.9
Energy 17.6
Financials 6.7
Health Care 15.7
Industrials 14.2
Information Technology 16.1
Investment Company 0.2
Option Contracts (0.2)
Short-Term Investments* 36.4
-----
129.5%
=====
43
BB&T Funds
SUMMARY OF PORTFOLIO HOLDINGS, CONTINUED (UNAUDITED)
PERCENT OF
EQUITY INCOME FUND NET ASSETS
------------------ ----------
Consumer Discretionary 3.5%
Consumer Staples 10.0
Energy 18.8
Financials 24.2
Health Care 8.2
Industrials 3.6
Information Technology 11.1
Materials 3.4
Option Contracts (0.0)
Telecommunication Services 3.8
Utilities 7.4
Short-Term Investments* 31.4
-----
125.4%
=====
PERCENT OF
SHORT U.S. GOVERNMENT FUND NET ASSETS
-------------------------- ----------
Federal Farm Credit Bank 8.2%
Federal Home Loan Bank 12.1
Federal Home Loan Mortgage Corporation 12.1
Federal Home Loan Mortgage Corp. -- Mortgage-Backed Securities 10.4
Federal National Mortgage Association 15.0
Federal National Mortgage Assoc. -- Mortgage-Backed Securities 18.1
U.S. Treasury Notes 19.7
Short-Term Investments* 50.9
-----
146.5%
=====
PERCENT OF
INTERMEDIATE U.S. GOVERNMENT FUND NET ASSETS
--------------------------------- ----------
Federal Home Loan Mortgage Corp. -- Mortgage-Backed Securities 17.7%
Federal Home Loan Mortgage Corp. -- U.S. Government Agencies 11.4
Federal National Mortgage Assoc. -- Mortgage-Backed Securities 26.1
Federal National Mortgage Assoc. -- U.S. Government Agencies 1.9
Sovereign 2.0
U.S. Treasury Notes 31.9
U.S. Government Backed Securities 7.9
Short-Term Investments* 14.3
-----
113.2%
=====
PERCENT OF
TOTAL RETURN BOND FUND NET ASSETS
---------------------- ----------
Corporate Bonds 40.3%
Federal Home Loan Bank 1.7
Federal Home Loan Mortgage Corp. -- Mortgage-Backed Securities 13.7
Federal Home Loan Mortgage Corp. -- U.S. Government Agencies 2.8
Federal National Mortgage Assoc. -- Mortgage-Backed Securities 18.9
Federal National Mortgage Assoc. -- U.S. Government Agencies 5.5
Government National Mortgage Assoc. 3.2
Municipal 6.1
U.S. Treasury Bonds 3.3
U.S. Treasury Notes 16.9
Short-Term Investments* 29.1
-----
141.5%
=====
PERCENT OF
KENTUCKY INTERMEDIATE TAX-FREE FUND NET ASSETS
----------------------------------- ----------
Investment Company 2.2%
Kentucky Municipal Bonds 101.0
-----
103.2%
=====
PERCENT OF
MARYLAND INTERMEDIATE TAX-FREE FUND NET ASSETS
----------------------------------- ----------
Investment Company 4.1%
Maryland Municipal Bonds 95.2
----
99.3%
====
PERCENT OF
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND NET ASSETS
----------------------------------------- ----------
Investment Company 2.5%
North Carolina Municipal Bonds 98.1
-----
100.6%
=====
PERCENT OF
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND NET ASSETS
----------------------------------------- ----------
Investment Company 2.1%
South Carolina Municipal Bonds 97.6
----
99.7%
====
PERCENT OF
VIRGINIA INTERMEDIATE TAX-FREE FUND NET ASSETS
----------------------------------- ----------
District of Columbia Municipal Bonds 2.2%
Investment Company 2.5
Virginia Municipal Bonds 94.9
----
99.6%
====
PERCENT OF
WEST VIRGINIA INTERMEDIATE TAX-FREE FUND NET ASSETS
---------------------------------------- ----------
Investment Company 1.1%
West Virginia Municipal Bonds 97.5
----
98.6%
====
PERCENT OF
PRIME MONEY MARKET FUND NET ASSETS
----------------------- ----------
Bankers Acceptance 0.4%
Certificates of Deposit 9.9
Collateralized Loan Agreements 15.0
Commercial Paper 32.4
Corporate Bonds 6.6
Municipal Bonds 1.2
Repurchase Agreement 5.9
Variable Rate Notes 28.6
-----
100.0%
=====
PERCENT OF
U.S. TREASURY MONEY MARKET FUND NET ASSETS
------------------------------- ----------
Repurchase Agreements 67.9%
U.S. Treasury Bills 12.2
U.S. Treasury Notes 19.9
-----
100.0%
=====
44
BB&T Funds
SUMMARY OF PORTFOLIO HOLDINGS, CONTINUED (UNAUDITED)
PERCENT OF
NATIONAL TAX-FREE MONEY MARKET FUND NET ASSETS
----------------------------------- ----------
Alabama 4.3%
Alaska 1.8
Arizona 3.8
Colorado 1.7
Florida 8.1
Illinois 15.2
Indiana 2.1
Kentucky 3.1
Louisiana 2.2
Maryland 1.5
Massachusetts 3.9
Michigan 2.1
Minnesota 8.5
Missouri 3.1
Nevada 2.6
New Jersey 4.0
New York 6.1
Ohio 0.9
Pennsylvania 3.1
Texas 5.0
Virginia 5.7
Wisconsin 9.0
Commercial Paper 2.1
Investment Company 0.0
----
99.9%
====
PERCENT OF
CAPITAL MANAGER CONSERVATIVE GROWTH FUND NET ASSETS
---------------------------------------- ----------
International Equity 6.0%
Large Cap 26.60
Mid Cap 4.8
Small Cap 3.1
Total Return Bond 56.6
U.S. Treasury 3.0
-----
100.1%
=====
PERCENT OF
CAPITAL MANAGER MODERATE GROWTH FUND NET ASSETS
------------------------------------ ----------
International Equity 9.8%
Large Cap 42.9
Mid Cap 7.7
Small Cap 5.0
Total Return Bond 31.6
U.S. Treasury 2.9
----
99.9%
====
PERCENT OF
CAPITAL MANAGER GROWTH FUND NET ASSETS
--------------------------- ----------
International Equity 11.9%
Large Cap 52.3
Mid Cap 9.4
Small Cap 6.0
Total Return 16.6
U.S. Treasury 3.6
----
99.8%
====
PERCENT OF
CAPITAL MANAGER EQUITY FUND NET ASSETS
--------------------------- ----------
International Equity 14.2%
Large Cap 62.8
Mid Cap 11.3
Small Cap 7.2
U.S. Treasury 4.5
-----
100.0%
=====
* Short-Term Investments represents the Repurchase Agreement and the invested
cash collateral received in connection with securities lending (see Note
2).
45
BB&T Funds
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the BB&T Funds (the "Funds"), you incur two types of costs:
(1) transaction costs, including sales charges (loads) on purchases and (2)
ongoing costs, including management fees; distribution fees; and other Fund
expenses.
These examples are intended to help you understand your ongoing costs (in
dollars) of investing in the Funds' and to compare these costs with the ongoing
costs of investing in other mutual funds."
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire period from April 1, 2006 through September
30, 2006.
Actual Example
The table below provides information about actual account values and actual
expenses. You may use the information below, together with the amount you
invested, to estimate the expenses that you paid over the period. Simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), then multiply the result by the number in the table under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
BEGINNING ENDING ANNUALIZED
ACCOUNT ACCOUNT EXPENSES PAID EXPENSE RATIO
VALUE VALUE DURING PERIOD* DURING PERIOD
4/1/06 9/30/06 4/1/06 - 9/30/06 4/1/06 - 9/30/06
--------- --------- ---------------- ----------------
LARGE CAP FUND
Class A Shares $1,000.00 $1,062.60 $ 5.89 1.14%
Class B Shares .................. 1,000.00 1,058.60 9.75 1.89%
Class C Shares .................. 1,000.00 1,058.80 9.75 1.89%
Institutional Shares............. 1,000.00 1,063.70 4.60 0.89%
LARGE CAP GROWTH FUND
Class A Shares .................. 1,000.00 963.90 5.61 1.14%
Class B Shares .................. 1,000.00 959.90 9.29 1.89%
Class C Shares .................. 1,000.00 959.90 9.29 1.89%
Institutional Shares............. 1,000.00 965.30 4.38 0.89%
MID CAP VALUE FUND
Class A Shares .................. 1,000.00 1,027.40 5.79 1.14%
Class B Shares .................. 1,000.00 1,024.00 9.59 1.89%
Class C Shares .................. 1,000.00 1,024.00 9.59 1.89%
Institutional Shares............. 1,000.00 1,029.00 4.53 0.89%
MID CAP GROWTH FUND
Class A Shares .................. 1,000.00 885.50 5.39 1.14%
Class B Shares .................. 1,000.00 881.90 8.92 1.89%
Class C Shares .................. 1,000.00 882.70 8.92 1.89%
Institutional Shares............. 1,000.00 886.90 4.21 0.89%
SMALL CAP FUND
Class A Shares .................. 1,000.00 959.10 6.29 1.28%
Class B Shares .................. 1,000.00 955.30 9.95 2.03%
Class C Shares .................. 1,000.00 955.20 9.95 2.03%
Institutional Shares............. 1,000.00 960.10 5.06 1.03%
INTERNATIONAL EQUITY FUND
Class A Shares .................. 1,000.00 1,041.90 7.06 1.38%
Class B Shares .................. 1,000.00 1,038.20 10.88 2.13%
Class C Shares .................. 1,000.00 1,037.90 10.93 2.14%
Institutional Shares............. 1,000.00 1,043.40 5.79 1.13%
SPECIAL OPPORTUNITIES EQUITY FUND
Class A Shares .................. 1,000.00 1,075.30 6.66 1.28%
Class B Shares .................. 1,000.00 1,071.00 10.54 2.03%
Class C Shares .................. 1,000.00 1,070.90 10.54 2.03%
Institutional Shares............. 1,000.00 1,076.70 5.36 1.03%
EQUITY INCOME FUND
Class A Shares .................. 1,000.00 1,075.60 6.24 1.20%
Class B Shares .................. 1,000.00 1,071.20 10.12 1.95%
Class C Shares .................. 1,000.00 1,071.20 10.12 1.95%
Institutional Shares............. 1,000.00 1,076.90 4.95 0.95%
SHORT U.S. GOVERNMENT FUND
Class A Shares .................. 1,000.00 1,024.10 4.52 0.89%
Institutional Shares............. 1,000.00 1,025.40 3.25 0.64%
INTERMEDIATE U.S. GOVERNMENT FUND
Class A Shares .................. 1,000.00 1,034.40 4.64 0.91%
Class B Shares .................. 1,000.00 1,030.70 8.45 1.66%
Class C Shares .................. 1,000.00 1,029.60 8.45 1.66%
Institutional Shares............. 1,000.00 1,034.60 3.37 0.66%
46
BB&T Funds
EXPENSE EXAMPLE, CONTINUED (UNAUDITED)
ANNUALIZED
BEGINNING ENDING EXPENSES PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
4/1/06 9/30/06 4/1/06 - 9/30/06 4/1/06 - 9/30/06
------------- ------------- ---------------- ----------------
TOTAL RETURN BOND FUND
Class A Shares ....................... $1,000.00 $1,033.10 $4.69 0.92%
Class B Shares ....................... 1,000.00 1,029.00 8.49 1.67%
Class C Shares ....................... 1,000.00 1,029.10 8.49 1.67%
Institutional Shares ................. 1,000.00 1,034.30 3.37 0.66%
KENTUCKY INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,032.80 4.74 0.93%
Institutional Shares ................. 1,000.00 1,034.20 3.47 0.68%
MARYLAND INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,036.90 4.39 0.86%
Institutional Shares ................. 1,000.00 1,037.10 3.06 0.60%
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,032.30 4.53 0.89%
Institutional Shares ................. 1,000.00 1,033.60 3.26 0.64%
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,030.80 4.73 0.93%
Institutional Shares ................. 1,000.00 1,033.30 3.47 0.68%
VIRGINIA INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,030.50 4.58 0.90%
Institutional Shares ................. 1,000.00 1,031.80 3.31 0.65%
WEST VIRGINIA INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,030.90 4.58 0.90%
Institutional Shares ................. 1,000.00 1,032.10 3.31 0.65%
PRIME MONEY MARKET FUND
Class A Shares ....................... 1,000.00 1,021.40 4.92 0.97%
Class B Shares ....................... 1,000.00 1,019.10 7.44 1.47%
Class C Shares ....................... 1,000.00 1,018.90 7.44 1.47%
Institutional Shares ................. 1,000.00 1,024.00 2.38 0.47%
U.S. TREASURY MONEY MARKET FUND
Class A Shares ....................... 1,000.00 1,020.40 4.76 0.94%
Class B Shares ....................... 1,000.00 1,017.90 7.33 1.45%
Class C Shares ....................... 1,000.00 1,017.90 7.28 1.44%
Institutional Shares ................. 1,000.00 1,023.00 2.28 0.45%
NATIONAL TAX-FREE MONEY MARKET FUND**
Class A Shares ....................... 1,000.00 1,005.10 1.04 0.62%
Class B Shares ....................... 1,000.00 1,003.60 2.33 1.39%
Class C Shares ....................... 1,000.00 1,003.60 2.33 1.39%
Institutional Shares ................. 1,000.00 1,005.30 0.67 0.40%
CAPITAL MANAGER CONSERVATIVE GROWTH FUND
Class A Shares ....................... 1,000.00 1,025.60 1.68 0.33%
Class B Shares ....................... 1,000.00 1,020.70 5.47 1.08%
Class C Shares ....................... 1,000.00 1,020.80 5.47 1.08%
Institutional Shares ................. 1,000.00 1,026.70 0.41 0.08%
CAPITAL MANAGER MODERATE GROWTH FUND
Class A Shares ....................... 1,000.00 1,020.80 1.77 0.35%
Class B Shares ....................... 1,000.00 1,017.30 5.56 1.10%
Class C Shares ....................... 1,000.00 1,017.30 5.56 1.10%
Institutional Shares ................. 1,000.00 1,023.00 0.51 0.10%
CAPITAL MANAGER GROWTH FUND
Class A Shares ....................... 1,000.00 1,017.90 1.82 0.36%
Class B Shares ....................... 1,000.00 1,014.50 5.61 1.11%
Class C Shares ....................... 1,000.00 1,014.50 5.61 1.11%
Institutional Shares ................. 1,000.00 1,019.20 0.56 0.11%
CAPITAL MANAGER EQUITY FUND
Class A Shares ....................... 1,000.00 1,015.20 1.82 0.36%
Class B Shares ....................... 1,000.00 1,012.00 5.60 1.11%
Class C Shares ....................... 1,000.00 1,012.10 5.60 1.11%
Institutional Shares ................. 1,000.00 1,017.00 0.56 0.11%
----------
* Expenses are equal to the average account value over the period multiplied
by the Fund's annualized expense ratio, multiplied by the number of days in
the most recent fiscal half-year divided by the number of days in the
fiscal year (to reflect the one-half year period).
** Information shown reflects values using the expense ratios and rates of
return for the period from August 1, 2006 (date of commencement of
operations) to September 30, 2006.
47
BB&T Funds
EXPENSE EXAMPLE, CONTINUED (UNAUDITED)
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Funds' actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses you paid for the period. You may
use this information to compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
ANNUALIZED
BEGINNING ENDING EXPENSES PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
4/1/06 9/30/06 4/1/06 - 9/30/06 4/1/06 - 9/30/06
------------- ------------- ---------------- ----------------
LARGE CAP FUND
Class A Shares ....................... $1,000.00 $1,019.35 $ 5.77 1.14%
Class B Shares ....................... 1,000.00 1,015.59 9.55 1.89%
Class C Shares ....................... 1,000.00 1,015.59 9.55 1.89%
Institutional Shares ................. 1,000.00 1,020.61 4.51 0.89%
LARGE CAP GROWTH FUND
Class A Shares ....................... 1,000.00 1,019.35 5.77 1.14%
Class B Shares ....................... 1,000.00 1,015.59 9.55 1.89%
Class C Shares ....................... 1,000.00 1,015.59 9.55 1.89%
Institutional Shares ................. 1,000.00 1,020.61 4.51 0.89%
MID CAP VALUE FUND
Class A Shares ....................... 1,000.00 1,019.35 5.77 1.14%
Class B Shares ....................... 1,000.00 1,015.59 9.55 1.89%
Class C Shares ....................... 1,000.00 1,015.59 9.55 1.89%
Institutional Shares ................. 1,000.00 1,020.61 4.51 0.89%
MID CAP GROWTH FUND
Class A Shares ....................... 1,000.00 1,019.35 5.77 1.14%
Class B Shares ....................... 1,000.00 1,015.59 9.55 1.89%
Class C Shares ....................... 1,000.00 1,015.59 9.55 1.89%
Institutional Shares ................. 1,000.00 1,020.61 4.51 0.89%
SMALL CAP FUND
Class A Shares ....................... 1,000.00 1,018.65 6.48 1.28%
Class B Shares ....................... 1,000.00 1,014.89 10.25 2.03%
Class C Shares ....................... 1,000.00 1,014.89 10.25 2.03%
Institutional Shares ................. 1,000.00 1,019.90 5.22 1.03%
INTERNATIONAL EQUITY FUND
Class A Shares ....................... 1,000.00 1,018.15 6.98 1.38%
Class B Shares ....................... 1,000.00 1,014.39 10.76 2.13%
Class C Shares ....................... 1,000.00 1,014.34 10.81 2.14%
Institutional Shares ................. 1,000.00 1,019.40 5.72 1.13%
SPECIAL OPPORTUNITIES EQUITY FUND
Class A Shares ....................... 1,000.00 1,018.65 6.48 1.28%
Class B Shares ....................... 1,000.00 1,014.89 10.25 2.03%
Class C Shares ....................... 1,000.00 1,014.89 10.25 2.03%
Institutional Shares ................. 1,000.00 1,019.90 5.22 1.03%
EQUITY INCOME FUND
Class A Shares ....................... 1,000.00 1,019.05 6.07 1.20%
Class B Shares ....................... 1,000.00 1,015.29 9.85 1.95%
Class C Shares ....................... 1,000.00 1,015.29 9.85 1.95%
Institutional Shares ................. 1,000.00 1,020.31 4.81 0.95%
SHORT U.S. GOVERNMENT FUND
Class A Shares ....................... 1,000.00 1,020.61 4.51 0.89%
Institutional Shares ................. 1,000.00 1,021.86 3.24 0.64%
INTERMEDIATE U.S. GOVERNMENT FUND
Class A Shares ....................... 1,000.00 1,020.51 4.61 0.91%
Class B Shares ....................... 1,000.00 1,016.75 8.39 1.66%
Class C Shares ....................... 1,000.00 1,016.75 8.39 1.66%
Institutional Shares ................. 1,000.00 1,021.76 3.35 0.66%
TOTAL RETURN BOND FUND
Class A Shares ....................... 1,000.00 1,020.46 4.66 0.92%
Class B Shares ....................... 1,000.00 1,016.70 8.44 1.67%
Class C Shares ....................... 1,000.00 1,016.70 8.44 1.67%
Institutional Shares ................. 1,000.00 1,021.76 3.35 0.66%
48
BB&T Funds
EXPENSE EXAMPLE, CONTINUED (UNAUDITED)
ANNUALIZED
BEGINNING ENDING EXPENSES PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
4/1/06 9/30/06 4/1/06 - 9/30/06 4/1/06 - 9/30/06
------------- ------------- ---------------- ----------------
KENTUCKY INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... $1,000.00 $1,020.41 $4.71 0.93%
Institutional Shares ................. 1,000.00 1,021.66 3.45 0.68%
MARYLAND INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,020.76 4.36 0.86%
Institutional Shares ................. 1,000.00 1,022.06 3.04 0.60%
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,020.61 4.51 0.89%
Institutional Shares ................. 1,000.00 1,021.86 3.24 0.64%
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,020.41 4.71 0.93%
Institutional Shares ................. 1,000.00 1,021.66 3.45 0.68%
VIRGINIA INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,020.56 4.56 0.90%
Institutional Shares ................. 1,000.00 1,021.81 3.29 0.65%
WEST VIRGINIA INTERMEDIATE TAX-FREE FUND
Class A Shares ....................... 1,000.00 1,020.56 4.56 0.90%
Institutional Shares ................. 1,000.00 1,021.81 3.29 0.65%
PRIME MONEY MARKET FUND
Class A Shares ....................... 1,000.00 1,020.21 4.91 0.97%
Class B Shares ....................... 1,000.00 1,017.70 7.44 1.47%
Class C Shares ....................... 1,000.00 1,017.70 7.44 1.47%
Institutional Shares ................. 1,000.00 1,022.71 2.38 0.47%
U.S. TREASURY MONEY MARKET FUND
Class A Shares ....................... 1,000.00 1,020.36 4.76 0.94%
Class B Shares ....................... 1,000.00 1,017.80 7.33 1.45%
Class C Shares ....................... 1,000.00 1,017.85 7.28 1.44%
Institutional Shares ................. 1,000.00 1,022.81 2.28 0.45%
NATIONAL TAX-FREE MONEY MARKET FUND **
Class A Shares ....................... 1,000.00 1,021.96 3.14 0.62%
Class B Shares ....................... 1,000.00 1,018.10 7.03 1.39%
Class C Shares ....................... 1,000.00 1,018.10 7.03 1.39%
Institutional Shares ................. 1,000.00 1,023.06 2.03 0.40%
CAPITAL MANAGER CONSERVATIVE GROWTH FUND
Class A Shares ....................... 1,000.00 1,023.41 1.67 0.33%
Class B Shares ....................... 1,000.00 1,019.65 5.47 1.08%
Class C Shares ....................... 1,000.00 1,019.65 5.47 1.08%
Institutional Shares ................. 1,000.00 1,024.67 0.41 0.08%
CAPITAL MANAGER MODERATE GROWTH FUND
Class A Shares ....................... 1,000.00 1,023.31 1.78 0.35%
Class B Shares ....................... 1,000.00 1,019.55 5.57 1.10%
Class C Shares ....................... 1,000.00 1,019.55 5.57 1.10%
Institutional Shares ................. 1,000.00 1,024.57 0.51 0.10%
CAPITAL MANAGER GROWTH FUND
Class A Shares ....................... 1,000.00 1,023.26 1.83 0.36%
Class B Shares ....................... 1,000.00 1,019.50 5.62 1.11%
Class C Shares ....................... 1,000.00 1,019.50 5.62 1.11%
Institutional Shares ................. 1,000.00 1,024.52 0.56 0.11%
CAPITAL MANAGER EQUITY FUND
Class A Shares ....................... 1,000.00 1,023.26 1.83 0.36%
Class B Shares ....................... 1,000.00 1,019.50 5.62 1.11%
Class C Shares ....................... 1,000.00 1,019.50 5.62 1.11%
Institutional Shares ................. 1,000.00 1,024.52 0.56 0.11%
----------
* Expenses are equal to the average account value over the period multiplied
by the Fund's annualized expense ratio, multiplied by the number of days in
the most recent fiscal half-year divided by the number of days in the
fiscal year (to reflect the one-half year period).
** Information shown reflects values using the expense ratios for the period
from August 1, 2006 (date of commencement of operations) to September 30,
2006 and has been adjusted to reflect values for the period from April 1,
2006 through September 30, 2006.
49
Large Cap Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS (94.7%)
Consumer Discretionary (11.7%)
Gannett Co., Inc. (b) ....................... 282,000 $ 16,026,060
Mattel, Inc. ................................ 434,800 8,565,560
Target Corp. (b) ............................ 168,111 9,288,133
Tiffany & Co. (b) ........................... 706,381 23,451,848
V.F. Corp. .................................. 103,250 7,532,088
Walt Disney Co. (The) ....................... 650,000 20,091,500
-------------
84,955,189
-------------
Consumer Staples (5.2%)
Altria Group, Inc. .......................... 138,590 10,609,065
Kimberly-Clark Corp. (b) .................... 276,500 18,072,039
Sara Lee Corp. .............................. 568,010 9,127,921
-------------
37,809,025
-------------
Energy (11.0%)
Anadarko Petroleum Corp. (b) ................ 219,000 9,598,770
ChevronTexaco Corp. ......................... 329,460 21,368,776
ConocoPhillips .............................. 265,347 15,796,107
Duke Energy Corp. (b) ....................... 242,000 7,308,400
Exxon Mobil Corp. (b) ....................... 290,000 19,459,000
Schlumberger, Ltd. (b) ...................... 96,000 5,954,880
-------------
79,485,933
-------------
Financials (21.8%)
AMBAC Financial Group, Inc. ................. 93,100 7,704,025
American International Group, Inc. .......... 182,000 12,059,320
Bank of New York Co., Inc. (The) ............ 250,000 8,815,000
CitiGroup, Inc. ............................. 405,666 20,149,430
Fannie Mae (b) .............................. 206,000 11,517,460
JPMorgan Chase & Co. ........................ 507,772 23,844,973
Lincoln National Corp. ...................... 118,600 7,362,688
Merrill Lynch & Co., Inc. (b) ............... 190,000 14,861,800
Northern Trust Corp. (b) .................... 257,718 15,058,463
St. Paul Travelers Cos., Inc. (The) ......... 298,500 13,996,665
Washington Mutual, Inc. (b) ................. 318,000 13,823,460
Wells Fargo & Co. ........................... 217,600 7,872,768
-------------
157,066,052
-------------
Health Care (14.5%)
Abbott Laboratories ......................... 186,000 9,032,160
Amgen, Inc. (a) (b) ......................... 312,984 22,387,745
Bristol-Myers Squibb Co. .................... 233,080 5,808,354
Johnson & Johnson ........................... 285,806 18,560,242
Merck & Co., Inc. (b) ....................... 507,821 21,277,699
Pfizer, Inc. ................................ 724,402 20,544,041
Wyeth ....................................... 145,000 7,371,800
-------------
104,982,041
-------------
Industrials (3.3%)
Emerson Electric Co. (The) .................. 41,370 3,469,288
General Electric Co. ........................ 105,000 3,706,500
Parker-Hannifin Corp. ....................... 117,000 9,094,410
Pitney Bowes, Inc. (b) ...................... 176,800 7,844,616
-------------
24,114,814
-------------
Information Technology (14.1%)
Automatic Data Processing, Inc. ............. 142,400 6,741,216
Cisco Systems, Inc. (a) (b) ................. 1,046,516 24,069,868
Dell, Inc. (a) (b) .......................... 844,202 19,281,574
SHARES OR FAIR
PRINCIPAL AMOUNT VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Information Technology, continued
First Data Corp. ............................ 152,000 $ 6,384,000
Intel Corp. ................................. 1,407,693 28,956,245
Microsoft Corp. ............................. 243,000 6,641,190
Time Warner, Inc. ........................... 564,000 10,281,720
-------------
102,355,813
-------------
Materials (3.7%)
Air Products & Chemicals, Inc. .............. 129,700 8,608,189
Alcoa, Inc. ................................. 252,000 7,066,080
Weyerhaeuser Co. (b) ........................ 186,500 11,475,345
-------------
27,149,614
-------------
Telecommunication Services (6.6%)
AT&T, Inc. (b) .............................. 421,837 13,735,013
BellSouth Corp. ............................. 180,000 7,695,000
Nokia Corp., ADR (b) ........................ 550,000 10,829,500
Verizon Communications, Inc. ................ 427,000 15,854,510
-------------
48,114,023
-------------
Utilities (2.8%)
NiSource, Inc. (b) .......................... 538,100 11,698,294
SCANA Corp. (b) ............................. 87,467 3,522,296
Xcel Energy, Inc. ........................... 231,275 4,775,829
-------------
19,996,419
Total Common Stocks
(Cost $525,464,176) ................... 686,028,923
-------------
WARRANT (0.0%)
Raytheon Co. (a) ............................ 7,110 101,460
-------------
Total Warrant (Cost $0) .................. 101,460
-------------
REPURCHASE AGREEMENT (5.3%)
U.S. Bank N.A., 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity value of
$38,421,643 (Collateralized fully by U.S.
Government Agencies) ..................... $ 38,405,481 38,405,481
-------------
Total Repurchase Agreement
(Cost $38,405,481) .................... 38,405,481
-------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES
ON LOAN (17.5%)
Pool of Various Securities for BB&T
Funds -- Note 2 -- Security Loans ........ 126,591,112 126,591,112
-------------
Total Securities Held as Collateral for
Securities on Loan
(Cost $126,591,112) ................... 126,591,112
-------------
Total Investments
(Cost $690,460,769) -- 117.5% ............ 851,126,976
Net other assets (liabilities) -- (17.5)% ... (126,835,316)
-------------
Net Assets -- 100.0% ........................ $ 724,291,660
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
50
Large Cap Growth Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS (91.3%)
Consumer Discretionary (12.6%)
American Eagle Outfitters, Inc. (b) ......... 65,600 $ 2,875,248
Best Buy, Inc. (b) .......................... 59,800 3,202,888
Coach, Inc. (a) (b) ......................... 113,100 3,890,640
Comcast Corp., Class A (a) (b) .............. 98,800 3,640,780
Federated Department Stores, Inc. (b) ....... 68,200 2,946,922
Hilton Hotels Corp. (b) ..................... 120,900 3,367,065
J. C. Penney, Inc. (b) ...................... 42,200 2,886,058
Polo Ralph Lauren Corp. ..................... 38,300 2,477,627
Starbucks Corp. (a) (b) ..................... 93,600 3,187,080
-------------
28,474,308
-------------
Consumer Staples (6.3%)
Archer-Daniels-Midland Co. .................. 85,800 3,250,104
Fomento Economico Mexicano SA, ADR .......... 29,900 2,898,506
Hansen Natural Corp. (a) (b) ................ 85,100 2,764,048
PepsiCo, Inc. ............................... 43,500 2,838,810
Procter & Gamble Co. ........................ 39,600 2,454,408
-------------
14,205,876
-------------
Energy (3.6%)
Cameco Corp. (b) ............................ 81,900 2,995,083
McDermott International, Inc. (a) ........... 66,300 2,771,340
Schlumberger Ltd. (b) ....................... 39,600 2,456,388
-------------
8,222,811
-------------
Financials (9.4%)
Affiliated Managers Group, Inc. (a) (b) ..... 33,800 3,383,718
American International Group, Inc. .......... 39,300 2,604,018
Bear Stearns Cos., Inc. (The) (b) ........... 18,200 2,549,820
Charles Schwab Corp. (The) (b) .............. 139,700 2,500,630
Chicago Mercantile Exchange Holdings,
Inc. (b) ................................. 7,400 3,539,050
Goldman Sachs Group, Inc. (The) (b) ......... 20,000 3,383,400
Merrill Lynch & Co., Inc. ................... 43,000 3,363,460
-------------
21,324,096
-------------
Health Care (18.5%)
AmerisourceBergen Corp. (b) ................. 52,600 2,377,520
Amgen, Inc. (a) (b) ......................... 31,762 2,271,936
Amylin Pharmaceuticals, Inc. (a) (b) ........ 72,800 3,208,296
Celgene Corp. (a) (b) ....................... 80,600 3,489,980
Fisher Scientific International, Inc. (a) ... 33,100 2,589,744
Genentech, Inc. (a) (b) ..................... 29,900 2,472,730
Gilead Sciences, Inc. (a) ................... 53,000 3,641,100
Humana, Inc. (a) ............................ 65,600 4,335,504
Medco Health Solutions, Inc. (a) ............ 37,500 2,254,125
Novartis AG, ADR ............................ 74,100 4,330,404
Schering-Plough Corp. ....................... 104,000 2,297,360
Stericycle, Inc. (a) (b) .................... 41,900 2,924,201
Wellpoint, Inc. (a) ......................... 29,200 2,249,860
Wyeth ....................................... 64,700 3,289,348
-------------
41,732,108
-------------
Industrials (7.7%)
Danaher Corp. (b) ........................... 53,481 3,672,540
FedEx Corp. ................................. 23,812 2,587,888
General Electric Co. ........................ 68,200 2,407,460
Monster Worldwide, Inc. (a) ................. 76,000 2,750,440
Precision Castparts Corp. (b) ............... 39,000 2,463,240
United Technologies Corp. ................... 56,500 3,579,275
-------------
17,460,843
-------------
SHARES OR FAIR
PRINCIPAL AMOUNT VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Information Technology (24.6%)
Advanced Micro Devices, Inc. (a) (b) ........ 91,000 $ 2,261,350
Agilent Technologies, Inc. (a) .............. 68,900 2,252,341
Akamai Technologies, Inc. (a) (b) ........... 75,000 3,749,250
Amphenol Corp., Class A (b) ................. 74,700 4,626,171
Apple Computer, Inc. (a) (b) ................ 49,400 3,805,282
Cisco Systems, Inc. (a) ..................... 112,400 2,585,200
Cognizant Technology Solutions Corp.,
Class A (a) .............................. 47,800 3,540,068
Google, Inc. (a) (b) ........................ 6,800 2,732,920
Hewlett-Packard Co. ......................... 123,000 4,512,870
MEMC Electronic Materials, Inc. (a) (b) ..... 100,100 3,666,663
Micron Technology, Inc. (a) (b) ............. 245,000 4,263,000
Microsoft Corp. ............................. 128,000 3,498,240
Motorola, Inc. .............................. 143,000 3,575,000
Nokia Corp., ADR ............................ 160,500 3,160,245
Oracle Corp. (a) (b) ........................ 291,200 5,165,889
QUALCOMM, Inc. .............................. 57,800 2,101,030
-------------
55,495,519
-------------
Telecommunication Services (7.1%)
America Movil SA de CV, Series L, ADR (b) ... 111,100 4,374,007
American Tower Corp., Class A (a) (b) ....... 108,500 3,960,250
AT&T, Inc. (b) .............................. 94,600 3,080,176
NII Holdings, Inc. (a) (b) .................. 72,800 4,525,248
-------------
15,939,681
-------------
Utilities (1.5%)
FirstEnergy Corp. (b) ....................... 29,900 1,670,214
FPL Group, Inc. (b) ......................... 37,700 1,696,500
-------------
3,366,714
-------------
Total Common Stocks
(Cost $173,798,922) ................... 206,221,956
-------------
EXCHANGE TRADED FUNDS (4.5%)
iShares Russell 1000 Growth Index
Fund (b) ................................. 195,000 10,171,200
-------------
Total Exchange Traded Funds
(Cost $9,911,034) ..................... 10,171,200
-------------
REPURCHASE AGREEMENT (3.1%)
U.S. Bank N.A., 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity value of
$6,883,073 (Collateralized fully by U.S.
Government Agencies) ..................... $ 6,880,178 6,880,178
-------------
Total Repurchase Agreement
(Cost $6,880,178) ..................... 6,880,178
-------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES
ON LOAN (44.7%)
Pool of Various Securities for BB&T
Funds -- Note 2 -- Security Loans ........ 101,006,062 101,006,062
-------------
Total Securities Held as Collateral for
Securities on Loan
(Cost $101,006,062) ...................... 101,006,062
-------------
Total Investments
(Cost $291,596,196) -- 143.6% ............ 324,279,396
Net other assets (liabilities) -- (43.6)% (98,443,084)
-------------
Net Assets -- 100.0% ........................ $ 225,836,312
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
51
Mid Cap Value Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS (94.7%)
Advertising (3.0%)
Interpublic Group of Cos., Inc. (a) (b) ..... 701,550 $ 6,945,345
-------------
Computer Software (14.9%)
BMC Software, Inc. (a) (b) .................. 226,650 6,169,413
CA, Inc. (b) ................................ 483,850 11,462,407
Computer Sciences Corp. (a) ................. 129,150 6,343,848
CSG Systems International, Inc. (a) (b) ..... 189,400 5,005,842
Progress Software Corp. (a) ................. 202,550 5,266,300
-------------
34,247,810
-------------
Consumer Discretionary (11.9%)
Gannett Co., Inc. (b) ....................... 93,300 5,302,239
International Speedway Corp. ................ 104,900 5,228,216
Kohl's Corp. (a) (b) ........................ 150,350 9,760,722
Lexmark International, Inc. (a) (b) ......... 116,900 6,740,454
Universal Technical Institute Inc. (a) ...... 10,900 195,001
-------------
27,226,632
-------------
Energy (1.6%)
Forest Oil Corp. (a) (b) .................... 117,600 3,714,984
-------------
Financials (32.3%)
Annaly Mortgage Management, Inc., REIT ...... 154,400 2,028,816
Aon Corp. (b) ............................... 154,050 5,217,674
Endurance Specialty Holdings, Ltd. .......... 190,045 6,700,987
Fidelity National Financial, Inc. ........... 179,300 7,467,844
Hudson City Bancorp, Inc. ................... 105,750 1,401,188
KeyCorp (b) ................................. 128,050 4,794,192
Leucadia National Corp. ..................... 190,600 4,988,002
MBIA, Inc. (b) .............................. 73,550 4,518,912
Mercury General Corp. (b) ................... 171,250 8,495,712
MoneyGram International, Inc. ............... 82,450 2,395,997
Popular Inc. ................................ 168,600 3,277,584
Protective Life Corp. ....................... 74,350 3,401,513
StanCorp Financial Group, Inc. .............. 193,350 8,629,210
Waddell and Reed Financial, Inc. ............ 339,100 8,392,724
Washington Federal, Inc. .................... 93,250 2,092,530
-------------
73,802,885
-------------
Health Care (7.2%)
King Pharmaceuticals, Inc. (a) (b) .......... 204,900 3,489,447
Par Pharmaceutical Cos., Inc. (a) ........... 122,400 2,232,576
STERIS Corp. ................................ 133,750 3,218,025
Watson Pharmaceuticals, Inc. (a) (b) ........ 115,200 3,014,784
Zimmer Holdings, Inc. (a) (b) ............... 67,900 4,583,250
-------------
16,538,082
-------------
SHARES OR FAIR
PRINCIPAL AMOUNT VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Industrials (11.4%)
Crane Co. ................................... 144,100 $ 6,023,380
Leggett & Platt, Inc. ....................... 328,325 8,217,975
R.H. Donnelley Corp. (b) .................... 131,750 6,969,575
Valspar Corp. ............................... 186,250 4,954,250
-------------
26,165,180
-------------
Information Technology (6.8%)
Affiliated Computer Services, Inc.,
Class A (a) .............................. 40,600 2,105,516
Polycom, Inc. (a) (b) ....................... 177,150 4,345,490
Serono SA, ADR (b) .......................... 213,250 4,582,742
Synopsys, Inc. (a) (b) ...................... 225,450 4,445,874
-------------
15,479,622
-------------
Telecommunication Services (5.6%)
Clear Channel Communications, Inc. (b) ...... 223,350 6,443,648
Discovery Holding Co., Class A (a) (b) ...... 449,750 6,503,385
-------------
12,947,034
-------------
Total Common Stocks
(Cost $198,604,571) ................... 217,067,574
-------------
REPURCHASE AGREEMENT (5.8%)
U.S. Bank N.A., 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity value of
$13,185,650 (Collateralized fully by U.S.
Government Agencies) ..................... $ 13,180,103 13,180,103
-------------
Total Repurchase Agreement
(Cost $13,180,103) .................... 13,180,103
-------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES
ON LOAN (27.1%)
Pool of Various Securities for BB&T
Funds -- Note 2 -- Security Loans ........ 62,152,094 62,152,094
-------------
Total Securities Held as Collateral for
Securities on Loan
(Cost $62,152,094) ..................... 62,152,094
-------------
Total Investments
(Cost $273,936,768) -- 127.6% ............ 292,399,771
-------------
Net other assets (liabilities) -- (27.6)% ... (63,188,741)
Net Assets -- 100.0% ........................ $ 229,211,030
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
52
Mid Cap Growth Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS (92.7%)
Consumer Discretionary (19.5%)
AnnTaylor Stores Corp. (a) (b) .............. 55,000 $ 2,302,300
Circuit City Stores, Inc. (b) ............... 91,200 2,290,032
Coach, Inc. (a) (b) ......................... 85,000 2,924,000
Coldwater Creek, Inc. (a) ................... 103,000 2,962,280
Crocs, Inc. (a) ............................. 66,000 2,240,700
Focus Media Holding, Ltd., ADR (a) .......... 26,000 1,505,920
GameStop Corp., Class A (a) (b) ............. 79,000 3,656,120
Guess?, Inc. (a) (b) ........................ 54,000 2,620,620
Hilton Hotels Corp. (b) ..................... 90,000 2,506,500
Nutri/System, Inc. (a) (b) .................. 59,000 3,675,110
Tween Brands, Inc. (a) (b) .................. 45,500 1,710,800
-------------
28,394,382
-------------
Consumer Staples (1.6%)
Corn Products International, Inc. ........... 72,500 2,359,150
-------------
Energy (4.4%)
Cameco Corp. (b) ............................ 56,000 2,047,920
Cameron International Corp. (a) (b) ......... 32,000 1,545,920
McDermott International, Inc. (a) ........... 35,500 1,483,900
TETRA Technologies, Inc. (a) ................ 57,000 1,377,120
-------------
6,454,860
-------------
Financials (16.5%)
Affiliated Managers Group, Inc. (a) (b) ..... 37,000 3,704,070
AllianceBernstein Holding L.P. .............. 61,000 4,208,390
Amvescap PLC, ADR ........................... 100,000 2,192,000
Bear Stearns Cos., Inc. (The) (b) ........... 11,600 1,625,160
Chicago Mercantile Exchange Holdings,
Inc. (b) ................................. 4,900 2,343,425
Host Marriott Corp. (b) ..................... 95,000 2,178,350
International Securities Exchange ........... 58,000 2,719,620
Holdings, Inc. (b) ..........................
Legg Mason, Inc. (b) ........................ 22,000 2,218,920
NASDAQ Stock Market, Inc. (a) 94,000 2,842,560
-------------
24,032,495
-------------
Health Care (14.4%)
Celgene Corp. (a) (b) ....................... 55,000 2,381,500
Covance, Inc. (a) ........................... 42,700 2,834,426
Express Scripts, Inc. (a) ................... 14,200 1,071,958
Humana, Inc. (a) ............................ 55,000 3,634,950
Intuitive Surgical, Inc. (a) (b) ............ 14,000 1,476,300
Medco Health Solutions, Inc. (a) (b) ........ 19,200 1,154,112
Pharmaceutical Product Development, Inc. .... 61,000 2,177,090
ResMed, Inc. (a) (b) ........................ 37,500 1,509,375
Respironics, Inc. (a) ....................... 76,000 2,934,360
Wellcare Health Plans, Inc. (a) ............. 30,500 1,727,215
-------------
20,901,286
-------------
Industrials (7.6%)
Corrections Corporation of America (a) ...... 65,250 2,822,063
Gol-Linhas Aereas Inteligentes, ADR (b) ..... 77,000 2,644,950
Manitowoc Company, Inc. ..................... 50,400 2,257,416
Precision Castparts Corp. ................... 25,000 1,579,000
Tam SA ADR (a) .............................. 55,000 1,754,500
-------------
11,057,929
-------------
SHARES OR FAIR
PRINCIPAL AMOUNT VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Information Technology (19.9%)
Activision, Inc. (a) ........................ 146,000 $ 2,204,600
Amdocs, Ltd. (a) ............................ 64,000 2,534,400
Amphenol Corp., Class A (b) ................. 49,000 3,034,570
Anixter International, Inc. (b) ............. 38,000 2,145,860
Cognizant Technology Solutions Corp.,
Class A (a) .............................. 37,000 2,740,220
Harris Corp. (b) ............................ 46,500 2,068,784
MEMC Electronic Materials, Inc. (a) (b) ..... 65,000 2,380,950
Micron Technology, Inc. (a) (b) ............. 159,000 2,766,600
MICROS Systems, Inc. (a) .................... 44,000 2,152,480
Spansion, Inc., Class A (a) (b) ............. 145,000 2,417,150
THQ Inc. (a) (b) ............................ 76,000 2,216,920
Varian Semiconductor Equipment
Associates, Inc. (a) ..................... 60,000 2,202,000
-------------
28,864,534
-------------
Materials (2.3%)
Airgas, Inc. ................................ 44,000 1,591,480
Titanium Metals Corp. (a) ................... 67,000 1,693,760
-------------
3,285,240
-------------
Telecommunication Services (4.8%)
American Tower Corp., Class A (a) (b) ....... 85,000 3,102,500
NII Holdings, Inc. (a) (b) .................. 63,000 3,916,080
-------------
7,018,580
-------------
Utilities (1.7%)
Allegheny Energy, Inc. (a) .................. 62,000 2,490,540
-------------
Total Common Stocks
(Cost $114,009,190) ................... 134,858,996
-------------
EXCHANGE TRADED FUNDS (4.0%)
iShares Russell Midcap Growth Index
Fund (b) ................................. 60,000 5,791,800
-------------
Total Exchange Traded Funds
(Cost $5,683,253) ..................... 5,791,800
-------------
REPURCHASE AGREEMENT (1.2%)
U.S. Bank N.A. 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity
value of $1,779,035 (Collateralized fully
by U.S. Government Agencies) ............. $ 1,778,287 1,778,287
-------------
Total Repurchase Agreement
(Cost $1,778,287) ..................... 1,778,287
-------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES
ON LOAN (38.3%)
Pool of Various Securities for BB&T
Funds -- Note 2 -- Security Loans ........ 55,773,608 55,773,608
-------------
Total Securities Held as Collateral for
Securities on Loan
(Cost $55,773,608) .................... 55,773,608
-------------
Total Investments
(Cost $177,244,338) -- 136.2% ............ 198,202,691
Net other assets (liabilities) -- (36.2)% ... (52,734,846)
-------------
Net Assets -- 100.0% ........................ 145,467,845
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
53
Small Cap Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS (88.4%)
Consumer Discretionary (13.7%)
BorgWarner, Inc. (b) ........................ 12,220 $ 698,617
CEC Entertainment, Inc. (a) ................. 37,287 1,174,913
Charlotte Russe Holding, Inc. (a) ........... 53,900 1,484,406
Deb Shops, Inc. ............................. 24,684 632,898
Emmis Communication Corp., Class A (a) ...... 95,300 1,167,425
Hartmarx Corp. (a) .......................... 233,176 1,578,602
Jos. A. Bank Clothiers, Inc. (a) (b) ........ 32,304 967,828
Lone Star Steakhouse & Saloon, Inc. ......... 12,200 338,794
M.D.C. Holdings, Inc. (b) ................... 12,610 585,735
Michaels Stores, Inc. ....................... 4,554 198,281
P.F. Chang's China Bistro, Inc. (a) (b) ..... 75,200 2,610,192
Polaris Industries, Inc. (b) ................ 37,016 1,523,208
Stanley Furniture Co., Inc. ................. 49,673 1,058,532
Steak n Shake Co. (The) (a) (b) ............. 124,600 2,104,494
Strattec Security Corp. (a) ................. 12,407 474,816
Zale Corp. (a) .............................. 16,896 468,695
-------------
17,067,436
-------------
Consumer Staples (1.7%)
Inter Parfums, Inc. ......................... 66,600 1,268,064
Sanderson Farms, Inc. (b) ................... 26,600 860,776
-------------
2,128,840
-------------
Energy (5.6%)
Berry Petroleum Co., Class A (b) ............ 19,536 550,134
Cabot Oil & Gas Corp. ....................... 7,366 353,052
Forest Oil Corp. (a) ........................ 39,106 1,235,359
Oceaneering International, Inc. (a) ......... 15,224 468,899
Oil States International, Inc. (a) (b) ...... 41,119 1,130,773
Pioneer Drilling Co. (a) (b) ................ 154,111 1,978,784
Teekay Shipping Corp. ....................... 29,732 1,222,283
-------------
6,939,284
-------------
Financials (15.7%)
AmerUs Group Co. (b) ........................ 11,248 764,976
Assured Guaranty, Ltd. ...................... 35,800 928,294
BRE Properties, Inc., Class A, REIT (b) ..... 10,270 613,427
CNA Surety Corp. (a) ........................ 44,035 889,507
Colonial BancGroup, Inc. .................... 50,260 1,231,370
Dime Community Bancshares ................... 86,432 1,273,143
First State Bancorp ......................... 23,324 605,724
Heritage Property Investment Trust, REIT (b) 13,480 491,481
Hilb, Rogal & Hobbs Co. (b) ................. 32,692 1,394,314
Hub International, Ltd. ..................... 24,676 713,630
InnKeepers USA Trust, REIT (b) .............. 68,492 1,115,735
Investment Technology Group, Inc. (a) ....... 13,710 613,523
Midland Co. (The) ........................... 17,542 759,919
NewAlliance Bancshares, Inc. (b) ............ 120,706 1,768,344
Peoples Bancorp, Inc. ....................... 24,834 725,898
Phoenix Cos., Inc. (The) .................... 76,680 1,073,520
Protective Life Corp. ....................... 10,982 502,427
Stewart Information Services Corp. .......... 36,124 1,256,031
Triad Guaranty, Inc. (a) .................... 27,920 1,428,666
Wintrust Financial Corp. .................... 26,675 1,337,751
-------------
19,487,680
-------------
Health Care (3.6%)
American Medical Systems Holdings,
Inc. (a) (b) ............................. 110,100 2,029,143
Greatbatch, Inc. (a) ........................ 49,000 1,108,380
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Health Care, continued
Owens & Minor, Inc. ......................... 13,843 $ 455,296
Pediatrix Medical Group, Inc. (a) ........... 9,368 427,181
West Pharmaceutical Services, Inc. .......... 10,000 392,700
-------------
4,412,700
-------------
Industrials (20.4%)
Briggs & Stratton Corp. (b) ................. 50,624 1,394,691
Curtiss-Wright Corp. (b) .................... 46,280 1,404,598
Esterline Technologies Corp. (a) ............ 62,700 2,116,752
Gardner Denver, Inc. (a) .................... 36,480 1,206,758
Genlyte Group, Inc. (a) (b) ................. 15,440 1,099,328
Gorman-Rupp Co. ............................. 29,563 966,710
Granite Construction, Inc. .................. 10,260 547,371
Kaydon Corp. (b) ............................ 41,355 1,530,962
LaBarge, Inc. (a) ........................... 226,848 2,359,219
Moog, Inc., Class A (a) ..................... 52,680 1,825,889
Mueller Industries, Inc. (b) ................ 30,635 1,077,433
Navigant Consulting Co. (a) ................. 50,257 1,008,155
Oshkosh Truck Corp. ......................... 40,540 2,046,054
Regal-Beloit Corp. .......................... 46,738 2,033,103
TBS International, Ltd., Class A (a) ........ 108,448 830,712
Universal Forest Products, Inc. (b) ......... 18,984 931,165
Watson Wyatt Worldwide, Inc., Class A (b) ... 30,800 1,260,336
Woodward Governor Co. (b) ................... 48,740 1,634,740
-------------
25,273,976
-------------
Information Technology (21.0%)
Avocent Corp. (a) ........................... 92,900 2,798,148
Commscope, Inc. (a) (b) ..................... 16,700 548,762
Comtech Telecommunications Corp. (a) (b) .... 77,873 2,607,188
Exar Corp. (a) .............................. 171,259 2,276,032
Imation Corp. (b) ........................... 44,855 1,800,928
Intersil Corp., Class A ..................... 13,630 334,617
Ixia (a) (b) ................................ 323,863 2,885,619
j2 Global Communications, Inc. (a) (b) ...... 33,400 907,478
KEMET Corp. (a) ............................. 95,688 772,202
Kronos, Inc. (a) ............................ 107,500 3,664,676
M-Systems Flash Disk Pioneers,
Ltd. (a) (b) ............................. 12,500 503,000
Perot Systems Corp., Class A (a) ............ 122,600 1,690,654
Richardson Electronics, Ltd. ................ 166,283 1,501,535
Rimage Corp. (a) ............................ 48,585 1,089,276
TNS, Inc. (a) (b) ........................... 86,300 1,299,678
Varian Semiconductor Equipment Associates,
Inc. (a) (b) ............................. 25,500 935,850
ViaSat, Inc. (a) ............................ 20,000 501,600
-------------
26,117,243
-------------
Materials (4.3%)
Gibraltar Industries, Inc. .................. 62,427 1,384,631
Glatfelter (b) .............................. 62,445 846,130
IAMGOLD Corp. (b) ........................... 60,000 509,400
Minerals Technologies, Inc. (b) ............. 26,915 1,437,260
Sensient Technologies Corp. ................. 15,500 303,335
Spartech Corp. (b) .......................... 32,740 876,450
-------------
5,357,206
-------------
Utilities (2.4%)
AGL Resources, Inc. (b) ..................... 19,710 719,415
Empire District Electric Co. (The) (b) ...... 29,760 666,029
Laclede Group, Inc. (The) ................... 14,368 460,925
Continued
54
Small Cap Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
SHARES OR FAIR
PRINCIPAL AMOUNT VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Utilities, continued
Nicor, Inc. (b) ............................. 9,230 $ 394,675
UIL Holdings Corp. .......................... 19,776 741,600
-------------
2,982,644
-------------
Total Common Stocks
(Cost $96,419,005) .................... 109,767,009
-------------
CORPORATE BONDS (0.1%)
Industrials (0.1%)
Mueller Industries, Inc., 6.00%, 11/1/14 .... $ 175,000 161,000
-------------
Total Corporate Bonds
(Cost $175,000) ....................... 161,000
-------------
EXCHANGE TRADED FUNDS (4.2%)
iShares Russell 2000 Growth Index Fund (b) .. 10,600 766,698
iShares Russell 2000 Index Fund (a) (b) ..... 42,500 3,058,725
iShares S&P SmallCap 600 Index Fund ......... 11,600 711,892
iShares S&P SmallCap 600 Growth Index
Fund (b) ................................. 5,800 693,100
-------------
Total Exchange Traded Funds
(Cost $5,025,632) ..................... 5,230,415
-------------
FAIR
PRINCIPAL AMOUNT VALUE
---------------- -------------
REPURCHASE AGREEMENT (7.2%)
U.S. Bank N.A., 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity
value of $8,941,721 (Collateralized fully
by U.S. Government Agencies) ............. $ 8,937,960 $ 8,937,960
-------------
Total Repurchase Agreement
(Cost $8,937,960) ..................... 8,937,960
-------------
SECURITIES HELD AS COLLATERAL FOR
SECURITIES ON LOAN (23.2%)
Pool of Various Securities for BB&T
Funds -- Note 2 -- Security Loans ........ 28,786,261 28,786,261
-------------
Total Securities Held as Collateral for
Securities on Loan
(Cost $28,786,261) .................... 28,786,261
-------------
Total Investments
(Cost $139,343,858) -- 123.1% ............ 152,882,645
Net other assets (liabilities) -- (23.1)%.... (28,696,778)
-------------
Net Assets -- 100.0% $ 124,185,867
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
55
International Equity Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS (95.1%)
Australia (2.9%)
Banks (0.8%)
National Australia Bank, Ltd. ............... 76,288 $ 2,086,111
-------------
Property & Causulty Insurance (1.1%)
QBE Insurance Group, Ltd. ................... 163,663 2,987,664
-------------
Transportation (1.0%)
Qantas Airways, Ltd. ........................ 889,400 2,591,129
-------------
7,664,904
-------------
Austria (0.4%)
Telecommunications (0.4%)
Telekom Austria AG .......................... 45,628 1,151,243
-------------
Belgium (1.5%)
Banking & Insurance Services (1.1%)
KBC Groep SA ................................ 27,203 2,864,436
-------------
Chemicals (0.4%)
Solvay SA ................................... 8,401 1,086,460
-------------
3,950,896
-------------
Finland (1.6%)
Paper & Related Products (1.0%)
UPM -- Kymmene, Oyj ......................... 106,100 2,520,969
-------------
Telecommunications (0.6%)
Nokia OYJ ................................... 77,650 1,541,757
-------------
4,062,726
-------------
France (7.6%)
Insurance (1.7%)
Axa ......................................... 118,475 4,368,213
-------------
Oil & Gas (2.4%)
Total SA .................................... 95,046 6,236,297
-------------
Pharmaceuticals (1.2%)
Sanofi-Aventis SA ........................... 36,375 3,237,597
-------------
Real Estate (0.5%)
Unibail ..................................... 5,624 1,181,546
-------------
Telecommunications (1.8%)
France Telecom SA ........................... 207,619 4,764,621
-------------
19,788,274
-------------
Germany (7.4%)
Automobiles & Trucks (0.5%)
Bayerische Motoren Werke AG ................. 23,422 1,255,275
-------------
Banking & Finance (1.5%)
Deutsche Postbank AG ........................ 37,403 2,839,689
IKB Deutsche Industriebank AG ............... 33,699 1,178,403
-------------
4,018,092
-------------
Diversified Products (0.5%)
Siemens AG .................................. 13,519 1,179,448
-------------
Electric Utilities (1.5%)
E. On AG .................................... 33,389 3,967,090
-------------
Insurance (0.3%)
Hannover Rueckversicherungs AG (a) .......... 16,304 685,475
-------------
Insurance-Multi-Line (2.0%)
Allianz AG .................................. 29,242 5,060,095
-------------
Manufacturing (0.4%)
Man AG ...................................... 13,026 1,100,433
-------------
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Germany, continued
Retail (0.6%)
Metro AG .................................... 27,792 $ 1,621,268
-------------
Telecommunications (0.1%)
Premiere AG (a) ............................. 19,316 255,927
-------------
19,143,103
-------------
Great Britain (22.4%)
Advertising/Marketing (0.4%)
WPP Group PLC ............................... 93,182 1,154,832
-------------
Banks (4.9%)
Barclays PLC ................................ 510,815 6,445,434
Royal Bank of Scotland Group PLC ............ 177,779 6,120,555
-------------
12,565,989
-------------
Beverages -- Wine & Spirits (2.2%)
Cadbury Schweppes PLC ....................... 122,336 1,302,007
Diageo PLC .................................. 246,618 4,356,075
-------------
5,658,082
-------------
Building & Construction (0.3%)
Balfour Beatty PLC .......................... 95,013 732,395
-------------
Distribution/Wholesale (0.9%)
Wolseley PLC ................................ 113,178 2,385,773
-------------
Diversified Operations/Commercial (0.2%)
Rentokil Initial PLC ........................ 198,694 544,943
-------------
Electric -- Distribution (0.6%)
Scottish & Southern Energy PLC .............. 62,100 1,532,271
-------------
Insurance (1.8%)
Prudential Corp. PLC ........................ 383,033 4,757,795
-------------
Media (0.2%)
ITV PLC ..................................... 284,224 514,802
-------------
Oil & Gas (2.5%)
BP PLC ...................................... 594,623 6,478,781
-------------
Pharmaceuticals (1.2%)
AstraZeneca PLC ............................. 16,877 1,054,655
GlaxoSmithKline PLC ......................... 74,996 1,996,486
-------------
3,051,141
-------------
Research & Development (0.4%)
Taylor Nelson Sofres PLC .................... 247,843 992,931
-------------
Retail -- Apparel (0.4%)
GUS PLC ..................................... 62,462 1,129,592
-------------
Retail -- Building (0.8%)
Kingfisher PLC .............................. 439,317 2,017,045
-------------
Retail -- Consumer Electronics (0.5%)
Kesa Electricals PLC ........................ 193,780 1,181,740
-------------
Retail -- Food (1.5%)
Tesco PLC ................................... 560,640 3,778,463
-------------
Telecommunication Services (2.4%)
Vodafone Group PLC .......................... 2,761,487 6,320,050
-------------
Tobacco (1.2%)
Gallaher Group PLC .......................... 188,860 3,090,154
-------------
57,886,779
-------------
Hong Kong (1.7%)
Manufacturing -- Consumer Goods (0.3%)
Yue Yuen Industrial Holdings, Ltd. .......... 237,000 736,214
-------------
Continued
56
International Equity Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Hong Kong, continued
Real Estate (0.5%)
Sun Hung Kai Properties, Ltd. ............... 109,000 $ 1,189,984
-------------
Retail -- Diversified (0.5%)
Esprit Asia Holdings, Ltd. .................. 142,500 1,299,628
-------------
Telecommunications (0.4%)
Hutchison Telecommunications (a) ............ 644,000 1,139,135
-------------
4,364,961
-------------
Ireland (2.8%)
Banking & Finance (2.1%)
Bank of Ireland ............................. 201,526 3,940,018
Depfa Bank PLC .............................. 86,071 1,591,098
-------------
5,531,116
-------------
Building & Construction (0.7%)
CRH PLC ..................................... 53,723 1,813,903
-------------
7,345,019
-------------
Italy (1.7%)
Banking & Finance (0.9%)
UniCredito Italiano S.p.A. .................. 296,195 2,457,933
-------------
Oil & Gas (0.8%)
Eni S.p.A. .................................. 68,254 2,022,411
-------------
4,480,344
-------------
Japan (19.9%)
Automobiles & Trucks (3.8%)
Honda Motor Co., Ltd. ....................... 73,600 2,473,897
Mitsubishi Corp. ............................ 114,400 2,150,267
Nissan Motors Co., Inc. ..................... 227,200 2,544,963
Toyota Motor Corp. .......................... 51,000 2,772,162
-------------
9,941,289
-------------
Banks (2.8%)
Bank of Yokohama, Ltd. (The) ................ 199,000 1,566,929
Sumitomo Mitsui Financial Group, Inc. ....... 296 3,107,612
Sumitomo Trust & Banking Co., Ltd. .......... 162,000 1,695,301
Takefuji Corp. .............................. 22,130 1,015,533
-------------
7,385,375
-------------
Brewery (0.6%)
Asahi Breweries, Ltd. ....................... 113,700 1,657,704
-------------
Diversified Chemicals (1.6%)
Nitto Denko Corp. ........................... 35,300 2,092,117
Shin-Etsu Chemical Co., Ltd. ................ 31,900 2,036,458
-------------
4,128,575
-------------
Diversified Financials (0.4%)
Nomura Holdings, Inc. ....................... 64,400 1,134,129
-------------
Drugs (0.3%)
Tanabe Seiyaku Co., Ltd. .................... 72,000 902,210
-------------
Electric Products (0.8%)
Funai Electric Co., Ltd. .................... 9,400 885,801
Yokogawa Electric Corp. ..................... 86,000 1,130,066
-------------
2,015,867
-------------
Electronic Components (1.2%)
Murata Manufacturing Co., Ltd. .............. 12,400 860,892
Rohm Co., Ltd. .............................. 23,300 2,164,093
-------------
3,024,985
-------------
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Japan, continued
Finance Services (0.4%)
Aiful Corp. ................................. 26,350 $ 1,019,554
-------------
Industrial (1.0%)
East Japan Railway Co. ...................... 224 1,566,540
SMC Corp. ................................... 7,800 1,032,207
-------------
2,598,747
-------------
Insurance (0.9%)
Mitsui Sumitomo Insurance Co., Ltd. ......... 181,000 2,263,458
-------------
Manufacturing (0.3%)
NTN Corp. ................................... 108,000 854,051
-------------
Manufacturing-Diversified (0.4%)
NOK Corp. ................................... 40,200 992,151
-------------
Office Equipment (1.1%)
Canon, Inc. ................................. 54,100 2,821,573
-------------
Oil & Gas (0.4%)
Tokyo Gas Co., Ltd. ......................... 203,000 1,017,492
-------------
Property & Causulty Insurance (0.4%)
Sompo Japan Insurance, Inc. ................. 78,000 1,021,641
-------------
Real Estate (0.4%)
Mitsui Fudosan Co., Ltd. .................... 42,000 954,788
-------------
Retail (0.6%)
AEON Co., Ltd. .............................. 66,800 1,637,338
-------------
Retail -- Automobile (0.8%)
Bridgestone Corp. ........................... 109,200 2,205,080
-------------
Telecommunications (1.2%)
KDDI Corp. .................................. 146 909,796
NTT DoCoMo, Inc. ............................ 1,409 2,171,179
-------------
3,080,975
-------------
Tobacco (0.5%)
Japan Tobacco, Inc. ......................... 304 1,181,407
-------------
51,838,389
-------------
Netherlands (10.1%)
Air Freight & Logistics (1.1%)
TNT NV ...................................... 74,637 2,830,435
-------------
Banking & Finance (3.8%)
ABN AMRO Holding NV ......................... 302,134 8,810,694
ING Groep NV ................................ 30,370 1,335,770
-------------
10,146,464
-------------
Electronic Equipment (0.8%)
ASML Holding NV (a) ......................... 93,987 2,197,411
-------------
Electronics (1.0%)
Koninklijke (Royal) Philips Electronics NV .. 71,476 2,507,564
-------------
Multi-Line Insurance (1.5%)
Aegon NV .................................... 207,643 3,893,751
-------------
Publishing (1.1%)
Reed Elsevier NV ............................ 166,144 2,770,085
-------------
Telecommunications (0.8%)
Koninklijke (Royal) KPN NV .................. 157,762 2,012,255
-------------
26,357,965
-------------
Norway (0.5%)
Telecommunications (0.5%)
Telenor ASA ................................. 102,300 1,334,457
-------------
Continued
57
International Equity Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Singapore (0.1%)
Retail (0.1%)
Jardine Cycle & Carriage, Ltd. .............. 28,908 $ 218,462
-------------
Spain (3.0%)
Banking & Finance (2.2%)
Banco Santander Central Hispano SA .......... 358,373 5,666,102
-------------
Petroleum (0.8%)
Repsol-YPF SA ............................... 67,638 2,012,735
-------------
7,678,837
-------------
Sweden (1.8%)
Appliances (0.4%)
Electrolux AB, Class B ...................... 62,800 1,020,135
-------------
Machinery & Equipment (0.5%)
Sandvik AB .................................. 130,100 1,491,789
-------------
Manufacturing (0.3%)
Husqvarna AB (a) ............................ 62,800 739,383
-------------
Telecommunications (0.6%)
Telefonaktiebolaget LM Ericsson, B Shares ... 425,000 1,473,579
-------------
4,724,886
Switzerland (9.7%)
Banks (2.8%)
Credit Suisse Group ......................... 125,036 7,236,505
-------------
Biotechnology (0.4%)
Straumann Holding AG ........................ 4,714 1,015,314
-------------
Building Materials (0.9%)
Holcim, Ltd. ................................ 29,168 2,384,585
-------------
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Switzerland, continued
Chemicals (0.4%)
Clariant AG ................................. 67,634 $ 914,339
-------------
Food Products (1.0%)
Nestle SA ................................... 7,699 2,685,196
-------------
Insurance (0.6%)
Swiss Re .................................... 21,880 1,674,999
-------------
Pharmaceuticals (3.6%)
Novartis AG ................................. 67,910 3,965,627
Roche Holding AG ............................ 31,361 5,423,764
-------------
9,389,391
-------------
25,300,329
-------------
Total Common Stocks
(Cost $182,608,966) ................... 247,291,574
-------------
EXCHANGE TRADED FUNDS (2.3%)
United States (2.3%)
iShares MSCI EAFE Index ..................... 87,000 5,891,640
-------------
Total Exchange Traded Funds
(Cost $ 5,845,333) .................... 5,891,640
-------------
Total Investments
(Cost $ 188,454,299) -- 97.4% ............ 253,183,214
Net other assets (liabilities) -- 2.6% ...... 6,715,867
-------------
Net Assets -- 100.0% ........................ $ 259,899,081
=============
CONTRACT
AMOUNT CONTRACT UNREALIZED
DELIVERY IN LOCAL VALUE FAIR APPRECIATION
CURRENCY DATE CURRENCY IN US DOLLAR VALUE (DEPRECIATION)
-------- -------- ---------- ------------ ----------- --------------
Short
British Sterling Pound vs. U.S. Dollar ..... 11/27/06 L 675,000 $ 1,248,109 $ 1,264,517 $(16,408)
British Sterling Pound vs. U.S. Dollar .. 11/27/06 3,790,000 7,167,080 7,100,029 67,051
British Sterling Pound vs. U.S. Dollar .. 11/27/06 2,475,000 4,709,057 4,636,561 72,496
-------- ---------- ----------- ----------- --------
Total Short Contracts ................ $13,124,246 $13,001,107 $123,139
=========== =========== ========
Long
British Sterling Pound vs. U.S. Dollar .. 11/27/06 L 935,000 $ 1,728,020 $ 1,751,590 $ 23,570
-------- ---------- ----------- ----------- --------
Total Long Contracts ................. $ 1,728,020 $ 1,751,590 $ 23,570
=========== =========== ========
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
58
Special Opportunities Equity Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS (93.1%)
Consumer Discretionary (18.9%)
Comcast Corp., Class A (a) (b) .............. 255,500 $ 9,415,174
Costco Wholesale Corp. (b) .................. 109,500 5,439,960
Laureate Education, Inc. (a) (b) ............ 138,587 6,632,774
News Corp., Class A ......................... 423,500 8,321,775
WCI Communities, Inc. (a) (b) ............... 108,700 1,895,728
YUM! Brands, Inc. ........................... 137,900 7,177,695
-------------
38,883,106
-------------
Consumer Staples (3.9%)
Smithfield Foods, Inc. (a) .................. 295,540 7,985,491
-------------
Energy (17.6%)
Apache Corp. (b) ............................ 131,000 8,279,200
CONSOL Energy, Inc. ......................... 238,500 7,567,605
Noble Corp. (b) ............................. 123,000 7,894,140
Pioneer Natural Resources Co. (b) ........... 134,000 5,242,080
Weatherford International, Ltd. (a) ......... 178,000 7,426,160
-------------
36,409,185
-------------
Financials (6.7%)
Markel Corp. (a) ............................ 14,600 5,995,636
Wells Fargo & Co. ........................... 217,500 7,869,150
-------------
13,864,786
-------------
Health Care (15.7%)
C.R. Bard, Inc. (b) ......................... 88,400 6,630,000
Emdeon Corp. (a) ............................ 626,500 7,336,315
KOS Pharmaceuticals, Inc. (a) ............... 191,000 9,439,220
MedCath Corp. (a) (b) ....................... 160,900 4,841,481
UnitedHealth Group, Inc. .................... 83,200 4,093,440
-------------
32,340,456
-------------
Industrials (14.2%)
J.B. Hunt Transport Services, Inc. (b) ...... 201,500 4,185,155
L-3 Communications Holdings, Inc. ........... 103,800 8,130,654
Nalco Holdings Co. (a) ...................... 451,500 8,361,780
PACCAR, Inc. ................................ 150,000 8,553,000
-------------
29,230,589
-------------
SHARES OR
PRINCIPAL FAIR
AMOUNT VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Information Technology (16.1%)
Activision, Inc. (a) (b) .................... 295,000 $ 4,454,500
ATI Technologies, Inc. (a) .................. 207,000 4,440,150
Checkfree Corp. (a) ......................... 113,500 4,689,820
Digital Insight Corp. (a) ................... 102,500 3,005,300
Fair Issac Corp. (b) ........................ 193,000 7,058,010
Symantec Corp. (a) (b) ...................... 451,500 9,607,920
-------------
33,255,700
-------------
Total Common Stocks
(Cost $154,279,456) ................... 191,969,313
-------------
INVESTMENT COMPANY (0.2%)
Morgan Stanley Quality Municipal
Income (b) ............................... 33,800 494,832
-------------
Total Investment Company
(Cost $445,097) ....................... 494,832
-------------
REPURCHASE AGREEMENT (6.5%)
U.S. Bank N.A., 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity value of
$13,500,699 (Collateralized fully by
U.S. Government Agencies) ................ $ 13,495,020 13,495,020
-------------
Total Repurchase Agreement
(Cost $13,495,020) .................... 13,495,020
-------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES
ON LOAN (29.9%)
Pool of Various Securities for BB&T
Funds -- Note 2 -- Security Loans ........ 61,799,055 61,799,055
-------------
Total Securities Held as Collateral for
Securities on Loan (Cost
$61,799,055) .......................... 61,799,055
-------------
Total Investments
(Cost $230,018,628) -- 129.7% ............ 267,758,220
Net other assets (liabilities) -- (29.7)% ... (61,324,221)
-------------
Net Assets -- 100.0% ........................ $ 206,433,999
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
59
Equity Income Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
COMMON STOCKS (94.0%)
Consumer Discretionary (3.5%)
KB Home (b) ................................. 95,000 $ 4,161,000
-------------
Consumer Staples (10.0%)
Altria Group, Inc. .......................... 31,420 2,405,201
Diageo PLC, ADR ............................. 28,500 2,024,640
General Mills, Inc. ......................... 54,000 3,056,400
Kimberly-Clark Corp. (b) .................... 67,000 4,379,120
-------------
11,865,361
-------------
Energy (18.8%)
ChevronTexaco Corp. (b) ..................... 72,500 4,702,350
ConocoPhillips .............................. 64,500 3,839,685
Kinder Morgan Management, LLC (a) (b) ....... 120,479 5,086,623
Natural Resource Partners L.P. .............. 7,800 391,482
Natural Resource Partners L.P. .............. 90,800 4,631,708
Petroleo Brasileiro SA, ADR ................. 45,000 3,772,350
-------------
22,424,198
-------------
Financials (24.2%)
CitiGroup, Inc. ............................. 72,885 3,620,198
Endurance Specialty Holdings, Ltd. .......... 137,000 4,830,620
Equity Inns, Inc., REIT ..................... 234,400 3,731,648
First Industrial Realty Trust, REIT ......... 110,000 4,840,000
Mills Corp. (The), REIT (b) ................. 49,000 818,790
U.S. Bancorp ................................ 99,000 3,288,780
Washington Real Estate Investment Trust,
REIT (b) ................................. 93,500 3,721,300
Weingarten Realty Investors, REIT (b) ....... 89,500 3,850,290
-------------
28,701,626
-------------
Health Care (8.2%)
Abbott Laboratories ......................... 96,500 4,686,040
Pfizer, Inc. ................................ 179,500 5,090,620
-------------
9,776,660
-------------
Industrials (3.6%)
General Electric Co. ........................ 122,900 4,338,370
-------------
SHARES OR
PRINCIPAL FAIR
AMOUNT VALUE
---------------- -------------
COMMON STOCKS, CONTINUED
Information Technology (11.1%)
Microchip Technology, Inc. .................. 139,000 $ 4,506,380
Nokia Corp., ADR (b) ........................ 214,000 4,213,660
Taiwan Semiconductor Manufacturing Co., Ltd.,
ADR (b) .................................. 473,000 4,540,800
-------------
13,260,840
-------------
Materials (3.4%)
E.I. DuPont de Nemours & Co. ................ 95,000 4,069,800
-------------
Telecommunication Services (3.8%) AT&T,
Inc. (b) .............................. 140,500 4,574,680
-------------
Utilities (7.4%)
Dominion Resources, Inc., Virginia (b)....... 57,500 4,398,175
Pinnacle West Capital Corp. (b) ............. 98,000 4,414,900
-------------
8,813,075
-------------
Total Common Stocks
(Cost $96,350,118) .................... 111,985,610
-------------
REPURCHASE AGREEMENT (5.6%)
U.S. Bank N.A., 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity value of
$6,676,368 (Collateralized fully by
U.S. Government Agencies) ................ $ 6,673,560 6,673,560
-------------
Total Repurchase Agreement
(Cost $6,673,560) ..................... 6,673,560
-------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES
ON LOAN (25.8%)
Pool of Various Securities for BB&T Funds --
Note 2 -- Security Loans ................. 30,739,802 30,739,802
-------------
Total Securities Held as Collateral for
Securities on Loan (Cost
$30,739,802) .......................... 30,739,802
-------------
Total Investments
(Cost $133,763,480) -- 125.4% ............ 149,398,972
Net other assets (liabilities) -- (25.4)% ... (30,282,293)
-------------
Net Assets -- 100.0% ........................ $ 119,116,679
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
60
Short U.S. Government Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL FAIR
AMOUNT VALUE
---------------- -------------
U.S. GOVERNMENT AGENCIES (47.4%)
Federal Farm Credit Bank (8.2%)
4.13%, 4/15/09 .............................. $ 5,000,000 $ 4,900,500
5.38%, 7/18/11 .............................. 1,000,000 1,017,733
-------------
5,918,233
-------------
Federal Home Loan Bank (12.1%)
3.25%, 12/17/07 (b) ......................... 3,000,000 2,936,154
3.63%, 11/14/08 (b) ......................... 4,000,000 3,891,256
4.63%, 2/18/11, Series 616 .................. 2,000,000 1,976,440
-------------
8,803,850
-------------
Federal Home Loan Mortgage Corporation
(12.1%)
3.25%, 2/25/08 (b) .......................... 4,000,000 3,899,916
3.50%, 4/1/08 ............................... 5,000,000 4,889,590
-------------
8,789,506
-------------
Federal National Mortgage Assoc. (15.0%)
3.88%, 5/15/07 (b) .......................... 4,000,000 3,966,116
4.63%, 1/15/08 (b) .......................... 7,000,000 6,962,270
-------------
10,928,386
-------------
Total U.S. Government Agencies
(Cost $34,707,587) .................. 34,439,975
-------------
MORTGAGE-BACKED SECURITIES (28.5%)
Federal Home Loan Mortgage Corporation
(10.4%)
5.00%, 12/1/08, Pool # M80714 ............... 524,043 519,703
4.50%, 1/1/10, Pool # M80792 ................ 1,715,348 1,689,902
3.50%, 10/15/10, Series 2786, Class PA ...... 1,528,738 1,519,412
4.50%, 1/15/11, Pool # 2782 ................. 1,625,463 1,615,091
6.50%, 5/1/13, Pool # E00548 ................ 255,546 260,186
3.50%, 8/15/16, Series 2866, Class WE ....... 1,206,637 1,195,075
6.00%, 9/1/16, Pool # E01049 ................ 718,873 729,281
-------------
7,528,650
-------------
Federal National Mortgage Assoc. (18.1%)
4.50%, 1/1/10, Pool # 254626 ................ 1,388,965 1,360,449
4.50%, 9/25/12, Series 2002-82, Class XJ .... 104,143 103,808
6.50%, 8/1/13, Pool # 251901 ................ 578,687 591,696
6.00%, 3/1/16, Pool # 253702 ................ 446,496 453,502
6.00%, 4/1/16, Pool # 535846 ................ 443,903 450,868
PRINCIPAL FAIR
AMOUNT VALUE
---------------- -------------
MORTGAGE-BACKED SECURITIES, CONTINUED
Federal National Mortgage Assoc., continued
6.50%, 4/1/16, Pool # 253706 ................ $ 742,722 $ 759,315
6.00%, 8/1/16, Pool # 545125 ................ 320,875 325,895
5.00%, 11/1/17, Pool # 254510 ............... 1,815,035 1,789,647
5.00%, 12/1/17, Pool # 254545 ............... 1,948,644 1,921,388
4.50%, 3/1/18, Pool # 555292 ................ 2,815,546 2,724,900
6.00%, 4/25/18, Series 2002-27, Class VB .... 2,500,922 2,498,575
2.75%, 6/25/34, Series 2004-W4, Class AI .... 149,702 149,194
-------------
13,129,237
-------------
Total Mortgage-Backed Securities
(Cost $20,963,699) .................... 20,657,887
-------------
U.S. Treasury Notes (19.7%)
4.38%, 1/31/08 .............................. 2,000,000 1,988,124
3.75%, 5/15/08 (b) .......................... 1,500,000 1,476,621
4.00%, 4/15/10 (b) .......................... 2,000,000 1,961,484
4.25%, 10/15/10 (b) ......................... 9,000,000 8,888,202
-------------
Total U.S. Treasury Notes
(Cost $14,368,890) .................... 14,314,431
-------------
REPURCHASE AGREEMENT (3.2%)
U.S. Bank N.A., 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity value of
$2,303,694 (Collateralized fully
by U.S. Government Agencies) ............. 2,302,725 2,302,725
-------------
Total Repurchase Agreement
(Cost $2,302,725) ..................... 2,302,725
-------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES
ON LOAN (47.7%)
Pool of Various Securities for BB&T
Funds -- Note 2 -- Security Loans ........ 34,618,745 34,618,745
-------------
Total Securities Held as Collateral for
Securities on Loan (Cost $34,618,745) .... 34,618,745
-------------
Total Investments
(Cost $106,961,646) --146.5% ............. 106,333,763
Net other assets (liabilities) -- (46.5)% ... (33,729,534)
-------------
Net Assets -- 100.0% ........................ $ 72,604,229
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
61
Intermediate U.S. Government Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MORTGAGE-BACKED SECURITIES (43.8%)
Federal Home Loan Mortgage Corp. (17.7%)
5.13%, 10/15/15, Series R003, Class AG ...... $ 22,269,077 $ 22,075,328
4.50%, 5/1/34, Pool # A21214 ................ 9,064,433 8,490,680
4.50%, 2/1/18, Pool # E94445 ................ 7,689,143 7,428,973
5.50%, 2/1/29, Pool # A18613 ................ 6,921,981 6,863,891
5.00%, 7/15/23, Series 2638, Class DH ....... 2,302,000 2,222,988
-------------
47,081,860
-------------
Federal National Mortgage Assoc. (26.1%)
5.00%, 1/1/18, Pool # 650205 ................ 6,440,624 6,346,350
4.50%, 3/1/18, Pool # 555292 ................ 5,631,093 5,449,802
5.50%, 1/1/33, Pool # 678321 ................ 2,156,487 2,131,923
5.00%, 7/1/33, Pool # 724965 ................ 3,826,185 3,689,618
5.00%, 8/1/33, Pool # 738751 ................ 1,660,403 1,601,340
5.00%, 8/1/33, Pool # 724365 ................ 1,249,017 1,204,683
5.00%, 10/1/33, Pool # 753298 ............... 1,006,976 971,328
4.50%, 9/1/34, Pool # 725866 ................ 8,507,447 7,947,496
6.50%, 11/1/34, Pool # 783476 ............... 3,791,327 3,863,504
5.50%, 5/1/35, Pool # 825530 ................ 15,930,935 15,695,747
5.50%, 9/1/35, Pool # 835787 ................ 10,972,779 10,810,788
7.00%, 8/1/36, Pool # 256360 ................ 9,762,660 10,028,503
-------------
69,741,082
-------------
Total Mortgage-Backed Securities
(Cost $118,702,277) ................... 116,822,942
-------------
U.S. TREASURY BONDS & NOTES (31.9%)
3.38%, 1/15/07 .............................. 5,000,000 6,366,457
4.88%, 7/31/11 .............................. 54,000,000 54,626,508
4.00%, 2/15/15 .............................. 25,000,000 23,930,675
-------------
Total U.S. Treasury Bonds & Notes
(Cost $84,707,318) .................... 84,923,640
-------------
U.S. GOVERNMENT AGENCIES (15.3%)
Federal Home Loan Mortgage Corp. (11.4%)
5.88%, 3/21/11 (b) .......................... 15,000,000 15,465,450
5.00%, 11/13/14, Series MTN, Callable
11/13/06 @100 (b) ........................ 15,000,000 14,829,705
-------------
30,295,155
-------------
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
U.S. GOVERNMENT AGENCIES, CONTINUED
Federal National Mortgage Assoc. (1.9%)
5.13%, 1/2/14 (b) ........................... $ 5,000,000 $ 4,986,130
-------------
Sovereign (2.0%)
Tennessee Valley Authority,
6.79%, 5/23/12 ........................... 5,000,000 5,450,100
-------------
Total U.S. Government Agencies
(Cost $41,279,881) .................... 40,731,385
-------------
U.S. GOVERNMENT BACKED SECURITIES (7.9%)
Banking & Financial Services (7.9%)
Private Export Funding, 4.97%, 8/15/13 ...... 4,350,000 4,363,607
Private Export Funding, 4.55%, 5/15/15 ...... 10,000,000 9,716,450
Private Export Funding, 4.95%, 11/15/15 ..... 7,000,000 7,002,751
-------------
Total U.S. Government Backed Securities
(Cost $21,638,756) ..................... 21,082,808
-------------
REPURCHASE AGREEMENT (0.8%)
U.S. Bank N.A., 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity value of
$2,047,349 (Collateralized fully by U.S.
Government Agencies) ..................... 2,046,488 2,046,488
-------------
Total Repurchase Agreement
(Cost$ 2,046,488) ..................... 2,046,488
-------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES
ON LOAN (13.5%)
Pool of Various Securities for BB&T
Funds -- Note 2 --Security Loans ......... 35,975,000 35,975,000
-------------
Total Securities Held as Collateral for
Securities on Loan (Cost $35,975,000) 35,975,000
-------------
Total Investments
(Cost $304,349,720) -- 113.2% ............ 301,582,263
Net other assets (liabilities) -- (13.2)% ... (35,205,721)
-------------
Net Assets -- 100.0% ........................ $ 266,376,542
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
62
Total Return Bond Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
CORPORATE BONDS (40.3%)
Aerospace & Defense (0.4%)
Raytheon Co., 6.15%, 11/1/08 ................ $ 1,425,000 $ 1,449,581
-------------
Airlines (0.8%)
Southwest Airlines Co., 5.25%, 10/1/14 ...... 2,980,000 2,907,792
-------------
Auto -- Cars/Light Trucks (0.6%)
DaimlerChrysler, 4.88%, 6/15/10 ............. 2,230,000 2,166,675
-------------
Banking & Financial Services (29.8%)
Accredited Mortgage Loan Trust, Series
2005-4, Class A2B, 5.47%, 12/25/35 (d)* .. 2,070,000 2,070,910
American Express Credit Account Master Trust,
5.33%, 3/15/11 (d)* ...................... 3,840,000 3,834,382
Bank of America Commercial Mortgage, Inc.,
4.81%, 12/10/42, Series 2004-6,
Class A5 ................................. 1,863,000 1,799,015
Bank of America Corp., 4.25%, 10/1/10 (d) ... 975,000 945,013
Bank of America Corp., 5.39%, Series 2006-5
Class A3, 2/10/14 (f) .................... 2,427,000 2,439,236
Boeing Capital Corp., 7.38%, 9/27/10 ........ 3,010,000 3,244,931
Chase Credit Card Master Trust, Series
2003-3, Class A, 5.44%, 10/15/10 (d) ..... 1,730,000 1,733,167
Chase Funding Mortgage Loan Asset-Backed,
5.42%, 5/25/33, Series 2003-4,
Class 1A5 ................................ 5,295,000 5,257,460
CIT Group, Inc., 5.00%, 2/13/14 ............. 1,378,000 1,332,117
CitiGroup Credit Card Issuance Trust, 5.61%,
Series 2003-A1, Class A1, 1/15/10 (d)* ... 330,000 330,478
Countrywide Asset-Backed Certificates, 5.70%,
8/25/34, Series 2004-3, Class 3A3 (d)* ... 7,960,000 7,989,445
Countrywide Asset-Backed Certificates, 5.53%,
10/25/35, Series 2005-4, Class
3AV2 (d)* ................................ 3,628,751 3,632,167
Credit-Based Asset Servicing and
Securitization, 4.83%, 8/25/35, Series
2005- CB5, Class AF2* .................... 4,150,000 4,096,742
CS First Boston Mortgage Securities Corp.,
3.52%, 1/15/37, Series 2004-C1, Class A2 . 3,910,000 3,795,055
ERP Operating LP, 5.13%, 3/15/16 ............ 1,950,000 1,883,710
Gatx Financial Corp., 5.13%, 4/15/10 ........ 3,599,000 3,555,567
General Electric Capital Commercial Mortgage
Corp., 3.92%, 11/10/38, Series 2004-C1,
Class A2 ................................. 5,560,000 5,368,958
Goldman Sachs Group, Inc., 5.125%,
1/15/15 .................................. 1,995,000 1,934,147
JPMorgan Chase Commercial Mortgage
Securities, 5.41%, Series 2005-A816
11/25/35, Class 1A1 ...................... 5,509,493 5,438,041
JPMorgan Chase Commercial Mortgage
Securities, 5.58%, Series 2006-CB16,
5/12/45, Class A3B ....................... 3,100,000 3,135,704
Lehman Brothers Holdings, Inc., 4.80%,
3/13/14, Series MTNG ..................... 3,642,000 3,493,672
MBNA Credit Card Master Note Trust, 5.45%,
8/16/10, Series 2003-A3, Class A3 (d)* ... 2,240,000 2,243,847
MBNA Credit Card Master Note Trust, Series
00-D, Class A, 5.53%, 8/16/10* ........... 3,460,000 3,464,149
Merrill Lynch & Co., 6.00%, 2/17/09 (b) ..... 3,435,000 3,492,018
Merrill Lynch/Countrywide Commercial
Mortgage, 5.39%, 7/12/46 ................. 2,700,000 2,714,732
Morgan Stanley, 4.25%, 5/15/10 (b) .......... 3,614,000 3,494,810
Residential Asset Mortgage Products, Inc.,
4.02%, 3/25/33, Series 2003-RS4,
Class AI6 ................................ 3,923,865 3,763,754
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
CORPORATE BONDS, CONTINUED
Banking & Financial Services, continued
Residential Asset Mortgage Products, Inc.,
5.58%, 11/25/35, Series 2005-RZ4,
Class A2 (d)* ............................ $ 3,031,000 $ 3,036,564
Residential Asset Securities Corp., 5.48%,
7/25/35, Series 2005-KS6, Class A2 (d)* .. 6,632,000 6,634,893
Structured Asset Investment Loan Trust,
5.54%, 1/25/36, Series 2005-11,
Class A6 (d)* ............................ 5,531,000 5,542,543
Synovus Financial Corp., 4.88%, 2/15/13 ..... 2,280,000 2,226,119
Wachovia Corp., 4.38%, 6/1/10 (b) ........... 1,827,000 1,783,581
Wells Fargo Co., 5.30%, 8/26/11 (b) ......... 3,840,000 3,865,647
Wells Fargo Home Equity Trust, Series
2004-2, Class AI3, 3.97%, 9/25/24 ........ 3,162,000 3,095,459
-------------
112,668,033
-------------
Correctional Institutions (0.5%)
Corrections Corp. of America, 6.25%,
3/15/13, Callable 3/15/09 @ 103.125 ...... 1,840,000 1,803,200
-------------
Information Technology (2.4%)
Cisco Systems Inc., 5.50%, 2/1/16 ........... 1,940,000 1,955,429
Electric Data Systems, Series B, 6.50%,
8/1/13 ................................... 3,481,000 3,531,217
Oracle Corp., 5.00%, 1/15/11 (b) ............ 3,605,000 3,570,561
-------------
9,057,207
-------------
Office Automation & Equipment (0.2%)
Xerox Corp., 6.40%, 3/15/16 ................. 920,000 915,400
-------------
Oil -- Field Services (0.2%)
Halliburton Co., 8.75%, 2/15/21 ............. 475,000 603,249
-------------
Paper & Related Products (0.8%)
International Paper Co., 6.75%, 9/1/11 ...... 3,013,000 3,199,460
-------------
Retail (0.4%)
Lowe's Companies, Inc., 8.25%, 6/1/10 ....... 1,468,000 1,617,840
-------------
Telecommunications (1.4%)
America Movil SA de CV, 5.75%, 1/15/15 (b) .. 1,314,000 1,294,098
Motorola, Inc., 7.50%, 5/15/25 (b) .......... 3,570,000 4,127,359
-------------
5,421,457
-------------
Utilities (2.8%)
American Electric Power, 5.38%, 3/15/10,
Series C ................................. 4,620,000 4,620,707
FirstEnergy Corp., 6.45%, 11/15/11 (b) ...... 1,910,000 1,992,466
General Electric Capital Corp., 5.00%,
1/8/16 (b) ............................... 2,005,000 1,963,338
General Electric Co., 5.00%, 2/1/13 (b) ..... 2,140,000 2,115,820
-------------
10,692,331
-------------
Total Corporate Bonds
(Cost $153,153,664) ................... 152,502,225
-------------
MORTGAGE-BACKED SECURITIES (35.8%)
Federal Home Loan Mortgage Corp. (13.7%)
6.00%, 10/1/19, Pool # G11679 ............... 2,389,928 2,423,614
5.00%, 5/1/20, Pool # B19275 ................ 3,360,401 3,302,233
5.50%, 11/1/20, Pool # J02711 ............... 1,612,820 1,611,864
5.50%, 3/1/21, Pool # J01432 ................ 560,735 560,633
5.00%, 7/1/25, Pool # C90908 ................ 2,880,002 2,797,985
4.50%, 6/1/35, Pool # G01842 ................ 2,289,596 2,140,531
5.50%, 6/1/35, Pool # A35148 ................ 5,466,473 5,393,620
5.50%, 7/1/35, Pool # A36540 ................ 3,412,036 3,366,564
Continued
63
Total Return Bond Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MORTGAGE-BACKED SECURITIES, CONTINUED
Federal Home Loan Mortgage Corp., continued
6.00%, 7/1/35, Pool # A36304 ................ $ 1,537,383 $ 1,545,434
5.50%, 8/1/35, Pool # A36652 ................ 1,373,016 1,354,718
5.00%, 9/1/35, Pool # A37961 ................ 1,835,253 1,766,047
5.50%, 9/1/35, Pool # G08080 ................ 1,031,649 1,017,900
5.50%, 12/1/35, Pool # A40359 ............... 1,614,462 1,592,946
5.50%, 4/1/36, Pool # A44445 ................ 4,206,145 4,148,492
6.50%, 5/1/36, Pool # A48509 ................ 2,263,085 2,305,347
5.00%, 7/1/36, Pool # G02291 ................ 686,034 659,827
5.92%, 7/1/36, Pool # 1G2448 ................ 3,074,887 3,084,387
5.87%, 8/1/36, Pool # 1B7116 ................ 3,636,137 3,642,800
5.87%, 8/1/36, Pool # 1G1094 ................ 3,654,371 3,662,810
5.56%, 10/15/36, Pool # 10036 (f) ........... 5,910,000 5,682,831
-------------
52,060,583
-------------
Federal National Mortgage Assoc. (18.9%)
6.00%, 10/1/13, Pool # 252061 ............... 154,046 156,410
5.50%, 4/1/18, Pool # 685496 ................ 238,400 238,292
4.50%, 6/1/19, Pool # 780349 ................ 3,290,488 3,174,860
5.00%, 8/1/20, Pool # 832058 ................ 389,336 382,589
5.00%, 8/1/20, Pool # 838787 ................ 600,494 590,089
5.50%, 11/1/20, Pool # 843972 ............... 1,407,255 1,406,618
5.50%, 12/1/20, Pool # 831138 ............... 1,758,840 1,758,044
5.50%, 5/1/21, Pool # 895628 ................ 3,226,917 3,225,455
5.00%, 9/1/25, Pool # 255892 ................ 1,737,390 1,686,598
6.50%, 1/1/35, Pool # 809198 ................ 1,351,088 1,375,897
5.50%, 3/1/35, Pool # 787561 ................ 6,500,895 6,404,923
5.50%, 4/1/35, Pool # 822982 ................ 4,928,171 4,864,585
6.00%, 4/1/35, Pool # 735503 (b) ............ 501,284 503,596
7.00%, 6/1/35, Pool # 255820 ................ 1,148,337 1,179,608
7.00%, 6/1/35, Pool # 830686 ................ 1,365,792 1,402,984
5.00%, 9/1/35, Pool # 757857 ................ 1,448,078 1,391,684
5.50%, 10/1/35, Pool # 817568 ............... 2,670,588 2,632,368
6.00%, 10/1/35 (f) .......................... 14,637,000 14,701,038
5.00%, 11/1/35, Pool # 844280 ............... 4,516,350 4,340,465
5.50%, 2/1/36, Pool #256101 ................. 2,237,810 2,205,784
5.50%, 2/1/36, Pool # 831295 ................ 1,310,480 1,291,726
6.50%, 3/1/36, Pool # 866062 ................ 2,428,640 2,473,234
5.62%, 5/1/36, Pool # 871259 ................ 3,329,329 3,299,124
6.50%, 7/1/36, Pool # 887293 ................ 2,206,428 2,246,942
5.95%, 8/1/36, Pool # 900502 ................ 3,713,846 3,731,941
5.56%, 10/25/36 (f) ......................... 4,840,000 4,650,940
-------------
71,315,794
-------------
Government National Mortgage Assoc. (3.2%)
5.00%, 10/1/35 (f) .......................... 12,549,862 12,189,053
-------------
Total Mortgage-Backed Securities
(Cost $136,272,217) ................... 135,565,430
-------------
U.S. TREASURY NOTES (16.9%)
2.00%, 1/15/14 .............................. 8,774,000 9,478,572
2.00%, 1/15/16 .............................. 2,021,000 2,024,556
7.25%, 5/15/16 (b) .......................... 5,145,000 6,166,365
8.88%, 8/15/17 (b) .......................... 25,907,000 35,000,771
7.88%, 2/15/21 (b) .......................... 8,532,000 11,212,251
-------------
Total U.S. Treasury Notes
(Cost $62,104,796) .................... 63,882,515
-------------
U.S. GOVERNMENT AGENCIES (10.0%)
Federal Home Loan Bank (1.7%)
4.85%, 8/10/10, Callable 2/10/07
@ 100 (b) ................................ 4,130,000 4,075,484
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
U.S. GOVERNMENT AGENCIES, CONTINUED
Federal Home Loan Bank, continued
Series FB11, 5.88%, 2/15/11 (b) ............. $ 2,335,000 $ 2,409,879
-------------
6,485,363
-------------
Federal Home Loan Mortgage Corp. (2.8%)
Series MTN, 4.50%, 6/15/10, Callable
6/15/06 @ 100 (b) ........................ 1,995,000 1,956,894
4.88%, 11/15/13 ............................. 5,202,000 5,175,069
5.50%, 7/15/16, Series 3061 Class VU (b) .... 3,614,127 3,639,970
-------------
10,771,933
-------------
Federal National Mortgage Assoc. (5.5%)
7.25%, 1/15/10, Series B (b) ................ 6,440,000 6,892,725
6.13%, 3/15/12 (b) .......................... 4,328,000 4,572,878
5.50%, 11/25/16, Series 2005-120
Class VA ................................. 5,110,391 5,118,954
5.50%, 10/25/24, Series 2006-18,
Class CA ................................. 3,426,994 3,436,265
4.40%, 11/25/33, Series 2003-W16,
Class AF5 ................................ 690,000 680,691
-------------
20,701,513
-------------
Total U.S. Government Agencies
(Cost $37,429,350) .................... 37,958,809
-------------
MUNICIPAL BONDS (6.1%)
California (1.4%)
Fresno County, California, Pension
Obligation, Series A, 4.20%, 8/15/13,
FGIC ..................................... 4,060,000 3,854,117
San Bernardino County, California, Financing
Authority, Pension Obligation Revenue,
6.87%, 8/1/08, MBIA ...................... 1,685,000 1,737,454
-------------
5,591,571
-------------
Florida (1.4%)
Gainesville, Florida, Post Employment
Benefits Obligation, 4.68%, 10/1/13 ...... 1,235,000 1,202,631
Gainesville, Florida, Post Employment
Benefits Obligation, 4.71%, 10/1/14 ...... 2,580,000 2,507,941
Palm Beach County, Florida, 5.74%,
6/1/12 ................................... 690,000 711,017
Palm Beach County, Florida, 5.78%,
6/1/13 ................................... 985,000 1,019,977
-------------
5,441,566
-------------
Illinois (1.0%)
Chicago, Illinois, Series B, 5.25%, 1/1/12,
XLCA ..................................... 2,185,000 2,199,771
Illinois State, 3.75%, 6/1/12 ............... 1,535,000 1,433,383
-------------
3,633,154
-------------
New York (1.3%)
New York State, Series D, 5.20%, 4/15/11 .... 2,230,000 2,238,875
New York State, Series D, 5.21%, 4/15/12 .... 855,000 863,328
Sales Tax Asset Receivables Corp., Series B,
4.06%, 10/15/10, FGIC .................... 1,735,000 1,674,431
-------------
4,776,634
-------------
Texas (0.6%)
Brownsville, Texas, Utility System, Series B,
4.92%, 9/1/14, AMBAC ..................... 2,470,000 2,435,544
-------------
Continued
64
Total Return Bond Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
Wisconsin (0.4%)
Wisconsin State General Revenue, Series A,
4.80%, 5/1/13 ............................ $ 1,380,000 $ 1,353,986
-------------
Total Municipal Bonds
(Cost $ 23,020,949) ................... 23,232,455
-------------
U.S. TREASURY BONDS (3.3%)
8.75%, 5/15/17 (b) ....................... 9,380,000 12,524,495
-------------
Total U.S. Treasury Bonds
(Cost $ 12,405,511) ................... 12,524,495
-------------
REPURCHASE AGREEMENT (3.3%)
U.S. Bank N.A., 5.05%, dated 9/29/06,
maturing 10/2/06, with a maturity value of
$12,554,812 (Collateralized fully by U.S.
Government Agencies) ..................... 12,549,531 12,549,531
-------------
Total Repurchase Agreement
(Cost $ 12,549,531) ................... 12,549,531
-------------
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES
ON LOAN (25.8%)
Pool of Various Securities for BB&T Funds --
Note 2 -- Security Loans ................. $ 97,576,279 $ 97,576,279
-------------
Total Securities Held as Collateral for
Securities on Loan (Cost $ 97,576,279) ... 97,576,279
-------------
Total Investments
(Cost $ 534,512,297) -- 141.5% ........... 535,791,739
Net other assets (liabilities) -- (41.5)% ... (157,043,365)
-------------
Net Assets -- 100.0% ........................ $ 378,748,374
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
65
Kentucky Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS (101.0%)
Kentucky (101.0%)
Allen County, KY, School District Finance
Corp., Revenue, 5.25%, 4/1/10, Prerefunded
4/1/07 @ 102 ............................. $ 455,000 $ 467,945
Bell County, KY, Public Properties Corp.,
Revenue, 5.40%, 9/1/13, Prerefunded 3/1/11
@ 102 .................................... 160,000 174,336
Daviess County, KY, Public Improvements
Corp., Refunding Revenue, Series A, 5.60%,
10/1/06, OID ............................. 245,000 245,012
Harlan County, KY, School District, School
Building Revenue, 4.25%, 7/1/16, MBIA .... 500,000 517,760
Hopkins County, KY, Correctional Facilities
Improvements, G.O., 5.38%, 2/1/09, FGIC .. 180,000 187,371
Jefferson County, KY, Capital Projects Corp.,
Revenue, 5.20%, 6/1/08, Callable 6/1/07
@ 102, MBIA .............................. 295,000 302,481
Kentucky Area Development District Finance
Trust Revenue, Series E, 5.40%, 6/1/14,
Callable 6/1/10 @ 102, Wachovia Bank
N.A. ..................................... 220,000 234,995
Kentucky Area Development District Financing,
Certificates of Participation, Series L,
5.15%, 5/1/36, Callable 5/1/16 @ 100 ..... 505,000 528,972
Kentucky Area Development District Financing,
Certificates of Participation, Series M,
4.30%, 8/1/09, Callable 8/1/07 @ 100 ..... 250,000 250,250
Kentucky Asset/Liability Commission General
Receipts Revenue, 5.00%, 10/1/15 ......... 480,000 525,691
Kentucky Economic Development Finance
Authority Revenue, Series A, 5.75%,
12/1/15, Prerefunded 6/1/10 @ 101, OID ... 500,000 532,840
Kentucky Housing Corp., Revenue, Series D,
5.20%, 7/1/07, FHA ....................... 65,000 65,543
Kentucky State Property & Buildings
Commission Refunding Revenue, Project
No. 76, 5.50%, 8/1/21, AMBAC ............. 620,000 724,805
Kentucky State Property & Buildings
Commission Refunding Revenue, Project
No. 83, 5.00%, 10/1/18, AMBAC ............ 250,000 276,163
Kentucky State Property & Buildings
Commission Revenue, 5.15%, 2/1/22, FSA ... 30,000 32,264
Kentucky State Property & Buildings
Commission Revenue, 5.00%, 10/1/22,
Prerefunded 10/1/13 @ 100, FSA ........... 465,000 502,898
Kentucky State Property & Buildings
Commission Revenue, Project No. 67, 5.50%,
9/1/12, Prerefunded 9/1/10 @ 100 ......... 500,000 535,450
Kentucky State Property & Buildings
Commission Revenue, Project No. 69, Series
A, 5.50%, 8/1/11, FSA .................... 540,000 586,089
Kentucky State Property & Buildings
Commission Revenue, Project No. 73,
5.25%, 11/1/11 ........................... 400,000 429,600
Kentucky State Property & Buildings
Commission Revenue, Project No. 74, 5.38%,
2/1/14, Prerefunded 2/1/12 @ 100, FSA .... 500,000 543,165
Kentucky State Property & Buildings
Commission Revenue, Project No. 81, 5.00%,
11/1/16, Callable 11/1/13 @ 100, AMBAC ... 500,000 539,220
SHARES OR
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
Kentucky, continued
Kentucky State Turnpike Authority Refunding
Revenue, Revitalization Project, Series A,
5.50%, 7/1/11, AMBAC ..................... $ 200,000 $ 216,824
Kentucky State Turnpike Authority Refunding
Revenue, Revitalization Project, Series A,
5.50%, 7/1/12, AMBAC ..................... 500,000 548,415
Kentucky State Turnpike Authority Refunding
Revenue, Revitalization Project, Series A,
5.50%, 7/1/15, AMBAC ..................... 270,000 304,757
Kentucky State Turnpike Authority Revenue,
Series B, 5.00%, 7/1/16, AMBAC ........... 500,000 548,075
Larue County, KY, School District, School
Building Revenue, 4.25%, 7/1/15, MBIA .... 245,000 253,874
Leslie County, KY, Detention Facilities
Improvement Project, G.O., 4.75%, 12/1/35,
Callable 12/1/15 @ 100, OID .............. 600,000 599,964
Louisville & Jefferson Counties, KY,
Metropolitan Sewer District Revenue, Series
A, 5.00%, 5/15/10, MBIA .................. 55,000 57,728
Louisville & Jefferson County, KY,
Metropolitan Government Health Systems
Revenue, Norton Healthcare, Inc., 5.00%,
10/1/26, Callable 10/1/16 @ 100 .......... 500,000 515,895
Louisville & Jefferson County, KY,
Metropolitan Sewer District Revenue,
Series A, 5.00%, 5/15/36, Callable
11/15/11 @ 101, MBIA, OID ................ 835,000 879,764
Louisville & Jefferson County, KY,
Metropolitan Sewer District Revenue,
Series A, 5.00%, 5/15/38, Callable 5/15/14
@ 101, FGIC .............................. 340,000 358,006
Louisville & Jefferson County, KY,
Waterworks & Water Systems Revenue,
5.00%, 11/15/16 .......................... 495,000 543,787
Louisville & Jefferson County, KY,
Waterworks & Water Systems Revenue,
4.00%, 11/15/12 .......................... 35,000 35,730
Louisville, KY, Parking Authority Revenue,
7.50%, 7/1/09, Callable 1/1/07 @ 100,
ETM ...................................... 350,000 386,057
Paducah, KY, Public Housing Authority
Revenue, 5.00%, 10/1/06, U.S. Government
Guaranteed ............................... 270,000 270,010
Somerset, KY, Independent School District
Finance Corp., Revenue, 4.00%, 10/1/08 ... 65,000 65,649
University of KY, University & College
Improvements Revenue, Series Q, 5.00%,
5/1/10, ETM .............................. 250,000 261,763
-------------
Total Municipal Bonds
(Cost $13,746,702) ....................... 14,049,148
-------------
INVESTMENT COMPANY (2.2%)
Federated Tax-Free Obligations Fund,
Institutional Service Class .............. 303,924 303,924
-------------
Total Investment Company
(Cost $ 303,924) ......................... 303,924
-------------
Total Investments
(Cost $14,050,626) -- 103.2% ............. 14,353,072
Net other assets (liabilities) -- (3.2)% .... (448,522)
-------------
Net Assets -- 100.0% ........................ $ 13,904,550
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
66
Maryland Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS (95.2%)
Maryland (95.2%)
Anne Arundel County, MD, Water Utility
Improvements, G.O., 5.38%, 3/1/13,
Prerefunded 3/1/12 @ 100 ................. $ 400,000 $ 435,768
Baltimore County, MD, Refunding, G.O., 4.25%,
9/1/25, Callable 9/1/16 @ 100, OID ....... 350,000 348,187
Baltimore County, MD, Water Utility
Improvements, Metropolitan District, 70th
Issue, G.O., 5.00%, 9/1/16 ............... 385,000 425,464
Baltimore, MD, Water Project, Unrefunded
Revenue, Series A, 5.00%, 7/1/24, ETM,
FGIC, OID ................................ 305,000 338,956
Charles County, MD, Construction & Public
Improvements Refunding, G.O., 5.00%,
3/1/11 ................................... 400,000 424,156
Frederick County, MD, Public Facilities
Refunding, G.O., 5.00%, 8/1/14 ........... 645,000 703,081
Frederick County, MD, Public Facilities,
G.O., 5.00%, 12/1/15 ..................... 500,000 549,405
Maryland State Department of Transportation
Revenue, 4.25%, 2/15/17, Callable 2/15/16
@ 100 .................................... 250,000 258,558
Maryland State Department of Transportation
Revenue, Second Issue, 5.00%, 6/1/15 ..... 100,000 109,463
Maryland State Health & Higher Educational
Facilities Authority Refunding Revenue,
Doctors Hospital, Inc., 5.50%, 7/1/24,
Callable 7/1/07 @ 100, OID ............... 240,000 240,180
Maryland State Health & Higher Educational
Facilities Authority Refunding Revenue,
Medstar Health, Inc., 5.00%, 4.375% ...... 145,000 149,750
Maryland State Health & Higher Educational
Facilities Authority Refunding Revenue,
Medstar Health, Inc., 5.00%, 8/15/12 ..... 275,000 289,974
Maryland State Health & Higher Educational
Facilities Authority Revenue, 5.13%,
7/1/33, Callable 7/1/08 @ 101,
FSA, OID ................................. 120,000 123,626
Maryland State Health & Higher Educational
Facilities Authority Revenue, Carroll
County General Hospital, 4.63%,
7/1/10, OID .............................. 75,000 76,879
Maryland State Health & Higher Educational
Facilities Authority Revenue, Helix Health
Issue, 5.13%, 7/1/11, AMBAC .............. 25,000 26,753
Maryland State Health & Higher Educational
Facilities Authority Revenue, Helix Health
Issue, 5.13%, 7/1/12, AMBAC, OID ......... 380,000 410,476
Maryland State Health & Higher Educational
Facilities Authority Revenue, Helix Health
Issue, 5.00%, 7/1/27, AMBAC, OID ......... 230,000 252,039
SHARES OR
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
Maryland, continued
Maryland State Health & Higher Educational
Facilities Authority Revenue, Howard
County General Hospital, 5.50%, 7/1/13,
Callable 7/1/07 @ 100, OID ............... $ 45,000 $ 45,882
Maryland State, MD, State & Local Facilities
Second Series, G.O., 5.00%, 8/1/17,
Callable 8/1/16 @ 100 .................... 300,000 330,291
Maryland State, MD, State & Local Facilities,
First Series, G.O., 5.00%, 3/1/10,
Callable 3/1/08 @ 101 .................... 350,000 360,546
Maryland State, MD, State & Local Facilities,
Second Series, G.O., 5.00%, 8/1/11 ....... 380,000 405,118
Montgomery County, MD, Construction & Public
Improvements, Series A, G.O., 5.00%,
7/1/17 ................................... 500,000 554,404
Montgomery County, MD, Construction & Public
Improvements, Series A, G.O., 5.00%,
2/1/21, Callable 2/1/12 @ 101 ............ 240,000 259,097
Montgomery County, MD, Construction & Public
Improvements, Series A, G.O., 5.00%,
2/1/22, Callable 2/1/12 @ 101 ............ 500,000 539,785
Prince Georges County, MD, Construction &
Public Improvements Refunding G.O.,
Series B, 5.00%, 10/1/12 ................. 690,000 742,715
Prince Georges County, MD, Construction &
Public Improvements, G.O., 5.00%,
9/15/13 .................................. 250,000 271,250
University of MD, System Auxiliary Facility &
Tuition Revenue, Series A, 5.00%, 10/1/23,
Callable 10/1/16 @ 100 ................... 400,000 432,032
Washington County, MD, Public Improvements,
G.O., 4.80%, 1/1/08, Callable 1/1/07 @
100, FGIC ................................ 100,000 100,092
Washington Suburban Sanitation District
Refunding, G.O., 5.00%, 6/1/12 ........... 275,000 295,485
-------------
Total Municipal Bonds
(Cost $ 9,356,423) .................... 9,499,412
-------------
INVESTMENT COMPANY (4.1%)
Federated Maryland Municipal Cash Trust ..... 404,752 404,752
-------------
Total Investment Company
(Cost $ 404,752) ...................... 404,752
-------------
Total Investments
(Cost $9,761,175) -- 99.3% ............... 9,904,164
Net other assets (liabilities) -- 0.7% ...... 64,914
-------------
Net Assets -- 100.0% ........................ $ 9,969,078
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
67
North Carolina Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS (98.1%)
North Carolina (98.1%)
Alamance County, NC, School Improvements,
G.O., 5.00%, 2/1/19, Callable 2/1/16
@ 100 .................................... $ 1,000,000 $ 1,090,180
Appalachian State University of North
Carolina Refunding Revenue, 5.25%,
7/15/20, Callable 7/15/15 @ 100, MBIA .... 1,000,000 1,101,200
Appalachian State University of North
Carolina, Refunding Revenue, 5.00%,
7/15/18, Callable 7/15/15 @ 100, MBIA .... 1,380,000 1,495,768
Asheville, NC, Water Systems Revenue,
Refunding Bonds, 5.00%, 8/1/21, Callable
8/1/15 @ 100, FSA ........................ 1,410,000 1,518,387
Bladen County, NC, G.O., 5.60%, 5/1/13,
Callable 5/1/10 @ 101.5, FSA ............. 1,150,000 1,244,760
Broad River, NC, Water Authority Water
System Revenue. 5.00%, 6/1/19 ............ 1,050,000 1,125,926
Brunswick County, NC, Enterprise Systems
Revenue, Series A, 5.25%, 4/1/17,
Callable 4/1/14 @ 100, FSA ............... 1,000,000 1,095,280
Cabarrus County, NC, Certificates of
Participation, 5.25%, 2/1/12, AMBAC ...... 1,285,000 1,382,429
Cabarrus County, NC, Refunding, G.O.,
5.00%, 2/1/16 ............................ 1,000,000 1,095,030
Charlotte, NC, Mecklenberg County Hospital
Authority Revenue, Health Care System,
Series A, 5.00%, 1/15/13, Callable
1/15/07 @ 102 ............................ 1,600,000 1,637,248
Charlotte, NC, Public Improvements, G.O.,
5.50%, 6/1/09 ............................ 1,460,000 1,534,942
Charlotte, NC, Storm Water Fee Revenue,
5.00%, 6/1/34, Callable 6/1/14 @ 100 ..... 1,405,000 1,474,224
Cumberland County, NC, School
Improvements, G.O., 5.50%, 3/1/09 ........ 1,055,000 1,103,066
Durham, NC, Refunding Bonds, G.O.,
5.00%, 2/1/13 ............................ 1,585,000 1,711,372
Durham, NC, Water & Sewer Utility Systems
Revenue, 5.00%, 6/1/12, Callable 6/1/11
@ 101 .................................... 1,000,000 1,067,770
Franklin County, NC, School Improvements,
G.O., 4.50%, 8/1/16, FSA ................. 265,000 281,396
Gastonia, NC, Combined Utilities System
Revenue, 5.00%, 5/1/16, Callable 5/1/15 @
100, AMBAC ............................... 1,060,000 1,151,870
Gastonia, NC, Combined Utilities Systems
Revenue, 5.00%, 5/1/10, MBIA ............. 1,000,000 1,050,150
Greenville, NC, Combined Enterprise Systems
Revenue, 5.50%, 9/1/10, FSA .............. 1,455,000 1,560,575
Guilford County, NC, Public Improvements,
G.O., Series B, 5.00%, 10/1/09 ........... 2,000,000 2,088,940
Guilford County, NC, Public Improvements,
G.O., Series B, 5.25%, 10/1/15, Callable
10/1/10 @ 102, OID ....................... 2,030,000 2,195,445
High Point, NC, Combined Enterprise System
Revenue, 4.20%, 11/1/18, Callable 11/1/16
@ 100, FSA ............................... 725,000 741,030
High Point, NC, Public Improvements, G.O.,
Series B, 5.40%, 6/1/08 .................. 1,350,000 1,391,243
Johnston County, NC, Finance Corp. Revenue,
5.50%, 8/1/10, Callable 8/1/09 @ 101,
FSA ...................................... 1,070,000 1,134,307
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
North Carolina, continued
Johnston County, NC, G.O., 5.50%, 3/1/12,
Callable 3/1/10 @ 101, FGIC .............. $ 1,000,000 $ 1,071,820
Johnston County, NC, Refunding, G.O., 5.00%,
2/1/16, Callable 2/1/15 @ 100, FGIC ...... 1,070,000 1,162,416
Lincoln County, NC, Certificates of
Participation, 4.00%, 6/1/10, FSA ........ 90,000 91,193
Lincoln County, NC, Certificates of
Participation, 5.00%, 6/1/12, FSA ........ 535,000 570,321
Lincoln County, NC, Certificates of
Participation, 5.00%, 6/1/13, FSA ........ 590,000 633,583
Lincoln County, NC, Certificates of
Participation, 5.00%, 6/1/16, FSA ........ 635,000 690,905
Lincolnton, NC, Combined Enterprise Systems
Refunding Revenue, 5.00%, 5/1/16,
Callable 5/1/15 @ 100, XLCA .............. 140,000 151,600
Mecklenburg County, NC, Public
Improvements, G.O., Series D, 5.00%,
4/1/11, Prerefunded 4/1/10 @ 100.5 ....... 1,000,000 1,053,170
Municipal Power Agency No. 1, Catawba
Electric Revenue, 5.50%, 1/1/13, AMBAC-
TCRS, ETM ................................ 1,185,000 1,289,505
New Hanover County, NC, Hospital Revenue,
Regional Medical Center Project, 5.25%,
10/1/12, Callable 10/1/09 @ 101, MBIA .... 1,000,000 1,052,370
New Hanover County, NC, Public
Improvements, G.O., 5.30%, 11/1/08 ....... 1,500,000 1,554,495
New Hanover County, NC, Refunding, G.O.,
5.25%, 2/1/18 ............................ 1,000,000 1,124,660
North Carolina Capital Facilities Finance
Agency Revenue, Pfeiffer University
Project, 5.25%, 5/1/15, Callable 11/1/06
@ 102 (d)(e) ............................. 2,092,897 2,134,755
North Carolina Eastern Municipal Power
Agency, Refunding Revenue, Series A,
4.50%, 1/1/24, Callable 1/1/22 @ 100 ..... 2,810,000 2,935,156
North Carolina Eastern Municipal Power
Agency, Power System Revenue, Series A,
5.00%, 1/1/17, ETM, OID .................. 670,000 731,613
North Carolina Eastern Municipal Power
Agency, Power System Revenue, Series A,
6.40%, 1/1/21, OID (d) ................... 4,000,000 4,888,559
North Carolina Eastern Municipal Power
Agency, Power System Revenue, Series A,
6.00%, 1/1/26, Prerefunded 1/1/22 @ 100,
OID ...................................... 1,305,000 1,594,084
North Carolina Medical Care Commission
Health Care Facilities Revenue, Carolina
Medicorp Project, 5.25%, 5/1/09, Callable
5/1/07 @ 100, OID ........................ 1,325,000 1,336,117
North Carolina Medical Care Commission
Health Care Facilities Revenue, Stanley
Memorial Hospital Project, 5.45%, 10/1/08,
Callable 10/1/06 @ 102, AMBAC ............ 750,000 765,960
North Carolina Medical Care Commission
Hospital Revenue, Gaston Memorial Hospital
Project, 5.40%, 2/15/11, Callable 2/15/07
@ 101 .................................... 565,000 577,600
Continued
68
North Carolina Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
North Carolina, continued
North Carolina Medical Care Commission
Hospital Revenue, Gaston Memorial Hospital
Project, 5.50%, 2/15/15, Callable 2/15/07
@ 101, OID ............................... $ 2,130,000 $ 2,189,448
North Carolina Medical Care Commission
Hospital Revenue, Halifax Regional Medical
Center, 4.60%, 8/15/07, OID (d)(e) ....... 1,795,000 1,798,734
North Carolina Medical Care Commission
Hospital Revenue, Pitt County Memorial
Hospital, Series A, 5.25%, 12/1/10,
Prerefunded 12/1/08 @ 101 ................ 1,155,000 1,206,340
North Carolina Medical Care Commission
Revenue, Health Care and Housing, ARC
Projects, Series A, 4.65%, 10/1/14 ....... 1,265,000 1,284,430
North Carolina Medicare Common Revenue,
4.75%, 9/1/24, Callable 9/1/14 @ 100 ..... 1,000,000 1,033,300
North Carolina State University, G.O., Series
A, 5.00%, 6/1/20, Callable 6/1/16 @ 100 .. 2,000,000 2,180,800
North Carolina State University, Water
Utility Improvements, G.O., Series A,
5.00%, 3/1/17, Callable 3/1/16 @ 100 ..... 1,625,000 1,781,829
North Carolina, Municipal Power Agency
Revenue, 5.00%, 1/1/20, OID .............. 420,000 465,864
Onslow County, NC, Certificates of
Participation, 4.38%, 6/1/14, XLCA ....... 305,000 317,450
Onslow County, NC, Certificates of
Participation, 4.50%, 6/1/15, XLCA ....... 280,000 294,182
Onslow County, NC, Certificates of
Participation, 5.00%, 6/1/15, MBIA ....... 1,000,000 1,091,920
Onslow County, NC, Certificates of
Participation, 4.50%, 6/1/16, XLCA ....... 170,000 178,733
Onslow County, NC, Certificates of
Participation, 4.50%, 6/1/24, Callable
6/1/16 @ 100, MBIA, OID .................. 1,580,000 1,613,496
Onslow County, NC, Hospital Authority
Revenue, Onslow Memorial Hospital
Project, 4.75%, 10/1/12, MBIA FHA ........ 240,000 252,732
Onslow County, NC, Schools, Certificates of
Participation, 5.00%, 6/1/19, Callable
6/1/16 @ 100, MBIA ....................... 2,920,000 3,175,617
Orange County, NC, Public Improvements
Project, Series A, Certificates of
Participation, 5.00%, 4/1/23, Callable
4/1/16 @ 100, AMBAC ...................... 1,000,000 1,069,450
Orange Water & Sewer Authority, Water &
Sewer System Revenue, Series A, 5.25%,
7/1/16, Callable 7/1/14 @ 100 ............ 1,475,000 1,618,444
Orange Water & Sewer Authority, Water &
Sewer System Revenue, Series A, 5.25%,
7/1/18, Callable 7/1/14 @ 100 ............ 1,690,000 1,842,506
Piedmont-Triad, NC, Airport Authority
Revenue, Series A, 6.38%, 7/1/16,
Prerefunded 7/1/09 @ 101, FSA ............ 1,385,000 1,499,512
Pitt County, NC, Revenue, Memorial Hospital
Project, 5.50%, 12/1/15, Callable
12/1/06 @ 101, ETM (d) ................... 2,425,000 2,560,679
SHARES OR
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
North Carolina, continued
Raleigh, NC, Combined Enterprise System
Refunding Revenue, Series B, 4.00%,
3/1/20, OID (f) .......................... $ 1,500,000 $ 1,484,595
Raleigh, NC, Combined Enterprise System
Revenue, Series A, 5.00%, 3/1/20 (f) ..... 500,000 541,365
Randolph County, NC, Certificates of
Participation, 5.30%, 6/1/13, Callable
6/1/09 @ 101, FSA (d) .................... 1,750,000 1,844,185
Rowan County, NC, Schools, G.O., 5.00%,
4/1/17, Callable 4/1/15 @ 100, AMBAC ..... 1,645,000 1,784,216
Rutherford County, NC, Certificates of
Participation, 5.00%, 9/1/18, Callable
9/1/12 @ 101 ............................. 1,595,000 1,704,481
University of North Carolina Charlotte
Revenue, 4.75%, 10/1/35, Callable 10/1/16
@ 100, AMBAC ............................. 425,000 435,897
University of North Carolina Refunding
Revenue, Series A, 4.75%, 12/1/34,
Callable 12/1/15 @ 100 ................... 1,075,000 1,103,079
University of North Carolina Wilmington,
Certificates of Participation, Student
Housing Project, 5.00%, 6/1/25, Callable
6/1/16 @ 100, FGIC ....................... 1,000,000 1,065,450
Wake County, NC, G.O., 5.30%, 2/1/11,
Prerefunded 2/1/10 @ 100.5 ............... 1,000,000 1,059,690
Wake County, NC, Hospital Authority
Revenue, 5.13%, 10/1/13, MBIA, ETM ....... 2,425,000 2,641,212
Wake County, NC, Schools, G.O., 5.00%,
5/1/21, Callable 5/1/15 @ 100 ............ 1,900,000 2,051,240
Wilmington, NC, Certificates of
Participation, Series A, 5.00%, 6/1/19,
Callable 6/1/16 @ 100 .................... 1,095,000 1,179,873
Wilmington, NC, Certificates of
Participation, Series A, 5.00%, 6/1/22,
Callable 6/1/16 @ 100 .................... 625,000 667,963
Winston-Salem Water & Sewer System
Refunding Revenue, 5.00%, 6/1/24,
Callable 6/1/15 @ 100 .................... 1,935,000 2,071,127
Winston-Salem Water & Sewer Systems Revenue,
5.00%, 6/1/20, Callable 6/1/15 @ 100 ..... 1,170,000 1,261,190
-------------
Total Municipal Bonds
(Cost $ 101,918,839) .................. 105,033,449
-------------
INVESTMENT COMPANY (2.5%)
PNC North Carolina Blackrock Fund,
Institutional Class ...................... 2,631,486 2,631,486
-------------
Total Investment Company
(Cost $2,631,486) ..................... 2,631,486
-------------
Total Investments
(Cost $ 104,550,325) -- 100.6% ........... 107,664,935
Net other assets (liabilities) -- (0.6)% .... (647,891)
-------------
Net Assets -- 100.0% ........................ $ 107,017,044
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
69
South Carolina Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS (97.6%)
South Carolina (97.6%)
Aiken County, SC, G.O., 4.00%, 2/1/12,
MBIA ..................................... $ 240,000 $ 244,826
Aiken County, SC, G.O., 4.00%, 2/1/14,
MBIA ..................................... 165,000 168,437
Anderson County, SC, School District No 2,
G.O., Series B, 6.00%, 3/1/12, Callable
3/1/10 @ 101, SCSDE ...................... 500,000 543,565
Anderson County, SC, School District No. 2,
G.O., Series B, 5.13%, 3/1/25, Callable
3/1/10 @ 101, MBIA, SCSDE ................ 850,000 888,377
Anderson County, SC. School District No. 4,
G.O., 4.50%, 3/1/23, Callable 3/1/16 @
100, FSA, SCSDE .......................... 365,000 372,012
Beaufort County, SC, Public Improvements,
G.O., 5.00%, 2/1/24, Callable 2/1/14 @
100, MBIA, State Aid Withholding ......... 180,000 190,519
Beaufort County, SC, School District
Refunding, G.O., Series A, 5.00%, 3/1/13,
SCSDE .................................... 125,000 134,780
Beaufort County, SC, School District
Refunding, G.O., Series A, 5.00%, 3/1/19,
Callable 3/1/15 @ 100, SCSDE ............. 465,000 500,991
Berkeley County, SC, Water & Sewer Revenue,
Series A, 5.00%, 6/1/24, Callable 6/1/15 @
100, FSA ................................. 350,000 372,512
Berkley County, SC, Water & Sewer Revenue,
Series A, 5.00%, 6/1/21, Callable 6/1/15 @
100, FSA ................................. 395,000 423,085
Charleston County, SC, G.O., 4.625%, 11/1/27,
Callable 11/1/15 @ 100, State Aid
Withholding .............................. 500,000 512,480
Charleston County, SC, School District
Refunding, G.O., Series B, 5.00%, 2/1/19,
Callable 2/1/12 @ 100, SCSDE ............. 250,000 263,865
Charleston, SC, Waterworks & Sewer Refunding
Revenue, 5.13%, 1/1/12 ................... 425,000 456,178
Charleston, SC, Waterworks & Sewer Refunding
Revenue, 5.25%, 1/1/14, Callable 1/1/11
@ 101 .................................... 600,000 641,651
Florence County, SC, Hospital Revenue,
Regional Medical Center Project, Series A,
5.25%, 11/1/11, Callable 11/1/08 @ 102,
MBIA ..................................... 500,000 525,100
Florence, SC, New Public Housing Authority
Revenue, 5.75%, 8/1/10, Callable 2/1/07 @
100, U.S. Government Guaranteed .......... 100,000 106,936
Greenville, SC, Stormwater System Revenue,
5.00%, 4/1/22, Callable 4/1/11 @ 101,
FSA ...................................... 350,000 368,025
Greenville, SC, Waterworks Revenue, 5.25%,
2/1/19, Callable 2/1/13 @ 100 ............ 380,000 413,888
Horry County, SC, School District, G.O.,
Series A, 5.00%, 3/1/11, SCSDE ........... 500,000 530,195
Horry County, SC, School District, G.O.,
Series A, 4.00%, 3/1/14, FSA, SCSDE ...... 285,000 290,925
Horry County, SC, School District, G.O.,
Series A, 5.38%, 3/1/15, Callable 3/1/12
@ 100, SCSDE ............................. 250,000 270,778
Jasper County, SC, School District, G.O.,
4.00%, 3/1/16, Callable 3/1/15 @ 100,
MBIA, SCSDE, OID ......................... 100,000 101,334
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
South Carolina, continued
Kershaw County, SC, School District, G.O.,
6.13%, 2/1/16, Prerefunded 2/1/10 @ 100,
SCSDE .................................... $ 500,000 $ 539,570
Lancaster County, SC, Assessment Revenue,
5.75%, 12/1/37, Callable 12/1/16 @ 100 ... 500,000 529,345
Laurens County, SC, School District No. 55
Installment Purchase Revenue, 5.25%,
12/1/24, Callable 12/1/15 @ 100 .......... 225,000 236,345
Laurens County, SC, School District No. 56,
G.O., 4.13%, 3/1/15, MBIA, SCSDE ......... 245,000 251,346
Lexington County, SC, Public Improvements,
G.O., 5.00%, 2/1/14, Callable 2/1/12 @
100, FGIC, State Aid Withholding ......... 500,000 532,200
Newberry County, SC, County School Project
Revenue, 5.25%, 12/1/21, Callable 12/1/15
@ 100 .................................... 225,000 247,311
Orangeburg County, SC, G.O., Series A,
4.00%, 4/1/13, FGIC ...................... 250,000 254,953
Richland County, SC, School District No. 1
Refunding, G.O., 5.00%, 3/1/19, Callable
3/1/15 @ 100, FSA, SCSDE ................. 400,000 430,960
Richland County, SC, School District No. 1,
G.O., Series A, 5.25%, 3/1/20, Callable
3/1/12, SCSDE ............................ 300,000 321,126
Rock Hill, SC, Utility Systems Refunding
Revenue, Series A, 5.38%, 1/1/19, Callable
1/1/13 @ 100, FSA ........................ 585,000 636,176
South Carolina Jobs Economic Development
Authority Hospital Facilities Revenue,
5.50%, 2/1/11, Callable 2/1/09 @ 101,
FSA ...................................... 500,000 525,010
South Carolina Jobs Economic Development
Authority Hospital Facilities Revenue,
6.00%, 8/1/12 ............................ 200,000 220,612
South Carolina State Economic Development,
G.O. Series A, 4.00%, 3/1/16, Callable
3/1/14 @ 100 ............................. 40,000 40,634
South Carolina State Economic Development,
G.O., Series A, 5.00%, 8/1/16, Callable
8/1/15 @ 100 ............................. 350,000 382,309
South Carolina State Economic Development,
G.O., Series C, 5.25%, 8/1/11 ............ 760,000 817,569
South Carolina State University, Wade Hampton
State Office Building, G.O., Series A,
5.00%, 11/1/15 ........................... 350,000 384,073
South Carolina State University, Wade Hampton
State Office Building, G.O., Series A,
4.00%, 11/1/17, Callable 11/1/15 @ 100,
OID ...................................... 100,000 101,468
South Carolina State, Public Services
Authority Revenue, Series A, 5.00%,
1/1/20, Callable 1/1/14 @ 100, AMBAC ..... 600,000 638,201
South Carolina State, Public Service
Authority Revenue, Series A, 5.00%,
1/1/17, Callable 1/1/14 @ 100, FSA ....... 450,000 482,756
South Carolina Transportation Infrastructure
Bank Refunding Revenue, 5.25%, 10/1/15,
AMBAC .................................... 500,000 555,860
Spartanburg County, SC, School District No.
5, G.O., 5.25%, 5/1/10, SCSDE ............ 525,000 556,080
Spartanburg, SC, Water Works Refunding
Revenue, 5.25%, 6/1/11, FSA .............. 500,000 536,095
Continued
70
South Carolina Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
South Carolina, continued
University of South Carolina Medical
Facilities Refunding Revenue, 6.00%,
8/15/12 .................................. $ 500,000 $ 562,755
Western Carolina Regional Sewer Authority,
Sewage System Revenue, 5.25%, 3/1/10,
FSA ...................................... 550,000 580,228
York County, SC, School District No. 3, G.O.,
Series A, 5.00%, 3/1/11, Callable 3/1/09
@ 101, SCSDE ............................. 275,000 286,696
-------------
Total Municipal Bonds
(Cost $18,444,845) ....................... 18,970,137
-------------
SHARES FAIR VALUE
---------------- -------------
INVESTMENT COMPANY (2.1%)
Federated Tax-Free Obligations Fund,
Institutional Service Class .............. 400,376 $ 400,376
-------------
Total Investment Company
(Cost $400,376) ....................... 400,376
-------------
Total Investments
(Cost $18,845,221) -- 99.7% .............. 19,370,513
Net other assets (liabilities) -- 0.3% ...... 57,158
-------------
Net Assets -- 100.0% ........................ $ 19,427,671
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
71
Virginia Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS (97.2%)
District of Columbia (2.2%)
Washington, D.C., Metropolitan Transportation
Authority Refunding Revenue, 6.00%,
7/1/09, FGIC ............................. $ 1,600,000 $ 1,703,232
-------------
Virginia (95.0%)
Alexandria, VA, Construction & Public
Improvements, G.O., 5.00%, 6/15/08, State
Aid Withholding .......................... 1,000,000 1,025,490
Alexandria, VA, Construction & Public
Improvements, G.O., 5.00%, 1/1/13 ........ 1,425,000 1,538,259
Alexandria, VA, G.O., Series A, 5.00%,
6/15/16 .................................. 1,000,000 1,102,700
Amherst Industrial Development Authority
Refunding Revenue, 4.50%, 9/1/18, Callable
9/1/16 @ 100 ............................. 40,000 40,672
Arlington County, VA, Public Improvement,
G.O., 5.13%, 6/1/11, Prerefunded 6/1/09 @
100, State Aid Withholding ............... 1,000,000 1,041,060
Arlington County, VA, Public Improvement,
G.O., 5.00%, 5/15/25, Callable 5/15/15 @
100, State Aid Withholding ............... 1,175,000 1,259,964
Arlington County, VA, Refunding, G.O., 5.00%,
5/15/15, Callable 5/15/14 @ 100 .......... 1,495,000 1,624,422
Chesapeake, VA, Refunding, G.O., 5.00%,
6/1/13 ................................... 1,000,000 1,080,610
Chesterfield County, VA, Pollution Control
Authority Revenue, 5.50%, 10/1/09,
Callable 11/27/06 @ 101 .................. 2,500,000 2,528,650
Fairfax County, VA, Economic Development
Authority Refunding Revenue, Series A,
4.10%, 10/1/13 ........................... 305,000 304,539
Fairfax County, VA, Economic Development
Authority Refunding Revenue, Series A,
4.15%, 10/1/14 ........................... 490,000 489,339
Fairfax County, VA, Economic Development
Authority Refunding Revenue, Series A,
4.20%, 10/1/15 ........................... 225,000 224,465
Fairfax County, VA, Economic Development
Authority Refunding Revenue, Series A,
4.25%, 10/1/16 ........................... 260,000 259,727
Fairfax County, VA, Economic Development
Authority Revenue, First Series, 5.25%,
9/1/10, Prerefunded 9/1/09 @ 102, OID .... 1,000,000 1,065,880
Henrico County, VA, Water & Sewer Refunding
Revenue, 5.25%, 5/1/11, Callable 5/1/09 @
102 ...................................... 1,000,000 1,058,900
Lessburg, VA, Public Utilities, G.O., 4.75%,
7/1/23, Callable 7/1/16 @ 100 ............ 1,275,000 1,342,065
Loudoun County, VA, Public Improvements,
G.O., Series B, 5.00%, 12/1/14 ........... 1,000,000 1,094,750
Loudoun County, VA, Water & Sewer Refunding
Revenue, 5.00%, 1/1/29, Callable 1/1/15 @
100 ...................................... 1,455,000 1,538,532
Loudoun County, VA, Water & Sewer Revenue,
5.75%, 1/1/11, FSA ....................... 1,000,000 1,086,540
Manassas, VA, Water Utility Improvements,
G.O., Series A, 5.25%, 1/1/11, Prerefunded
1/1/08 @ 102 ............................. 1,200,000 1,248,180
New Port Community Development Authority
Special Assessment, 5.50%, 9/1/26,
Callable 9/1/16 @ 101 .................... 1,325,000 1,358,854
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
Virginia, continued
Newport News, VA, G.O., Series A, 5.50%,
5/1/13, Prerefunded 5/1/10 @ 102, OID .... $ 1,845,000 $ 2,002,065
Newport News, VA, G.O., Series A, 5.00%,
7/1/22, Callable 7/1/13 @ 100, State Aid
Withholding .............................. 1,250,000 1,324,038
Norfolk, VA, Water Revenue, 5.13%, 11/1/11,
Callable 11/1/08 @ 101, FSA .............. 1,030,000 1,071,921
Pittsylvania County, VA, G.O., Series B,
5.63%, 3/1/15, Callable 3/1/11 @ 102,
MBIA ..................................... 1,315,000 1,443,120
Portsmouth, VA, Public Utility Refunding,
G.O., Series B, 5.00%, 4/1/21, Callable
4/1/15 @ 100, MBIA ....................... 2,135,000 2,294,015
Portsmouth, VA, Public Utility Refunding,
G.O., Series B, 5.00%, 4/1/22, Callable
4/1/15 @ 100, MBIA ....................... 1,375,000 1,475,361
Prince William County, VA, Service Authority
Water & Sewer System Revenue, 5.00%,
7/1/14, Callable 7/1/13 @ 102 ............ 1,000,000 1,087,600
Richmond, VA, G.O., 5.25%, 1/15/09, FSA ..... 1,500,000 1,557,645
Roanoke, VA, Public Improvement, G.O.,
5.00%, 10/1/17, Callable 10/1/14 @ 101 ... 1,000,000 1,089,200
Roanoke, VA, Public Improvement, G.O.,
5.00%, 2/1/18, Callable 2/1/15 @ 101,
State Aid Withholding .................... 1,000,000 1,090,010
Spotsylvania County, VA, Public
Improvements, G.O., 5.00%, 1/15/17,
Callable 1/15/16 @ 100 ................... 1,645,000 1,800,831
Spotsylvania County, VA, Refunding, G.O.,
5.50%, 7/15/12, FSA ...................... 2,925,000 3,221,039
University of VA, General Revenue, 5.00%,
6/1/22, Callable 6/1/13 @ 100 ............ 540,000 572,945
Upper Occoquan Sewer Authority, Regional
Sewer Refunding Revenue, 5.00%, 7/1/25,
Callable 7/1/15 @ 100, FSA ............... 1,000,000 1,066,340
Virginia Beach, VA, Industrial Development
Authority Revenue, Sentara Health Systems,
5.25%, 11/1/09, Callable 11/1/08 @ 101,
MBIA ..................................... 1,000,000 1,041,960
Virginia Beach, VA, Public Improvement, G.O.,
5.25%, 3/1/08, State Aid Withholding ..... 1,000,000 1,023,900
Virginia Beach, VA, Public Improvement, G.O.,
5.25%, 3/1/11, Prerefunded 3/1/10 @ 101,
State Aid Withholding, OID ............... 3,205,000 3,414,606
Virginia College Building Authority,
Educational Facilities Revenue, 5.50%,
4/1/10 ................................... 1,000,000 1,062,560
Virginia College Building Authority,
Educational Facilities Revenue, 5.00%,
9/1/19, Callable 9/1/11 @ 100 ............ 1,090,000 1,147,181
Virginia College Building Authority,
Educational Facilities Revenue, Series A,
5.00%, 9/1/22, Callable 9/1/15 @ 100 ..... 1,000,000 1,073,610
Virginia College Building Authority,
Educational Facilities Revenue, 5.25%,
1/1/31, MBIA ............................. 1,755,000 2,036,484
Virginia Commonwealth Transportation Board
Refunding Revenue, Series B, 4.25%,
5/15/16 .................................. 15,000 15,555
Virginia Commonwealth Transportation Board
Revenue, Series B, 5.75%, 5/15/09 ........ 1,035,000 1,092,401
Continued
72
Virginia Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
Virginia, continued
Virginia Commonwealth Transportation Board
Revenue, Series B, 5.50%, 5/15/15,
Prerefunded 5/15/09 @ 101, OID ........... $ 1,185,000 $ 1,254,157
Virginia State Authority, Water Revenue,
5.25%, 10/1/15 ........................... 1,040,000 1,160,401
Virginia State Public Building Authority
Revenue, Series A, 5.00%, 8/1/15 ......... 1,500,000 1,640,835
Virginia State Public Building Authority,
Public Facilities Revenue, Series A,
5.00%, 8/1/14 ............................ 2,000,000 2,175,840
Virginia State Public School Authority
Refunding Revenue, Series A, 5.25%,
8/1/17, State Aid Withholding ............ 280,000 314,140
Virginia State Public School Authority
Refunding Revenue, Series D, 5.25%,
2/1/12, State Aid Withholding ............ 1,145,000 1,237,001
Virginia State Public School Authority
Revenue, Series C, 5.00%, 8/1/28, Callable
8/1/13 @ 100, State Aid Withholding ...... 1,510,000 1,585,651
Virginia State Public School Authority, G.O.,
Series B, 5.25%, 8/1/10, Prerefunded
8/1/09 @ 101, State Aid Withholding,
OID ...................................... 1,000,000 1,055,440
Virginia State Public School Authority, G.O.,
Series B, 3.00%, 8/1/20, Callable 8/1/11 @
101, OID ................................. 3,815,000 3,338,087
SHARES OR
PRINCIPAL AMOUNT FAIR VALUE
---------------- -------------
MUNICIPAL BONDS, CONTINUED
Virginia, continued
Virginia State Public School Authority,
School Financing Revenue, Series A, 5.25%,
8/1/10, Callable 8/1/09 @ 101, OID ....... $ 2,040,000 $ 2,165,440
Virginia State Resources Authority
Infrastructure Revenue, 4.00%, 11/1/16 ... 25,000 25,422
Winchester, VA, Public Improvements, G.O.,
5.00%, 11/1/22, Callable 11/1/15 @ 100,
FGIC ..................................... 2,210,000 2,380,436
-------------
73,650,835
-------------
Total Municipal Bonds
(Cost $72,892,964) .................... 75,354,067
-------------
INVESTMENT COMPANY (2.5%)
PNC Virginia Blackrock Fund, Institutional
Class .................................... 1,899,615 1,899,615
-------------
Total Investment Company
(Cost $1,899,615) ..................... 1,899,615
-------------
Total Investments
(Cost $74,792,579) -- 99.7% .............. 77,253,682
Net other assets (liabilities) -- 0.3% ...... 263,903
-------------
Net Assets -- 100.0% ........................ $ 77,517,585
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
73
West Virginia Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL FAIR
AMOUNT VALUE
---------------- ------------
MUNICIPAL BONDS (97.5%)
West Virginia (97.5%)
Cabell County, WV, Board of Education, G.O.,
5.00%, 5/1/16, MBIA ...................... $ 2,000,000 $ 2,188,440
Cabell, Putnam & Wayne Counties, West
Virginia, Single Family Residential
Mortgage Revenue, 7.38%, 4/1/11, FGIC,
ETM ...................................... 640,000 731,366
Charleston, WV, Urban Renewal Authority
Revenue, 5.25%, 12/15/18, Callable
12/15/09 @ 103, FSA ...................... 1,080,000 1,156,928
Clarksburg, WV, Water Refunding Revenue,
5.25%, 9/1/19, Callable 9/1/12 @ 101,
FGIC ..................................... 1,190,000 1,290,222
Fairmont State College, WV, Student Activity
Revenue, Series B, 5.00%, 6/1/32, Callable
6/1/13 @ 100, FGIC ....................... 1,400,000 1,460,368
Fairmont, WV, Waterworks Refunding Revenue,
5.38%, 7/1/13, Callable 7/1/07 @ 102,
MBIA, OID ................................ 680,000 701,753
Harrison County, WV, Building Commission
Revenue, 5.15%, 4/1/18, Prerefunded 4/1/08
@ 102, AMBAC, OID ........................ 1,000,000 1,042,070
Harrison County, WV, County Commission Solid
Waste Disposal Revenue, Series B, 6.30%,
5/1/23, Callable 5/1/07 @ 100,
AMBAC -- TCRS ............................ 860,000 870,535
Logan County, WV, Logan County Health
Revenue, 8.00%, 12/1/16, ETM ............. 690,000 901,168
Monongalia County, WV, Building Commission
Hospital Revenue, Monongalia General
Hospital Project, 5.00%, 7/1/30, Callable
7/1/15 @ 100 ............................. 1,700,000 1,738,590
Monongalia County, WV, Pollution Control
Refunding Revenue, Series B, 5.95%,
4/1/13, Callable 4/1/07 @ 100, MBIA ...... 2,000,000 2,017,300
Ohio County, WV, Board of Education
Refunding, G.O., 5.00%, 6/1/13, Callable
6/1/08 @ 102, MBIA, OID .................. 800,000 832,120
Ohio County, WV, Commission Special District
Excise Tax Revenue, Fort Henry Economic
Development, Series B, 5.63%, 3/1/36 ..... 640,000 661,715
Ohio County, WV, Commission Tax Increment
Revenue, Fort Henry Centre Financing
District, Series A, 5.63%, 6/1/34,
Callable 12/1/15 @ 100 ................... 1,000,000 1,050,410
Parkersburg, WV, Waterworks & Sewage System
Refunding Revenue, Series C, 5.00%,
9/1/14, FGIC ............................. 1,190,000 1,293,399
Parkersburg, WV, Waterworks & Sewage System
Refunding Revenue, Series C, 5.00%,
9/1/15, FGIC ............................. 1,330,000 1,452,613
Parkersburg, WV, Waterworks & Sewage System
Refunding Revenue, Series C, 4.00%,
9/1/16, Callable 9/1/15 @ 100, FGIC ...... 640,000 648,480
Parkersburg, WV, Waterworks & Sewage Systems
Refunding Revenue, Series A, 4.50%,
8/1/22, Callable 8/1/15 @ 100, FGIC ...... 965,000 979,726
Pleasants County, WV, Pollution Control
Refunding Revenue, Series C, 6.15%,
5/1/15, Callable 5/1/07 @ 100, AMBAC,
MBIA ..................................... 1,000,000 1,018,310
Pleasants County, WV, Pollution Control
Refunding Revenue, Series C, 6.15%,
5/1/15, Callable 5/1/07 @ 100, AMBAC ..... 1,100,000 1,120,141
PRINCIPAL FAIR
AMOUNT VALUE
---------------- ------------
MUNICIPAL BONDS, CONTINUED
West Virginia, continued
South Charleston, WV, Hospital Refunding
Revenue, Series A, 5.50%, 10/1/09,
Callable 10/1/06 @ 100, MBIA ............. $ 520,000 $ 522,371
Weirton, WV, Municipal Hospital Building
Revenue, Series A, 5.25%, 12/1/11, OID ... 1,500,000 1,521,840
West Virginia Economic Development
Authority Lease Revenue, State Energy
Savings Project, 4.50%, 6/1/17, Callable
6/1/15 @ 100 ............................. 360,000 368,078
West Virginia Economic Development
Authority Lease Revenue, State Energy
Savings Project, 4.75%, 6/1/21, Callable
6/1/15 @ 100 ............................. 1,035,000 1,064,580
West Virginia Economic Development Authority
Revenue, Department of Environmental
Protection, 4.75%, 11/1/11 ............... 535,000 563,285
West Virginia Economic Development Authority
Revenue, Series A, 5.50%, 6/1/12, MBIA ... 2,000,000 2,191,360
West Virginia Economic Development Authority
Revenue, Series A, 5.50%, 6/1/15, Callable
6/1/12 @ 101, MBIA ....................... 1,000,000 1,102,100
West Virginia Economic Development Authority
Revenue, Series A, 5.00%, 10/1/15,
Callable 10/1/11 @ 101 ................... 1,250,000 1,328,138
West Virginia Economic Development Authority
Revenue, Series A, 5.50%, 6/1/18, Callable
6/1/12 @ 101, MBIA ....................... 1,000,000 1,095,640
West Virginia Higher Education Policy
Commission Revenue Higher Education
Facilities, Series B, 5.00%, 4/1/34 ...... 1,135,000 1,186,983
West Virginia Higher Educational Facilities
Revenue, Series B, 5.00%, 4/1/14, FGIC ... 250,000 270,618
West Virginia Higher Educational Facilities
Revenue, Series B, 5.00%, 4/1/23, Callable
4/1/14 @ 100, FGIC ....................... 5,490,000 5,833,728
West Virginia State Building Commission
Refunding Revenue, Series A, 5.25%,
7/1/10, AMBAC ............................ 1,950,000 2,062,671
West Virginia State Capital Appreciation,
Infrastructure, G.O., Series A, 3.15%,
11/1/24, FGIC, OID, Zero Coupon** ........ 500,000 225,135
West Virginia State Hospital Finance
Authority Refunding Revenue, 5.00%,
8/1/09, Callable 8/1/07 @ 100, FSA ....... 800,000 807,880
West Virginia State Hospital Finance
Authority Revenue, 6.10%, 1/1/18, Callable
1/1/07 @ 100, MBIA ....................... 1,300,000 1,320,709
West Virginia State Hospital Finance
Authority Revenue, 5.50%, 3/1/22, Callable
3/1/14 @ 100 ............................. 970,000 1,022,458
West Virginia State Hospital Finance
Authority Revenue, Series A, 6.50%,
9/1/16, ETM, OID ......................... 620,000 740,429
West Virginia State Housing Development Fund
Revenue, Marion Unity Apartments Project,
Series A, 5.40%, 1/1/16, Callable 7/1/11
@ 100 .................................... 400,000 402,128
West Virginia State Housing Development Fund
Revenue, Marion Unity Apartments Project,
Series A, 5.75%, 1/1/29, Callable 7/1/11
@ 100, OID ............................... 515,000 519,419
Continued
74
West Virginia Intermediate Tax-Free Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
PRINCIPAL FAIR
AMOUNT VALUE
---------------- ------------
MUNICIPAL BONDS, CONTINUED
West Virginia, continued
West Virginia State Parkways Economic
Development & Tourism Authority Refunding
Revenue, 5.00%, 5/15/10, FGIC ............ $ 1,165,000 $ 1,222,784
West Virginia State Parkways Economic
Development & Tourism Authority Refunding
Revenue, 5.25%, 5/15/12, FGIC ............ 1,000,000 1,082,440
West Virginia State Parkways Economic
Development & Tourism Authority Refunding
Revenue, 5.25%, 5/15/17, FGIC ............ 700,000 782,383
West Virginia State School Building Authority
Revenue, 5.25%, 1/1/14, MBIA ............. 500,000 548,890
West Virginia State School Building Authority
Revenue, 5.25%, 7/1/14, MBIA ............. 615,000 677,853
West Virginia State Water Development
Authority Revenue, Series A, 5.50%,
11/1/18, Prerefunded 11/1/09 @ 102,
AMBAC .................................... 1,000,000 1,074,780
West Virginia State Water Development
Authority Revenue, Series A, 5.00%,
11/1/44, Callable 11/1/15 @ 100, FSA ..... 1,000,000 1,046,800
West Virginia State, Highway Improvements,
G.O., 5.50%, 6/1/10, FSA ................. 1,395,000 1,488,312
West Virginia State, State Road Improvements,
G.O., 5.00%, 6/1/16, Callable 6/1/15
@ 100, FGIC .............................. 2,000,000 2,174,560
SHARES OR
PRINCIPAL FAIR
AMOUNT VALUE
---------------- ------------
MUNICIPAL BONDS, CONTINUED
West Virginia, continued
West Virginia University, School Improvements
Revenue, Series A, 5.50%, 4/1/11, MBIA ... $ 1,485,000 $ 1,604,275
West Virginia University, School Improvements
Revenue, Series C, 5.00%, 10/1/25,
Callable 10/1/14 @ 100, FGIC ............. 2,155,000 2,283,201
West Virginia Water Development Authority
Revenue Series A, 5.00%, 10/1/28, Callable
10/1/13 @ 101, OID ....................... 2,115,000 2,230,500
Wheeling, WV, Waterworks & Sewer Systems
Revenue, Series A, 4.75%, 6/1/36, Callable
6/1/16 @ 100, FSA ........................ 1,500,000 1,534,965
-------------
Total Municipal Bonds
(Cost $63,334,706) .................... 65,056,947
-------------
INVESTMENT COMPANY (1.1%)
Federated Tax-Free Obligations Fund,
Institutional Service Class .............. 727,776 727,776
-------------
Total Investment Company
(Cost $727,776) ....................... 727,776
-------------
Total Investments
(Cost $64,062,482) -- 98.6% .............. 65,784,723
Net other assets (liabilities) -- 1.4% ...... 904,360
-------------
Net Assets -- 100.0% ........................ $ 66,689,083
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
75
Prime Money Market Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
BANKERS ACCEPTANCE (0.4%)
Banking (0.4%)
Wachovia Bank NA, 5.45%, 12/22/06 ........... $ 6,000,000 $ 5,925,517
-------------
Total Bankers Acceptance
(Cost $5,925,517) ..................... 5,925,517
-------------
CERTIFICATES OF DEPOSIT (9.9%)
Banking (9.9%)
Barclays Bank PLC, 5.38%, 10/4/06 ........... 25,000,000 25,000,000
Barclays Bank PLC, 4.75%, 10/17/06 .......... 5,000,000 5,000,005
Calyon Bank, Paris, 5.36%, 4/30/07 .......... 5,000,000 5,000,139
Citizens Bank of Pennsylvania, 5.37%,
11/27/06 ................................. 5,000,000 5,000,078
Credit Suisse, Zurich, 4.78%, 10/27/06 ...... 14,000,000 14,000,000
Credit Suisse, Zurich, 5.25%, 11/20/06 ...... 3,000,000 3,000,000
Credit Suisse, Zurich, 4.92%, 2/5/07 ........ 5,000,000 5,000,000
Credit Suisse, Zurich, 5.21%, 3/29/07 ....... 5,000,000 5,000,000
Depfa Bank PLC, 5.26%, 4/9/07 ............... 5,000,000 5,000,000
Deutsche Bank AG, 4.50%, 10/13/06 ........... 6,000,000 6,000,000
First Tennessee Bank, 5.31%, 12/26/06 ....... 12,000,000 12,000,000
Huntington National Bank, 5.45%, 12/4/06 .... 10,000,000 10,000,000
Royal Bank of Scotland PLC, Edinburgh,
4.40%, 10/4/06 ........................... 5,000,000 5,000,000
Societe General, Paris, 5.41%, 2/20/07 ...... 10,000,000 10,000,000
Toronto Dominion Bank, 5.42%, 2/12/07 ....... 12,000,000 12,000,000
Toronto Dominion Bank, 5.295%, 4/13/07 ...... 2,000,000 2,000,000
Toronto Dominion Bank, 5.60%, 6/18/07 ....... 4,000,000 4,000,000
Toronto Dominion Bank, 5.51%, 8/3/07 ........ 2,500,000 2,501,365
-------------
Total Certificates of Deposit
(Cost $135,501,587) ................... 135,501,587
-------------
COMMERCIAL PAPER** (32.4%)
Financial Services (30.8%)
Amsterdam Funding Corp., 5.27%,
11/27/06 (c) ............................. 15,000,000 14,874,838
Amsterdam Funding Corp., 5.29%, 2/9/07 (c) .. 8,000,000 7,846,148
Bank of America Corp., 5.28%, 10/16/06 ...... 25,000,000 24,944,999
CIT Group, Inc., 5.01%, 10/3/06 ............. 2,000,000 1,999,440
DaimlerChrysler North America Holding Corp.,
5.41%, 11/13/06 .......................... 5,100,000 5,067,079
DaimlerChrysler North America Holding Corp.,
5.37%, 11/20/06 .......................... 2,300,000 2,282,846
DaimlerChrysler North America Holding Corp.,
5.38%, 12/20/06 .......................... 700,000 691,631
DaimlerChrysler North America Holding Corp.,
5.36%, 12/27/06 .......................... 5,700,000 5,626,166
DaimlerChrysler Revolving Corp., 5.24%,
12/27/06 ................................. 20,000,000 19,746,733
Danske Corp., Inc., 4.98%, 4/10/07 .......... 4,000,000 3,894,228
Dresdner US Finance, 5.28%, 11/20/06 ........ 10,000,000 9,926,667
Edison Asset Securitization, 5.38%,
10/5/06 (c) .............................. 10,000,000 9,994,022
FCAR Auto Loan Trust, 5.27%, 11/7/06 ........ 10,000,000 9,945,836
FCAR Auto Loan Trust, 5.11%, 11/13/06 ....... 8,000,000 7,951,171
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
COMMERCIAL PAPER**, CONTINUED
Financial Services, continued
FCAR Auto Loan Trust, 5.28%, 12/11/06 ....... $ 1,750,000 $ 1,731,777
FCAR Auto Loan Trust, 5.29%, 2/5/07 ......... 8,000,000 7,850,704
FCAR Auto Loan Trust, 5.28%, 2/6/07 ......... 8,000,000 7,849,813
FCAR Auto Loan Trust, 5.31%, 2/12/07 ........ 10,000,000 9,802,350
FCAR Auto Loan Trust, 5.31%, 2/15/07 ........ 10,000,000 9,797,925
FCAR Auto Loan Trust, 5.25%, 3/7/07 ......... 6,000,000 5,862,625
Fountain Square Commercial Funding Corp.,
5.34%, 11/1/06 (c) ....................... 8,000,000 7,963,213
Fountain Square Commercial Funding Corp.,
5.28%, 11/16/06 (c) ...................... 20,000,000 19,865,067
Fountain Square Commercial Funding Corp.,
5.27%, 12/15/06 (c) ...................... 15,000,000 14,835,313
Galaxy Funding, Inc., 5.24%, 12/29/06 (c) ... 8,000,000 7,896,364
Georgetown Funding Co., LLC, 5.30%,
10/24/06 (c) ............................. 25,000,000 24,915,346
Grampian Funding LLC, 5.37%, 10/25/06 (c) ... 10,000,000 9,964,200
Grampian Funding LLC, 5.28%, 2/5/07 (c) ..... 7,000,000 6,869,737
Grampian Funding LLC, 5.27%, 2/6/07 (c) ..... 4,000,000 3,925,120
Grampian Funding LLC, 5.29%, 2/7/07 (c) ..... 8,000,000 7,848,497
Grampian Funding LLC, 5.24%, 3/12/07 (c) .... 3,500,000 3,417,470
Greenwich Capital Holdings, 5.29%,
10/13/06*** .............................. 6,000,000 6,000,000
Greenwich Capital Holdings, 5.24%,
12/19/06 ................................. 15,000,000 14,827,517
Klio II Funding, Ltd., 5.28%, 10/18/06 (c) .. 15,000,000 14,962,600
Klio II Funding, Ltd., 5.15%, 10/19/06 (c) .. 20,000,000 19,947,250
Nissan Motor Acceptance Corp., 5.33%,
10/30/06 (c) ............................. 7,671,000 7,638,064
Paradigm Funding LLC, 5.28%, 11/29/06 (c) ... 10,000,000 9,913,467
Paradigm Funding LLC, 5.23%, 3/21/07 (c) .... 13,000,000 12,677,048
Picaros Funding LLC, 5.39%, 10/6/06 (c) ..... 5,000,000 4,996,257
Picaros Funding LLC, 5.34%, 10/11/06 (c) .... 6,500,000 6,490,250
Picaros Funding LLC, 5.11%, 10/20/06 (c) .... 20,000,000 19,944,267
Picaros Funding LLC, 5.25%, 2/8/07 (c) ...... 10,000,000 9,809,514
Societe Generale Northern American,
5.27%, 2/12/07 ........................... 8,000,000 7,843,220
Volkswagen of America, Inc., 5.33%,
10/20/06 (c) ............................. 13,200,000 13,162,868
-------------
423,399,647
-------------
Retail (1.6%)
Fortune Brands, Inc., 5.47%, 10/3/06 (c) .... 2,000,000 1,999,392
Fortune Brands, Inc., 5.37%, 10/20/06 (c) ... 6,000,000 5,982,995
Heinz (H.J) Finance Co., 5.34%,
10/26/06 (c) ............................. 13,500,000 13,449,938
-------------
21,432,325
-------------
Total Commercial Paper
(Cost $444,831,972) ................... 444,831,972
-------------
Continued
76
Prime Money Market Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
CORPORATE BONDS (6.6%)
Asset Backed Securities (1.8%)
CNH Equipment Trust, Series 2006-A,
Class A-1, 4.99%, 4/5/07 ................. $ 1,744,247 $ 1,744,247
CNH Equipment Trust, Series 2006-B,
Class A-1, 5.39%, 10/5/07 ................ 10,000,000 10,000,000
Ford Credit Auto Owner Trust, Series 2006-B,
Class A-1, 5.40%, 9/15/07 (c) ............ 4,111,431 4,111,431
GS Auto Loans Trust, Series 2006-1,
Class A-1, 5.51%, 8/15/07 ................ 5,982,009 5,982,009
Household Automotive Trust, Series 2006-1,
Class A-1, 5.275%, 6/18/07 ............... 2,644,534 2,644,534
-------------
24,482,221
-------------
Financial Services (4.8%)
Dupont Teijin Films U.K., 5.32%, 10/31/06 ... 25,000,000 25,000,000
Federal Home Loan Mortgage Corp., 5.41%,
6/18/07, Callable 11/22/06 @ 100 ......... 3,000,000 3,000,000
Huntington National Bank, 2.75%, 10/16/06 ... 2,660,000 2,657,024
K2 (USA) LLC, 5.00%, 3/12/07 (c) ............ 6,700,000 6,700,000
Merrill Lynch & Co., Inc., Series 1, 5.31%,
8/24/07 .................................. 8,000,000 8,000,000
Royal Bank of Canada, Montreal,
5.49%, 10/2/07 ........................... 4,000,000 4,000,000
Sigma Finance, Inc., 4.91%, 1/26/07 (c) ..... 3,000,000 3,000,000
Sigma Finance, Inc., 4.83%, 1/30/07 (c) ..... 3,000,000 3,000,000
Sigma Finance, Inc., 5.00%, 3/8/07 (c) ...... 4,000,000 4,000,000
Sigma Finance, Inc., 5.25%, 4/30/07 (c) ..... 3,000,000 3,000,000
Sigma Finance, Inc., 5.75%, 7/25/07 (c) ..... 4,000,000 4,000,000
-------------
66,357,024
-------------
Total Corporate Bonds
(Cost $90,839,245) .................... 90,839,245
-------------
MUNICIPAL BONDS (1.2%)
Economic Development (0.9%)
Florida Hurricane Catastrophe Finance
Corp., Series B, 5.34%, 8/15/07,
Callable 7/15/07 @ 100* .................. 12,000,000 12,000,000
-------------
Industrial Revenue (0.3%)
Kansas City, Missouri, Industrial
Development Authority Revenue, West Edge
Project, 5.34%, 10/4/06* ................. 4,000,000 4,000,000
-------------
Total Municipal Bonds
(Cost $16,000,000) .................... 16,000,000
-------------
VARIABLE RATE NOTES* (28.6%)
Banking & Financial Services (12.7%)
Anchor Holdings, 5.38%, 10/4/06, (LCD U.S.
Bank N.A.) ............................... 1,760,000 1,760,000
Barclays Bank PLC, 5.27%, 1/29/07 ........... 4,000,000 3,999,725
Bartlett, Illinois, Redevelopment Project,
5.38%, 10/4/06, (LCD LaSalle Bank) ....... 5,000,000 5,000,000
Christian Life Assembly of the Assemblies
of God, 5.47%, 10/4/06, (LCD Fulton
Bank) .................................... 3,265,000 3,265,000
Damascus Co., Series 1998, 5.38%, 10/4/06 ... 3,045,000 3,045,000
Depfa Bank PLC, Series EXL, 5.43%,
6/15/07 (c) .............................. 15,000,000 15,000,000
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
VARIABLE RATE NOTES*, CONTINUED
Banking & Financial Services, continued
Franklin County, Ohio, Edison Welding,
Series 1995, 5.38%, 10/5/06, (LCD
Huntington Bank) ......................... $ 4,775,000 $ 4,775,000
Guilford Capital LLC, Series 2002-A,
5.42%, 10/4/06, (LCD Regions Bank) ....... 1,620,000 1,620,000
H.C. Equities, 5.33%, 10/4/06, (LCD
Wachovia Bank NA) ........................ 4,910,000 4,910,000
HBOS Treasury Services PLC, 5.00%, 7/24/07 .. 10,000,000 10,000,000
HBOS Treasury Services PLC, 5.38%, 8/1/07 ... 23,300,000 23,300,000
HBOS Treasury Services PLC, Series MTN,
5.30%, 8/9/07 (c) ........................ 2,000,000 2,000,000
HBOS Treasury Services PLC, 5.46%,
9/20/07 (c) .............................. 500,000 500,280
HBOS Treasury Services PLC, 5.46%,
10/1/07 (c) .............................. 8,000,000 8,000,000
Indian Hills Country Club, 5.40%, 10/4/06,
(LCD AmSouth Bank NA, Birmingham) ........ 3,785,000 3,785,000
Kent Capital LLC, Series 1999, 5.47%,
10/4/06, (LCD Huntington Bank) ........... 5,285,000 5,285,000
Maryland Economic Development Corp., 5.43%,
10/3/06, (LCD Manufacturers & Traders
Trust Co.) ............................... 7,000,000 7,000,000
Monet Trust, Series 2001, Class A-2A,
5.43%, 12/28/06, (LCD Dresden Bank
AG) (c) (e) .............................. 30,000,000 30,000,000
New Keibler Thompson Co., 5.42%,
12/1/08, (LCD Manufacturers & Traders
Trust Co.) ............................... 4,940,000 4,940,000
Quality Synthetic Rubber Co., 5.32%,
10/4/06, (LCD U.S. Bank N.A.) ............ 288,000 288,000
Spira Millennium LLC, 5.35%, 10/4/06,
(LCD Bank of America) .................... 3,655,000 3,655,000
Stone Creek LLC, 5.33%, 10/4/06, (LCD
Columbus Bank and Trust Co.) ............. 14,485,000 14,485,000
TOG Properties, Inc., 5.40%, 10/4/06,
(LCD AmSouth Bank N.A.) .................. 7,142,000 7,142,000
Vestavia Hills Baptist, 5.40%, 10/4/06,
(LCD Amsouth Bank NA) .................... 2,900,000 2,900,000
Wells Fargo & Co., 5.38%, 8/3/07 ............ 2,000,000 2,000,000
World Wildlife Fund, Inc., 5.37%, 10/4/06,
(LCD AMBAC Financial Group, Inc.) ........ 4,725,000 4,725,000
-------------
173,380,005
-------------
Brokers & Dealers (4.6%)
Goldman Sachs Group, Inc., 5.38%,
8/15/07 (c) .............................. 5,000,000 5,000,244
Greenwich Capital Holdings, 5.29%, 11/9/06 .. 2,000,000 2,000,000
Merrill Lynch & Co., Inc., Series 1,
5.365%, 5/29/07 .......................... 12,000,000 12,000,000
Merrill Lynch & Company, Inc., 5.58%,
7/11/07 (c) .............................. 12,000,000 12,000,000
Merrill Lynch & Company, Inc., 5.39%,
8/3/07 ................................... 10,000,000 10,000,000
Morgan Stanley, Series EXLS, 5.35%,
8/3/07 ................................... 10,000,000 10,000,000
Morgan Stanley, 5.39%, 8/3/07 ............... 5,000,000 5,000,000
Continued
77
Prime Money Market Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
VARIABLE RATE NOTES*, CONTINUED
Brokers & Dealers, continued
Morgan Stanley, 5.40%, 8/27/07 .............. $ 7,000,000 $ 7,000,000
-------------
63,000,244
-------------
Financial Services (8.8%)
Bank of Ireland, 5.31%, 8/14/07 (c) ......... 25,000,000 25,000,000
BNP Paribas SA, 5.36%, 5/18/07 (c) .......... 14,000,000 14,000,000
Compass Securitization LLC, 5.285%,
1/12/07 (c) .............................. 8,000,000 7,999,411
Compass Securitization LLC, 5.285%,
3/6/07 (c) ............................... 15,000,000 14,999,030
Compass Securitization LLC, 5.285%,
9/3/07 (c) ............................... 8,000,000 7,999,440
General Electric Capital Corp., 5.455%,
7/9/07 (c) ............................... 7,000,000 7,000,000
General Electric Capital Corp., 5.43%,
8/17/07 (c) .............................. 7,000,000 7,000,000
Paradigm Funding LLC, 5.29%, 4(2)
3/1/07 (c) ............................... 10,000,000 9,999,583
SLM Corp., 5.33%, 8/10/07 ................... 15,000,000 15,000,000
Westpac Banking Corp., 5.30%, 7/16/07 (c) ... 12,000,000 12,000,000
-------------
120,997,464
-------------
Financial, Speciality (1.0%)
K2 (USA) LLC, 5.445%, 4/25/07 (c) ........... 4,000,000 3,999,091
K2 (USA) LLC, 5.31%, 7/10/07 (c) ............ 3,000,000 3,000,085
K2 (USA) LLC, 5.32%, 10/9/07 (c) ............ 2,000,000 1,999,800
SLM Corp., 5.685%, 7/25/07 (c) .............. 5,000,000 5,009,232
-------------
14,008,208
-------------
Insurance (1.5%)
Genworth Life Insurance Co., 5.53%,
11/9/06 (e) .............................. 5,000,000 5,000,000
Metropolitan Life Insurance Co., 5.61%,
11/1/06 (e) .............................. 5,000,000 5,000,000
Metropolitan Life Insurance Co. of
Connecticut, 5.28%, 11/21/06 (e) ......... 5,000,000 5,000,000
New York Life Insurance Co., 5.48%,
11/25/06 (e) ............................. 5,000,000 5,000,000
-------------
20,000,000
-------------
Total Variable Rate Notes
(Cost $391,385,921) ................... 391,385,921
-------------
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- --------------
REPURCHASE AGREEMENT (5.9%)
ING Financial Markets, 5.40%, dated
9/29/06, maturing 10/2/06, with a maturity
value of $80,114,035 (Collateralized
fully by various U.S. Government
Agencies) ................................ $ 80,078,000 $ 80,078,000
--------------
Total Repurchase Agreement
(80,078,000) .......................... 80,078,000
--------------
COLLATERALIZED LOAN AGREEMENTS (15.0%)
Bear Stearns & Co., 5.50%, dated 9/29/06,
maturing 10/2/06, with a maturity value
of $25,011,448 ........................... 25,000,000 25,000,000
First Boston, 5.48%, dated 9/29/06,
maturing 10/2/06, with a maturity value
of $26,011,863 ........................... 26,000,000 26,000,000
Goldman Sachs Group, Inc., 5.48%, dated
9/29/06, maturing 10/2/06, with a
maturity value of $18,008,213 ............ 18,000,000 18,000,000
Greenwich Capital Markets, Inc., 5.50%,
dated 9/29/06, maturing 10/2/06, with a
maturity value of $22,010,083 ............ 22,000,000 22,000,000
J.P. Morgan Securities, Inc., 5.48%, dated
9/29/06, maturing 10/2/06, with a
maturity value of $25,011,406 ............ 25,000,000 25,000,000
Merrill Lynch & Co., 5.51%, dated 9/29/06,
maturing 10/2/06, with a maturity value
of $20,009,175 ........................... 20,000,000 20,000,000
Morgan Stanley, 5.48%, dated 9/29/06,
maturing 10/2/06, with a maturity value
of $45,020,531 ........................... 45,000,000 45,000,000
Washington Mutual, 5.45%, dated 9/29/06,
maturing 10/2/06, with a maturity value
of $25,011,344 ........................... 25,000,000 25,000,000
--------------
Total Collateralized Loan Agreements
(Cost $206,000,000) ................... 206,000,000
--------------
Total Investments
(Cost $1,370,562,242) -- 100.0% .......... 1,370,562,242
Net other assets (liabilities) -- 0.0% ...... 29,786
--------------
Net Assets -- 100.0% ........................ $1,370,592,028
==============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
78
U.S. Treasury Money Market Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
U.S. TREASURY BILLS** (12.2%)
4.65%, 10/12/06 ............................. $ 20,000,000 $ 19,970,917
4.815%, 12/21/06 ............................ 30,000,000 29,660,476
4.94%, 1/18/07 .............................. 30,000,000 29,550,012
-------------
Total U.S. Treasury Bills
(Cost $79,181,405) .................... 79,181,405
-------------
U.S. TREASURY NOTES (19.9%)
2.50%, 10/31/06 ............................. 30,000,000 29,938,325
3.50%, 11/15/06 ............................. 30,000,000 29,940,801
2.88%, 11/30/06 ............................. 30,000,000 29,884,086
3.13%, 1/31/07 .............................. 30,000,000 29,810,147
2.25%, 2/15/07 .............................. 10,000,000 9,899,421
-------------
Total U.S. Treasury Notes
(Cost $129,472,780) ................... 129,472,780
-------------
REPURCHASE AGREEMENTS (67.9%)
Bank of America Corp., 4.75%, dated
9/29/06, maturing 10/2/06, with a maturity
value of $110,043,542 (Collateralized
fully by U.S. Treasury Notes) ............ 110,000,000 110,000,000
First Boston, 4.95%, dated, 9/29/06,
maturing 10/2/06, with a maturity value of
$131,526,743 (Collateralized fully by
U.S. Treasury Notes) ..................... 131,472,510 131,472,510
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
REPURCHASE AGREEMENTS, CONTINUED
Goldman Sachs Group, Inc., 4.90%, dated
9/29/06, maturing 10/2/06, with a maturity
value of $75,030,625 (Collateralized
fully by U.S. Treasury Notes) ............ $ 75,000,000 $ 75,000,000
Lehman Brothers Holdings, Inc., 5.00%,
dated 9/29/06, maturing 10/2/06, with a
maturity value of $70,029,167
(Collateralized fully by U.S. Treasury
Notes) ................................... 70,000,000 70,000,000
Merrill Lynch & Co., 4.85%, dated 9/29/06,
maturing 10/2/06, with a maturity value of
$55,022,229 (Collateralized fully by U.S.
Treasury Notes) .......................... 55,000,000 55,000,000
-------------
Total Repurchase Agreements
(Cost $441,472,510) ................... 441,472,510
-------------
Total Investments
(Cost $650,126,695) -- 100.0% ............ 650,126,695
Net other assets (liabilities) -- 0.0% ...... (307,105)
-------------
Net Assets -- 100.0% ........................ $ 649,819,590
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
79
National Tax-Free Money Market Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
MUNICIPAL BONDS (97.8%)
Alabama (4.3%)
Jefferson County, AL, Sewer Refunding
Revenue, SubSeries B-7, 3.76%, 10/5/06,
XLCA* .................................... $ 2,300,000 $ 2,300,000
Port City, AL, Medical Clinic Board Revenue,
3.73%, 10/5/06, AMBAC* ................... 1,780,000 1,780,000
-------------
4,080,000
-------------
Alaska (1.8%)
Valdez, AK, Marine Terminal Refunding
Revenue, BP Pipelines, Inc. Project,
3.85%, 10/2/06* .......................... 1,700,000 1,700,000
-------------
Arizona (3.8%)
Arizona Health Facilities Authority Revenue,
3.79%, 10/5/06, Citibank* ................ 3,500,000 3,500,000
Tucson, AZ, Industrial Development Authority
Revenue, Lincoln Garden Project, 3.74%,
10/3/06, FHLMC* .......................... 100,000 100,000
-------------
3,600,000
-------------
Colorado (1.7%)
Thorton, CO, Industrial Development
Refunding Revenue, 3.84%, 8/1/11, U.S.
Bank* .................................... 1,600,000 1,600,000
-------------
Florida (8.1%)
Jacksonville, FL, Economic Development,
Commission Health Care Facilities Revenue,
Series A, 3.78%, 10/5/06, Fortis Banque
Belgium, JP Morgan Chase Bank* ........... 1,225,000 1,225,000
Miami, FL, Health Facilities Authority
Refunding Revenue, Mercy Hospital Project,
3.75%, 10/4/06, NationsBank N.A.* ........ 3,020,000 3,020,000
Pasco County, FL, School Board, Certificates
of Participation, 3.74%, 10/5/06,
AMBAC* ................................... 1,250,000 1,250,000
Tallahassee, FL, Capital Bonds Revenue,
Series 607, 3.78%, 10/5/06, FSA (c)* ..... 2,290,000 2,290,000
-------------
7,785,000
-------------
Illinois (15.2%)
Chicago, IL, Metropolitan Water Reclamation
District, G.O., Series 59, 3.78%, 10/5/06,
Goldman Sachs (c)* ....................... 2,000,000 2,000,000
Cook County, IL, Public Improvements, G.O.,
Series B, 3.75%, 10/4/06, Landesbank
Hessen* .................................. 4,750,000 4,750,000
Illinois Development Finance Authority
Revenue, St. Ignatius College Preparatory,
3.76%, 10/4/06, Northern Trust Co.* ...... 4,000,000 4,000,000
Illinois Health Facilities Authority
Refunding Revenue, Series B, 3.75%,
10/4/06, J.P. Morgan Chase Bank* ......... 3,800,000 3,800,000
-------------
14,550,000
-------------
Indiana (2.1%)
Indiana Health Facilities Financing Authority
Revenue, Riverview Hospital Project,
3.75%, 10/5/06, National City Bank of
Indiana* . ............................... 2,000,000 2,000,000
-------------
Kentucky (3.1%)
Jefferson County, KY, Student Housing
Industrial Building Revenue, Series A,
3.75%, 10/5/06, Regions Bank* ............ 3,000,000 3,000,000
-------------
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
MUNICIPAL BONDS, CONTINUED
Louisiana (2.2%)
New Orleans, LA, Refunding, G.O., Series A20,
3.83%, 10/4/06, FGIC (c)* ................ $ 2,095,000 $ 2,095,000
-------------
Maryland (1.5%)
Maryland State Health & Higher Educational
Facilities Authority Revenue, Series A,
3.75%, 10/4/06, Bank One* ................ 1,400,000 1,400,000
-------------
Massachusetts (3.9%)
Clipper Tax Exempt Trust, Certificates of
Participation, 3.75%, 2/1/07, State Street
Bank & Trust (c)* ........................ 3,699,000 3,699,000
-------------
Michigan (2.1%)
Kent, MI, Hospital Finance Authority
Refunding Revenue, Series B, 3.74%,
10/4/06, MBIA* ........................... 2,025,000 2,025,000
-------------
Minnesota (8.5%)
Minneapolis, MN, Health Care System
Revenue, Series A, 3.74%, 10/4/06,
AMBAC* ................................... 4,000,000 4,000,000
University of Minnesota, Various Purposes
Revenue, Series C, 3.72%, 10/4/06,
JP Morgan Chase Bank* .................... 4,150,000 4,150,000
-------------
8,150,000
-------------
Missouri (3.1%)
Kansas City, MO, Industrial Development
Authority Revenue, Downtown Arena
Project, Series C, 3.77%, 10/4/06,
AMBAC* ................................... 3,000,000 3,000,000
-------------
Nevada (2.6%)
Truckee, NV, Meadows Water Authority
Revenue, Series 2006B, 3.60%, 2/6/07 ..... 2,500,000 2,500,000
-------------
New Jersey (4.0%)
Fanwood, NJ, Tax Anticipation Notes, G.O.,
4.13%, 12/1/06 ........................... 1,400,000 1,400,746
Park Ridge, NJ, Board of Education, G.O.,
4.50%, 8/7/07 ............................ 1,340,000 1,345,466
West Orange Township, NJ, G.O., 4.50%,
6/20/07 .................................. 1,082,545 1,087,770
-------------
3,833,982
-------------
New York (6.1%)
New York State Housing Finance Agency
Service Refunding Revenue, Series G,
3.75%, 10/4/06, WestLB* .................. 2,000,000 2,000,000
New York, NY, Public Improvements, G.O.,
SubSeries H6, 3.74%, 10/4/06, Fleet
National Bank* ........................... 3,850,000 3,850,000
-------------
5,850,000
-------------
Ohio (0.9%)
Cleveland Heights, OH,, 4.50%, 8/9/07 ....... 850,000 855,246
-------------
Pennsylvania (3.1%)
Pennsylvania State Higher Educational
Facilities Revenue, Drexel University,
Series B, 3.76%, 10/5/06, Landesbank
Hessen* .................................. 3,000,000 3,000,000
-------------
Texas (5.0%)
Harris County, TX, Health Facilities
Development Revenue, Texas Medical Center
Project, 3.89%, 10/2/06, MBIA* ........... 1,300,000 1,300,000
Continued
80
National Tax-Free Money Market Fund
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED SEPTEMBER 30, 2006
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
MUNICIPAL BONDS, CONTINUED
Texas, continued
North Texas Tollway Authority Revenue, Series
C, 3.77%, 10/4/06, FGIC* ................. $ 3,500,000 $ 3,500,000
-------------
4,800,000
-------------
Virginia (5.7%)
Virginia Beach, VA, Development Authority
Revenue, LifeNet Project, 3.75%, 10/4/06,
SunTrust Bank* ........................... 3,550,000 3,550,000
Virginia Small Business Finance Authority
Refunding Revenue, Virginia Historical
Society, 3.75%, 10/4/06, SunTrust Bank* .. 1,900,000 1,900,000
-------------
5,450,000
-------------
Wisconsin (9.0%)
Wisconsin State Health & Educational
Facilities Authority Revenue, Grace
Lutheran Foundation Project, 3.74%,
10/4/06, Firstar Bank N.A.* .............. 2,340,000 2,340,000
Wisconsin State Health & Educational
Facilities Authority Revenue, Series B,
3.75%, 10/5/06, Marshall & Ilsley* ....... 4,500,000 4,500,000
Wisconsin State Health & Educational
Facilities Revenue, 3.74%, 10/5/06,
Citibank N.A.* ........................... 1,800,000 1,800,000
-------------
8,640,000
-------------
Total Municipal Bonds
(Cost $93,613,228) .................... 93,613,228
-------------
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT COST
---------------- -------------
COMMERCIAL PAPER (2.1%)
Connecticut (2.1%)
Connecticut Development Authority, New
England Power Co., Series 1999, 3.70%,
10/30/06.................................. $ 2,000,000 $ 2,000,000
-------------
Total Commercial Paper
(Cost $ 2,000,000)..................... 2,000,000
-------------
INVESTMENT COMPANY (0.0%)
Investment Company (0.0%)
SEI Tax-Exempt Trust -- Institutional Class.. 27,717 27,717
-------------
Total Investment Company
(Cost $ 27,717)........................ 27,717
-------------
Total Investments
(Cost $ 95,640,945) -- 99.9%.............. 95,640,945
Net other assets (liabilities) -- 0.1%....... 119,560
-------------
Net Assets -- 100.0%......................... $ 95,760,505
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
81
Capital Manager Conservative Growth Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
---------------- -------------
AFFILIATED INVESTMENT COMPANIES (100.1%)
BB&T International Equity Fund, Institutional
Class .................................... 330,464 $ 3,711,110
BB&T Large Cap Fund, Institutional Class .... 483,602 9,855,815
BB&T Large Cap Growth Fund, Institutional
Class .................................... 717,207 6,512,240
BB&T Mid Cap Growth Fund, Institutional
Class .................................... 89,715 1,174,370
BB&T Mid Cap Value Fund, Institutional
Class .................................... 130,423 1,765,931
BB&T Small Cap Fund, Institutional Class .... 124,157 1,885,952
BB&T Total Return Bond Fund, Institutional
Class .................................... 3,434,900 34,795,534
BB&T U.S. Treasury Money Market Fund,
Institutional Class ...................... 1,841,589 1,841,589
-------------
Total Affiliated Investment Companies
(Cost $55,801,810) .................... 61,542,541
-------------
Total Investments
(Cost $55,801,810) -- 100.1% .......... 61,542,541
Net other assets (liabilities) -- (0.1)% .... (37,067)
-------------
Net Assets -- 100.0% ........................ $ 61,505,474
=============
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
82
Capital Manager Moderate Growth Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
--------- -----------
AFFILIATED INVESTMENT COMPANIES (99.9%)
BB&T International Equity Fund, Institutional
Class ............................................. 701,834 $ 7,881,594
BB&T Large Cap Fund, Institutional Class ............. 1,036,179 21,117,323
BB&T Large Cap Growth Fund, Institutional
Class ............................................. 1,503,652 13,653,160
BB&T Mid Cap Growth Fund, Institutional
Class ............................................. 190,360 2,491,816
BB&T Mid Cap Value Fund, Institutional
Class ............................................. 277,122 3,752,229
BB&T Small Cap Fund, Institutional Class ............. 263,669 4,005,138
BB&T Total Return Bond Fund, Institutional
Class ............................................. 2,520,474 25,532,403
BB&T U.S. Treasury Money Market Fund,
Institutional Class ............................... 2,373,313 2,373,313
-----------
Total Affiliated Investment Companies
(Cost $71,161,734) ............................. 80,806,976
-----------
Total Investments
(Cost $71,161,734) -- 99.9% ....................... 80,806,976
Net other assets (liabilities) -- 0.1% ............... 113,941
-----------
Net Assets -- 100.0% ................................. $80,920,917
===========
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
83
Capital Manager Growth Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
--------- -----------
AFFILIATED INVESTMENT COMPANIES (99.8%)
BB&T International Equity Fund, Institutional
Class ............................................. 660,358 $ 7,415,820
BB&T Large Cap Fund, Institutional Class ............. 980,715 19,986,966
BB&T Large Cap Growth Fund, Institutional
Class ............................................. 1,401,000 12,721,080
BB&T Mid Cap Growth Fund, Institutional
Class ............................................. 179,022 2,343,394
BB&T Mid Cap Value Fund, Institutional
Class ............................................. 260,742 3,530,446
BB&T Small Cap Fund, Institutional Class ............. 248,004 3,767,178
BB&T Total Return Bond Fund, Institutional
Class ............................................. 1,023,264 10,365,663
BB&T U.S. Treasury Money Market Fund,
Institutional Class ............................... 2,218,042 2,218,042
-----------
Total Affiliated Investment Companies
(Cost $54,449,108) ............................. 62,348,589
-----------
Total Investments
(Cost $54,449,108) -- 99.8% ....................... 62,348,589
Net other assets (liabilities) -- 0.2% ............... 123,119
-----------
Net Assets -- 100.0% ................................. $62,471,708
===========
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
84
Capital Manager Equity Fund
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 2006
FAIR
SHARES VALUE
--------- -----------
AFFILIATED INVESTMENT COMPANIES (100.0%)
BB&T International Equity Fund, Institutional
Class ............................................. 388,056 $ 4,357,869
BB&T Large Cap Fund, Institutional Class ............. 579,827 11,816,874
BB&T Large Cap Growth Fund, Institutional
Class ............................................. 816,241 7,411,468
BB&T Mid Cap Growth Fund, Institutional
Class ............................................. 105,355 1,379,097
BB&T Mid Cap Value Fund, Institutional
Class ............................................. 153,575 2,079,400
BB&T Small Cap Fund, Institutional Class ............. 145,810 2,214,854
BB&T U.S. Treasury Money Market Fund,
Institutional Class ............................... 1,375,891 1,375,891
-----------
Total Affiliated Investment Companies
(Cost $25,518,100) ............................. 30,635,453
-----------
Total Investments
(Cost $25,518,100) -- 100.0% ...................... 30,635,453
Net other assets (liabilities) -- 0.0% ............... (3,475)
-----------
Net Assets -- 100.0% ................................. $30,631,978
===========
See page 86 for footnote legend to the Schedules of Portfolio Investments.
See accompanying notes to the financial statements.
85
BB&T Funds
FOOTNOTE LEGEND TO THE SCHEDULES OF PORTFOLIO INVESTMENTS
(a) Represents non-income producing security.
(b) Represents that all or a portion of the security was on loan as of
September 30, 2006.
(c) Rule 144A, Section 4(2) or other security which is restricted as to resale
to institutional investors. The Investment Advisor, using board approved
procedures, has deemed these securities or a portion of these securities to
be liquid.
(d) Represents that all or a portion of the security was pledged as collateral
for securities purchased on a when-issued basis.
(e) Rule 144A, Section 4(2) or other security which is restricted as to resale
to institutional investors. The Investment Advisor, using board approved
procedures, has deemed these securities to be illiquid. As of September 30,
2006, these securities represent 3.7% and 3.6% of net assets in the North
Carolina Intermediate Tax-Free Fund and the Prime Money Market Fund,
respectively.
(f) Represents a security purchased on a when-issued basis. At September 30,
2006, total cost of investments purchased on a when-issued basis for the
Total Return Bond and the North Carolina Intermediate Tax-Free Fund was
$39,663,098 and $2,016,215, respectively.
* The interest rate for this variable rate note, which will change
periodically, is based either on the prime rate or an index of market
rates. The reflected rate is in effect as of September 30, 2006. For bond
funds, the maturity date reflected is the final maturity date. For money
market funds, the maturity date reflected is the next reset date.
** Discount Note or zero coupon bond. Rate disclosed represents the effective
yield at September 30, 2006.
*** Interest bearing commercial paper
ADR -- American Depositary Receipt.
AMBAC -- Insured by AMBAC Indemnity Corp.
AMBAC-TCRS -- Secondarily Insured by AMBAC Indemnity Corp.
ETM -- Escrowed to Maturity.
FGIC -- Insured by the Financial Guaranty Insurance Corp.
FHA -- Insured by the Federal Housing Administration.
FSA -- Insured by Financial Security Assurance.
G.O. -- General Obligation
LCD -- Letter of Credit.
LLC -- Limited Liability Company.
MBIA -- Insured by the Municipal Bond Insurance Association.
NA -- North America.
OID -- Original Issue Discount.
REIT -- Real Estate Investment Trust.
SCSDE -- South Carolina School District Enhancement.
XLCA -- Insured by XL Capital Assurance.
See accompanying notes to the financial statements.
86
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
87
BB&T Funds
STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2006
LARGE CAP LARGE CAP
FUND GROWTH FUND
------------ ------------
ASSETS:
Investments, at cost ................................................. $652,055,288 $284,716,018
Unrealized appreciation (depreciation) ............................ 160,666,207 32,683,200
------------ ------------
Investments, at fair value* ....................................... 812,721,495 317,399,218
Repurchase agreements, at cost ....................................... 38,405,481 6,880,178
Cash ................................................................. -- --
Foreign currency, at value** ......................................... -- --
Interest and dividends receivable .................................... 964,315 281,220
Receivable for capital shares issued ................................. 190,567 1,117
Receivable for investments sold ...................................... -- 7,864,285
Receivable for forward foreign currency contracts .................... -- --
Receivable from fund accounting ...................................... -- --
Reclaims receivable .................................................. -- --
Receivable from Advisor .............................................. -- --
Prepaid and other expenses ........................................... 11,107 5,619
------------ ------------
Total Assets ......................................................... 852,292,965 332,431,637
------------ ------------
LIABILITIES:
Call options written (premiums received $--; $--; $--; $--; $--;
$--; $910,575; $ 170,749) ......................................... -- --
Cash overdraft ....................................................... -- 3,710
Dividends payable .................................................... 270,220 131,054
Payable for forward foreign currency contracts ....................... -- --
Payable for investments purchased .................................... -- 4,929,053
Payable for capital shares redeemed .................................. 550,374 242,032
Payable for collateral received on loaned securities ................. 126,591,112 101,006,062
Accrued expenses and other payables:
Investment advisory fees .......................................... 409,740 194,151
Administration fees ............................................... 66,111 31,296
Fund accounting fees .............................................. 6,014 2,950
Transfer agency fees .............................................. 19,828 9,636
Distribution fees ................................................. 22,181 9,325
Compliance service fees ........................................... 979 481
Trustee fees ...................................................... 317 156
Other ............................................................. 64,429 35,419
------------ ------------
Total Liabilities .................................................... 128,001,305 106,595,325
------------ ------------
NET ASSETS:
Capital .............................................................. 488,293,326 200,780,840
Accumulated (distributions in excess of) net investment income ....... (104,143) 230,874
Accumulated realized gains/(losses) from investment and foreign
currency transactions ............................................. 75,436,270 (7,858,602)
Net unrealized appreciation/depreciation on investments and
translation of assets and liabilities in foreign currency ......... 160,666,207 32,683,200
------------ ------------
Net Assets ........................................................... $724,291,660 $225,836,312
============ ============
NET ASSETS
Class A Shares .................................................... $ 48,656,168 $ 9,445,810
Class B Shares .................................................... 14,807,596 8,970,050
Class C Shares .................................................... 161,325 36,886
Institutional Shares ................................................. 660,666,571 207,383,566
------------ ------------
Total ................................................................ $724,291,660 $225,836,312
============ ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING (UNLIMITED NUMBER OF SHARES
AUTHORIZED, NO PAR VALUE):
Class A Shares .................................................... 2,393,513 1,058,076
Class B Shares .................................................... 734,971 1,071,062
Class C Shares .................................................... 8,023 4,403
Institutional Shares ................................................. 32,417,350 22,850,209
------------ ------------
Total ................................................................ 35,553,857 24,983,750
============ ============
NET ASSET VALUE
Class A Shares -- redemption price per share ...................... $ 20.33 $ 8.93
============ ============
Class B Shares -- offering price per share*** ..................... $ 20.15 $ 8.37
============ ============
Class C Shares -- offering price per share*** ..................... $ 20.11 $ 8.38
============ ============
Institutional Shares -- offering and redemption price per share ... $ 20.38 $ 9.08
============ ============
Maximum Sales Charge -- Class A Shares ............................... 5.75% 5.75%
============ ============
Maximum Offering Price (100%/(100% -- Maximum Sales Charge)) of net
asset value adjusted to the nearest cent per share -- Class A
Shares ............................................................ $ 21.57 $ 9.47
============ ============
----------
* The Large Cap Fund, Large Cap Growth Fund, Mid Cap Value Fund, Mid Cap
Growth Fund, Small Cap Fund, Special Opportunities Equity Fund and Equity
Income Fund include securities on loan of $122,511,470; $97,859,740;
$59,151,395; $53,993,107; $27,427,088; $59,886,231 and $29,578,851;
respectively.
** The International Equity Fund includes foreign currency at cost of
$2,396,286.
*** Redemption price per share varies by length of time shares are held.
See accompanying notes to the financial statements.
88
SPECIAL
MID CAP MID CAP SMALL CAP INTERNATIONAL OPPORTUNITIES EQUITY
VALUE FUND GROWTH FUND FUND EQUITY FUND EQUITY FUND INCOME FUND
------------- ------------ ------------ ------------- ------------- ------------
$ 260,756,665 $175,466,051 $130,405,898 $188,454,299 $216,523,608 $127,089,920
18,463,003 20,958,353 13,538,787 64,728,915 37,739,592 15,635,492
------------- ------------ ------------ ------------ ------------ ------------
279,219,668 196,424,404 143,944,685 253,183,214 254,263,200 142,725,412
13,180,103 1,778,287 8,937,960 -- 13,495,020 6,673,560
-- -- -- 3,664,822 -- --
-- -- -- 2,393,987 -- --
224,522 62,961 90,913 711,025 46,796 300,306
254,935 99,210 161,685 2,620 417,831 377,033
-- 5,977,269 -- 23,077 1,014,695 110,268
-- -- -- 163,117 -- --
-- -- -- 321 -- --
-- -- -- 575,213 -- --
-- -- 48,529 -- -- --
4,311 4,848 10,228 3,433 9,092 7,729
------------- ------------ ------------ ------------ ------------ ------------
292,883,539 204,346,979 153,194,000 260,720,829 269,246,634 150,194,308
------------- ------------ ------------ ------------ ------------ ------------
-- -- -- -- 360,500 40,425
-- -- -- -- -- --
39,603 -- 14,873 424,126 -- 88,674
-- -- -- 16,408
1,145,254 2,671,531 -- -- 135,675 --
140,891 307,823 100,945 100,875 277,011 85,543
62,152,094 55,773,608 28,786,261 -- 61,799,055 30,739,802
129,780 84,134 82,022 190,297 133,745 67,327
20,974 13,517 11,044 23,829 18,847 10,819
2,034 1,382 1,225 4,261 1,852 1,127
6,979 5,253 6,167 5,093 14,441 7,957
7,754 4,272 5,370 2,513 62,910 31,055
303 204 171 354 278 158
98 66 55 115 90 51
26,745 17,344 -- 53,877 8,231 4,691
------------- ------------ ------------ ------------ ------------ ------------
63,672,509 58,879,134 29,008,133 821,748 62,812,635 31,077,629
------------- ------------ ------------ ------------ ------------ ------------
203,165,703 108,397,658 116,494,950 198,079,465 159,131,371 100,654,011
(66,896) -- (27,923) (820,134) -- (345,575)
7,649,220 16,111,834 (5,819,947) (2,240,412) 9,012,961 3,042,427
18,463,003 20,958,353 13,538,787 64,880,162 38,289,667 15,765,816
------------- ------------ ------------ ------------ ------------ ------------
$ 229,211,030 $145,467,845 $124,185,867 $259,899,081 $206,433,999 $119,116,679
============= ============ ============ ============ ============ ============
$ 13,392,650 $ 10,381,460 $ 9,352,901 $ 4,201,595 $ 81,882,593 $ 60,059,329
5,391,165 2,376,548 4,091,524 1,819,323 22,901,428 9,591,774
742,624 32,659 19,725 187,815 34,417,955 14,260,898
209,684,591 132,677,178 110,721,717 253,690,348 67,232,023 35,204,678
------------- ------------ ------------ ------------ ------------ ------------
$ 229,211,030 $145,467,845 $124,185,867 $259,899,081 $206,433,999 $119,116,679
============= ============ ============ ============ ============ ============
992,600 833,648 619,130 380,026 4,983,133 4,495,930
407,505 198,829 277,855 173,970 1,431,176 719,445
56,150 2,731 1,341 17,995 2,149,667 1,070,368
15,489,898 10,138,727 7,290,067 22,592,171 4,058,002 2,632,591
------------- ------------ ------------ ------------ ------------ ------------
16,946,153 11,173,935 8,188,393 23,164,162 12,621,978 8,918,334
============= ============ ============ ============ ============ ============
$ 13.49 $ 12.45 $ 15.11 $ 11.06 $ 16.43 $ 13.36
============= ============ ============ ============ ============ ============
$ 13.23 $ 11.95 $ 14.73 $ 10.46 $ 16.00 $ 13.33
============= ============ ============ ============ ============ ============
$ 13.23 $ 11.96 $ 14.71 $ 10.44 $ 16.01 $ 13.32
============= ============ ============ ============ ============ ============
$ 13.54 $ 13.09 $ 15.19 $ 11.23 $ 16.57 $ 13.37
============= ============ ============ ============ ============ ============
5.75% 5.75% 5.75% 5.75% 5.75% 5.75%
============= ============ ============ ============ ============ ============
$ 14.32 $ 13.21 $ 16.03 $ 11.73 $ 17.43 $ 14.17
============= ============ ============ ============ ============ ============
See accompanying notes to the financial statements.
89
BB&T Funds
STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2006
SHORT U.S. INTERMEDIATE U.S.
GOVERNMENT FUND GOVERNMENT FUND
--------------- -----------------
ASSETS:
Investments, at cost ................................................ $104,658,921 $302,303,232
Unrealized appreciation (depreciation) ........................... (627,883) (2,767,457)
------------ ------------
Investments, at fair value ....................................... 104,031,038 299,535,775
Repurchase agreements, at cost ...................................... 2,302,725 2,046,488
Cash ................................................................ -- --
Interest and dividends receivable ................................... 771,831 1,974,356
Receivable for capital shares issued ................................ 333,780 5,181
Receivable for investments sold ..................................... -- --
Receivable from fund accounting ..................................... -- --
Prepaid expenses .................................................... 1,647 4,202
------------ ------------
Total Assets ........................................................ 107,441,021 303,566,002
------------ ------------
LIABILITIES:
Dividends payable ................................................... 142,090 546,991
Payable for investments purchased ................................... -- --
Payable for capital shares redeemed ................................. 15,053 435,356
Payable for collateral received on loaned securities ................ 34,618,745 35,975,000
Accrued expenses and other payables:
Investment advisory fees ......................................... 36,788 140,774
Administration fees .............................................. 10,396 33,254
Fund accounting fees ............................................. 1,472 3,937
Transfer agency fees ............................................. 1,764 7,773
Distribution fees ................................................ 1,283 5,480
Compliance service fees .......................................... 161 558
Trustee fees ..................................................... 52 181
Other ............................................................ 8,988 40,156
------------ ------------
Total Liabilities ................................................... 34,836,792 37,189,460
------------ ------------
NET ASSETS:
Capital ............................................................. 81,028,297 282,551,331
Accumulated (distributions in excess of) net investment income ...... 578,326 3,334,973
Accumulated realized gains/(losses) from investment transactions .... (8,374,511) (16,742,305)
Net unrealized appreciation/depreciation on investments ............. (627,883) (2,767,457)
------------ ------------
Net Assets .......................................................... $ 72,604,229 $266,376,542
============ ============
NET ASSETS
Class A Shares ................................................... $ 6,232,886 $ 9,747,743
Class B Shares ................................................... -- 4,019,686
Class C Shares ................................................... -- 206,699
Institutional Shares ............................................. 66,371,343 252,402,414
------------ ------------
Total ............................................................... $ 72,604,229 $266,376,542
============ ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING (UNLIMITED NUMBER OF SHARES
AUTHORIZED, NO PAR VALUE):
Class A Shares ................................................... 657,361 985,733
Class B Shares ................................................... -- 407,878
Class C Shares ................................................... -- 20,958
Institutional Shares ............................................. 6,993,897 25,490,546
------------ ------------
Total ............................................................... 7,651,258 26,905,115
============ ============
NET ASSET VALUE
Class A Shares -- redemption price per share ..................... $ 9.48 $ 9.89
============ ============
Class B Shares -- offering price per share** ..................... $ -- $ 9.86
============ ============
Class C Shares -- offering price per share** ..................... $ -- $ 9.86
============ ============
Institutional Shares -- offering and redemption price per share .. $ 9.49 $ 9.90
============ ============
Maximum Sales Charge -- Class A Shares .............................. 3.00% 5.75%
============ ============
Maximum Offering Price (100%(100% -- Maximum Sales Charge)) of net
asset value adjusted to the nearest cent per share -- Class A
Shares ........................................................... $ 9.77 $ 10.49
============ ============
----------
* The Short U.S. Government Fund, Intermediate U.S. Government Fund, and
Total Return Bond Fund include securities on loan of $33,937,870;
$35,279,800 and $95,486,370; respectively.
** Redemption price per share varies by length of time shares are held.
See accompanying notes to the financial statements.
90
KENTUCKY MARYLAND NORTH CAROLINA SOUTH CAROLINA VIRGINIA
TOTAL RETURN INTERMEDIATE INTERMEDIATE INTERMEDIATE INTERMEDIATE INTERMEDIATE
BOND FUND TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND
------------ ------------- ------------- -------------- -------------- -------------
$521,962,766 $14,050,626 $9,761,175 $104,550,325 $18,845,221 $ 74,792,579
1,279,442 302,446 142,989 3,114,610 525,292 2,461,103
------------ ----------- ---------- ------------ ----------- ------------
523,242,208 14,353,072 9,904,164 107,664,935 19,370,513 77,253,682
12,549,531 -- -- -- -- --
152,901 -- -- -- -- --
2,966,698 201,034 93,462 1,473,943 205,444 931,497
615,418 -- -- 212,974 -- 118,562
24,525,568 -- -- 27,404 -- 747,632
513 -- -- -- -- --
3,564 92 61 438 325 1,522
------------ ----------- ---------- ------------ ----------- ------------
564,056,401 14,554,198 9,997,687 109,379,694 19,576,282 79,052,895
------------ ----------- ---------- ------------ ----------- ------------
1,168,869 32,851 22,596 275,217 46,587 208,574
85,900,687 569,415 -- 2,016,215 -- 1,280,000
308,678 37,202 -- -- 88,972 --
97,576,279 -- -- -- -- --
213,298 4,710 2,454 39,780 6,893 28,453
49,943 1,322 924 9,992 1,812 7,201
5,244 943 882 2,004 810 1,432
7,682 247 167 1,733 333 1,091
5,451 558 402 3,925 814 2,411
782 21 14 150 27 110
253 7 4 48 9 35
70,861 2,372 1,166 13,586 2,354 6,003
------------ ----------- ---------- ------------ ----------- ------------
185,308,027 649,648 28,609 2,362,650 148,611 1,535,310
------------ ----------- ---------- ------------ ----------- ------------
387,447,641 13,677,210 9,970,476 103,792,285 $18,875,471 74,947,771
2,191,115 5,134 (479) 52,797 15,758 31,874
(12,169,824) (80,240) (143,908) 57,352 11,150 76,837
1,279,442 302,446 142,989 3,114,610 525,292 2,461,103
------------ ----------- ---------- ------------ ----------- ------------
$378,748,374 $13,904,550 $9,969,078 $107,017,044 $19,427,671 $ 77,517,585
============ =========== ========== ============ =========== ============
$ 6,407,334 $ 2,729,100 $1,966,267 $ 19,162,931 $ 4,001,389 $ 11,875,099
4,871,996 -- -- -- -- --
115,829 -- -- -- -- --
367,353,215 11,175,450 8,002,811 87,854,113 15,426,282 65,642,486
------------ ----------- ---------- ------------ ----------- ------------
$378,748,374 $13,904,550 $9,969,078 $107,017,044 $19,427,671 $ 77,517,585
============ =========== ========== ============ =========== ============
632,937 269,551 194,311 1,845,353 386,439 1,042,326
480,870 -- -- -- -- --
11,433 -- -- -- -- --
36,269,429 1,105,064 789,653 8,461,343 1,499,483 5,763,016
------------ ----------- ---------- ------------ ----------- ------------
37,394,669 1,374,615 983,964 10,306,696 1,885,922 6,805,342
============ =========== ========== ============ =========== ============
$ 10.12 $ 10.12 $ 10.12 $ 10.38 $ 10.35 $ 11.39
============ =========== ========== ============ =========== ============
$ 10.13 $ -- $ -- $ -- $ -- $ --
============ =========== ========== ============ =========== ============
$ 10.13 $ -- $ -- $ -- $ -- $ --
============ =========== ========== ============ =========== ============
$ 10.13 $ 10.11 $ 10.13 $ 10.38 $ 10.29 $ 11.39
============ =========== ========== ============ =========== ============
5.75% 3.00% 3.00% 3.00% 3.00% 3.00%
============ =========== ========== ============ =========== ============
$ 10.74 $ 10.44 $ 10.43 $ 10.71 $ 10.67 $ 11.75
============ =========== ========== ============ =========== ============
See accompanying notes to the financial statements.
91
BB&T Funds
STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2006
WEST VIRGINIA
INTERMEDIATE PRIME MONEY
TAX-FREE FUND MARKET FUND
------------- --------------
ASSETS:
Investments:
Unaffiliated investments, at cost ................................ $64,062,482 $1,084,484,242
Investment in affiliates, at cost ................................ -- --
----------- --------------
Total investments, at cost .......................................... 64,062,482 1,084,484,242
Unrealized appreciation (depreciation) ........................... 1,722,241 --
----------- --------------
Investments, at value ............................................... 65,784,723 1,084,484,242
Repurchase agreements, at cost ...................................... -- 80,078,000
Collateralized loan agreements, at cost ............................. -- 206,000,000
Cash ................................................................ -- 3,766
Interest and dividends receivable ................................... 1,113,656 5,416,224
Receivable for capital shares issued ................................ 19,403 --
Prepaid expenses .................................................... 691 10,873
----------- --------------
Total Assets ........................................................ 66,918,473 1,375,993,105
----------- --------------
LIABILITIES:
Dividends payable ................................................... 182,474 2,542,032
Payable for investments purchased ................................... -- 1,999,800
Payable for capital shares redeemed ................................. 1,500 --
Accrued expenses and other payables:
Investment advisory fees ......................................... 24,569 316,129
Administration fees .............................................. 6,193 118,817
Fund accounting fees ............................................. 1,371 17,869
Transfer agency fees ............................................. 1,068 11,296
Distribution fees ................................................ 3,217 254,675
Compliance service fees .......................................... 92 1,786
Trustee fees ..................................................... 30 578
Other ............................................................ 8,876 138,095
----------- --------------
Total Liabilities ................................................... 229,390 5,401,077
----------- --------------
NET ASSETS:
Capital ............................................................. 64,803,466 1,370,586,340
Accumulated (distribution in excess of) net investment income ....... (55,375) 1,184
Accumulated realized gains/(losses) from investment transactions .... 218,751 4,504
Net unrealized appreciation/depreciation on investments ............. 1,722,241 --
----------- --------------
Net Assets .......................................................... $66,689,083 $1,370,592,028
=========== ==============
NET ASSETS
Class A Shares ................................................... $15,772,694 $ 636,326,997
Class B Shares ................................................... -- 2,255,590
Class C Shares ................................................... -- 393,090
Institutional Shares ............................................. 50,916,389 731,616,351
----------- --------------
Total ............................................................... $66,689,083 $1,370,592,028
=========== ==============
SHARES OF BENEFICIAL INTEREST OUTSTANDING (UNLIMITED NUMBER OF SHARES
AUTHORIZED, NO PAR VALUE):
Class A Shares ................................................... 1,610,777 636,323,798
Class B Shares ................................................... -- 2,255,944
Class C Shares ................................................... -- 393,086
Institutional Shares ............................................. 5,194,569 731,628,946
----------- --------------
Total ............................................................... 6,805,346 1,370,601,774
=========== ==============
NET ASSET VALUE
Class A Shares -- redemption price per share ..................... $ 9.79 $ 1.00
=========== ==============
Class B Shares -- offering price per share* ...................... $ -- $ 1.00
=========== ==============
Class C Shares -- offering price per share* ...................... $ -- $ 1.00
=========== ==============
Institutional Shares -- offering and redemption price per share .. $ 9.80 $ 1.00
=========== ==============
Maximum Sales Charge -- Class A Shares .............................. 3.00% NA
=========== ==============
Maximum Offering Price (100%/100% -- Maximum Sales Charge) of net
asset value adjusted to the nearest cent per share -- Class A
Shares ........................................................... $ 10.09 $ 1.00
=========== ==============
----------
* Redemption price per share varies by length of time shares are held.
See accompanying notes to the financial statements.
92
U.S. TREASURY NATIONAL CAPITAL MANAGER CAPITAL MANAGER
MONEY MARKET TAX-FREE MONEY CONSERVATIVE MODERATE CAPITAL MANAGER CAPITAL MANAGER
FUND MARKET FUND GROWTH FUND GROWTH FUND GROWTH FUND EQUITY FUND
------------- -------------- --------------- --------------- --------------- ---------------
$208,654,185 $95,640,945 $ -- $ -- $ -- $ --
-- -- 55,801,810 71,161,734 54,449,108 25,518,100
------------ ----------- ----------- ----------- ----------- -----------
208,654,185 95,640,945 55,801,810 71,161,734 54,449,108 25,518,100
-- -- 5,740,731 9,645,242 7,899,481 5,117,353
------------ ----------- ----------- ----------- ----------- -----------
208,654,185 95,640,945 61,542,541 80,806,976 62,348,589 30,635,453
441,472,510 -- -- -- -- --
1,314,215 406,626 187,185 198,179 131,007 52,465
-- -- 1 1,331 41,493 6,760
7,138 4,197 978 1,627 1,361 2,172
------------ ----------- ----------- ----------- ----------- -----------
651,448,048 96,051,768 61,730,705 81,008,113 62,522,450 30,696,850
------------ ----------- ----------- ----------- ----------- -----------
1,285,741 258,161 7,120 8,996 4,116 4,468
-- -- -- -- -- --
-- -- 200,675 33,007 9,771 46,336
140,167 16,379 -- -- -- --
55,053 9,490 -- -- -- --
10,889 1,234 505 660 506 245
5,559 1,049 2,007 5,797 4,901 2,192
68,546 2 6,118 24,610 20,394 8,152
921 141 109 141 113 62
298 46 35 46 37 20
61,284 4,761 8,662 13,939 10,904 3,397
------------ ----------- ----------- ----------- ----------- -----------
1,628,458 291,263 225,231 87,196 50,742 64,872
------------ ----------- ----------- ----------- ----------- -----------
649,819,344 95,757,477 57,364,419 71,699,547 54,842,631 24,030,124
246 3,028 54,876 94,881 83,846 47,480
-- -- (1,654,552) (518,753) (354,250) 1,437,021
-- -- 5,740,731 9,645,242 7,899,481 5,117,353
------------ ----------- ----------- ----------- ----------- -----------
$649,819,590 $95,760,505 $61,505,474 $80,920,917 $62,471,708 $30,631,978
------------ ----------- ----------- ----------- ----------- -----------
$167,899,725 $ 1,005 $ 9,364,676 $33,472,098 $22,801,442 $ 7,761,893
380,554 1,004 4,968,402 21,610,252 19,365,660 8,022,794
55,009 1,004 126,760 139,183 61,330 10,212
481,484,302 95,757,492 47,045,636 25,699,384 20,243,276 14,837,079
------------ ----------- ----------- ----------- ----------- -----------
$649,819,590 $95,760,505 $61,505,474 $80,920,917 $62,471,708 $30,631,978
============ =========== =========== =========== =========== ===========
167,899,969 1,005 940,155 3,276,340 2,229,554 670,773
380,552 1,004 498,621 2,151,129 1,927,365 712,550
55,009 1,004 12,760 13,779 6,105 910
481,484,089 95,757,492 4,687,278 2,506,213 1,977,545 1,273,975
------------ ----------- ----------- ----------- ----------- -----------
649,819,619 95,760,505 6,138,814 7,947,461 6,140,569 2,658,208
============ =========== =========== =========== =========== ===========
$ 1.00 $ 1.00 $ 9.96 $ 10.22 $ 10.23 $ 11.57
============ =========== =========== =========== =========== ===========
$ 1.00 $ 1.00 $ 9.96 $ 10.05 $ 10.05 $ 11.26
============ =========== =========== =========== =========== ===========
$ 1.00 $ 1.00 $ 9.93 $ 10.10 $ 10.05 $ 11.22
============ =========== =========== =========== =========== ===========
$ 1.00 $ 1.00 $ 10.04 $ 10.25 $ 10.24 $ 11.65
============ =========== =========== =========== =========== ===========
NA NA 5.75% 5.75% 5.75% 5.75%
============ =========== =========== =========== =========== ===========
$ 1.00 $ 1.00 10.57 $ 10.84 $ 10.85 $ 12.28
============ =========== =========== =========== =========== ===========
See accompanying notes to the financial statements.
93
BB&T Funds
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2006
LARGE CAP LARGE CAP
FUND GROWTH FUND
----------- ------------
INVESTMENT INCOME:
Interest income .......................................... $ 1,230,665 $ 459,645
Dividend income .......................................... 17,070,769 4,089,284
Foreign tax withholding .................................. -- --
Income from securities lending ........................... 125,434 71,297
----------- ------------
Total Investment Income .................................. 18,426,868 4,620,226
----------- ------------
EXPENSES:
Investment advisory fees ................................. 5,075,497 2,669,370
Administration fees ...................................... 775,253 407,694
Fund accounting fees ..................................... 86,724 46,905
Transfer agency fees ..................................... 145,019 76,221
Distribution fees -- Class A Shares ...................... 218,866 45,932
Distribution fees -- Class B Shares ...................... 189,381 111,680
Distribution fees -- Class C Shares ...................... 1,607 277
Compliance service fees .................................. 11,970 6,757
Custodian fees ........................................... 69,727 35,486
Legal fees ............................................... 57,871 28,434
Printing fees ............................................ 65,274 32,068
Trustee fees ............................................. 25,552 13,917
Other .................................................... 97,955 43,306
----------- ------------
Total expenses before waivers ............................ 6,820,696 3,518,047
Less expenses waived by the Investment Advisor ........... (340,766) (180,419)
Less expenses waived by the Distributor .................. (109,433) (22,966)
----------- ------------
Net Expenses ............................................. 6,370,497 3,314,662
----------- ------------
Net Investment Income (Loss) ............................. 12,056,371 1,305,564
----------- ------------
REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gains (losses) on option contracts .......... -- --
Net realized gains (losses) from investment and foreign
currency transactions ................................. 88,409,170 16,243,812
Change in unrealized appreciation/depreciation of
investment securities and foreign
currency transactions ................................. (7,600,664) (18,517,591)
----------- ------------
Net realized/unrealized gains (losses) on investments and
foreign currency transactions ......................... 80,808,506 (2,273,779)
----------- ------------
Change in net assets from operations ..................... $92,864,877 $ (968,215)
=========== ============
See accompanying notes to the financial statements.
94
SPECIAL
MID CAP MID CAP SMALL CAP INTERNATIONAL OPPORTUNITIES EQUITY
VALUE FUND GROWTH FUND FUND EQUITY FUND EQUITY FUND INCOME FUND
----------- ------------ ----------- ------------- ------------- -----------
$ 311,188 $ 254,962 $ 345,825 $ 3,080 $ 682,860 $ 369,196
2,484,748 1,222,735 814,095 7,570,653 1,266,956 3,157,724
-- -- -- (608,813) -- --
48,616 100,871 79,433 -- 10,083 4,360
----------- ------------ ----------- ----------- ----------- -----------
2,844,552 1,578,568 1,239,353 6,964,920 1,959,899 3,531,280
----------- ------------ ----------- ----------- ----------- -----------
1,546,717 1,103,333 944,834 2,469,434 1,539,712 710,045
236,247 168,512 106,628 279,088 217,566 114,676
27,556 19,899 13,498 58,089 25,905 14,643
45,403 35,418 32,803 38,714 104,026 48,885
32,329 27,531 27,934 18,594 388,869 250,662
50,808 26,566 25,143 19,715 221,008 75,256
6,293 635 128 1,341 316,763 113,543
3,478 2,544 1,298 4,282 3,450 1,625
22,040 13,460 9,593 146,233 20,223 10,927
16,026 10,760 12,994 19,523 11,995 9,443
17,320 12,362 58,896 20,421 17,360 8,983
6,852 5,509 3,342 8,940 7,240 3,817
31,462 22,843 19,963 32,225 40,346 36,102
----------- ------------ ----------- ----------- ----------- -----------
2,042,531 1,449,372 1,257,054 3,116,599 2,914,463 1,398,607
(102,798) (73,899) (237,497) (246,941) -- --
-- -- (13,967) (9,297) (194,434) (125,331)
----------- ------------ ----------- ----------- ----------- -----------
1,939,733 1,375,473 1,005,590 2,860,361 2,720,029 1,273,276
----------- ------------ ----------- ----------- ----------- -----------
904,819 203,095 233,763 4,104,559 (760,130) 2,258,004
----------- ------------ ----------- ----------- ----------- -----------
-- -- -- -- (196,621) 238,474
8,877,102 20,794,688 7,772,158 19,044,559 12,563,370 3,091,876
16,291,051 (22,292,477) (5,276,497) 15,908,410 9,047,945 9,391,746
----------- ------------ ----------- ----------- ----------- -----------
25,168,153 (1,497,789) 2,495,661 34,952,969 21,414,694 12,722,096
----------- ------------ ----------- ----------- ----------- -----------
$26,072,972 $ (1,294,694) $ 2,729,424 $39,057,528 $20,654,564 $14,980,100
=========== ============ =========== =========== =========== ===========
See accompanying notes to the financial statements.
95
BB&T Funds
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2006
SHORT U.S. INTERMEDIATE U.S.
GOVERNMENT FUND GOVERNMENT FUND
--------------- -----------------
INVESTMENT INCOME:
Interest income ................................................ $ 5,172,929 $ 23,574,944
Dividend income ................................................ -- --
Income from securities lending ................................. 62,800 178,602
----------- ------------
Total Investment Income ........................................ 5,235,729 23,753,546
----------- ------------
EXPENSES:
Investment advisory fees ....................................... 814,222 2,780,380
Administration fees ............................................ 153,384 523,806
Fund accounting fees ........................................... 23,289 67,481
Transfer agency fees ........................................... 18,677 69,876
Distribution fees -- Class A Shares ............................ 35,027 55,003
Distribution fees -- Class B Shares ............................ -- 48,441
Distribution fees -- Class C Shares ............................ -- 2,534
Compliance service fees ........................................ 3,019 10,680
Custodian fees ................................................. 11,854 43,894
Legal fees ..................................................... 8,712 33,072
Printing fees .................................................. 16,011 39,035
Trustee fees ................................................... 7,790 15,460
Other .......................................................... 17,722 57,151
----------- ------------
Total expenses before waivers .................................. 1,109,707 3,746,813
Less expenses waived by the Investment Advisor ................. (203,556) (519,609)
Less expenses waived by the Distributor ........................ (17,514) (27,502)
----------- ------------
Net Expenses ................................................... 888,637 3,199,702
----------- ------------
Net Investment Income (Loss) ................................... 4,347,092 20,553,844
----------- ------------
REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) from investment transactions ....... (1,978,418) (9,966,118)
Change in unrealized appreciation/depreciation of investments .. 1,712,330 1,445,810
----------- ------------
Net realized/unrealized gains (losses) on investments .......... (266,088) (8,520,308)
----------- ------------
Change in net assets from operations ........................... $ 4,081,004 $ 12,033,536
=========== ============
See accompanying notes to the financial statements.
96
KENTUCKY MARYLAND NORTH CAROLINA SOUTH CAROLINA VIRGINIA
TOTAL RETURN INTERMEDIATE INTERMEDIATE INTERMEDIATE INTERMEDIATE INTERMEDIATE
BOND FUND TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND
------------ ------------- ------------- -------------- -------------- -------------
$25,975,173 $ 616,005 $382,570 $4,767,324 $831,116 $3,445,273
-- 17,753 11,844 70,313 19,379 54,470
191,260 -- -- -- -- --
----------- --------- -------- ---------- -------- ----------
26,166,433 633,758 394,414 4,837,637 850,495 3,499,743
----------- --------- -------- ---------- -------- ----------
3,082,584 96,941 63,448 668,147 119,847 471,653
580,699 18,264 11,953 125,873 22,578 88,854
71,798 11,443 10,633 23,856 11,786 19,447
69,511 2,378 1,520 14,771 3,040 10,473
32,905 13,401 8,613 103,110 20,085 61,764
55,769 -- -- -- -- --
1,667 -- -- -- -- --
9,213 334 207 1,941 380 1,508
54,027 1,524 965 10,146 2,119 7,955
44,539 5,590 2,721 11,992 4,308 7,881
45,964 1,470 921 11,071 1,936 7,416
19,604 604 381 3,937 756 2,982
64,117 2,639 2,947 14,801 4,727 11,020
----------- --------- -------- ---------- -------- ----------
4,132,397 154,588 104,309 989,645 191,562 690,953
(584,078) (34,028) (31,993) (167,037) (34,377) (117,913)
(16,453) (6,701) (4,306) (51,555) (10,042) (30,882)
----------- --------- -------- ---------- -------- ----------
3,531,866 113,859 68,010 771,053 147,143 542,158
----------- --------- -------- ---------- -------- ----------
22,634,567 519,899 326,404 4,066,584 703,352 2,957,585
----------- --------- -------- ---------- -------- ----------
(8,825,146) (72,900) 7,432 (13,423) 9,779 24,954
4,715,034 157,761 69,432 48,434 (29,884) (334,335)
----------- --------- -------- ---------- -------- ----------
(4,110,112) 84,861 76,864 35,011 (20,105) (309,381)
----------- --------- -------- ---------- -------- ----------
$18,524,455 $ 604,760 $403,268 $4,101,595 $683,247 $2,648,204
=========== ========= ======== ========== ======== ==========
See accompanying notes to the financial statements.
97
BB&T Funds
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2006
WEST VIRGINIA
INTERMEDIATE PRIME MONEY
TAX-FREE FUND MARKET FUND
------------- -----------
INVESTMENT INCOME:
Interest income .................................................. $3,117,315 $56,308,099
Dividend income .................................................. 41,841 --
Dividend income from affiliates .................................. -- --
Income from securities lending ................................... -- --
---------- -----------
Total Investment Income .......................................... 3,159,156 56,308,099
---------- -----------
EXPENSES:
Investment advisory fees ......................................... 303,144 4,676,394
Administration fees .............................................. 76,147 1,321,457
Fund accounting fees ............................................. 20,837 150,406
Transfer agency fees ............................................. 9,381 148,815
Distribution fees -- Class A Shares .............................. 37,058 2,769,589
Distribution fees -- Class B Shares .............................. -- 16,436
Distribution fees -- Class C Shares .............................. -- 4,206
Compliance services fees ......................................... 1,299 19,085
Custodian fees ................................................... 5,549 140,746
Legal fees ....................................................... 4,330 93,069
Printing fees .................................................... 5,647 136,296
Trustee fees ..................................................... 2,447 43,235
Organizational fees .............................................. -- --
Other ............................................................ 11,743 143,061
---------- -----------
Total expenses before waivers .................................... 477,582 9,662,795
Less expenses waived by the Investment Advisor ................... -- (1,286,009)
Less expenses waived by the Administrator ........................ -- --
Less expenses waived by the Distributor .......................... -- --
---------- -----------
Net Expenses ..................................................... 477,582 8,376,786
---------- -----------
Net Investment Income (Loss) ..................................... 2,681,574 47,931,313
---------- -----------
REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) from investment securities ........... 136,323 5,292
Net realized gain distributions from underlying funds ............ -- --
Change in unrealized appreciation/depreciation on investments .... (192,498) --
---------- -----------
Net realized/unrealized gains (losses) on investments ............ (56,175) 5,292
---------- -----------
Change in net assets from operations ............................. $2,625,399 $47,936,605
========== ===========
See accompanying notes to the financial statements.
98
U.S. TREASURY NATIONAL CAPITAL MANAGER CAPITAL MANAGER
MONEY MARKET TAX-FREE MONEY CONSERVATIVE MODERATE CAPITAL MANAGER CAPITAL MANAGER
FUND MARKET FUND GROWTH FUND GROWTH FUND GROWTH FUND EQUITY FUND
------------- -------------- --------------- --------------- --------------- ---------------
$30,197,514 $590,491 $ -- $ -- $ -- $ --
-- 2,916 -- -- -- --
-- -- 2,877,159 2,734,840 1,830,591 787,037
149,908 -- -- -- -- --
----------- -------- ----------- ---------- ----------- ----------
30,347,422 593,407 2,877,159 2,734,840 1,830,591 787,037
----------- -------- ----------- ---------- ----------- ----------
2,689,591 41,826 209,164 246,015 193,672 105,179
760,194 19,069 94,547 111,212 87,546 47,541
85,113 2,313 10,581 12,364 9,733 5,303
90,675 2,179 16,830 38,904 35,708 16,515
631,628 1 47,438 159,328 101,598 35,091
5,641 2 50,872 219,184 184,198 78,272
279 2 1,315 1,284 543 153
13,264 267 1,669 1,802 1,367 751
70,631 1,419 8,764 10,063 8,092 4,695
53,209 2,310 7,088 8,226 6,662 3,663
78,740 4,115 7,576 8,059 6,221 3,433
25,248 -- 3,373 3,856 3,050 1,690
-- 56,637 -- -- -- --
112,897 2,452 14,085 18,820 16,271 10,285
----------- -------- ----------- ---------- ----------- ----------
4,617,110 132,592 473,302 839,117 654,661 312,571
(893,817) (65,002) (209,164) (246,015) (193,672) (105,179)
-- -- (94,547) (111,212) (87,546) (47,541)
-- -- (23,719) (79,664) (50,799) (17,545)
----------- -------- ----------- ---------- ----------- ----------
3,723,293 67,590 145,872 402,226 322,644 142,306
----------- -------- ----------- ---------- ----------- ----------
26,624,129 525,817 2,731,287 2,332,614 1,507,947 644,731
----------- -------- ----------- ---------- ----------- ----------
-- -- 1,095,376 (272,821) (1,042,314) 404,368
-- -- 1,582,059 2,448,754 2,275,079 1,553,175
-- -- (1,047,526) 1,819,387 2,791,650 724,038
----------- -------- ----------- ---------- ----------- ----------
-- -- 1,629,909 3,995,320 4,024,415 2,681,581
----------- -------- ----------- ---------- ----------- ----------
$26,624,129 $525,817 $ 4,361,196 $6,327,934 $ 5,532,362 $3,326,312
=========== ======== =========== ========== =========== ==========
See accompanying notes to the financial statements.
99
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS
LARGE CAP FUND
---------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
FROM INVESTMENT ACTIVITIES
OPERATIONS:
Net investment income (loss) ..................................... $ 12,056,371 $ 12,192,576
Net realized gains (losses) from investment securities ........... 88,409,170 47,605,821
Change in unrealized appreciation/depreciation of investments .... (7,600,664) 35,932,841
------------ ------------
Change in net assets from operations ................................ 92,864,877 95,731,238
------------ ------------
DIVIDENDS TO CLASS A SHAREHOLDERS:
Net investment income ............................................ (677,051) (576,782)
Net realized gains from investment transactions .................. (3,036,244) --
DIVIDENDS TO CLASS B SHAREHOLDERS:
Net investment income ............................................ (156,092) (209,031)
Net realized gains from investment transactions .................. (1,539,960) --
DIVIDENDS TO CLASS C SHAREHOLDERS:
Net investment income ............................................ (1,303) (1,373)
Net realized gains from investment transactions .................. (13,216) --
DIVIDENDS TO INSTITUTIONAL CLASS SHAREHOLDERS:
Net investment income ............................................ (11,183,646) (11,420,295)
Net realized gains from investment transactions .................. (43,740,178) --
------------ ------------
Change in net assets from shareholder dividends ..................... (60,347,690) (12,207,481)
------------ ------------
CAPITAL TRANSACTIONS:
Change in net assets from capital transactions ...................... 24,201,504 (94,385,766)
------------ ------------
Change in net assets ................................................ 56,718,691 (10,862,009)
NET ASSETS:
Beginning of period .............................................. 667,572,969 678,434,978
------------ ------------
End of period .................................................... $724,291,660 $667,572,969
============ ============
Accumulated (distributions in excess of) net investment income ...... $ (104,143) $ (142,422)
============ ============
See accompanying notes to the financial statements.
100
LARGE CAP GROWTH FUND MID CAP VALUE FUND MID CAP GROWTH FUND
--------------------------------------- --------------------------------------- ---------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 1,305,564 $ 2,215,410 $ 904,819 $ 2,086,164 $ 203,095 $ (650,843)
16,243,812 24,836,740 8,877,102 78,019,273 20,794,688 14,423,194
(18,517,591) 8,590,549 16,291,051 (40,170,825) (22,292,477) 19,508,277
------------- ------------ ------------ ------------ ------------ ------------
(968,215) 35,642,699 26,072,972 39,934,612 (1,294,694) 33,280,628
------------- ------------ ------------ ------------ ------------ ------------
(12,977) (41,621) (41,421) (87,140) (18,135) --
-- -- (1,333,885) (3,524,287) (1,059,712) (107,640)
-- (34,833) (901) (16,556) -- --
-- -- (513,508) (1,270,093) (249,959) (26,807)
-- (110) (122) (1,758) -- --
-- -- (45,330) (114,396) (8,280) (2,371)
(1,054,388) (2,146,171) (974,981) (1,899,246) (373,020) --
-- -- (18,584,706) (54,097,901) (12,750,698) (1,390,450)
------------- ------------ ------------ ------------ ------------ ------------
(1,067,365) (2,222,735) (21,494,854) (61,011,377) (14,459,804) (1,527,268)
------------- ------------ ------------ ------------ ------------ ------------
(129,985,831) (44,276,953) 35,091,592 14,299,002 21,521,015 (20,323,437)
------------- ------------ ------------ ------------ ------------ ------------
(132,021,411) (10,856,989) 39,669,710 (6,777,763) 5,766,517 11,429,923
357,857,723 368,714,712 189,541,320 196,319,083 139,701,328 128,271,405
------------- ------------ ------------ ------------ ------------ ------------
$ 225,836,312 $357,857,723 $229,211,030 $189,541,320 $145,467,845 $139,701,328
============= ============ ============ ============ ============ ============
$ 230,874 $ (7,325) $ (66,896) $ 45,710 $ -- $ --
============= ============ ============ ============ ============ ============
See accompanying notes to the financial statements.
101
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
SMALL CAP
FUND
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2006 2005
------------- -------------
FROM INVESTMENT ACTIVITIES OPERATIONS:
Net investment income (loss) .............................. $ 233,763 $ 693,285
Net realized gains (losses) from option contracts,
investment and foreign currency transactions ........... 7,772,158 7,666,906
Change in unrealized appreciation/depreciation of
investment securities and foreign currency
transactions ........................................... (5,276,497) 3,616,868
------------ ------------
Change in net assets from operations ......................... 2,729,424 11,977,059
------------ ------------
DIVIDENDS TO CLASS A SHAREHOLDERS:
Net investment income ..................................... (10,336) (5,318)
Net realized gains from investment transactions ........... (191,408) (20,187)
DIVIDENDS TO CLASS B SHAREHOLDERS:
Net investment income ..................................... (2,860) (1,258)
Net realized gains from investment transactions ........... (45,459) (4,329)
DIVIDENDS TO CLASS C SHAREHOLDERS:
Net investment income ..................................... (9) (29)
Net realized gains from investment transactions ........... (613) (43)
DIVIDENDS TO INSTITUTIONAL CLASS SHAREHOLDERS:
Net investment income ..................................... (292,050) (644,153)
Net realized gains from investment transactions ........... (8,036,789) (1,923,687)
------------ ------------
Change in net assets from shareholder dividends .............. (8,579,524) (2,599,004)
------------ ------------
CAPITAL TRANSACTIONS:
Change in net assets from capital transactions ............... 67,122,321 (13,757,275)
------------ ------------
Change in net assets ......................................... 61,272,221 (4,379,220)
NET ASSETS:
Beginning of period ....................................... 62,913,646 67,292,866
------------ ------------
End of period ............................................. $124,185,867 $ 62,913,646
============ ============
Accumulated (distributions in excess of) net investment
income .................................................... $ (27,923) $ 18,791
============ ============
See accompanying notes to the financial statements.
102
INTERNATIONAL EQUITY SPECIAL OPPORTUNITIES EQUITY EQUITY INCOME
FUND FUND FUND
----------------------------- ----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2006 2005 2006 2005 2006 2005
------------- ------------- ------------ ------------- ------------- -------------
$ 4,104,559 $ 3,189,210 $ (760,130) $ (835,017) $ 2,258,004 $ 1,410,198
19,044,559 23,396,171 12,366,749 8,511,250 3,330,350 2,050,561
15,908,410 16,828,222 9,047,945 16,152,156 9,391,746 5,384,664
------------- ------------ ------------ ------------ ------------ -----------
39,057,528 43,413,603 20,654,564 23,828,389 14,980,100 8,845,423
------------- ------------ ------------ ------------ ------------ -----------
(55,882) (29,608) -- -- (1,319,564) (602,645)
-- -- (3,922,525) (323,812) (981,811) (18,755)
(19,949) (15,662) -- -- (147,380) (61,733)
-- -- (1,153,429) (136,241) (137,614) (4,173)
(1,335) (234) -- -- (221,294) (97,631)
-- -- (1,585,769) (174,173) (213,187) (5,788)
(3,894,301) (3,151,658) -- -- (908,127) (658,424)
-- -- (3,033,471) (381,013) (674,732) (44,436)
------------- ------------ ------------ ------------ ------------ -----------
(3,971,467) (3,197,162) (9,695,194) (1,015,239) (4,603,709) (1,493,585)
------------- ------------ ------------ ------------ ------------ -----------
(10,378,503) (42,128,491) 6,813,948 68,303,302 23,032,998 47,396,767
------------- ------------ ------------ ------------ ------------ -----------
24,707,558 (1,912,050) 17,773,318 91,116,452 33,409,389 54,748,605
235,191,523 237,103,573 188,660,681 97,544,229 85,707,290 30,958,685
------------- ------------ ------------ ------------ ------------ -----------
$ 259,899,081 $235,191,523 $206,433,999 $188,660,681 $119,116,679 $85,707,290
============= ============ ============ ============ ============ ===========
$ (820,134) $ (897,254) $ -- $ -- $ (345,575) $ (7,214)
============= ============ ============ ============ ============ ===========
See accompanying notes to the financial statements.
103
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
SHORT U.S. GOVERNMENT FUND
---------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
FROM INVESTMENT ACTIVITIES OPERATIONS:
Net investment income (loss) .............................. $ 4,347,092 $ 5,003,172
Net realized gains (losses) from investment securities .... (1,978,418) (379,543)
Change in unrealized appreciation/depreciation of
investments ............................................ 1,712,330 (2,478,333)
------------ ------------
Change in net assets from operations ......................... 4,081,004 2,145,296
------------ ------------
DIVIDENDS TO CLASS A SHAREHOLDERS:
Net investment income ..................................... (230,094) (243,972)
Net realized gains from investment transactions ........... -- --
DIVIDENDS TO CLASS B SHAREHOLDERS:
Net investment income ..................................... -- --
Net realized gains from investment transactions ........... -- --
DIVIDENDS TO CLASS C SHAREHOLDERS:
Net investment income ..................................... -- --
Net realized gains from investment transactions ........... -- --
DIVIDENDS TO INSTITUTIONAL CLASS SHAREHOLDERS:
Net investment income ..................................... (4,533,855) (5,957,741)
Net realized gains from investment transactions ........... -- --
------------ ------------
Change in net assets from shareholder dividends .............. (4,763,949) (6,201,713)
------------ ------------
CAPITAL TRANSACTIONS:
Change in net assets from capital transactions ............... (90,478,365) (36,554,057)
------------ ------------
Change in net assets ......................................... (91,161,310) (40,610,474)
NET ASSETS:
Beginning of period ....................................... 163,765,539 204,376,013
------------ ------------
End of period ............................................. $ 72,604,229 $163,765,539
============ ============
Accumulated (distributions in excess of) net investment income $ 578,326 $ 208,500
============ ============
See accompanying notes to the financial statements.
104
INTERMEDIATE U.S. GOVERNMENT FUND TOTAL RETURN BOND FUND KENTUCKY INTERMEDIATE TAX-FREE FUND
--------------------------------------- --------------------------------------- ---------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 20,553,844 $ 21,870,460 $ 22,634,567 $ 13,383,359 $ 519,899 $ 495,844
(9,966,118) (273,986) (8,825,146) 5,949,823 (72,900) 51,649
1,445,810 (7,911,749) 4,715,034 (12,459,542) 157,761 (322,868)
------------- ------------ ------------ ------------ ----------- -----------
12,033,536 13,684,725 18,524,455 6,873,640 604,760 224,625
------------- ------------ ------------ ------------ ----------- -----------
(465,227) (477,803) (284,767) (243,169) (80,960) (69,816)
-- (56,160) (31,092) (15,675) -- --
(169,209) (190,379) (197,744) (224,351) -- --
-- (29,669) (26,599) (20,100) -- --
(8,786) (14,318) (5,884) (8,225) -- --
-- (2,287) (927) (747) -- --
(19,963,279) (23,429,629) (22,969,331) (15,035,177) (439,339) (423,702)
-- (2,449,142) (2,117,462) (858,176) -- --
------------- ------------ ------------ ------------ ----------- -----------
(20,606,501) (26,649,387) (25,633,806) (16,405,620) (520,299) (493,518)
------------- ------------ ------------ ------------ ----------- -----------
(283,831,378) 17,614,479 (89,525,200) 200,521,516 (4,315,092) 2,217,737
------------- ------------ ------------ ------------ ----------- -----------
(292,404,343) 4,649,817 (96,634,551) 190,989,536 (4,230,631) 1,948,844
558,780,885 554,131,068 475,382,925 284,393,389 18,135,181 16,186,337
------------- ------------ ------------ ------------ ----------- -----------
$ 266,376,542 $558,780,885 $378,748,374 $475,382,925 $13,904,550 $18,135,181
============= ============ ============ ============ =========== ===========
$ 3,334,973 $ 291,829 $ 2,191,115 $ 484,864 $ 5,134 $ 1,688
============= ============ ============ ============ =========== ===========
See accompanying notes to the financial statements.
105
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
MARYLAND INTERMEDIATE
TAX-FREE FUND
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2006 2005
------------- -------------
FROM INVESTMENT ACTIVITIES OPERATIONS:
Net investment income (loss) ..................................... $ 326,404 $ 303,626
Net realized gains (losses) from investment securities ........... 7,432 (20,169)
Change in unrealized appreciation/depreciation of investments .... 69,432 (113,820)
----------- -----------
Change in net assets from operations ................................ 403,268 169,637
----------- -----------
DIVIDENDS TO CLASS A SHAREHOLDERS:
Net investment income ............................................ (49,779) (26,781)
Net realized gains from investment transactions .................. -- --
DIVIDENDS TO INSTITUTIONAL CLASS SHAREHOLDERS:
Net investment income ............................................ (276,916) (277,284)
Net realized gains from investment transactions .................. -- --
----------- -----------
Change in net assets from shareholder dividends ..................... (326,695) (304,065)
----------- -----------
CAPITAL TRANSACTIONS:
Change in net assets from capital transactions ...................... (1,799,980) 2,052,613
----------- -----------
Change in net assets ................................................ (1,723,407) 1,918,185
NET ASSETS:
Beginning of period .............................................. 11,692,485 9,774,300
----------- -----------
End of period .................................................... $ 9,969,078 $11,692,485
=========== ===========
Accumulated (distributions in excess of) net investment income ...... $ (479) $ (139)
=========== ===========
See accompanying notes to the financial statements.
106
NORTH CAROLINA INTERMEDIATE SOUTH CAROLINA INTERMEDIATE VIRGINIA INTERMEDIATE
TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND
----------------------------- ----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2006 2005 2006 2005 2006 2005
------------- ------------- ------------- ------------- ------------- -------------
$ 4,066,584 $ 3,955,629 $ 703,352 $ 699,510 $ 2,957,585 $ 2,871,165
(13,423) 984,109 9,779 347,851 24,954 451,579
48,434 (3,088,206) (29,884) (719,387) (334,335) (1,964,246)
------------ ------------ ----------- ----------- ----------- -----------
4,101,595 1,851,532 683,247 327,974 2,648,204 1,358,498
------------ ------------ ----------- ----------- ----------- -----------
(702,597) (733,411) (132,635) (120,824) (430,643) (439,836)
(188,609) (38,438) (70,839) (26,156) (73,017) (26,900)
(3,317,274) (3,212,382) (570,487) (578,238) (2,478,318) (2,431,188)
(813,080) (159,613) (276,367) (119,968) (374,838) (133,111)
------------ ------------ ----------- ----------- ----------- -----------
(5,021,560) (4,143,844) (1,050,328) (845,186) (3,356,816) (3,031,035)
------------ ------------ ----------- ----------- ----------- -----------
(7,080,678) (2,116,768) (745,427) (579,207) (2,498,062) 606,500
------------ ------------ ----------- ----------- ----------- -----------
(8,000,643) (4,409,080) (1,112,508) (1,096,419) (3,206,674) (1,066,037)
115,017,687 119,426,767 20,540,179 21,636,598 80,724,259 81,790,296
------------ ------------ ----------- ----------- ----------- -----------
$107,017,044 $115,017,687 $19,427,671 $20,540,179 $77,517,585 $80,724,259
============ ============ =========== =========== =========== ===========
$ 52,797 $ 44,132 $ 15,758 $ 15,982 $ 31,874 $ 33,064
============ ============ =========== =========== =========== ===========
See accompanying notes to the financial statements.
107
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
WEST VIRGINIA INTERMEDIATE
TAX-FREE FUND
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2006 2005
------------- -------------
FROM INVESTMENT ACTIVITIES OPERATIONS:
Net investment income (loss) ..................................... $ 2,681,574 $ 2,658,263
Net realized gains (losses) on securities ........................ 136,323 424,070
Change in unrealized appreciation/depreciation from investments .. (192,498) (1,514,595)
----------- -----------
Change in net assets from operations ................................ 2,625,399 1,567,738
----------- -----------
DIVIDENDS TO CLASS A SHAREHOLDERS:
Net investment income ............................................ (558,845) (410,722)
Net realized gains from investment transactions .................. (87,942) (83,550)
DIVIDENDS TO CLASS B SHAREHOLDERS:
Net investment income ............................................ -- --
DIVIDENDS TO CLASS C SHAREHOLDERS:
Net investment income ............................................ -- --
DIVIDENDS TO INSTITUTIONAL CLASS SHAREHOLDERS:
Net investment income ............................................ (2,105,580) (2,242,970)
Net realized gains from investment transactions .................. (336,138) (472,029)
----------- -----------
Change in net assets from shareholder dividends ..................... (3,088,505) (3,209,271)
----------- -----------
CAPITAL TRANSACTIONS:
Change in net assets from capital transactions ...................... (2,420,101) (3,118,848)
----------- -----------
Change in net assets ................................................ (2,883,207) (4,760,381)
NET ASSETS:
Beginning of period .............................................. 69,572,290 74,332,671
----------- -----------
End of period .................................................... $66,689,083 $69,572,290
=========== ===========
Accumulated (distributions in excess of) net investment income ...... $ (55,375) $ (9,154)
=========== ===========
----------
(a) Period from commencement of operations.
See accompanying notes to the financial statements.
108
PRIME MONEY U.S. TREASURY MONEY NATIONAL TAX-FREE MONEY
MARKET FUND MARKET FUND MARKET FUND
------------------------------- ------------------------------ FOR THE PERIOD
FOR THE FOR THE FOR THE FOR THE AUGUST 1,
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 2006 THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2006 2005 2006 2005 2006 (a)
-------------- -------------- ------------- -------------- -----------------------
$ 47,931,313 $ 20,982,349 $ 26,624,129 $ 17,879,508 $ 525,817
5,292 296 -- -- --
-- -- -- -- --
-------------- -------------- ------------ -------------- ------------
47,936,605 20,982,645 26,624,129 17,879,508 525,817
-------------- -------------- ------------ -------------- ------------
(21,234,567) (9,358,223) (4,584,379) (2,034,759) (5)
-- -- -- -- --
(55,231) (26,256) (16,774) (8,071) (4)
(14,081) (4,720) (922) (109) (4)
(26,636,706) (11,593,150) (22,022,054) (15,836,569) (525,804)
-- -- -- -- --
-------------- -------------- ------------ -------------- ------------
(47,940,585) (20,982,349) (26,624,129) (17,879,508) (525,817)
-------------- -------------- ------------ -------------- ------------
364,257,195 47,539,283 (58,021,270) (341,713,777) 95,760,505
-------------- -------------- ------------ -------------- ------------
364,253,215 47,539,579 (58,021,270) (341,713,777) 95,760,505
1,006,338,813 958,799,234 707,840,860 1,049,554,637 --
-------------- -------------- ------------ -------------- ------------
$1,370,592,028 $1,006,338,813 $649,819,590 $ 707,840,860 $ 95,760,505
============== ============== ============ ============== ============
$ 1,184 $ 9,668 $ 246 $ 246 $ 3,028
============== ============== ============ ============== ============
See accompanying notes to the financial statements.
109
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
CAPITAL MANAGER CONSERVATIVE
GROWTH FUND
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2006 2005
------------- -------------
FROM INVESTMENT ACTIVITIES
OPERATIONS:
Net investment income (loss) ..................................... $ 2,731,287 $ 2,105,959
Net realized gains (losses) from investment securities and
distributions from underlying funds ........................... 2,677,435 (462,685)
Change in unrealized appreciation/depreciation on investments .... (1,047,526) 4,281,075
------------ -----------
Change in net assets from operations ................................ 4,361,196 5,924,349
------------ -----------
DIVIDENDS TO CLASS A SHAREHOLDERS:
Net investment income ............................................ (316,793) (168,581)
Net realized gains from investment transactions .................. -- --
DIVIDENDS TO CLASS B SHAREHOLDERS:
Net investment income ............................................ (132,184) (77,014)
Net realized gains from investment transactions .................. -- --
DIVIDENDS TO CLASS C SHAREHOLDERS:
Net investment income ............................................ (3,332) (2,499)
Net realized gains from investment transactions .................. -- --
DIVIDENDS TO INSTITUTIONAL CLASS SHAREHOLDERS:
Net investment income ............................................ (2,306,502) (1,775,465)
Net realized gains from investment transactions .................. -- --
------------ -----------
Change in net assets from shareholder dividends ..................... (2,758,811) (2,023,559)
------------ -----------
CAPITAL TRANSACTIONS:
Change in net assets from capital transactions ...................... (25,686,559) 3,484,227
------------ -----------
Change in net assets ................................................ (24,084,174) 7,385,017
NET ASSETS:
Beginning of period .............................................. 85,589,648 78,204,631
------------ -----------
End of period .................................................... $ 61,505,474 $85,589,648
============ ===========
Accumulated (distributions in excess of) net investment income ...... $ 54,876 $ 82,400
============ ===========
----------
(a) Period from commencement of operations.
See accompanying notes to the financial statements.
110
CAPITAL MANAGER MODERATE CAPITAL MANAGER CAPITAL MANAGER
GROWTH FUND GROWTH FUND EQUITY FUND
----------------------------- ----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2006 2005 2006 2005 2006 2005
------------- ------------- ------------- ------------- ------------- -------------
$ 2,332,614 $ 1,437,620 $ 1,507,947 $ 830,676 $ 644,731 $ 313,973
2,175,933 (1,028,947) 1,232,765 (477,103) 1,957,543 779,359
1,819,387 7,702,572 2,791,650 6,904,538 724,038 3,696,738
------------ ----------- ------------ ----------- ------------ -----------
6,327,934 8,111,245 5,532,362 7,258,111 3,326,312 4,790,070
------------ ----------- ------------ ----------- ------------ -----------
(821,797) (404,055) (438,399) (169,918) (120,990) (28,662)
-- -- -- -- (112,648) --
(405,497) (176,756) (266,484) (66,171) (78,167) (6,994)
-- -- -- -- (134,397) --
(2,447) (1,384) (879) (138) (173) (1)
-- -- -- -- (336) --
(1,138,350) (725,067) (840,595) (472,193) (484,161) (192,382)
-- -- -- -- (458,864) --
------------ ----------- ------------ ----------- ------------ -----------
(2,368,091) (1,307,262) (1,546,357) (708,420) (1,389,736) (228,039)
------------ ----------- ------------ ----------- ------------ -----------
(17,335,086) 13,866,681 (13,457,141) 10,933,539 (10,823,403) 4,544,281
------------ ----------- ------------ ----------- ------------ -----------
(13,375,243) 20,670,664 (9,471,136) 17,483,230 (8,886,827) 9,106,312
94,296,160 73,625,496 71,942,844 54,459,614 39,518,805 30,412,493
------------ ----------- ------------ ----------- ------------ -----------
$ 80,920,917 $94,296,160 $ 62,471,708 $71,942,844 $ 30,631,978 $39,518,805
============ =========== ============ =========== ============ ===========
$ 94,881 $ 130,358 $ 83,846 $ 122,256 $ 47,480 $ 85,934
============ =========== ============ =========== ============ ===========
See accompanying notes to the financial statements.
111
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
LARGE CAP
FUND
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2006 2005
------------- -------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued ...................................... $ 11,455,809 $ 9,661,619
Dividends reinvested ............................................. 3,356,212 546,626
Value of shares redeemed ......................................... (8,183,336) (6,489,397)
------------- -------------
Change in net assets from Class A Share transactions ................ 6,628,685 3,718,848
CLASS B SHARES:
Proceeds from shares issued ...................................... 1,081,268 1,142,035
Dividends reinvested ............................................. 1,681,643 210,190
Value of shares redeemed ......................................... (10,671,968) (8,551,951)
------------- -------------
Change in net assets from Class B Share transactions ................ (7,909,057) (7,199,726)
CLASS C SHARES:
Proceeds from shares issued ...................................... 33,770 52,119
Dividends reinvested ............................................. 14,517 1,389
Value of shares redeemed ......................................... (69,676) (52,297)
------------- -------------
Change in net assets from Class C Share transactions ................ (21,389) 1,211
INSTITUTIONAL SHARES:
Proceeds from shares issued ...................................... 120,655,536 68,736,038
Dividends reinvested ............................................. 36,292,487 6,375,592
Value of shares redeemed ......................................... (131,444,758) (166,017,729)
Redemption In-Kind ............................................... -- --
------------- -------------
Change in net assets from Institutional Share transactions .......... 25,503,265 (90,906,099)
------------- -------------
Change in net assets from capital transactions ...................... $ 24,201,504 $ (94,385,766)
============= =============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued ........................................................... 594,942 517,981
Reinvested ....................................................... 179,580 29,386
Redeemed ......................................................... (422,997) (347,071)
------------- -------------
Change in Class A Shares ............................................ 351,525 200,296
CLASS B SHARES:
Issued ........................................................... 56,846 62,625
Reinvested ....................................................... 91,167 11,398
Redeemed ......................................................... (560,116) (463,800)
------------- -------------
Change in Class B Shares ............................................ (412,103) (389,777)
CLASS C SHARES:
Issued ........................................................... 1,766 2,803
Reinvested ....................................................... 789 75
Redeemed ......................................................... (3,652) (2,943)
------------- -------------
Change in Class C Shares ............................................ (1,097) (65)
INSTITUTIONAL SHARES:
Issued ........................................................... 6,218,257 3,763,766
Reinvested ....................................................... 1,936,824 342,725
Redeemed ......................................................... (6,769,780) (8,934,669)
Redemption In-Kind ............................................... -- --
------------- -------------
Change in Institutional Shares ...................................... 1,385,301 (4,828,178)
------------- -------------
Change in Shares .................................................... 1,323,626 (5,017,724)
============= =============
See accompanying notes to the financial statements.
112
LARGE CAP MID CAP MID CAP
GROWTH FUND VALUE FUND GROWTH FUND
----------------------------- ----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2006 2005 2006 2005 2006 2005
------------- ------------- ------------- ------------- ------------- -------------
$ 2,852,916 $ 1,781,452 $ 3,543,605 $ 4,485,560 $ 2,584,357 $ 2,518,857
11,461 34,217 1,321,057 3,485,585 1,036,602 106,199
(2,494,029) (2,280,442) (4,085,956) (3,419,250) (2,501,025) (2,430,159)
------------- ------------ ------------ ------------ ------------ ------------
370,348 (464,773) 778,706 4,551,895 1,119,934 194,897
432,338 602,206 1,037,911 945,833 765,099 228,265
-- 34,776 512,918 1,284,643 246,230 26,526
(3,961,543) (2,993,414) (768,298) (730,819) (706,264) (342,348)
------------- ------------ ------------ ------------ ------------ ------------
(3,529,205) (2,356,432) 782,531 1,499,657 305,065 (87,557)
23,255 11,034 433,480 86,720 26,775 59,422
-- 110 38,170 90,479 8,279 2,371
(3,112) (20,255) (104,036) (314,401) (74,621) (241,417)
------------- ------------ ------------ ------------ ------------ ------------
20,143 (9,111) 367,614 (137,202) (39,567) (179,624)
72,052,259 38,224,930 65,662,801 41,973,265 50,476,104 24,514,270
588,523 1,162,910 13,345,528 34,205,347 6,303,907 587,204
(199,487,899) (80,834,477) (45,845,588) (67,793,960) (31,644,428) (45,352,627)
-- -- -- -- (5,000,000) --
------------- ------------ ------------ ------------ ------------ ------------
(126,847,117) (41,446,637) 33,162,741 8,384,652 20,135,583 (20,251,153)
------------- ------------ ------------ ------------ ------------ ------------
$(129,985,831) $(44,276,953) $ 35,091,592 $ 14,299,002 $ 21,521,015 $(20,323,437)
============= ============ ============ ============ ============ ============
317,364 203,723 273,562 271,180 191,168 200,123
1,257 3,819 105,779 259,391 79,757 8,835
(276,880) (260,302) (312,940) (216,209) (188,884) (195,031)
------------- ------------ ------------ ------------ ------------ ------------
41,741 (52,760) 66,401 314,362 82,041 13,927
50,542 73,333 80,934 57,215 58,023 19,563
-- 4,106 41,799 97,143 19,667 2,263
(470,181) (361,793) (59,657) (43,973) (56,695) (28,374)
------------- ------------ ------------ ------------ ------------ ------------
(419,639) (284,354) 63,076 110,385 20,995 (6,548)
2,671 1,334 34,345 5,360 2,021 4,938
-- 13 3,110 6,824 661 202
(377) (2,390) (7,989) (19,649) (5,700) (18,787)
------------- ------------ ------------ ------------ ------------ ------------
2,294 (1,043) 29,466 (7,465) (3,018) (13,647)
7,893,018 4,363,516 5,063,390 2,538,005 3,586,780 1,903,007
63,148 128,373 1,064,393 2,536,735 461,521 46,864
(21,972,602) (9,093,856) (3,519,435) (4,052,925) (2,306,318) (3,563,229)
-- -- -- -- (338,524) --
------------- ------------ ------------ ------------ ------------ ------------
(14,016,436) (4,601,967) 2,608,348 1,021,815 1,403,459 (1,613,358)
------------- ------------ ------------ ------------ ------------ ------------
(14,392,040) (4,940,124) 2,767,291 1,439,097 1,503,477 (1,619,626)
============= ============ ============ ============ ============ ============
See accompanying notes to the financial statements.
113
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
SMALL CAP FUND
---------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued .............................. $ 1,563,815 $ 1,710,491
Proceeds from shares issued in conversion ................ 8,076,416 --
Dividends reinvested ..................................... 170,057 24,657
Value of shares redeemed ................................. (1,718,429) (578,781)
------------ ------------
Change in net assets from Class A Share transactions ........ 8,091,859 1,156,367
CLASS B SHARES:
Proceeds from shares issued .............................. 315,041 127,135
Proceeds from shares issued in conversion ................ 4,879,881 --
Dividends reinvested ..................................... 48,317 5,587
Value of shares redeemed ................................. (1,226,132) (35,184)
------------ ------------
Change in net assets from Class B Share transactions ........ 4,017,107 97,538
CLASS C SHARES:
Proceeds from shares issued .............................. 2,569 4,000
Proceeds from shares issued in conversion ................ 19,229 --
Dividends reinvested ..................................... 622 72
Value of shares redeemed ................................. (6,076) (1,606)
------------ ------------
Change in net assets from Class C Share transactions ........ 16,344 2,466
INSTITUTIONAL SHARES:
Proceeds from shares issued .............................. 32,824,936 12,467,749
Proceeds from shares issued in conversion ................ 40,922,638 --
Dividends reinvested ..................................... 3,865,352 1,559,698
Value of shares redeemed ................................. (18,615,915) (29,041,093)
Redemption In-Kind ....................................... (4,000,000) --
------------ ------------
Change in net assets from Institutional Share transactions .. 54,997,011 (15,013,646)
------------ ------------
Change in net assets from capital transactions .............. $ 67,122,321 $(13,757,275)
============ ============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued ................................................... 102,573 108,999
Issued in conversion ..................................... 519,217 --
Reinvested ............................................... 11,590 1,663
Redeemed ................................................. (112,183) (37,585)
------------ ------------
Change in Class A Shares .................................... 521,197 73,077
CLASS B SHARES:
Issued ................................................... 20,791 8,300
Issued in conversion ..................................... 320,692 --
Reinvested ............................................... 3,358 382
Redeemed ................................................. (83,084) (2,282)
------------ ------------
Change in Class B Shares .................................... 261,757 6,400
CLASS C SHARES:
Issued ................................................... 176 265
Issued in conversion ..................................... 1,265 --
Reinvested ............................................... 43 5
Redeemed ................................................. (409) (105)
------------ ------------
Change in Class C Shares .................................... 1,075 165
INSTITUTIONAL SHARES:
Issued ................................................... 2,167,101 802,471
Issued in conversion ..................................... 2,617,536 --
Reinvested ............................................... 262,650 105,249
Redeemed ................................................. (1,227,142) (1,887,106)
Redemption In-Kind ....................................... (243,605) --
------------ ------------
Change in Institutional Shares .............................. 3,576,540 (979,386)
------------ ------------
Change in Shares ............................................ 4,360,569 (899,744)
============ ============
See accompanying notes to the financial statements.
114
INTERNATIONAL EQUITY FUND SPECIAL OPPORTUNITIES EQUITY FUND EQUITY INCOME FUND
--------------------------------------- --------------------------------------- ---------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 1,793,701 $ 2,478,283 $ 15,547,406 $ 50,533,764 $21,290,688 $33,326,261
-- -- -- -- -- --
47,633 28,796 3,800,006 314,726 2,115,087 589,988
(1,828,946) (837,193) (17,598,570) (12,154,765) (9,336,457) (1,849,819)
------------ ------------ ------------ ------------ ----------- -----------
12,388 1,669,886 1,748,842 38,693,725 14,069,318 32,066,430
372,771 142,997 2,567,933 7,432,082 3,887,798 3,572,969
-- -- -- -- -- --
19,183 16,175 1,097,183 132,617 265,635 62,723
(850,793) (640,348) (3,722,250) (1,625,829) (955,321) (119,544)
------------ ------------ ------------ ------------ ----------- -----------
(458,839) (481,176) (57,134) 5,938,870 3,198,112 3,516,148
170,185 88,381 5,924,611 14,020,481 5,773,799 6,467,982
-- -- -- -- -- --
1,343 235 1,572,304 171,895 415,183 100,048
(90,384) (852) (5,037,947) (3,171,753) (1,775,128) (304,640)
------------ ------------ ------------ ------------ ----------- -----------
81,144 87,764 2,458,968 11,020,623 4,413,854 6,263,390
55,147,602 24,998,978 9,101,491 15,525,894 3,565,186 5,868,423
-- -- -- -- -- --
2,544,478 2,083,059 2,382,335 339,818 1,338,621 688,209
(67,705,276) (70,487,002) (8,820,554) (3,215,628) (3,552,093) (1,005,833)
-- -- -- -- -- --
------------ ------------ ------------ ------------ ----------- -----------
(10,013,196) (43,404,965) 2,663,272 12,650,084 1,351,714 5,550,799
------------ ------------ ------------ ------------ ----------- -----------
$(10,378,503) $(42,128,491) $ 6,813,948 $ 68,303,302 $23,032,998 $47,396,767
============ ============ ============ ============ =========== ===========
172,056 267,274 1,018,572 3,430,628 1,686,364 2,869,638
-- -- -- -- -- --
4,418 3,230 257,977 21,932 169,418 50,231
(181,464) (93,010) (1,151,094) (804,158) (736,138) (156,448)
------------ ------------ ------------ ------------ ----------- -----------
(4,990) 177,494 125,455 2,648,402 1,119,644 2,763,421
37,241 16,667 172,046 512,930 309,059 307,803
-- -- -- -- -- --
1,888 1,917 76,035 9,352 21,327 5,368
(85,845) (74,499) (249,906) (109,982) (75,605) (10,194)
------------ ------------ ------------ ------------ ----------- -----------
(46,716) (55,915) (1,825) 412,300 254,781 302,977
16,883 9,933 397,055 975,534 458,843 561,000
-- -- -- -- -- --
131 27 108,885 12,122 33,388 8,567
(9,159) (101) (336,921) (212,218) (141,240) (25,759)
------------ ------------ ------------ ------------ ----------- -----------
7,855 9,859 169,019 775,438 350,991 543,808
5,126,219 2,743,691 588,662 1,037,730 278,895 509,983
-- -- -- -- -- --
232,202 231,260 160,751 23,598 107,088 59,891
(6,367,133) (7,688,123) (577,140) (210,210) (280,919) (83,473)
-- -- -- -- -- --
------------ ------------ ------------ ------------ ----------- -----------
(1,008,712) (4,713,172) 172,273 851,118 105,064 486,401
------------ ------------ ------------ ------------ ----------- -----------
(1,052,563) (4,581,734) 464,922 4,687,258 1,830,480 4,096,607
============ ============ ============ ============ =========== ===========
See accompanying notes to the financial statements.
115
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
SHORT U.S. GOVERNMENT FUND
---------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued .............................. $ 1,127,528 $ 1,521,231
Dividends reinvested ..................................... 166,865 200,254
Value of shares redeemed ................................. (3,017,691) (2,023,644)
------------- ------------
Change in net assets from Class A Share transactions ........ (1,723,298) (302,159)
CLASS B SHARES:
Proceeds from shares issued .............................. -- --
Dividends reinvested ..................................... -- --
Value of shares redeemed ................................. -- --
------------- ------------
Change in net assets from Class B share transactions ........ -- --
CLASS C SHARES:
Proceeds from shares issued .............................. -- --
Dividends reinvested ..................................... -- --
Value of shares redeemed ................................. -- --
------------- ------------
Change in net assets from Class C share transactions ........ -- --
INSTITUTIONAL SHARES:
Proceeds from shares issued .............................. 11,753,484 45,135,970
Dividends reinvested ..................................... 2,059,779 2,187,510
Value of shares redeemed ................................. (102,568,330) (83,575,378)
Redemption In-Kind ....................................... -- --
------------- ------------
Change in net assets from Institutional Share transactions .. (88,755,067) (36,251,898)
------------- ------------
Change in net assets from capital transactions .............. $ (90,478,365) $(36,554,057)
============= ============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued ................................................... 119,357 158,795
Reinvested ............................................... 17,694 20,875
Redeemed ................................................. (319,852) (211,022)
------------- ------------
Change in Class A Shares .................................... (182,801) (31,352)
CLASS B SHARES:
Issued ................................................... -- --
Reinvested ............................................... -- --
Redeemed ................................................. -- --
------------- ------------
Change in Class B Shares .................................... -- --
CLASS C SHARES:
Issued ................................................... -- --
Reinvested ............................................... -- --
Redeemed ................................................. -- --
------------- ------------
Change in Class C Shares .................................... -- --
INSTITUTIONAL SHARES:
Issued ................................................... 1,244,012 4,698,111
Reinvested ............................................... 218,187 227,789
Redeemed ................................................. (10,850,633) (8,711,294)
Redemption In-Kind ....................................... -- --
------------- ------------
Change in Institutional Shares .............................. (9,388,434) (3,785,394)
------------- ------------
Change in Shares ............................................ (9,571,235) (3,816,746)
============= ============
See accompanying notes to the financial statements.
116
INTERMEDIATE U.S. GOVERNMENT FUND TOTAL RETURN BOND FUND KENTUCKY INTERMEDIATE TAX-FREE FUND
--------------------------------------- --------------------------------------- ---------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 3,393,825 $ 7,912,637 $ 1,566,777 $ 3,553,124 $ 470,225 $ 880,498
412,369 511,872 281,750 236,789 68,849 68,804
(7,612,519) (6,364,645) (2,569,535) (1,171,666) (398,856) (1,085,960)
------------- ------------- ------------- ------------ ----------- -----------
(3,806,325) 2,059,864 (721,008) 2,618,247 140,218 (136,658)
403,411 309,161 516,135 590,741 -- --
151,333 204,831 200,161 232,014 -- --
(2,171,972) (1,534,282) (1,878,269) (1,092,541) -- --
------------- ------------- ------------- ------------ ----------- -----------
(1,617,228) (1,020,290) (1,161,973) (269,786) -- --
20,199 92,895 30,094 16,713 -- --
5,918 13,100 6,267 8,371 -- --
(87,702) (428,764) (133,111) (57,214) -- --
------------- ------------- ------------- ------------ ----------- -----------
(61,585) (322,769) (96,750) (32,130) -- --
33,817,098 161,477,331 212,135,973 239,507,286 1,710,390 7,483,716
11,550,412 13,752,797 10,881,639 7,254,855 694 1,275
(323,713,750) (158,332,454) (117,974,744) (48,556,956) (6,166,394) (5,130,596)
-- -- (192,588,337) -- -- --
------------- ------------- ------------- ------------ ----------- -----------
(278,346,240) 16,897,674 (87,545,469) 198,205,185 (4,455,310) 2,354,395
------------- ------------- ------------- ------------ ----------- -----------
$(283,831,378) $ 17,614,479 $ (89,525,200) $200,521,516 $(4,315,092) $ 2,217,737
============= ============= ============= ============ =========== ===========
344,880 783,801 155,247 341,242 47,360 86,656
42,011 50,474 27,949 22,635 6,892 6,786
(773,802) (629,447) (253,889) (112,317) (39,896) (106,990)
------------- ------------- ------------- ------------ ----------- -----------
(386,911) 204,828 (70,693) 251,560 14,356 (13,548)
41,199 30,638 51,008 56,591 -- --
15,461 20,267 19,832 22,148 -- --
(222,404) (151,847) (187,185) (104,808) -- --
------------- ------------- ------------- ------------ ----------- -----------
(165,744) (100,942) (116,345) (26,069) -- --
1,788 9,176 2,989 1,598 -- --
604 1,296 620 800 -- --
(8,890) (42,455) (13,311) (5,488) -- --
------------- ------------- ------------- ------------ ----------- -----------
(6,498) (31,983) (9,702) (3,090) -- --
3,429,697 15,900,619 21,073,955 22,968,831 172,234 739,641
1,174,507 1,355,399 1,079,488 693,599 70 126
(32,878,165) (15,658,921) (11,710,373) (4,652,378) (617,147) (506,921)
-- -- (18,936,906) -- -- --
------------- ------------- ------------- ------------ ----------- -----------
(28,273,961) 1,597,097 (8,493,836) 19,010,052 (444,843) 232,846
------------- ------------- ------------- ------------ ----------- -----------
(28,833,114) 1,669,000 (8,690,576) 19,232,453 (430,487) 219,298
============= ============= ============= ============ =========== ===========
See accompanying notes to the financial statements.
117
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
MARYLAND INTERMEDIATE
TAX-FREE FUND
---------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued .............................. $ 521,102 $ 1,131,881
Dividends reinvested ..................................... 36,314 19,961
Value of shares redeemed ................................. (221,862) (196,969)
----------- -----------
Change in net assets from Class A Share transactions ........ 335,554 954,873
INSTITUTIONAL SHARES:
Proceeds from shares issued .............................. 2,217,996 3,481,070
Dividends reinvested ..................................... -- 28
Value of shares redeemed ................................. (4,353,530) (2,383,358)
----------- -----------
Change in net assets from Institutional Share transactions .. (2,135,534) 1,097,740
----------- -----------
Change in net assets from capital transactions .............. $(1,799,980) $ 2,052,613
=========== ===========
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued ................................................... 52,437 112,251
Reinvested ............................................... 3,642 1,978
Redeemed ................................................. (22,268) (19,446)
----------- -----------
Change in Class A Shares .................................... 33,811 94,783
INSTITUTIONAL SHARES:
Issued ................................................... 222,409 344,202
Reinvested ............................................... -- 3
Redeemed ................................................. (437,179) (235,979)
----------- -----------
Change in Institutional Shares .............................. (214,770) 108,226
----------- -----------
Change in Shares ............................................ (180,959) 203,009
=========== ===========
See accompanying notes to the financial statements.
118
NORTH CAROLINA INTERMEDIATE SOUTH CAROLINA INTERMEDIATE VIRGINIA INTERMEDIATE
TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND
--------------------------------------- --------------------------------------- ---------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 4,652,606 $ 7,701,435 $ 328,384 $ 567,315 $ 1,838,786 $ 3,405,742
705,765 639,663 183,085 139,596 250,054 217,712
(7,591,504) (8,948,526) (505,780) (690,630) (3,235,407) (3,208,442)
------------ ------------ ----------- ----------- ------------ ------------
(2,233,133) (607,428) 5,689 16,281 (1,146,567) 415,012
22,919,184 31,065,370 3,332,757 2,267,601 14,726,302 16,254,714
49,122 27,118 1,063 -- 80,896 59,445
(27,815,851) (32,601,828) (4,084,936) (2,863,089) (16,158,693) (16,122,671)
------------ ------------ ----------- ----------- ------------ ------------
(4,847,545) (1,509,340) (751,116) (595,488) (1,351,495) 191,488
------------ ------------ ----------- ----------- ------------ ------------
$ (7,080,678) $ (2,116,768) $ (745,427) $ (579,207) $ (2,498,062) $ 606,500
============ ============ =========== =========== ============ ============
452,100 729,383 31,839 53,567 161,944 292,826
68,638 60,575 17,805 13,084 22,108 18,732
(740,681) (851,796) (49,587) (64,210) (285,422) (275,812)
------------ ------------ ----------- ----------- ------------ ------------
(219,943) (61,838) 57 2,441 (101,370) 35,746
2,225,950 2,948,573 325,968 214,639 1,306,843 1,400,680
4,779 2,576 105 -- 7,154 5,117
(2,703,831) (3,087,873) (399,095) (270,854) (1,432,134) (1,386,069)
------------ ------------ ----------- ----------- ------------ ------------
(473,102) (136,724) (73,022) (56,215) (118,137) 19,728
------------ ------------ ----------- ----------- ------------ ------------
(693,045) (198,562) (72,965) (53,774) (219,507) 55,474
============ ============ =========== =========== ============ ============
See accompanying notes to the financial statements.
119
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
WEST VIRGINIA INTERMEDIATE
TAX-FREE FUND
---------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued ................................ $ 3,071,322 $ 4,029,274
Dividends reinvested ....................................... 461,980 382,174
Value of shares redeemed ................................... (1,595,339) (1,048,404)
------------ ------------
Change in net assets from Class A Share transactions .......... 1,937,963 3,363,044
CLASS B SHARES:
Proceeds from shares issued ................................ -- --
Dividends reinvested ....................................... -- --
Value of shares redeemed ................................... -- --
------------ ------------
Change in net assets from Class B Share transactions .......... -- --
CLASS C SHARES:
Proceeds from shares issued ................................ -- --
Dividends reinvested ....................................... -- --
Value of shares redeemed ................................... -- --
------------ ------------
Change in net assets from Class C Share transactions .......... -- --
INSTITUTIONAL SHARES:
Proceeds from shares issued ................................ 9,179,142 7,786,086
Dividends reinvested ....................................... 6,188 1,049
Value of shares redeemed ................................... (13,543,394) (14,269,027)
------------ ------------
Change in net assets from Institutional Share transactions .... (4,358,064) (6,481,892)
------------ ------------
Change in net assets from capital transactions ................ $ (2,420,101) $ (3,118,848)
============ ============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued ..................................................... 315,965 405,774
Reinvested ................................................. 47,574 38,436
Redeemed ................................................... (164,690) (105,279)
------------ ------------
Change in Class A Shares ...................................... 198,849 338,931
CLASS B SHARES:
Issued ..................................................... -- --
Reinvested ................................................. -- --
Redeemed ................................................... -- --
------------ ------------
Change in Class B Shares ...................................... -- --
CLASS C SHARES:
Issued ..................................................... -- --
Reinvested ................................................. -- --
Redeemed ................................................... -- --
------------ ------------
Change in Class C Shares ...................................... -- --
INSTITUTIONAL SHARES:
Issued ..................................................... 944,140 783,915
Reinvested ................................................. 637 105
Redeemed ................................................... (1,394,252) (1,436,248)
------------ ------------
Change in Institutional Shares ................................ (449,475) (652,228)
------------ ------------
Change in Shares .............................................. (250,626) (313,297)
============ ============
----------
(a) Period from commencement of operations.
See accompanying notes to the financial statements.
120
PRIME MONEY U.S. TREASURY MONEY NATIONAL TAX-FREE MONEY
MARKET FUND MARKET FUND MARKET FUND
--------------------------------------- --------------------------------------- FOR THE PERIOD
FOR THE FOR THE FOR THE FOR THE AUGUST 1, 2006
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 (a)
------------------ ------------------ ------------------ ------------------ -----------------------
$ 877,547,136 $ 653,088,826 $ 209,931,673 $ 122,382,575 $ 1,000
21,227,737 9,671,407 4,583,261 2,116,647 5
(755,729,498) (595,695,608) (160,875,549) (132,739,325) --
--------------- --------------- --------------- --------------- ------------
143,045,375 67,064,625 53,639,385 (8,240,103) 1,005
1,712,243 461,617 200,191 313,580 1,000
54,133 26,539 15,977 7,886 4
(1,300,846) (977,892) (642,930) (401,098) --
--------------- --------------- --------------- --------------- ------------
465,530 (489,736) (426,762) (79,632) 1,004
598,347 93,694 49,093 32,427 1,000
14,032 4,767 923 111 4
(545,083) (225,799) (32,524) -- --
--------------- --------------- --------------- --------------- ------------
67,296 (127,338) 17,492 32,538 1,004
1,603,996,022 1,062,641,967 992,710,421 850,340,038 126,414,787
3,220,388 1,490,626 6,433,545 3,639,835 5
(1,386,537,416) (1,083,040,861) (1,110,395,351) (1,187,406,453) (30,657,300)
--------------- --------------- --------------- --------------- ------------
220,678,994 (18,908,268) (111,251,385) (333,426,580) 95,757,492
--------------- --------------- --------------- --------------- ------------
$ 364,257,195 $ 47,539,283 $ (58,021,270) $ (341,713,777) $ 95,760,505
=============== =============== =============== =============== ============
877,547,136 653,088,826 209,931,673 122,382,575 1,000
21,227,737 9,671,407 4,583,261 2,116,647 5
(755,729,498) (595,695,608) (160,875,549) (132,739,325) --
--------------- --------------- --------------- --------------- ------------
143,045,375 67,064,625 53,639,385 (8,240,103) 1,005
1,712,243 461,617 200,191 313,580 1,000
54,133 26,539 15,977 7,886 4
(1,300,846) (977,892) (642,930) (401,098) --
--------------- --------------- --------------- --------------- ------------
465,530 (489,736) (426,762) (79,632) 1,004
598,347 93,694 49,093 32,427 1,000
14,032 4,767 923 111 4
(545,083) (225,799) (32,524) -- --
--------------- --------------- --------------- --------------- ------------
67,296 (127,338) 17,492 32,538 1,004
1,603,996,022 1,062,641,967 992,710,421 850,340,038 126,414,787
3,220,388 1,490,626 6,433,545 3,639,835 5
(1,386,537,416) (1,083,040,861) (1,110,395,351) (1,187,406,453) (30,657,300)
--------------- --------------- --------------- --------------- ------------
220,678,994 (18,908,268) (111,251,385) (333,426,580) 95,757,492
--------------- --------------- --------------- --------------- ------------
364,257,195 47,539,283 (58,021,270) (341,713,777) 95,760,505
=============== =============== =============== =============== ============
See accompanying notes to the financial statements.
121
BB&T Funds
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
CAPITAL MANAGER CONSERVATIVE
GROWTH FUND
---------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued ................................ $ 2,894,718 $ 4,545,111
Dividends reinvested ....................................... 299,243 174,477
Value of shares redeemed ................................... (2,683,350) (1,604,470)
------------ -----------
Change in net assets from Class A Share transactions .......... 510,611 3,115,118
CLASS B SHARES:
Proceeds from shares issued ................................ 889,140 837,278
Dividends reinvested ....................................... 127,595 83,612
Value of shares redeemed ................................... (1,145,079) (1,025,899)
------------ -----------
Change in net assets from Class B Share transactions .......... (128,344) (105,009)
CLASS C SHARES:
Proceeds from shares issued ................................ 1,495 4,097
Dividends reinvested ....................................... 3,332 2,873
Value of shares redeemed ................................... (36,001) (40,020)
------------ -----------
Change in net assets from Class C Share transactions .......... (31,174) (33,050)
INSTITUTIONAL SHARES:
Proceeds from shares issued ................................ 5,104,480 7,174,505
Dividends reinvested ....................................... 2,277,160 2,031,356
Value of shares redeemed ................................... (8,511,559) (8,698,693)
Redemption-In-Kind ......................................... (24,907,733) --
------------ -----------
Change in net assets from Institutional Share transactions .... (26,037,652) 507,168
------------ -----------
Change in net assets from capital transactions ................ $(25,686,559) $ 3,484,227
============ ===========
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued ..................................................... 296,643 471,031
Reinvested ................................................. 30,431 18,128
Redeemed ................................................... (273,031) (166,711)
------------ -----------
Change in Class A Shares ...................................... 54,043 322,448
CLASS B SHARES:
Issued ..................................................... 90,828 87,018
Reinvested ................................................. 12,972 8,692
Redeemed ................................................... (116,632) (106,529)
------------ -----------
Change in Class B Shares ...................................... (12,832) (10,819)
CLASS C SHARES:
Issued ..................................................... 152 425
Reinvested ................................................. 340 300
Redeemed ................................................... (3,693) (4,189)
------------ -----------
Change in Class C Shares ...................................... (3,201) (3,464)
INSTITUTIONAL SHARES:
Issued ..................................................... 513,254 738,450
Reinvested ................................................. 230,153 209,918
Redeemed ................................................... (861,524) (898,329)
Redemption-In-Kind ......................................... (2,498,268) --
------------ -----------
Change in Institutional Shares ................................ (2,616,385) 50,039
------------ -----------
Change in Shares .............................................. (2,578,375) 358,204
============ ===========
----------
(a) Period from commencement of operations.
See accompanying notes to the financial statements.
122
CAPITAL MANAGER MODERATE CAPITAL MANAGER CAPITAL MANAGER
GROWTH FUND GROWTH FUND EQUITY FUND
--------------------------------------- --------------------------------------- ---------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 8,370,745 $10,050,273 $ 7,362,741 $ 6,209,050 $ 2,384,353 $ 2,993,886
799,802 432,713 429,052 174,631 210,775 29,192
(5,935,951) (3,962,369) (3,318,572) (2,661,745) (1,401,220) (1,002,205)
------------ ----------- ------------ ----------- ------------ -----------
3,234,596 6,520,617 4,473,221 3,721,936 1,193,908 2,020,873
3,181,245 4,133,083 3,406,232 4,047,594 1,133,885 1,701,167
401,790 179,010 264,038 65,614 211,435 6,959
(4,769,211) (3,138,147) (2,440,432) (2,300,772) (1,260,549) (773,587)
------------ ----------- ------------ ----------- ------------ -----------
(1,186,176) 1,173,946 1,229,838 1,812,436 84,771 934,539
24,138 46,923 22,379 4,603 5,438 301
2,447 1,384 879 137 509 1
(14,889) (118,189) (1,305) (36,901) (15,439) (74,313)
------------ ----------- ------------ ----------- ------------ -----------
11,696 (69,882) 21,953 (32,161) (9,492) (74,011)
7,818,183 8,257,339 7,034,663 7,167,157 6,871,867 4,088,655
1,126,897 799,904 830,721 505,600 925,609 198,724
(3,589,079) (2,815,243) (2,757,951) (2,241,429) (1,950,722) (2,624,499)
(24,751,203) -- (24,289,586) -- (17,939,344) --
------------ ----------- ------------ ----------- ------------ -----------
(19,395,202) 6,242,000 (19,182,153) 5,431,328 (12,092,590) 1,662,880
------------ ----------- ------------ ----------- ------------ -----------
$(17,335,086) $13,866,681 $(13,457,141) $10,933,539 $(10,823,403) $ 4,544,281
============ =========== ============ =========== ============ ===========
839,102 1,053,979 739,695 666,388 211,575 286,202
79,930 45,275 43,090 18,603 18,983 2,805
(594,781) (415,364) (332,216) (286,259) (124,422) (95,524)
------------ ----------- ------------ ----------- ------------ -----------
324,251 683,890 450,569 398,732 106,136 193,483
324,054 441,141 347,785 442,110 103,854 169,091
40,900 18,957 27,107 7,100 19,679 680
(487,690) (335,050) (249,120) (252,552) (115,637) (76,268)
------------ ----------- ------------ ----------- ------------ -----------
(122,736) 125,048 125,772 196,658 7,896 93,503
2,457 4,988 2,312 499 504 30
248 146 90 14 48 --
------------ ----------- ------------ ----------- ------------ -----------
(1,507) (12,517) (134) (4,068) (1,388) (7,356)
1,198 (7,383) 2,268 (3,555) (836) (7,326)
775,206 862,088 703,458 768,886 603,581 389,867
112,593 83,518 83,724 53,932 82,964 18,948
(357,251) (293,469) (278,118) (239,476) (175,325) (250,678)
(2,436,142) -- (2,407,293) -- (1,579,166) --
------------ ----------- ------------ ----------- ------------ -----------
(1,905,594) 652,137 (1,898,229) 583,342 (1,067,946) 158,137
------------ ----------- ------------ ----------- ------------ -----------
(1,702,881) 1,453,692 (1,319,620) 1,175,177 (954,750) 437,797
============ =========== ============ =========== ============ ===========
See accompanying notes to the financial statements.
123
BB&T Funds
FINANCIAL HIGHLIGHTS, CLASS A SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
------------------------------------
NET
REALIZED/
UNREALIZED DIVIDENDS
GAINS -----------------------------------
(LOSSES) NET REALIZED
NET ON GAINS ON
ASSET NET INVESTMENTS INVESTMENTS
VALUE, INVESTMENT AND FOREIGN TOTAL FROM NET AND FOREIGN
BEGINNING INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
--------- ---------- ------------ ---------- ---------- ------------ ---------
LARGE CAP FUND
Year Ended September 30, 2006............ $19.47 0.30(b) 2.30 2.60 (0.30) (1.44) (1.74)
Year Ended September 30, 2005............ $17.26 0.28 2.22 2.50 (0.29) -- (0.29)
Year Ended September 30, 2004............ $14.87 0.23 2.38 2.61 (0.22) -- (0.22)
Year Ended September 30, 2003............ $12.84 0.23 2.03 2.26 (0.23) -- (0.23)
Year Ended September 30, 2002............ $16.79 0.18 (3.47) (3.29) (0.18) (0.48) (0.66)
LARGE CAP GROWTH FUND
Year Ended September 30, 2006............ $ 8.97 0.02(b) (0.05) (0.03) (0.01) -- (0.01)
Year Ended September 30, 2005............ $ 8.22 0.02(b) 0.77 0.79 (0.04) -- (0.04)
Year Ended September 30, 2004............ $ 7.69 (0.01) 0.54 0.53 -- -- --
Year Ended September 30, 2003............ $ 6.60 (0.02) 1.11 1.09 -- -- --
Year Ended September 30, 2002............ $ 8.16 (0.06) (1.50) (1.56) -- -- --
MID CAP VALUE FUND
Year Ended September 30, 2006............ $13.35 0.03(b) 1.60 1.63 (0.04) (1.45) (1.49)
Year Ended September 30, 2005............ $15.40 0.13(b) 3.04 3.17 (0.13) (5.09) (5.22)
Year Ended September 30, 2004............ $12.98 0.18(b) 2.42 2.60 (0.18) -- (0.18)
Year Ended September 30, 2003............ $10.93 0.16(b) 2.04 2.20 (0.15) -- (0.15)
Year Ended September 30, 2002............ $13.12 0.17(b) (1.04) (0.87) (0.17) (1.15) (1.32)
MID CAP GROWTH FUND
Year Ended September 30, 2006............ $13.90 (0.01)(b) --(c) (0.01) (0.02) (1.42) (1.44)
Year Ended September 30, 2005............ $10.95 (0.09)(b) 3.18 3.09 -- (0.14) (0.14)
Year Ended September 30, 2004............ $ 9.84 (0.08) 1.19 1.11 -- -- --
Year Ended September 30, 2003............ $ 8.07 (0.09) 1.86 1.77 -- -- --
Year Ended September 30, 2002............ $ 9.80 (0.08) (1.02) (1.10) -- (0.63) (0.63)
SMALL CAP FUND
Year Ended September 30, 2006............ $16.38 --(b)(c) 1.06 1.06 (0.03) (2.30) (2.33)
Year Ended September 30, 2005............ $14.21 0.11(b) 2.62 2.73 (0.14) (0.42) (0.56)
Year Ended September 30, 2004............ $11.44 --(b)(c) 2.90 2.90 (0.01) (0.12) (0.13)
May 19, 2003 to September 30, 2003 (a)... $10.00 0.01(b) 1.43 1.44 --(c) -- --(c)
INTERNATIONAL EQUITY FUND
Year Ended September 30, 2006............ $ 9.58 0.14(b) 1.49 1.63 (0.15) -- (0.15)
Year Ended September 30, 2005............ $ 8.12 0.10(b) 1.47 1.57 (0.11) -- (0.11)
Year Ended September 30, 2004............ $ 6.88 0.07(b) 1.25 1.32 (0.08) -- (0.08)
Year Ended September 30, 2003............ $ 6.31 0.06(b) 0.54 0.60 (0.03) -- (0.03)
Year Ended September 30, 2002............ $ 7.43 (0.02)(b) (1.10) (1.12) -- -- --
SPECIAL OPPORTUNITIES EQUITY FUND
Year Ended September 30, 2006............ $15.57 (0.04) 1.69 1.65 -- (0.79) (0.79)
Year Ended September 30, 2005............ $13.08 (0.07) 2.68 2.61 -- (0.12) (0.12)
Year Ended September 30, 2004............ $10.53 (0.06) 2.69 2.63 -- (0.08) (0.08)
June 2, 2003 to September 30, 2003 (a)... $10.00 (0.01) 0.54 0.53 -- -- --
EQUITY INCOME FUND
Year Ended September 30, 2006............ $12.09 0.28 1.58 1.86 (0.32) (0.27) (0.59)
Year Ended September 30, 2005............ $10.35 0.24 1.77 2.01 (0.25) (0.02) (0.27)
June 30, 2004 to September 30, 2004 (a).. $10.00 0.05(b) 0.34 0.39 (0.04) -- (0.04)
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Amount is less than $0.005.
(d) Not annualized for periods less than one year.
(e) Annualized for periods less than one year.
See accompanying notes to the financial statements.
124
RATIOS/SUPPLEMENTARY
DATA
-------------------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET NET ASSETS, RATIO OF INCOME RATIO OF
VALUE, TOTAL RETURN END OF NET EXPENSES (LOSS) TO EXPENSES TO
END OF (EXCLUDES SALES PERIOD TO AVERAGE AVERAGE NET AVERAGE PORTFOLIO
PERIOD CHARGE) (d) (000) NET ASSETS (e) ASSETS (e) NET ASSETS* (e) TURNOVER RATE**
--------- --------------- ----------- -------------- ------------ --------------- ---------------
$20.33 14.29% $48,656 1.14% 1.53% 1.43% 34.83%
$19.47 14.60% $39,756 1.14% 1.56% 1.48% 19.50%
$17.26 17.61% $31,783 1.20% 1.32% 1.56% 16.40%
$14.87 17.73% $25,397 1.17% 1.67% 1.55% 18.89%
$12.84 (20.57)% $22,222 1.23% 1.11% 1.62% 23.02%
$ 8.93 (0.31)% $ 9,446 1.13% 0.19% 1.43% 186.19%
$ 8.97 9.62% $ 9,116 1.14% 0.38% 1.49% 62.78%
$ 8.22 6.89% $ 8,784 1.22% (0.33)% 1.58% 127.47%
$ 7.69 16.52% $ 7,042 1.18% (0.35)% 1.57% 91.73%
$ 6.60 (19.12)% $ 6,240 1.28% (0.57)% 1.67% 100.46%
$13.49 13.18% $13,393 1.13% 0.23% 1.18% 53.92%
$13.35 20.82% $12,361 1.15% 0.76% 1.25% 126.99%
$15.40 20.10% $ 9,423 1.23% 1.22% 1.35% 19.17%
$12.98 20.31% $ 6,841 1.20% 1.33% 1.35% 18.28%
$10.93 (8.24)% $ 5,070 1.15% 1.29% 1.38% 18.20%
$12.45 (0.49)% $10,381 1.14% (0.07)% 1.19% 140.90%
$13.90 28.45% $10,444 1.14% (0.71)% 1.26% 92.74%
$10.95 11.28% $ 8,079 1.25% (0.90)% 1.36% 138.61%
$ 9.84 21.93% $ 6,486 1.19% (0.96)% 1.36% 125.97%
$ 8.07 (12.54)% $ 5,533 1.17% (0.88)% 1.44% 117.06%
$15.11 6.96% $ 9,353 1.28% (0.03)% 1.77% 43.25%
$16.38 19.64% $ 1,604 1.29% 0.69% 1.77% 8.39%
$14.21 25.53% $ 353 1.48% (0.03)% 1.91% 11.25%
$11.44 14.43% $ 112 2.04% 0.35% 2.29% 48.84%
$11.06 17.04% $ 4,202 1.40% 1.37% 1.75% 36.22%
$ 9.58 19.46% $ 3,687 1.46% 1.15% 1.83% 44.96%
$ 8.12 19.25% $ 1,686 1.58% 0.91% 1.92% 50.68%
$ 6.88 9.58% $ 2,162 1.63% 0.95% 1.90% 199.78%
$ 6.31 (15.07)% $ 1,412 1.68% (0.24)% 1.93% 95.86%
$16.43 11.16% $81,883 1.28% (0.26)% 1.53% 58.01%
$15.57 20.05% $75,627 1.30% (0.41)% 1.57% 30.38%
$13.08 25.06% $28,903 1.42% (0.77)% 1.80% 32.06%
$10.53 5.30% $ 5,460 1.06% (0.42)% 2.02% 13.24%
$13.36 15.79% $60,059 1.20% 2.28% 1.45% 45.38%
$12.09 19.55% $40,825 1.10% 2.57% 1.57% 39.65%
$10.35 3.89% $ 6,342 1.54% 1.79% 2.14% 1.65%
See accompanying notes to the financial statements.
125
BB&T Funds
FINANCIAL HIGHLIGHTS, CLASS A SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
-----------------------------------
NET
REALIZED/ DIVIDENDS
NET ASSET NET UNREALIZED -----------------------------------
VALUE, INVESTMENT GAINS TOTAL FROM NET NET REALIZED
BEGINNING INCOME (LOSSES) ON INVESTMENT INVESTMENT GAINS ON TOTAL
OF PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME INVESTMENTS DIVIDENDS
--------- ---------- ----------- ---------- ---------- ------------ ---------
SHORT U.S. GOVERNMENT FUND
Year Ended September 30, 2006 ........ $ 9.50 0.28(b) 0.01(i) 0.29 (0.31) -- (0.31)
Year Ended September 30, 2005 ........ $ 9.70 0.23 (0.14) 0.09 (0.29) -- (0.29)
Year Ended September 30, 2004 ........ $ 9.89 0.17 (0.10) 0.07 (0.26) -- (0.26)
Year Ended September 30, 2003 ........ $10.08 0.27 (0.11) 0.16 (0.35) -- (0.35)
Year Ended September 30, 2002 ........ $10.04 0.43(c) 0.06(c) 0.49 (0.45) -- (0.45)
INTERMEDIATE U.S. GOVERNMENT FUND
Year Ended September 30, 2006 ........ $10.01 0.41(b) (0.11) 0.30 (0.42) -- (0.42)
Year Ended September 30, 2005 ........ $10.24 0.35(b) (0.15) 0.20 (0.38) (0.05) (0.43)
Year Ended September 30, 2004 ........ $10.57 0.32 (0.19) 0.13 (0.33) (0.13) (0.46)
Year Ended September 30, 2003 ........ $10.77 0.35 (0.07) 0.28 (0.39) (0.09) (0.48)
Year Ended September 30, 2002 ........ $10.38 0.47(d) 0.42(d) 0.89 (0.50) -- (0.50)
TOTAL RETURN BOND FUND
Year Ended September 30, 2006 ........ $10.31 0.42(b) (0.12) 0.30 (0.44) (0.05) (0.49)
Year Ended September 30, 2005 ........ $10.59 0.38(b) (0.19) 0.19 (0.44) (0.03) (0.47)
Year Ended September 30, 2004 ........ $10.72 0.41 (0.08) 0.33 (0.46) -- (0.46)
Year Ended September 30, 2003 ........ $10.33 0.47 0.41 0.88 (0.49) -- (0.49)
Year Ended September 30, 2002 ........ $10.56 0.53(e) (0.04)(e) 0.49 (0.55) (0.17) (0.72)
KENTUCKY INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $10.06 0.30 0.06 0.36 (0.30) -- (0.30)
Year Ended September 30, 2005 ........ $10.22 0.27(b) (0.16) 0.11 (0.27) -- (0.27)
Year Ended September 30, 2004 ........ $10.23 0.27(b) (0.01) 0.26 (0.27) -- (0.27)
February 24, 2003 to September 30,
2003 (a) .......................... $10.00 0.15(b) 0.35 0.50 (0.27) -- (0.27)
MARYLAND INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $10.02 0.29 0.10 0.39 (0.29) -- (0.29)
Year Ended September 30, 2005 ........ $10.15 0.26(b) (0.13) 0.13 (0.26) -- (0.26)
Year Ended September 30, 2004 ........ $10.15 0.24 --(f) 0.24 (0.24) -- (0.24)
February 24, 2003 to September 30,
2003 (a) .......................... $10.00 0.18 0.15 0.33 (0.18) -- (0.18)
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $10.46 0.36 --(f) 0.36 (0.35) (0.09) (0.44)
Year Ended September 30, 2005 ........ $10.67 0.35 (0.19) 0.16 (0.35) (0.02) (0.37)
Year Ended September 30, 2004 ........ $10.81 0.32 (0.10) 0.22 (0.32) (0.04) (0.36)
Year Ended September 30, 2003 ........ $10.86 0.33 (0.01) 0.32 (0.33) (0.04) (0.37)
Year Ended September 30, 2002 ........ $10.54 0.36 0.40 0.76 (0.36) (0.08) (0.44)
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $10.54 0.34 (0.01) 0.33 (0.34) (0.18) (0.52)
Year Ended September 30, 2005 ........ $10.81 0.34 (0.19) 0.15 (0.34) (0.08) (0.42)
Year Ended September 30, 2004 ........ $10.88 0.34 (0.07) 0.27 (0.33) (0.01) (0.34)
Year Ended September 30, 2003 ........ $10.87 0.34 0.01 0.35 (0.34) -- (0.34)
Year Ended September 30, 2002 ........ $10.46 0.37 0.41 0.78 (0.37) -- (0.37)
VIRGINIA INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $11.49 0.40 (0.05) 0.35 (0.39) (0.06) (0.45)
Year Ended September 30, 2005 ........ $11.74 0.39 (0.22) 0.17 (0.40) (0.02) (0.42)
Year Ended September 30, 2004 ........ $11.96 0.38 (0.14) 0.24 (0.38) (0.08) (0.46)
Year Ended September 30, 2003 ........ $11.99 0.37 0.01 0.38 (0.37) (0.04) (0.41)
Year Ended September 30, 2002 ........ $11.57 0.41 0.42 0.83 (0.41) -- (0.41)
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the fund as a whole
without distinguishing between classes of shares issued.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses), and the net investment income ratio
would have been: $0.47, $0.02, and 4.38%, respectively.
(d) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses), and the net investment income ratio
would have been: $0.49, $0.40, and 4.74%, respectively.
(e) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses), and the net investment income ratio
would have been: $0.54, $(0.05), and 5.23%, respectively.
(f) Amount is less than $0.005.
(g) Not annualized for periods less than one year.
(h) Annualized for periods less than one year.
(i) The amount shown for a share outstanding throughout the period does not
accord with the change in aggregate gains and losses in the portfolio of
securities during the period because of the timing of sales and purchases
of Fund shares in relation to fluctuating market values during the period.
See accompanying notes to the financial statements.
126
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET NET ASSETS, RATIO OF INCOME RATIO OF
VALUE, TOTAL RETURN END OF NET EXPENSES (LOSS) TO EXPENSES TO
END OF (EXCLUDES PERIOD TO AVERAGE AVERAGE NET AVERAGE PORTFOLIO
PERIOD SALES CHARGE) (g) (000) NET ASSETS (h) ASSETS (h) NET ASSETS* (h) TURNOVER RATE**
--------- ----------------- ----------- -------------- ------------ --------------- ---------------
$ 9.48 3.12% $ 6,233 0.89% 2.99% 1.29% 98.08%
$ 9.50 0.96% $ 7,980 0.91% 2.40% 1.34% 33.67%
$ 9.70 0.71% $ 8,456 0.99% 1.85% 1.41% 62.59%
$ 9.89 1.56% $ 9,619 1.00% 2.48% 1.40% 93.86%
$10.08 5.03% $ 5,286 1.03% 4.03%(c) 1.43% 73.93%
$ 9.89 3.08% $ 9,748 0.92% 4.21% 1.29% 127.13%
$10.01 1.98% $13,744 0.96% 3.41% 1.33% 107.04%
$10.24 1.30% $11,959 1.05% 2.90% 1.42% 98.35%
$10.57 2.62% $ 9,646 1.07% 3.13% 1.42% 209.07%
$10.77 8.85% $ 6,453 1.10% 4.56%(d) 1.45% 79.36%
$10.12 2.96% $ 6,407 0.93% 4.16% 1.29% 226.36%
$10.31 1.88% $ 7,254 0.96% 3.62% 1.33% 173.74%
$10.59 3.22% $ 4,786 1.07% 3.84% 1.44% 31.95%
$10.72 8.69% $ 4,308 1.08% 4.34% 1.44% 43.98%
$10.33 4.98% $ 2,042 1.11% 5.11%(e) 1.50% 69.15%
$10.12 3.67% $ 2,729 0.91% 3.02% 1.37% 64.55%
$10.06 1.06% $ 2,566 0.89% 2.65% 1.47% 37.50%
$10.22 2.55% $ 2,746 0.78% 2.63% 1.57% 24.78%
$10.23 5.09% $ 1,877 0.62% 2.50% 1.65% 42.87%
$10.12 3.95% $ 1,966 0.85% 2.89% 1.41% 219.80%
$10.02 1.28% $ 1,609 0.81% 2.57% 1.52% 44.67%
$10.15 2.37% $ 667 0.75% 2.32% 1.73% 55.18%
$10.15 3.32% $ 482 0.72% 2.22% 2.24% 40.16%
$10.38 3.58% $19,163 0.90% 3.45% 1.30% 94.95%
$10.46 1.49% $21,600 0.90% 3.29% 1.36% 60.84%
$10.67 2.10% $22,689 0.90% 3.03% 1.42% 67.80%
$10.81 3.04% $25,323 0.92% 3.11% 1.42% 44.56%
$10.86 7.46% $23,828 0.93% 3.41% 1.43% 20.39%
$10.35 3.27% $ 4,001 0.93% 3.30% 1.35% 80.24%
$10.54 1.39% $ 4,072 0.92% 3.20% 1.40% 56.03%
$10.81 2.60% $ 4,149 0.90% 3.11% 1.44% 32.63%
$10.88 3.29% $ 4,680 0.86% 3.14% 1.43% 32.04%
$10.87 7.67% $ 4,128 0.83% 3.52% 1.48% 21.81%
$11.39 3.23% $11,877 0.90% 3.55% 1.30% 76.53%
$11.49 1.44% $13,145 0.89% 3.39% 1.36% 48.04%
$11.74 2.05% $13,005 0.91% 3.22% 1.43% 45.07%
$11.96 3.24% $ 7,447 0.92% 3.14% 1.42% 34.17%
$11.99 7.36% $ 3,041 0.96% 3.45% 1.46% 13.12%
See accompanying notes to the financial statements.
127
BB&T Funds
FINANCIAL HIGHLIGHTS, CLASS A SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
-----------------------------------
NET
REALIZED/ DIVIDENDS
NET ASSET NET UNREALIZED -----------------------------------
VALUE, INVESTMENT GAINS TOTAL FROM NET NET REALIZED
BEGINNING INCOME (LOSSES) ON INVESTMENT INVESTMENT GAINS ON TOTAL
OF PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME INVESTMENTS DIVIDENDS
--------- ---------- ----------- ---------- ---------- ------------ ---------
WEST VIRGINIA INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $ 9.85 0.39 (0.02) 0.37 (0.37) (0.06) (0.43)
Year Ended September 30, 2005 ........ $10.08 0.35(b) (0.15) 0.20 (0.35) (0.08) (0.43)
Year Ended September 30, 2004 ........ $10.20 0.32 (0.07) 0.25 (0.33) (0.04) (0.37)
Year Ended September 30, 2003 ........ $10.35 0.33(b) 0.01 0.34 (0.33) (0.16) (0.49)
Year Ended September 30, 2002 ........ $10.01 0.43 0.31 0.74 (0.38) (0.02) (0.40)
PRIME MONEY MARKET FUND
Year Ended September 30, 2006 ........ $ 1.00 0.04 --(c) 0.04 (0.04) -- (0.04)
Year Ended September 30, 2005 ........ $ 1.00 0.02 --(c) 0.02 (0.02) -- (0.02)
Year Ended September 30, 2004 ........ $ 1.00 --(c) --(c) --(c) --(c) -- --(c)
Year Ended September 30, 2003 ........ $ 1.00 --(c) -- --(c) --(c) -- --(c)
Year Ended September 30, 2002 ........ $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
U.S. TREASURY MONEY MARKET FUND
Year Ended September 30, 2006 ........ $ 1.00 0.04 -- 0.04 (0.04) -- (0.04)
Year Ended September 30, 2005 ........ $ 1.00 0.02 -- 0.02 (0.02) -- (0.02)
Year Ended September 30, 2004 ........ $ 1.00 --(c) -- --(c) --(c) -- --(c)
Year Ended September 30, 2003 ........ $ 1.00 --(c) -- --(c) --(c) -- --(c)
Year Ended September 30, 2002 ........ $ 1.00 0.01 --(c) 0.01 (0.01) -- (0.01)
NATIONAL TAX-FREE MONEY MARKET FUND
August 1, 2006 to September 30,
2006 (a) .......................... $ 1.00 --(c) -- --(c) --(c) -- --(c)
CAPITAL MANAGER CONSERVATIVE GROWTH
FUND***
Year Ended September 30, 2006 ........ $ 9.76 0.31(b) 0.22 0.53 (0.33) -- (0.33)
Year Ended September 30, 2005 ........ $ 9.30 0.23 0.45 0.68 (0.22) -- (0.22)
Year Ended September 30, 2004 ........ $ 8.84 0.16(b) 0.46 0.62 (0.16) -- (0.16)
Year Ended September 30, 2003 ........ $ 8.29 0.18 0.57 0.75 (0.16) (0.04) (0.20)
Year Ended September 30, 2002 ........ $ 9.12 0.23 (0.68) (0.45) (0.20) (0.18) (0.38)
CAPITAL MANAGER MODERATE GROWTH FUND***
Year Ended September 30, 2006 ........ $ 9.79 0.24(b) 0.45 0.69 (0.26) -- (0.26)
Year Ended September 30, 2005 ........ $ 9.01 0.17(b) 0.76 0.93 (0.15) -- (0.15)
Year Ended September 30, 2004 ........ $ 8.28 0.08(b) 0.73 0.81 (0.08) -- (0.08)
Year Ended September 30, 2003 ........ $ 7.47 0.08 0.82 0.90 (0.08) (0.01) (0.09)
Year Ended September 30, 2002 ........ $ 8.82 0.12 (0.99) (0.87) (0.11) (0.37) (0.48)
CAPITAL MANAGER GROWTH FUND***
Year Ended September 30, 2006 ........ $ 9.68 0.20(b) 0.56 0.76 (0.21) -- (0.21)
Year Ended September 30, 2005 ........ $ 8.70 0.13 0.96 1.09 (0.11) -- (0.11)
Year Ended September 30, 2004 ........ $ 7.81 0.05(b) 0.88 0.93 (0.04) -- (0.04)
Year Ended September 30, 2003 ........ $ 6.87 0.04 0.94 0.98 (0.04) -- (0.04)
Year Ended September 30, 2002 ........ $ 8.46 0.03 (1.20) (1.17) (0.02) (0.40) (0.42)
CAPITAL MANAGER EQUITY FUND***
Year Ended September 30, 2006 ........ $10.95 0.17(b) 0.83 1.00 (0.19) (0.19) (0.38)
Year Ended September 30, 2005 ........ $ 9.58 0.09(b) 1.34 1.43 (0.06) -- (0.06)
Year Ended September 30, 2004 ........ $ 8.45 0.02(b) 1.12 1.14 (0.01) -- (0.01)
Year Ended September 30, 2003 ........ $ 7.36 --(b)(c) 1.15 1.15 (0.01) (0.05) (0.06)
Year Ended September 30, 2002 ........ $ 8.96 (0.02) (1.58) (1.60) -- -- --
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
*** The expense ratios exclude the impact of fees/expenses paid by each
underlying fund.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Amount is less than $0.005.
(d) Not annualized for periods less than one year.
(e) Annualized for periods less than one year.
See accompanying notes to the financial statements.
128
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET NET ASSETS, RATIO OF INCOME RATIO OF
VALUE, TOTAL RETURN END OF NET EXPENSES (LOSS) TO EXPENSES TO
END OF (EXCLUDES PERIOD TO AVERAGE AVERAGE NET AVERAGE PORTFOLIO
PERIOD SALES CHARGE) (d) (000) NET ASSETS (e) ASSETS (e) NET ASSETS* (e) TURNOVER RATE**
--------- ----------------- ----------- -------------- ------------ --------------- ---------------
$ 9.79 3.85% $ 15,773 0.90% 3.80% 0.90% 50.14%
$ 9.85 1.97% $ 13,911 0.93% 3.50% 0.96% 32.10%
$10.08 2.51% $ 10,815 1.01% 3.24% 1.03% 16.24%
$10.20 3.41% $ 11,541 0.98% 3.23% 1.01% 25.59%
$10.35 7.61% $ 10,029 0.97% 3.78% 1.13% 61.44%
$ 1.00 3.86% $636,327 0.98% 3.83% 1.09% --
$ 1.00 1.92% $493,282 0.91% 1.91% 1.13% --
$ 1.00 0.41% $426,217 0.86% 0.40% 1.20% --
$ 1.00 0.48% $459,375 0.98% 0.47% 1.19% --
$ 1.00 1.21% $416,782 1.05% 1.20% 1.23% --
$ 1.00 3.64% $167,900 0.96% 3.63% 1.09% --
$ 1.00 1.69% $114,260 0.89% 1.66% 1.14% --
$ 1.00 0.31% $122,500 0.79% 0.31% 1.21% --
$ 1.00 0.30% $135,059 0.99% 0.32% 1.20% --
$ 1.00 1.01% $197,830 1.05% 1.01% 1.24% --
$ 1.00 0.51% $ 1 0.62% 2.96% 1.26% --
$ 9.96 5.54% $ 9,365 0.33% 3.12% 0.95% 5.69%
$ 9.76 7.39% $ 8,646 0.43% 2.45% 1.01% 52.50%
$ 9.30 6.97% $ 5,242 0.69% 1.68% 1.14% 2.47%
$ 8.84 9.09% $ 2,579 0.78% 1.86% 1.23% 33.03%
$ 8.29 (5.18)% $ 1,198 0.79% 2.25% 1.24% 6.29%
$10.22 7.10% $ 33,472 0.35% 2.44% 0.97% 7.33%
$ 9.79 10.35% $ 28,912 0.48% 1.77% 1.05% 37.83%
$ 9.01 9.77% $ 20,428 0.74% 0.92% 1.19% 0.17%
$ 8.28 12.13% $ 8,054 0.75% 1.11% 1.20% 21.46%
$ 7.47 (10.76)% $ 3,194 0.81% 1.26% 1.26% 14.56%
$10.23 7.97% $ 22,801 0.36% 2.01% 0.98% 6.26%
$ 9.68 12.51% $ 17,219 0.48% 1.37% 1.07% 26.22%
$ 8.70 11.85% $ 12,007 0.75% 0.52% 1.23% 0.19%
$ 7.81 14.22% $ 4,660 0.80% 0.59% 1.25% 17.80%
$ 6.87 (14.82)% $ 2,700 0.87% 0.39% 1.32% 8.38%
$11.57 9.39% $ 7,762 0.36% 1.53% 0.97% 1.48%
$10.95 14.95% $ 6,183 0.45% 0.91% 1.09% 2.14%
$ 9.58 13.53% $ 3,557 0.77% 0.22% 1.31% 3.10%
$ 8.45 15.61% $ 1,225 0.95% 0.05% 1.40% 8.30%
$ 7.36 (17.86)% $ 645 0.90% (0.15)% 1.35% 5.75%
See accompanying notes to the financial statements.
129
BB&T Funds
FINANCIAL HIGHLIGHTS, CLASS B SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
------------------------------------
NET
REALIZED/ DIVIDENDS
UNREALIZED -----------------------------------
GAINS NET REALIZED
(LOSSES) ON GAINS ON
NET ASSET NET INVESTMENTS INVESTMENTS
VALUE, INVESTMENT AND FOREIGN TOTAL FROM NET AND FOREIGN
BEGINNING INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
--------- ---------- ------------ ---------- ---------- ------------ ---------
LARGE CAP FUND
Year Ended September 30, 2006 ........ $19.31 0.16(b) 2.27 2.43 (0.15) (1.44) (1.59)
Year Ended September 30, 2005 ........ $17.12 0.13 2.22 2.35 (0.16) -- (0.16)
Year Ended September 30, 2004 ........ $14.75 0.09 2.38 2.47 (0.10) -- (0.10)
Year Ended September 30, 2003 ........ $12.75 0.12 2.01 2.13 (0.13) -- (0.13)
Year Ended September 30, 2002 ........ $16.68 0.06 (3.44) (3.38) (0.07) (0.48) (0.55)
LARGE CAP GROWTH FUND
Year Ended September 30, 2006 ........ $ 8.47 (0.05)(b) (0.05) (0.10) -- -- --
Year Ended September 30, 2005 ........ $ 7.80 (0.03)(b) 0.72 0.69 (0.02) -- (0.02)
Year Ended September 30, 2004 ........ $ 7.36 (0.13) 0.57 0.44 -- -- --
Year Ended September 30, 2003 ........ $ 6.36 (0.08)(b) 1.08 1.00 -- -- --
Year Ended September 30, 2002 ........ $ 7.93 (0.12) (1.45) (1.57) -- -- --
MID CAP VALUE FUND
Year Ended September 30, 2006 ........ $13.16 (0.07)(b) 1.59 1.52 --(c) (1.45) (1.45)
Year Ended September 30, 2005 ........ $15.30 --(b)(c) 3.02 3.02 (0.07) (5.09) (5.16)
Year Ended September 30, 2004 ........ $12.91 0.07(b) 2.42 2.49 (0.10) -- (0.10)
Year Ended September 30, 2003 ........ $10.90 0.07 2.03 2.10 (0.09) -- (0.09)
Year Ended September 30, 2002 ........ $13.10 0.08 (1.03) (0.95) (0.10) (1.15) (1.25)
MID CAP GROWTH FUND
Year Ended September 30, 2006 ........ $13.47 (0.11)(b) 0.01(g) (0.10) -- (1.42) (1.42)
Year Ended September 30, 2005 ........ $10.70 (0.17)(b) 3.08 2.91 -- (0.14) (0.14)
Year Ended September 30, 2004 ........ $ 9.68 (0.16) 1.18 1.02 -- -- --
Year Ended September 30, 2003 ........ $ 8.00 (0.13) 1.81 1.68 -- -- --
Year Ended September 30, 2002 ........ $ 9.79 (0.14)(b) (1.02) (1.16) -- (0.63) (0.63)
SMALL CAP FUND
Year Ended September 30, 2006 ........ $16.11 (0.12)(b) 1.05 0.93 (0.01) (2.30) (2.31)
Year Ended September 30, 2005 ........ $14.06 --(b)(c) 2.58 2.58 (0.11) (0.42) (0.53)
Year Ended September 30, 2004 ........ $11.40 (0.10)(b) 2.88 2.78 -- (0.12) (0.12)
May 19, 2003 to September 30,
2003 (a) .......................... $10.00 (0.04)(b) 1.44 1.40 -- -- --
INTERNATIONAL EQUITY FUND
Year Ended September 30, 2006 ........ $ 9.09 0.06(b) 1.42 1.48 (0.11) -- (0.11)
Year Ended September 30, 2005 ........ $ 7.74 0.03(b) 1.38 1.41 (0.06) -- (0.06)
Year Ended September 30, 2004 ........ $ 6.57 0.02(b) 1.19 1.21 (0.04) -- (0.04)
Year Ended September 30, 2003 ........ $ 6.07 (0.02)(b) 0.54 0.52 (0.02) -- (0.02)
Year Ended September 30, 2002 ........ $ 7.19 (0.07)(b) (1.05) (1.12) -- -- --
SPECIAL OPPORTUNITIES EQUITY FUND
Year Ended September 30, 2006 ........ $15.29 (0.16) 1.66 1.50 -- (0.79) (0.79)
Year Ended September 30, 2005 ........ $12.95 (0.13) 2.59 2.46 -- (0.12) (0.12)
Year Ended September 30, 2004 ........ $10.50 (0.12) 2.65 2.53 -- (0.08) (0.08)
June 2, 2003 to September 30,
2003 (a) .......................... $10.00 (0.02) 0.52 0.50 -- -- --
EQUITY INCOME FUND
Year Ended September 30, 2006 ........ $12.08 0.19 1.56 1.75 (0.23) (0.27) (0.50)
Year Ended September 30, 2005 ........ $10.34 0.16 1.77 1.93 (0.17) (0.02) (0.19)
June 30, 2004 to September 30,
2004 (a) .......................... $10.00 0.03(b) 0.34 0.37 (0.03) -- (0.03)
INTERMEDIATE U.S. GOVERNMENT FUND
Year Ended September 30, 2006 ........ $ 9.98 0.34(b) (0.12) 0.22 (0.34) -- (0.34)
Year Ended September 30, 2005 ........ $10.20 0.27(b) (0.13) 0.14 (0.31) (0.05) (0.36)
Year Ended September 30, 2004 ........ $10.53 0.21 (0.16) 0.05 (0.25) (0.13) (0.38)
Year Ended September 30, 2003 ........ $10.73 0.27 (0.07) 0.20 (0.31) (0.09) (0.40)
Year Ended September 30, 2002 ........ $10.35 0.39(d) 0.41(d) 0.80 (0.42) -- (0.42)
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Amount is less than $0.005.
(d) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses), and the net investment income ratio
would have been: $0.41, $0.39 and 3.99% respectively.
(e) Not annualized for periods less than one year.
(f) Annualized for periods less than one year.
(g) The amount shown for a share outstanding throughout the period does not
accord with the change in aggregate gains and losses in the portfolio of
securities during the period because of the timing of sales and purchases
of Fund shares in relation to fluctuating market values during the period.
See accompanying notes to the financial statements.
130
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET NET ASSETS, RATIO OF INCOME RATIO OF
VALUE, TOTAL RETURN END OF NET EXPENSES (LOSS) TO EXPENSES TO
END OF (EXCLUDES PERIOD TO AVERAGE AVERAGE NET AVERAGE PORTFOLIO
PERIOD SALES CHARGE) (e) (000) NET ASSETS (f) ASSETS (f) NET ASSETS* (f) TURNOVER RATE**
--------- ----------------- ----------- -------------- ------------ --------------- ---------------
$20.15 13.45% $14,808 1.88% 0.85% 1.93% 34.83%
$19.31 13.75% $22,148 1.89% 0.82% 1.99% 19.50%
$17.12 16.75% $26,309 1.95% 0.58% 2.06% 16.40%
$14.75 16.74% $26,215 1.91% 0.92% 2.05% 18.89%
$12.75 (21.14)% $24,849 1.98% 0.36% 2.12% 23.02%
$ 8.37 (1.18)% $ 8,970 1.88% (0.58)% 1.93% 186.19%
$ 8.47 8.89% $12,621 1.89% (0.36)% 1.99% 62.78%
$ 7.80 5.98% $13,845 1.96% (1.08)% 2.08% 127.47%
$ 7.36 15.72% $14,217 1.93% (1.10)% 2.07% 91.73%
$ 6.36 (19.80)% $13,040 2.03% (1.32)% 2.17% 100.46%
$13.23 12.38% $ 5,391 1.89% (0.53)% 1.93% 53.92%
$13.16 19.94% $ 4,534 1.89% 0.02% 1.99% 126.99%
$15.30 19.31% $ 3,582 1.98% 0.47% 2.10% 19.17%
$12.91 19.31% $ 2,071 1.95% 0.58% 2.10% 18.28%
$10.90 (8.80)% $ 1,158 1.91% 0.63% 2.12% 18.20%
$11.95 (1.23)% $ 2,377 1.89% (0.83)% 1.94% 140.90%
$13.47 27.42% $ 2,395 1.91% (1.46)% 2.01% 92.74%
$10.70 10.54% $ 1,973 2.00% (1.65)% 2.11% 138.61%
$ 9.68 21.00% $ 1,030 1.95% (1.73)% 2.11% 125.97%
$ 8.00 (13.20)% $ 507 1.76% (1.52)% 2.07% 117.06%
$14.73 6.19% $ 4,092 2.04% (0.79)% 2.28% 43.25%
$16.11 18.79% $ 259 2.05% 0.00% 2.27% 8.39%
$14.06 24.56% $ 136 2.22% (0.75)% 2.41% 11.25%
$11.40 14.00% $ 29 2.69% (0.93)% 2.69% 48.84%
$10.46 16.27% $ 1,819 2.15% 0.64% 2.25% 36.22%
$ 9.09 18.34% $ 2,007 2.20% 0.36% 2.33% 44.96%
$ 7.74 18.47% $ 2,140 2.33% 0.24% 2.42% 50.68%
$ 6.57 8.63% $ 2,012 2.40% (0.37)% 2.41% 199.78%
$ 6.07 (15.58)% $ 2,056 2.43% (1.01)% 2.43% 95.86%
$16.00 10.35% $22,901 2.03% (1.01)% 2.03% 58.01%
$15.29 19.09% $21,911 2.06% (1.18)% 2.08% 30.38%
$12.95 24.17% $13,215 2.15% (1.51)% 2.30% 32.06%
$10.50 5.00% $ 4,360 1.80% (1.16)% 2.50% 13.24%
$13.33 14.84% $ 9,592 1.95% 1.52% 1.95% 45.38%
$12.08 18.79% $ 5,611 1.87% 1.74% 2.09% 39.65%
$10.34 3.66% $ 1,672 2.29% 1.07% 2.65% 1.65%
$ 9.86 2.32% $ 4,020 1.68% 3.48% 1.79% 127.13%
$ 9.98 1.33% $ 5,725 1.71% 2.67% 1.84% 107.04%
$10.20 0.55% $ 6,883 1.80% 2.15% 1.92% 98.35%
$10.53 1.86% $ 7,869 1.82% 2.42% 1.92% 209.97%
$10.73 7.96% $ 5,981 1.85% 3.81%(d) 1.95% 79.36%
See accompanying notes to the financial statements.
131
BB&T Funds
FINANCIAL HIGHLIGHTS, CLASS B SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
-----------------------------------
NET
REALIZED/ DIVIDENDS
NET ASSET NET UNREALIZED -----------------------------------
VALUE, INVESTMENT GAINS TOTAL FROM NET NET REALIZED
BEGINNING INCOME (LOSSES) ON INVESTMENT INVESTMENT GAINS ON TOTAL
OF PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME INVESTMENTS DIVIDENDS
--------- ---------- ----------- ---------- ---------- ------------ ---------
TOTAL RETURN BOND FUND
Year Ended September 30, 2006 ........ $10.32 0.34(b) (0.12) 0.22 (0.36) (0.05) (0.41)
Year Ended September 30, 2005 ........ $10.59 0.30(b) (0.18) 0.12 (0.36) (0.03) (0.39)
Year Ended September 30, 2004 ........ $10.72 0.32 (0.07) 0.25 (0.38) -- (0.38)
Year Ended September 30, 2003 ........ $10.34 0.39 0.40 0.79 (0.41) -- (0.41)
Year Ended September 30, 2002 ........ $10.57 0.45(d) (0.04)(d) 0.41 (0.47) (0.17) (0.64)
PRIME MONEY MARKET FUND
Year Ended September 30, 2006 ........ $ 1.00 0.03 --(c) 0.03 (0.03) -- (0.03)
Year Ended September 30, 2005 ........ $ 1.00 0.01 --(c) 0.01 (0.01) -- (0.01)
Year Ended September 30, 2004 ........ $ 1.00 --(c) --(c) --(c) --(c) -- --(C)
Year Ended September 30, 2003 ........ $ 1.00 --(c) -- --(c) --(c) -- --(C)
Year Ended September 30, 2002 ........ $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
U.S. TREASURY MONEY MARKET FUND
Year Ended September 30, 2006 ........ $ 1.00 0.03 -- 0.03 (0.03) -- (0.03)
Year Ended September 30, 2005 ........ $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
Year Ended September 30, 2004 ........ $ 1.00 --(c) -- --(c) --(c) -- --(C)
Year Ended September 30, 2003 ........ $ 1.00 --(c) -- --(c) --(c) -- --(C)
Year Ended September 30, 2002 ........ $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
NATIONAL TAX-FREE MONEY MARKET FUND
August 1, 2006 to September 30,
2006 (a) .......................... $ 1.00 --(c) -- --(c) --(c) -- --(C)
CAPITAL MANAGER CONSERVATIVE GROWTH
FUND***
Year Ended September 30, 2006 ........ $ 9.76 0.23(b) 0.23 0.46 (0.26) -- (0.26)
Year Ended September 30, 2005 ........ $ 9.30 0.16 0.45 0.61 (0.15) -- (0.15)
Year Ended September 30, 2004 ........ $ 8.85 0.09(b) 0.45 0.54 (0.09) -- (0.09)
Year Ended September 30, 2003 ........ $ 8.29 0.11 0.59 0.70 (0.10) (0.04) (0.14)
Year Ended September 30, 2002 ........ $ 9.13 0.15 (0.67) (0.52) (0.14) (0.18) (0.32)
CAPITAL MANAGER MODERATE GROWTH FUND***
Year Ended September 30, 2006 ........ $ 9.64 0.17(b) 0.42 0.59 (0.18) -- (0.18)
Year Ended September 30, 2005 ........ $ 8.86 0.09(b) 0.77 0.86 (0.08) -- (0.08)
Year Ended September 30, 2004 ........ $ 8.15 0.02(b) 0.71 0.73 (0.02) -- (0.02)
Year Ended September 30, 2003 ........ $ 7.41 0.04 0.80 0.84 (0.09) (0.01) (0.10)
Year Ended September 30, 2002 ........ $ 8.75 0.05 (0.97) (0.92) (0.05) (0.37) (0.42)
CAPITAL MANAGER GROWTH FUND***
Year Ended September 30, 2006 ........ $ 9.51 0.12(b) 0.56 0.68 (0.14) -- (0.14)
Year Ended September 30, 2005 ........ $ 8.55 0.05(b) 0.95 1.00 (0.04) -- (0.04)
Year Ended September 30, 2004 ........ $ 7.70 (0.02)(b) 0.87 0.85 -- -- --
Year Ended September 30, 2003 ........ $ 6.80 (0.01) 0.91 0.90 --(c) -- --(c)
Year Ended September 30, 2002 ........ $ 8.42 (0.01) (1.21) (1.22) -- (0.40) (0.40)
CAPITAL MANAGER EQUITY FUND***
Year Ended September 30, 2006 ........ $10.67 0.09(b) 0.80 0.89 (0.11) (0.19) (0.30)
Year Ended September 30, 2005 ........ $ 9.36 0.01(b) 1.31 1.32 (0.01) -- (0.01)
Year Ended September 30, 2004 ........ $ 8.30 (0.05)(b) 1.11 1.06 -- -- --
Year Ended September 30, 2003 ........ $ 7.28 (0.05)(b) 1.12 1.07 -- (0.05) (0.05)
Year Ended September 30, 2002 ........ $ 8.93 (0.04) (1.61) (1.65) -- -- --
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
*** The expense ratios exclude the impact of fees/expenses paid by each
underlying fund.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Amount is less than $0.005.
(d) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses) and the net investment income ratio
would have been: $0.46, $(0.05) and 4.51%, respectively.
(e) Not annualized for periods less than one year.
(f) Annualized for periods less than one year.
See accompanying notes to the financial statements.
132
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET NET ASSETS, RATIO OF INCOME RATIO OF
VALUE, TOTAL RETURN END OF NET EXPENSES (LOSS) TO EXPENSES TO
END OF (EXCLUDES PERIOD TO AVERAGE AVERAGE NET AVERAGE PORTFOLIO
PERIOD SALES CHARGE) (e) (000) NET ASSETS (f) ASSETS (f) NET ASSETS* (f) TURNOVER RATE**
--------- ----------------- ----------- -------------- ------------ --------------- ---------------
$10.13 2.27% $ 4,872 1.68% 3.39% 1.79% 226.36%
$10.32 1.21% $ 6,161 1.71% 2.87% 1.84% 173.14%
$10.59 2.45% $ 6,602 1.82% 3.09% 1.94% 31.95%
$10.72 7.77% $ 6,358 1.83% 3.61% 1.94% 43.98%
$10.34 4.18% $ 4,465 1.84% 4.39%(d) 1.99% 69.15%
$ 1.00 3.37% $ 2,256 1.48% 3.34% 1.59% --
$ 1.00 1.32% $ 1,790 1.49% 1.28% 1.63% --
$ 1.00 0.06% $ 2,280 1.20% 0.06% 1.70% --
$ 1.00 0.15% $ 2,543 1.32% 0.16% 1.69% --
$ 1.00 0.60% $ 2,730 1.67% 0.70% 1.77% --
$ 1.00 3.12% $ 381 1.46% 2.97% 1.59% --
$ 1.00 1.09% $ 807 1.48% 1.05% 1.64% --
$ 1.00 0.05% $ 887 1.05% 0.05% 1.71% --
$ 1.00 0.16% $ 1,126 1.12% 0.15% 1.70% --
$ 1.00 0.39% $ 1,121 1.69% 0.48% 1.77% --
$ 1.00 0.36% $ 1 1.39% 2.19% 1.78% --
$ 9.96 4.75% $ 4,968 1.08% 2.37% 1.45% 5.69%
$ 9.76 6.58% $ 4,992 1.20% 1.64% 1.51% 52.50%
$ 9.30 6.10% $ 4,857 1.44% 0.93% 1.64% 2.47%
$ 8.85 8.45% $ 3,150 1.53% 1.07% 1.73% 33.03%
$ 8.29 (5.94)% $ 1,682 1.53% 1.49% 1.73% 6.29%
$10.05 6.21% $21,610 1.10% 1.70% 1.47% 7.33%
$ 9.64 9.72% $21,909 1.24% 0.99% 1.55% 37.83%
$ 8.86 8.94% $19,049 1.49% 0.17% 1.69% 0.17%
$ 8.15 11.29% $ 8,929 1.50% 0.35% 1.70% 21.46%
$ 7.41 (11.35)% $ 4,384 1.56% 0.52% 1.76% 14.56%
$10.05 7.22% $19,366 1.11% 1.27% 1.48% 6.26%
$ 9.51 11.68% $17,141 1.23% 0.59% 1.57% 26.22%
$ 8.55 11.04% $13,730 1.50% (0.23)% 1.73% 0.19%
$ 7.70 13.31% $ 9,142 1.55% (0.16)% 1.75% 17.80%
$ 6.80 (15.53)% $ 5,712 1.62% (0.35)% 1.82% 8.38%
$11.26 8.51% $ 8,023 1.11% 0.80% 1.47% 1.48%
$10.67 14.11% $ 7,515 1.21% 0.11% 1.58% 2.14%
$ 9.36 12.77% $ 5,720 1.52% (0.54)% 1.81% 3.10%
$ 8.30 14.74% $ 2,475 1.70% (0.69)% 1.90% 8.30%
$ 7.28 (18.48)% $ 1,302 1.67% (0.94)% 1.87% 5.75%
See accompanying notes to the financial statements.
133
BB&T Funds
FINANCIAL HIGHLIGHTS, CLASS C SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
------------------------------------
NET
REALIZED/ DIVIDENDS
UNREALIZED -----------------------------------
GAINS NET REALIZED
(LOSSES) ON GAINS ON
NET ASSET NET INVESTMENTS INVESTMENTS
VALUE, INVESTMENT AND FOREIGN TOTAL FROM NET AND FOREIGN
BEGINNING INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
--------- ---------- ------------ ---------- ---------- ------------ ---------
LARGE CAP FUND
Year Ended September 30, 2006 ............ $19.28 0.16(b) 2.26 2.42 (0.15) (1.44) (1.59)
Year Ended September 30, 2005 ............ $17.09 0.14 2.19 2.33 (0.14) -- (0.14)
Year Ended September 30, 2004 ............ $14.73 0.09 2.37 2.46 (0.10) -- (0.10)
Year Ended September 30, 2003 ............ $12.74 0.13 1.99 2.12 (0.13) -- (0.13)
Year Ended September 30, 2002 ............ $16.67 0.08 (3.45) (3.37) (0.08) (0.48) (0.56)
LARGE CAP GROWTH FUND
Year Ended September 30, 2006 ............ $ 8.47 (0.05)(b) (0.04) (0.09) -- -- --
Year Ended September 30, 2005 ............ $ 7.81 (0.04)(b) 0.73 0.69 (0.03) -- (0.03)
Year Ended September 30, 2004 ............ $ 7.37 (0.12) 0.56 0.44 -- -- --
Year Ended September 30, 2003 ............ $ 6.37 (0.08)(b) 1.08 1.00 -- -- --
Year Ended September 30, 2002 ............ $ 7.94 (0.10)(b) (1.47) (1.57) -- -- --
MID CAP VALUE FUND
Year Ended September 30, 2006 ............ $13.16 (0.07)(b) 1.59 1.52 --(c) (1.45) (1.45)
Year Ended September 30, 2005 ............ $15.30 --(b)(c) 3.02 3.02 (0.07) (5.09) (5.16)
Year Ended September 30, 2004 ............ $12.92 0.07(b) 2.41 2.48 (0.10) -- (0.10)
Year Ended September 30, 2003 ............ $10.90 0.07(b) 2.04 2.11 (0.09) -- (0.09)
Year Ended September 30, 2002 ............ $13.11 0.08 (1.04) (0.96) (0.10) (1.15) (1.25)
MID CAP GROWTH FUND
Year Ended September 30, 2006 ............ $13.47 (0.09)(b) --(c) (0.09) -- (1.42) (1.42)
Year Ended September 30, 2005 ............ $10.70 (0.17)(b) 3.08 2.91 -- (0.14) (0.14)
Year Ended September 30, 2004 ............ $ 9.69 (0.16) 1.17 1.01 -- -- --
Year Ended September 30, 2003 ............ $ 8.00 (0.15) 1.84 1.69 -- -- --
Year Ended September 30, 2002 ............ $ 9.79 (0.15)(b) (1.01) (1.16) -- (0.63) (0.63)
SMALL CAP FUND
Year Ended September 30, 2006 ............ $16.10 (0.11)(b) 1.03 0.92 (0.01) (2.30) (2.31)
Year Ended September 30, 2005 ............ $14.06 (0.02)(b) 2.60 2.58 (0.12) (0.42) (0.54)
Year Ended September 30, 2004 ............ $11.40 (0.12)(b) 2.90 2.78 -- (0.12) (0.12)
May 19, 2003 to September 30, 2003 (a) ... $10.00 (0.05)(b) 1.45 1.40 -- -- --
INTERNATIONAL EQUITY FUND
Year Ended September 30, 2006 ............ $ 9.07 0.05(b) 1.42 1.47 (0.10) -- (0.10)
Year Ended September 30, 2005 ............ $ 7.74 0.06(b) 1.36 1.42 (0.09) -- (0.09)
Year Ended September 30, 2004 ............ $ 6.58 --(b) 1.20 1.20 (0.04) -- (0.04)
Year Ended September 30, 2003 ............ $ 6.07 (0.07)(b) 0.60 0.53 (0.02) -- (0.02)
Year Ended September 30, 2002 ............ $ 7.20 (0.07) (1.06) (1.13) -- -- --
SPECIAL OPPORTUNITIES EQUITY FUND
Year Ended September 30, 2006 ............ $15.30 (0.14) 1.64 1.50 -- (0.79) (0.79)
Year Ended September 30, 2005 ............ $12.95 (0.13) 2.60 2.47 -- (0.12) (0.12)
Year Ended September 30, 2004 ............ $10.50 (0.11) 2.64 2.53 -- (0.08) (0.08)
June 2, 2003 to September 30, 2003 (a) ... $10.00 (0.02) 0.52 0.50 -- -- --
EQUITY INCOME FUND
Year Ended September 30, 2006 ............ $12.07 0.19 1.56 1.75 (0.23) (0.27) (0.50)
Year Ended September 30, 2005 ............ $10.34 0.17 1.76 1.93 (0.18) (0.02) (0.20)
June 30, 2004 to September 30, 2004 (a) .. $10.00 0.03(b) 0.34 0.37 (0.03) -- (0.03)
INTERMEDIATE U.S. GOVERNMENT FUND
Year Ended September 30, 2006 ............ $ 9.98 0.34(b) (0.12) 0.22 (0.34) -- (0.34)
Year Ended September 30, 2005 ............ $10.20 0.27(b) (0.13) 0.14 (0.31) (0.05) (0.36)
Year Ended September 30, 2004 ............ $10.53 0.17 (0.12) 0.05 (0.25) (0.13) (0.38)
Year Ended September 30, 2003 ............ $10.74 0.26 (0.07) 0.19 (0.31) (0.09) (0.40)
Year Ended September 30, 2002 ............ $10.35 0.38(d) 0.43(d) 0.81 (0.42) -- (0.42)
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Amount is less than $0.005.
(d) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses), and the net investment income ratio
would have been: $0.40, $0.41 and 3.99%, respectively.
(e) Not annualized for periods less than one year.
(f) Annualized for periods less than one year.
See accompanying notes to the financial statements.
134
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET TOTAL NET ASSETS, RATIO OF NET INCOME RATIO OF
VALUE, RETURN END OF EXPENSES TO (LOSS) TO EXPENSES TO
END OF (EXCLUDES SALES PERIOD AVERAGE AVERAGE NET AVERAGE PORTFOLIO
PERIOD CHARGE) (e) (000) NET ASSETS (f) ASSETS (f) NET ASSETS* (f) TURNOVER RATE**
--------- --------------- ----------- -------------- ------------ --------------- ---------------
$ 20.11 13.42% $ 161 1.88% 0.82% 1.94% 34.83%
$ 19.28 13.77% $ 176 1.88% 0.80% 1.98% 19.50%
$ 17.09 16.72% $ 157 1.95% 0.57% 2.07% 16.40%
$ 14.73 16.72% $ 122 1.92% 0.90% 2.06% 18.89%
$ 12.74 (21.10)% $ 52 1.94% 0.41% 2.08% 23.02%
$ 8.38 (1.18)% $ 37 1.89% (0.56)% 1.93% 186.19%
$ 8.47 8.90% $ 18 1.89% (0.43)% 1.98% 62.78%
$ 7.81 5.97% $ 25 1.96% (1.08)% 2.08% 127.47%
$ 7.37 15.70% $ 31 1.93% (1.10)% 2.06% 91.73%
$ 6.37 (19.77)% $ 37 1.98% (1.23)% 2.12% 100.46%
$ 13.23 12.38% $ 743 1.89% (0.53)% 1.93% 53.92%
$ 13.16 19.97% $ 351 1.90% 0.01% 2.00% 126.99%
$ 15.30 19.20% $ 523 1.98% 0.45% 2.10% 19.17%
$ 12.92 19.40% $ 484 1.95% 0.61% 2.10% 18.28%
$ 10.90 (8.86)% $ 300 1.91% 0.65% 2.12% 18.20%
$ 11.96 (1.15)% $ 33 1.88% (0.70)% 1.93% 140.90%
$ 13.47 27.42% $ 77 1.91% (1.46)% 2.00% 92.74%
$ 10.70 10.42% $ 208 2.00% (1.65)% 2.11% 138.61%
$ 9.69 21.13% $ 164 1.95% (1.71)% 2.11% 125.97%
$ 8.00 (13.20)% $ 143 1.81% (1.58)% 2.13% 117.06%
$ 14.71 6.17% $ 20 2.03% (0.76)% 2.27% 43.25%
$ 16.10 18.71% $ 4 2.04% (0.12)% 2.25% 8.39%
$ 14.06 24.56% $ 1 2.25% (0.89)% 2.44% 11.25%
$ 11.40 14.00% $ 1 2.64% (1.15)% 2.64% 48.84%
$ 10.44 16.26% $ 188 2.15% 0.47% 2.25% 36.22%
$ 9.07 18.38% $ 92 2.23% 0.70% 2.34% 44.96%
$ 7.74 18.30% $ 2 2.32% (0.04)% 2.42% 50.68%
$ 6.58 8.80% $ 2 2.40% (1.06)% 2.40% 199.78%
$ 6.07 (15.69)% $ 7 2.43% (0.98)% 2.43% 95.86%
$ 16.01 10.34% $34,418 2.03% (1.02)% 2.03% 58.01%
$ 15.30 19.16% $30,299 2.06% (1.17)% 2.08% 30.38%
$ 12.95 24.17% $15,611 2.15% (1.51)% 2.30% 32.06%
$ 10.50 5.00% $ 4,052 1.80% (1.17)% 2.52% 13.24%
$ 13.32 14.85% $14,261 1.95% 1.52% 1.95% 45.38%
$ 12.07 18.74% $ 8,683 1.87% 1.77% 2.08% 39.65%
$ 10.34 3.66% $ 1,816 2.29% 1.14% 2.65% 1.65%
$ 9.86 2.31% $ 207 1.68% 3.47% 1.79% 127.13%
$ 9.98 1.33% $ 274 1.71% 2.66% 1.84% 107.04%
$ 10.20 0.55% $ 607 1.80% 2.15% 1.92% 98.35%
$ 10.53 1.77% $ 836 1.82% 2.57% 1.92% 209.07%
$ 10.74 8.05% $ 1,313 1.79% 3.81%(d) 1.89% 79.36%
See accompanying notes to the financial statements.
135
BB&T Funds
FINANCIAL HIGHLIGHTS, CLASS C SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
-----------------------------------
NET DIVIDENDS
REALIZED/ ----------------------------------
NET ASSET NET UNREALIZED NET
VALUE, INVESTMENT GAINS TOTAL FROM NET REALIZED
BEGINNING INCOME (LOSSES) ON INVESTMENT INVESTMENT GAINS ON TOTAL
OF PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME INVESTMENTS DIVIDENDS
--------- ---------- ----------- ---------- ---------- ----------- ---------
TOTAL RETURN BOND FUND
Year Ended September 30, 2006 ............... $10.32 0.34(b) (0.12) 0.22 (0.36) (0.05) (0.41)
Year Ended September 30, 2005 ............... $10.59 0.30(b) (0.18) 0.12 (0.36) (0.03) (0.39)
Year Ended September 30, 2004 ............... $10.72 0.33 (0.08) 0.25 (0.38) -- (0.38)
Year Ended September 30, 2003 ............... $10.33 0.39 0.41 0.80 (0.41) -- (0.41)
Year Ended September 30, 2002 ............... $10.56 0.43(b)(d) --(d) 0.43 (0.49) (0.17) (0.66)
PRIME MONEY MARKET FUND
Year Ended September 30, 2006 ............... $ 1.00 0.03 --(c) 0.03 (0.03) -- (0.03)
Year Ended September 30, 2005 ............... $ 1.00 0.01 --(c) 0.01 (0.01) -- (0.01)
Year Ended September 30, 2004 ............... $ 1.00 --(c) --(c) --(c) --(c) -- --(c)
Year Ended September 30, 2003 ............... $ 1.00 --(c) -- --(c) --(c) -- --(c)
January 30, 2002 to September 30, 2002 (a) .. $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
U.S. TREASURY MONEY MARKET FUND
Year Ended September 30, 2006 ............... $ 1.00 0.03 -- 0.03 (0.03) -- (0.03)
Year Ended September 30, 2005 ............... $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
Year Ended September 30, 2004 ............... $ 1.00 --(c) -- --(c) --(c) -- --(c)
Year Ended September 30, 2003 ............... $ 1.00 --(c) -- --(c) --(c) -- --(c)
January 30, 2002 to September 30, 2002 (a) .. $ 1.00 --(c) -- --(c) --(c) -- --(c)
NATIONAL TAX-FREE MONEY MARKET FUND
August 1, 2006 to September 30, 2006 (a) .... $ 1.00 --(c) -- --(c) --(c) -- --(c)
CAPITAL MANAGER CONSERVATIVE GROWTH FUND***
Year Ended September 30, 2006 ............... $ 9.73 0.23(b) 0.23 0.46 (0.26) -- (0.26)
Year Ended September 30, 2005 ............... $ 9.27 0.16 0.45 0.61 (0.15) -- (0.15)
Year Ended September 30, 2004 ............... $ 8.82 0.09(b) 0.44 0.53 (0.08) -- (0.08)
Year Ended September 30, 2003 ............... $ 8.26 0.09 0.61 0.70 (0.10) (0.04) (0.14)
Year Ended September 30, 2002 ............... $ 9.10 0.17 (0.69) (0.52) (0.14) (0.18) (0.32)
CAPITAL MANAGER MODERATE GROWTH FUND***
Year Ended September 30, 2006 ............... $ 9.69 0.17(b) 0.42 0.59 (0.18) -- (0.18)
Year Ended September 30, 2005 ............... $ 8.91 0.09(b) 0.77 0.86 (0.08) -- (0.08)
Year Ended September 30, 2004 ............... $ 8.18 0.01(b) 0.73 0.74 (0.01) -- (0.01)
Year Ended September 30, 2003 ............... $ 7.42 0.03 0.82 0.85 (0.08) (0.01) (0.09)
Year Ended September 30, 2002 ............... $ 8.77 0.04 (0.97) (0.93) (0.05) (0.37) (0.42)
CAPITAL MANAGER GROWTH FUND***
Year Ended September 30, 2006 ............... $ 9.52 0.11(b) 0.57 0.68 (0.15) -- (0.15)
Year Ended September 30, 2005 ............... $ 8.56 0.04(b) 0.95 0.99 (0.03) -- (0.03)
Year Ended September 30, 2004 ............... $ 7.71 (0.02)(b) 0.87 0.85 -- -- --
Year Ended September 30, 2003 ............... $ 6.80 (0.01)(b) 0.93 0.92 (0.01) -- (0.01)
Year Ended September 30, 2002 ............... $ 8.41 (0.02) (1.19) (1.21) -- (0.40) (0.40)
CAPITAL MANAGER EQUITY FUND***
Year Ended September 30, 2006 ............... $10.64 0.10(b) 0.78 0.88 (0.11) (0.19) (0.30)
Year Ended September 30, 2005 ............... $ 9.33 (0.01)(b) 1.32 1.31 --(c) -- --(c)
Year Ended September 30, 2004 ............... $ 8.28 (0.05)(b) 1.10 1.05 -- -- --
Year Ended September 30, 2003 ............... $ 7.26 (0.05)(b) 1.12 1.07 --(c) (0.05) (0.05)
Year Ended September 30, 2002 ............... $ 8.92 (0.12) (1.54) (1.66) -- -- --
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
*** The expense ratios exclude the impact of fees/expenses paid by each
underlying fund.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Amount is less than $0.005.
(d) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses) and the net investment income ratio
would have been: $0.44, $(0.01) and 4.40%, respectively.
(e) Not annualized for periods less than one year.
(f) Annualized for periods less than one year.
See accompanying notes to the financial statements.
136
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET TOTAL NET ASSETS, RATIO OF NET INCOME RATIO OF
VALUE, RETURN END OF EXPENSES TO (LOSS) TO EXPENSES TO
END OF (EXCLUDES SALES PERIOD AVERAGE AVERAGE NET AVERAGE PORTFOLIO
PERIOD CHARGE) (e) (000) NET ASSETS (f) ASSETS (f) NET ASSETS* (f) TURNOVER RATE**
--------- --------------- ----------- -------------- ------------ --------------- ---------------
$10.13 2.18% $ 116 1.68% 3.35% 1.79% 226.36%
$10.32 1.21% $ 218 1.71% 2.88% 1.84% 173.74%
$10.59 2.44% $ 257 1.82% 3.09% 1.94% 31.95%
$10.72 7.86% $ 282 1.83% 3.61% 1.94% 43.98%
$10.33 4.37% $ 318 1.89% 4.28%(d) 2.03% 69.15%
$ 1.00 3.35% $ 393 1.48% 3.35% 1.59% --
$ 1.00 1.32% $ 326 1.49% 1.29% 1.64% --
$ 1.00 0.06% $ 453 1.20% 0.06% 1.70% --
$ 1.00 0.15% $ 555 1.30% 0.14% 1.69% --
$ 1.00 0.28% $ 314 1.60% 0.40% 1.65% --
$ 1.00 3.13% $ 55 1.45% 3.30% 1.59% --
$ 1.00 1.07% $ 38 1.50% 1.40% 1.66% --
$ 1.00 0.05% $ 5 1.02% 0.05% 1.71% --
$ 1.00 0.16% $ 8 1.12% 0.17% 1.70% --
$ 1.00 0.18% $ 10 1.60% 0.27% 1.64% --
$ 1.00 0.36% $ 1 1.39% 2.19% 1.78% --
$ 9.93 4.75% $ 127 1.08% 2.35% 1.45% 5.69%
$ 9.73 6.58% $ 155 1.20% 1.63% 1.52% 52.50%
$ 9.27 6.06% $ 180 1.44% 0.93% 1.64% 2.47%
$ 8.82 8.50% $ 148 1.53% 1.05% 1.73% 33.03%
$ 8.26 (5.98)% $ 62 1.52% 1.45% 1.72% 6.29%
$10.10 6.19% $ 139 1.10% 1.71% 1.47% 7.33%
$ 9.69 9.62% $ 122 1.25% 0.95% 1.56% 37.83%
$ 8.91 9.08% $ 178 1.49% 0.17% 1.69% 0.17%
$ 8.18 11.39% $ 182 1.51% 0.40% 1.71% 21.46%
$ 7.42 (11.40)% $ 307 1.58% 0.53% 1.78% 14.56%
$10.05 7.19% $ 61 1.11% 1.17% 1.46% 6.26%
$ 9.52 11.61% $ 37 1.26% 0.43% 1.59% 26.22%
$ 8.56 11.02% $ 63 1.50% (0.23)% 1.73% 0.19%
$ 7.71 13.48% $ 52 1.54% (0.14)% 1.74% 17.80%
$ 6.80 (15.43)% $ 12 1.61% (0.34)% 1.81% 8.38%
$11.22 8.44% $ 10 1.11% 0.90% 1.48% 1.48%
$10.64 14.15% $ 19 1.27% (0.09)% 1.63% 2.14%
$ 9.33 12.68% $ 85 1.52% (0.54)% 1.81% 3.10%
$ 8.28 14.78% $ 28 1.73% (0.66)% 1.92% 8.30%
$ 7.26 (18.61)% $ 1 1.94% (1.31)% 1.94% 5.75%
See accompanying notes to the financial statements.
137
BB&T Funds
FINANCIAL HIGHLIGHTS, INSTITUTIONAL SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
---------------------------------------- DIVIDENDS
NET REALIZED/ -------------------------------------
UNREALIZED NET REALIZED
GAINS (LOSSES) GAINS ON
NET ASSET NET ON INVESTMENTS INVESTMENTS
VALUE, INVESTMENT AND FOREIGN TOTAL FROM NET AND FOREIGN
BEGINNING INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
--------- ---------- -------------- ---------- ---------- ------------ ---------
LARGE CAP FUND
Year Ended September 30, 2006 ... $19.51 0.35(b) 2.31 2.66 (0.35) (1.44) (1.79)
Year Ended September 30, 2005 ... $17.29 0.34 2.22 2.56 (0.34) -- (0.34)
Year Ended September 30, 2004 ... $14.90 0.26 2.39 2.65 (0.26) -- (0.26)
Year Ended September 30, 2003 ... $12.87 0.27 2.03 2.30 (0.27) -- (0.27)
Year Ended September 30, 2002 ... $16.82 0.22 (3.47) (3.25) (0.22) (0.48) (0.70)
LARGE CAP GROWTH FUND
Year Ended September 30, 2006 ... $ 9.12 0.04(b) (0.05) (0.01) (0.03) -- (0.03)
Year Ended September 30, 2005 ... $ 8.35 0.06(b) 0.77 0.83 (0.06) -- (0.06)
Year Ended September 30, 2004 ... $ 7.79 (0.01) 0.57 0.56 -- -- --
Year Ended September 30, 2003 ... $ 6.67 (0.01)(b) 1.13 1.12 -- -- --
Year Ended September 30, 2002 ... $ 8.23 (0.03) (1.53) (1.56) -- -- --
MID CAP VALUE FUND
Year Ended September 30, 2006 ... $13.38 0.06(b) 1.62 1.68 (0.07) (1.45) (1.52)
Year Ended September 30, 2005 ... $15.41 0.17(b) 3.05 3.22 (0.16) (5.09) (5.25)
Year Ended September 30, 2004 ... $12.98 0.22(b) 2.42 2.64 (0.21) -- (0.21)
Year Ended September 30, 2003 ... $10.93 0.19(b) 2.04 2.23 (0.18) -- (0.18)
Year Ended September 30, 2002 ... $13.12 0.20 (1.04) (0.84) (0.20) (1.15) (1.35)
MID CAP GROWTH FUND
Year Ended September 30, 2006 ... $14.51 0.02(b) 0.02(f) 0.04 (0.04) (1.42) (1.46)
Year Ended September 30, 2005 ... $11.40 (0.06)(b) 3.31 3.25 -- (0.14) (0.14)
Year Ended September 30, 2004 ... $10.22 (0.08) 1.26 1.18 -- -- --
Year Ended September 30, 2003 ... $ 8.36 (0.06) 1.92 1.86 -- -- --
Year Ended September 30, 2002 ... $10.10 (0.06) (1.05) (1.11) -- (0.63) (0.63)
SMALL CAP FUND
Year Ended September 30, 2006 ... $16.44 0.05(b) 1.05 1.10 (0.05) (2.30) (2.35)
Year Ended September 30, 2005 ... $14.23 0.16(b) 2.62 2.78 (0.15) (0.42) (0.57)
Year Ended September 30, 2004 ... $11.44 0.02(b) 2.91 2.93 (0.02) (0.12) (0.14)
May 19, 2003 to September 30,
2003 (a) ..................... $10.00 (0.01)(b) 1.45 1.44 --(c) -- --(c)
INTERNATIONAL EQUITY FUND
Year Ended September 30, 2006 ... $ 9.72 0.18(b) 1.50 1.68 (0.17) -- (0.17)
Year Ended September 30, 2005 ... $ 8.24 0.12(b) 1.49 1.61 (0.13) -- (0.13)
Year Ended September 30, 2004 ... $ 6.98 0.10(b) 1.26 1.36 (0.10) -- (0.10)
Year Ended September 30, 2003 ... $ 6.41 0.05(b) 0.57 0.62 (0.05) -- (0.05)
Year Ended September 30, 2002 ... $ 7.53 -- (1.12) (1.12) --(c) -- --(c)
SPECIAL OPPORTUNITIES EQUITY FUND
Year Ended September 30, 2006 ... $15.65 --(c) 1.71 1.71 -- (0.79) (0.79)
Year Ended September 30, 2005 ... $13.12 (0.03) 2.68 2.65 -- (0.12) (0.12)
Year Ended September 30, 2004 ... $10.53 (0.05) 2.72 2.67 -- (0.08) (0.08)
June 2, 2003 to September 30,
2003 (a) ..................... $10.00 --(c) 0.53 0.53 --(c) -- --(c)
EQUITY INCOME FUND
Year Ended September 30, 2006 ... $12.10 0.32 1.57 1.89 (0.35) (0.27) (0.62)
Year Ended September 30, 2005 ... $10.35 0.28 1.76 2.04 (0.27) (0.02) (0.29)
June 30, 2004 to September 30,
2004 (a) ..................... $10.00 0.05(b) 0.34 0.39 (0.04) -- (0.04)
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Amount is less than $0.005.
(d) Not annualized for periods less than one year.
(e) Annualized for periods less than one year.
(f) The amount shown for a share outstanding throughout the period does not
accord with the change in aggregate gains and losses in the portfolio of
securities during the period because of the timing of sales and purchases
of Fund shares in relation to fluctuating market values during the period.
See accompanying notes to the financial statements.
138
RATIOS/SUPPLEMENTARY DATA
-------------------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET NET ASSETS, RATIO OF NET INCOME RATIO OF
VALUE, END OF EXPENSES TO (LOSS) TO EXPENSES TO
END OF TOTAL PERIOD AVERAGE AVERAGE NET AVERAGE PORTFOLIO
PERIOD RETURN (d) (000) NET ASSETS (e) ASSETS (e) NET ASSETS* (e) TURNOVER RATE**
--------- ---------- ----------- -------------- ------------ --------------- ---------------
$20.38 14.59% $660,667 0.89% 1.80% 0.93% 34.83%
$19.51 14.92% $605,493 0.89% 1.82% 0.99% 19.50%
$17.29 17.86% $620,186 0.95% 1.58% 1.06% 16.40%
$14.90 17.98% $475,289 0.92% 1.90% 1.06% 18.89%
$12.87 (20.33)% $319,971 0.98% 1.37% 1.12% 23.02%
$ 9.08 (0.10)% $207,384 0.88% 0.40% 0.93% 186.19%
$ 9.12 9.92% $336,103 0.89% 0.63% 0.99% 62.78%
$ 8.35 7.19% $346,061 0.97% (0.08)% 1.08% 127.47%
$ 7.79 16.79% $272,961 0.93% (0.11)% 1.07% 91.73%
$ 6.67 (18.96)% $160,933 1.02% (0.30)% 1.16% 100.46%
$13.54 13.52% $209,685 0.89% 0.48% 0.93% 53.92%
$13.38 21.14% $172,295 0.89% 1.02% 0.99% 126.99%
$15.41 20.44% $182,791 0.98% 1.47% 1.10% 19.17%
$12.98 20.60% $142,280 0.95% 1.57% 1.10% 18.28%
$10.93 (8.01)% $ 85,013 0.90% 1.54% 1.13% 18.20%
$13.09 (0.15)% $132,677 0.89% 0.17% 0.94% 140.90%
$14.51 28.73% $126,785 0.91% (0.46)% 1.01% 92.74%
$11.40 11.55% $118,012 1.00% (0.65)% 1.11% 138.61%
$10.22 22.25% $100,226 0.95% (0.72)% 1.12% 125.97%
$ 8.36 (12.26)% $ 69,975 0.89% (0.62)% 1.17% 117.06%
$15.19 7.23% $110,722 1.02% 0.30% 1.26% 43.25%
$16.44 19.99% $ 61,046 1.05% 1.07% 1.28% 8.39%
$14.23 25.78% $ 66,802 1.26% 0.15% 1.42% 11.25%
$11.44 14.43% $ 43,462 1.69% (0.17)% 1.69% 48.84%
$11.23 17.38% $253,690 1.15% 1.68% 1.25% 36.22%
$ 9.72 19.61% $229,406 1.20% 1.34% 1.33% 44.96%
$ 8.24 19.48% $233,275 1.32% 1.30% 1.42% 50.68%
$ 6.98 9.72% $187,315 1.40% 0.78% 1.41% 199.78%
$ 6.41 (14.85)% $123,330 1.43% 0.03% 1.43% 95.86%
$16.57 11.50% $ 67,232 1.03% (0.02)% 1.03% 58.01%
$15.65 20.29% $ 60,823 1.06% (0.18)% 1.08% 30.38%
$13.12 25.44% $ 39,816 1.12% (0.49)% 1.32% 32.06%
$10.53 5.31% $ 26,360 0.82% (0.11)% 1.64% 13.24%
$13.37 16.04% $ 35,205 0.95% 2.55% 0.95% 45.38%
$12.10 19.88% $ 30,588 0.90% 2.62% 1.12% 39.65%
$10.35 3.94% $ 21,128 1.29% 1.91% 1.63% 1.65%
See accompanying notes to the financial statements.
139
BB&T Funds
FINANCIAL HIGHLIGHTS, INSTITUTIONAL SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
-------------------------------------- DIVIDENDS
NET ASSET NET NET REALIZED/ -----------------------------------
VALUE, INVESTMENT UNREALIZED TOTAL FROM NET NET REALIZED
BEGINNING INCOME GAINS (LOSSES) INVESTMENT INVESTMENT GAINS ON TOTAL
OF PERIOD (LOSS) ON INVESTMENTS ACTIVITIES INCOME INVESTMENTS DIVIDENDS
--------- ---------- -------------- ---------- ---------- ------------ ---------
SHORT U.S. GOVERNMENT FUND
Year Ended September 30, 2006 ........ $ 9.51 0.30(b) 0.01(i) 0.31 (0.33) -- (0.33)
Year Ended September 30, 2005 ........ $ 9.71 0.25 (0.13) 0.12 (0.32) -- (0.32)
Year Ended September 30, 2004 ........ $ 9.90 0.20 (0.11) 0.09 (0.28) -- (0.28)
Year Ended September 30, 2003 ........ $10.09 0.29 (0.11) 0.18 (0.37) -- (0.37)
Year Ended September 30, 2002 ........ $10.05 0.45(c) 0.06(c) 0.51 (0.47) -- (0.47)
INTERMEDIATE U.S. GOVERNMENT FUND
Year Ended September 30, 2006 ........ $10.03 0.44(b) (0.13) 0.31 (0.44) -- (0.44)
Year Ended September 30, 2005 ........ $10.25 0.37(b) (0.13) 0.24 (0.41) (0.05) (0.46)
Year Ended September 30, 2004 ........ $10.58 0.34 (0.18) 0.16 (0.36) (0.13) (0.49)
Year Ended September 30, 2003 ........ $10.78 0.37 (0.07) 0.30 (0.41) (0.09) (0.50)
Year Ended September 30, 2002 ........ $10.39 0.49(d) 0.42(d) 0.91 (0.52) -- (0.52)
TOTAL RETURN BOND FUND
Year Ended September 30, 2006 ........ $10.32 0.45(b) (0.13) 0.32 (0.46) (0.05) (0.51)
Year Ended September 30, 2005 ........ $10.59 0.39(b) (0.16) 0.23 (0.47) (0.03) (0.50)
Year Ended September 30, 2004 ........ $10.72 0.44 (0.08) 0.36 (0.49) -- (0.49)
Year Ended September 30, 2003 ........ $10.33 0.49 0.41 0.90 (0.51) -- (0.51)
Year Ended September 30, 2002 ........ $10.56 0.55(e) (0.04)(e) 0.51 (0.57) (0.17) (0.74)
KENTUCKY INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $10.04 0.33 0.07 0.40 (0.33) -- (0.33)
Year Ended September 30, 2005 ........ $10.20 0.29(b) (0.16) 0.13 (0.29) -- (0.29)
Year Ended September 30, 2004 ........ $10.22 0.28(b) (0.02) 0.26 (0.28) -- (0.28)
February 24, 2003 to September 30,
2003 (a) .......................... $10.00 0.16(b) 0.20 0.36 (0.14) -- (0.14)
MARYLAND INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $10.04 0.31 0.09 0.40 (0.31) -- (0.31)
Year Ended September 30, 2005 ........ $10.16 0.28(b) (0.12) 0.16 (0.28) -- (0.28)
Year Ended September 30, 2004 ........ $10.16 0.25 --(f) 0.25 (0.25) -- (0.25)
February 24, 2003 to September 30,
2003 (a) .......................... $10.00 0.13 0.16 0.29 (0.13) -- (0.13)
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $10.46 0.39 --(f) 0.39 (0.38) (0.09) (0.47)
Year Ended September 30, 2005 ........ $10.66 0.38 (0.19) 0.19 (0.37) (0.02) (0.39)
Year Ended September 30, 2004 ........ $10.81 0.35 (0.12) 0.23 (0.34) (0.04) (0.38)
Year Ended September 30, 2003 ........ $10.86 0.35 (0.01) 0.34 (0.35) (0.04) (0.39)
Year Ended September 30, 2002 ........ $10.54 0.38 0.39 0.77 (0.37) (0.08) (0.45)
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $10.47 0.37 --(f) 0.37 (0.37) (0.18) (0.55)
Year Ended September 30, 2005 ........ $10.74 0.36 (0.19) 0.17 (0.36) (0.08) (0.44)
Year Ended September 30, 2004 ........ $10.81 0.35 (0.06) 0.29 (0.35) (0.01) (0.36)
Year Ended September 30, 2003 ........ $10.81 0.35 --(f) 0.35 (0.35) -- (0.35)
Year Ended September 30, 2002 ........ $10.39 0.39 0.41 0.80 (0.38) -- (0.38)
VIRGINIA INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $11.49 0.42 (0.04) 0.38 (0.42) (0.06) (0.48)
Year Ended September 30, 2005 ........ $11.74 0.42 (0.23) 0.19 (0.42) (0.02) (0.44)
Year Ended September 30, 2004 ........ $11.95 0.40 (0.13) 0.27 (0.40) (0.08) (0.48)
Year Ended September 30, 2003 ........ $11.99 0.39 --(f) 0.39 (0.39) (0.04) (0.43)
Year Ended September 30, 2002 ........ $11.57 0.43 0.41 0.84 (0.42) -- (0.42)
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the fund as a whole
without distinguishing between classes of shares issued.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses), and the net investment income ratio
would have been: $0.49, $0.02, and 4.65%, respectively.
(d) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses), and the net investment income ratio
would have been: $0.51, $0.40, and 4.99%, respectively.
(e) Without the adoption of the change in amortization method as required by
the November 2000 revised version of the AICPA Audit and Accounting Guide
for Investment Companies, the amounts for net investment income, net
realized/unrealized gains (losses), and the net investment income ratio
would have been: $0.56, $(0.05), and 5.54%, respectively.
(f) Amount is less than $0.005.
(g) Not annualized for periods less than one year.
(h) Annualized for periods less than one year.
(i) The amount shown for a share outstanding throughtout the period does not
accord with the change in aggregate gains and losses in the portfolio of
securities during the period because of the timing of sales and purchases
of Fund shares in relation to fluctuating market values during the period.
See accompanying notes to the financial statements.
140
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET NET ASSETS, RATIO OF NET INCOME RATIO OF
VALUE, END OF EXPENSES TO (LOSS) TO EXPENSES TO
END OF TOTAL PERIOD AVERAGE AVERAGE NET AVERAGE PORTFOLIO
PERIOD RETURN (g) (000) NET ASSETS (h) ASSETS (h) NET ASSETS* (h) TURNOVER RATE**
--------- ---------- ----------- -------------- ------------ --------------- ---------------
$ 9.49 3.37% $ 66,371 0.64% 3.21% 0.79% 98.08%
$ 9.51 1.21% $155,786 0.66% 2.64% 0.84% 33.67%
$ 9.71 0.96% $195,920 0.74% 2.10% 0.91% 62.59%
$ 9.90 1.78% $199,980 0.76% 2.81% 0.91% 93.86%
$10.09 5.27% $181,797 0.78% 4.30%(c) 0.93% 73.93%
$ 9.90 3.23% $252,402 0.67% 4.45% 0.79% 127.13%
$10.03 2.34% $539,038 0.70% 3.67% 0.83% 107.04%
$10.25 1.56% $534,682 0.80% 3.15% 0.92% 98.35%
$10.58 2.88% $447,665 0.82% 3.43% 0.92% 209.07%
$10.78 9.11% $340,231 0.85% 4.81%(d) 0.95% 79.36%
$10.13 3.30% $367,353 0.67% 4.42% 0.79% 226.36%
$10.32 2.23% $461,749 0.71% 3.87% 0.83% 173.74%
$10.59 3.47% $272,749 0.82% 4.09% 0.94% 31.95%
$10.72 8.95% $215,000 0.83% 4.61% 0.94% 43.98%
$10.33 5.19% $142,509 0.83% 5.42%(e) 0.98% 69.15%
$10.11 4.04% $ 11,175 0.66% 3.26% 0.87% 64.55%
$10.04 1.28% $ 15,569 0.68% 2.87% 0.97% 37.50%
$10.20 2.61% $ 13,441 0.63% 2.78% 1.07% 24.78%
$10.22 3.63% $ 14,759 0.53% 2.56% 1.23% 42.87%
$10.13 4.10% $ 8,003 0.60% 3.13% 0.90% 219.80%
$10.04 1.60% $ 10,084 0.58% 2.78% 1.03% 44.67%
$10.16 2.52% $ 9,108 0.60% 2.47% 1.23% 55.18%
$10.16 2.93% $ 4,897 0.61% 2.27% 1.65% 40.16%
$10.38 3.84% $ 87,854 0.65% 3.70% 0.80% 94.95%
$10.46 1.80% $ 93,418 0.68% 3.51% 0.86% 60.84%
$10.66 2.15% $ 96,738 0.75% 3.18% 0.92% 67.80%
$10.81 3.19% $ 95,613 0.77% 3.26% 0.92% 44.56%
$10.86 7.62% $ 93,856 0.78% 3.57% 0.93% 20.39%
$10.29 3.66% $ 15,426 0.69% 3.58% 0.86% 80.24%
$10.47 1.62% $ 16,468 0.71% 3.44% 0.93% 56.03%
$10.74 2.77% $ 17,488 0.75% 3.26% 0.94% 32.63%
$10.81 3.35% $ 18,297 0.72% 3.31% 0.93% 32.04%
$10.81 7.94% $ 17,960 0.67% 3.70% 0.97% 21.81%
$11.39 3.49% $ 65,652 0.65% 3.80% 0.80% 76.53%
$11.49 1.66% $ 67,579 0.68% 3.60% 0.86% 48.04%
$11.74 2.29% $ 68,786 0.76% 3.37% 0.93% 45.07%
$11.95 3.31% $ 77,577 0.78% 3.28% 0.92% 34.17%
$11.99 7.48% $ 81,683 0.78% 3.66% 0.93% 13.12%
See accompanying notes to the financial statements.
141
BB&T Funds
FINANCIAL HIGHLIGHTS, INSTITUTIONAL SHARES
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
INVESTMENT ACTIVITIES
-----------------------------------
NET
REALIZED/ DIVIDENDS
NET ASSET NET UNREALIZED -----------------------------------
VALUE, INVESTMENT GAINS TOTAL FROM NET NET REALIZED
BEGINNING INCOME (LOSSES) ON INVESTMENT INVESTMENT GAINS ON TOTAL
OF PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME INVESTMENTS DIVIDENDS
--------- ---------- ----------- ---------- ---------- ------------ ---------
WEST VIRGINIA INTERMEDIATE TAX-FREE FUND
Year Ended September 30, 2006 ........ $ 9.86 0.40 (0.01) 0.39 (0.39) (0.06) (0.45)
Year Ended September 30, 2005 ........ $10.09 0.37(b) (0.15) 0.22 (0.37) (0.08) (0.45)
Year Ended September 30, 2004 ........ $10.21 0.36 (0.09) 0.27 (0.35) (0.04) (0.39)
Year Ended September 30, 2003 ........ $10.35 0.35 0.02 0.37 (0.35) (0.16) (0.51)
Year Ended September 30, 2002 ........ $10.02 0.41 0.34 0.75 (0.40) (0.02) (0.42)
PRIME MONEY MARKET FUND
Year Ended September 30, 2006 ........ $ 1.00 0.04 --(c) 0.04 (0.04) -- (0.04)
Year Ended September 30, 2005 ........ $ 1.00 0.02 --(c) 0.02 (0.02) -- (0.02)
Year Ended September 30, 2004 ........ $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
Year Ended September 30, 2003 ........ $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
Year Ended September 30, 2002 ........ $ 1.00 0.02 --(c) 0.02 (0.02) -- (0.02)
U.S. TREASURY MONEY MARKET FUND
Year Ended September 30, 2006 ........ $ 1.00 0.04 -- 0.04 (0.04) -- (0.04)
Year Ended September 30, 2005 ........ $ 1.00 0.02 -- 0.02 (0.02) -- (0.02)
Year Ended September 30, 2004 ........ $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
Year Ended September 30, 2003 ........ $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
Year Ended September 30, 2002 ........ $ 1.00 0.02 -- 0.02 (0.02) -- (0.02)
NATIONAL TAX-FREE MONEY MARKET FUND
August 1, 2006 to September 30,
2006 (a) .......................... $ 1.00 0.01 -- 0.01 (0.01) -- (0.01)
CAPITAL MANAGER CONSERVATIVE GROWTH
FUND***
Year Ended September 30, 2006 ........ $ 9.83 0.33(b) 0.24 0.57 (0.36) -- (0.36)
Year Ended September 30, 2005 ........ $ 9.36 0.26 0.46 0.72 (0.25) -- (0.25)
Year Ended September 30, 2004 ........ $ 8.90 0.18(b) 0.46 0.64 (0.18) -- (0.18)
Year Ended September 30, 2003 ........ $ 8.33 0.18 0.61 0.79 (0.18) (0.04) (0.22)
Year Ended September 30, 2002 ........ $ 9.17 0.22 (0.66) (0.44) (0.22) (0.18) (0.40)
CAPITAL MANAGER MODERATE GROWTH FUND***
Year Ended September 30, 2006 ........ $ 9.83 0.27(b) 0.43 0.70 (0.28) -- (0.28)
Year Ended September 30, 2005 ........ $ 9.04 0.19(b) 0.77 0.96 (0.17) -- (0.17)
Year Ended September 30, 2004 ........ $ 8.30 0.10(b) 0.74 0.84 (0.10) -- (0.10)
Year Ended September 30, 2003 ........ $ 7.47 0.10 0.82 0.92 (0.08) (0.01) (0.09)
Year Ended September 30, 2002 ........ $ 8.82 0.14 (0.99) (0.85) (0.13) (0.37) (0.50)
CAPITAL MANAGER GROWTH FUND***
Year Ended September 30, 2006 ........ $ 9.69 0.22(b) 0.57 0.79 (0.24) -- (0.24)
Year Ended September 30, 2005 ........ $ 8.70 0.15(b) 0.97 1.12 (0.13) -- (0.13)
Year Ended September 30, 2004 ........ $ 7.81 0.07(b) 0.88 0.95 (0.06) -- (0.06)
Year Ended September 30, 2003 ........ $ 6.87 0.06(b) 0.93 0.99 (0.05) -- (0.05)
Year Ended September 30, 2002 ........ $ 8.46 0.05 (1.20) (1.15) (0.04) (0.40) (0.44)
CAPITAL MANAGER EQUITY FUND***
Year Ended September 30, 2006 ........ $11.02 0.20(b) 0.84 1.04 (0.22) (0.19) (0.41)
Year Ended September 30, 2005 ........ $ 9.64 0.12(b) 1.34 1.46 (0.08) -- (0.08)
Year Ended September 30, 2004 ........ $ 8.49 0.04(b) 1.14 1.18 (0.03) -- (0.03)
Year Ended September 30, 2003 ........ $ 7.39 0.02(b) 1.15 1.17 (0.02) (0.05) (0.07)
Year Ended September 30, 2002 ........ $ 8.97 (0.01) (1.57) (1.58) --(c) -- --(c)
----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
*** The expense ratios exclude the impact of fees/expenses paid by each
underlying fund.
(a) Period from commencement of operations.
(b) Per share net investment income (loss) has been calculated using the
average daily shares method.
(c) Amount is less than $0.005.
(d) Not annualized for periods less than one year.
(e) Annualized for periods less than one year.
See accompanying notes to the financial statements.
142
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
INVESTMENT
NET ASSET NET ASSETS, RATIO OF NET INCOME RATIO OF
VALUE, END OF EXPENSES TO (LOSS) TO EXPENSES TO
END OF TOTAL PERIOD AVERAGE AVERAGE NET AVERAGE NET PORTFOLIO
PERIOD RETURN (d) (000) NET ASSETS (e) ASSETS (e) ASSETS* (e) TURNOVER RATE**
--------- ---------- ----------- -------------- ------------ ----------- ---------------
$ 9.80 4.10% $ 50,916 0.65% 4.03% 0.65% 50.14%
$ 9.86 2.22% $ 55,662 0.68% 3.74% 0.72% 32.10%
$10.09 2.76% $ 63,518 0.76% 3.49% 0.78% 16.24%
$10.21 3.77% $ 79,361 0.73% 3.48% 0.76% 25.59%
$10.35 7.78% $ 78,170 0.72% 4.04% 0.82% 61.44%
$ 1.00 4.38% $731,616 0.48% 4.34% 0.59% --
$ 1.00 2.34% $510,941 0.49% 2.31% 0.63% --
$ 1.00 0.70% $529,849 0.57% 0.69% 0.70% --
$ 1.00 0.87% $667,534 0.60% 0.86% 0.69% --
$ 1.00 1.61% $532,465 0.64% 1.54% 0.71% --
$ 1.00 4.15% $481,484 0.46% 4.04% 0.59% --
$ 1.00 2.11% $592,736 0.48% 2.02% 0.64% --
$ 1.00 0.54% $926,162 0.57% 0.53% 0.71% --
$ 1.00 0.67% $838,022 0.61% 0.67% 0.70% --
$ 1.00 1.40% $915,013 0.65% 1.35% 0.72% --
$ 1.00 0.53% $ 95,757 0.40% 3.14% 0.79% --
$10.04 5.87% $ 47,046 0.08% 3.35% 0.45% 5.69%
$ 9.83 7.70% $ 71,796 0.20% 2.64% 0.51% 52.50%
$ 9.36 7.16% $ 67,925 0.44% 1.93% 0.64% 2.47%
$ 8.90 9.55% $ 31,748 0.53% 2.09% 0.73% 33.03%
$ 8.33 (5.05)% $ 26,347 0.54% 2.47% 0.74% 6.29%
$10.25 7.33% $ 25,699 0.10% 2.65% 0.47% 7.33%
$ 9.83 10.69% $ 43,353 0.23% 2.01% 0.56% 37.83%
$ 9.04 10.12% $ 33,971 0.49% 1.17% 0.69% 0.17%
$ 8.30 12.40% $ 26,168 0.50% 1.35% 0.70% 21.46%
$ 7.47 (10.55)% $ 20,977 0.58% 1.48% 0.78% 14.56%
$10.24 8.22% $ 20,243 0.11% 2.24% 0.48% 6.26%
$ 9.69 12.89% $ 37,546 0.23% 1.60% 0.57% 26.22%
$ 8.70 12.10% $ 28,660 0.50% 0.77% 0.73% 0.19%
$ 7.81 14.49% $ 21,484 0.56% 0.82% 0.76% 17.80%
$ 6.87 (14.61)% $ 17,981 0.62% 0.63% 0.82% 8.38%
$11.65 9.66% $ 14,837 0.11% 1.75% 0.47% 1.48%
$11.02 15.23% $ 25,802 0.22% 1.10% 0.58% 2.14%
$ 9.64 13.87% $ 21,051 0.52% 0.42% 0.81% 3.10%
$ 8.49 15.82% $ 16,077 0.70% 0.29% 0.90% 8.30%
$ 7.39 (17.61)% $ 11,352 0.83% (0.15)% 1.03% 5.75%
See accompanying notes to the financial statements.
143
BB&T Funds
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2006
1. ORGANIZATION:
The BB&T Funds commenced operations on October 5, 1992 and are registered
under the Investment Company Act of 1940, as amended ("the 1940 Act"), as an
open-end investment company established as a Massachusetts business trust.
The BB&T Funds offer shares of the Large Cap Fund (formerly known as the
Large Company Value Fund), the Large Cap Growth Fund (formerly known as the
Large Company Growth Fund), the Mid Cap Value Fund, the Mid Cap Growth Fund, the
Small Cap Fund (formerly known as the Small Company Value Fund), the
International Equity Fund, the Special Opportunities Equity Fund, the Equity
Income Fund, the Short U.S. Government Fund, the Intermediate U.S. Government
Fund, the Total Return Bond Fund, the Kentucky Intermediate Tax-Free Fund, the
Maryland Intermediate Tax-Free Fund, the North Carolina Intermediate Tax-Free
Fund, the South Carolina Intermediate Tax-Free Fund, the Virginia Intermediate
Tax-Free Fund, the West Virginia Intermediate Tax-Free Fund, the Prime Money
Market Fund, the U.S. Treasury Money Market Fund, the National Tax-Free Money
Market Fund, the Capital Manager Conservative Growth Fund, the Capital Manager
Moderate Growth Fund, the Capital Manager Growth Fund and the Capital Manager
Equity Fund (referred to individually as a "Fund" and collectively as the
"Funds"). The Kentucky Intermediate Tax-Free Fund, the Maryland Intermediate
Tax-Free Fund, the North Carolina Intermediate Tax-Free Fund, the South Carolina
Intermediate Tax-Free Fund, the Virginia Intermediate Tax-Free Fund and the West
Virginia Intermediate Tax-Free Fund are referred to as the "Tax-Free Funds". The
Prime Money Market Fund, the U.S. Treasury Money Market Fund and the National
Tax-Free Money Market Fund are referred to as the "Money Market Funds". The
Capital Manager Conservative Growth Fund, the Capital Manager Moderate Growth
Fund, the Capital Manager Growth Fund and the Capital Manager Equity Fund are
referred to as the "Fund of Funds". The Funds, excluding the Money Market Funds
and the Fund of Funds, are referred to as the "Variable Net Asset Value Funds".
The Fund of Funds invest in underlying mutual funds as opposed to individual
securities.
All Funds except the Tax-Free Funds are diversified funds under the 1940
Act. The Tax-Free Funds are non-diversified funds, which means they may
concentrate their investments in the securities of a limited number of issuers.
The BB&T Funds are authorized to issue an unlimited amount of shares
without par value. The Funds offer up to four classes of shares: Class A Shares,
Class B Shares, Class C Shares and Institutional Shares. As of September 30,
2006, Class B Shares and Class C Shares of the Short U.S. Government Fund and
the Tax-Free Funds were not yet being offered. Class A Shares of the Variable
Net Asset Value Funds and Fund of Funds, excluding the Short U.S. Government
Fund, have a maximum sales charge of 5.75% as a percentage of original purchase
price. The Class A Shares of the Tax-Free Funds and the Short U.S. Government
Fund have a maximum sales charge of 3.00% as a percentage of the original
purchase price. Certain purchases of Class A Shares will not be subject to a
front-end sales charge, but will be subject to a contingent deferred sales
charge ("CDSC") of 1.00% of the purchase price if redeemed less than one year
after purchase. The Class B Shares of the Funds are offered without any
front-end sales charge but will be subject to a CDSC ranging from a maximum of
5.00% if redeemed less than one year after purchase to 0.00% if redeemed more
than six years after purchase. The Class C Shares of the Funds are offered
without any front-end sales charge but will be subject to a maximum CDSC of
1.00% if redeemed less than one year after purchase.
Each class of shares has identical rights and privileges except with
respect to the fees paid under the distribution plan, voting rights on matters
affecting a single class of shares and the exchange privilege of each class of
shares.
During the fiscal year ended September 30, 2006, the Mid Cap Growth Fund,
the Small Cap Fund, the Total Return Bond Fund, the Capital Manager Conservative
Growth Fund, the Capital Manager Moderate Growth Fund, the Capital Manager
Growth Fund and the Capital Manager Equity Fund delivered securities of the
Funds in exchange for the redemption of Institutional Shares
(redemption-in-kind). Cash and securities were transferred for redemptions at a
fair value of $5,000,000; $4,000,000; $192,588,337; $24,907,733; $24,751,203;
$24,289,586 and $17,939,344 for the Mid Cap Growth Fund, the Small Cap Fund, the
Total Return Bond Fund, the Capital Manager Conservative Growth Fund, the
Capital Manager Moderate Growth Fund, the Capital Manager Growth Fund and the
Capital Manager Equity Fund, respectively. For financial reporting purposes, the
Mid Cap Growth Fund, the Small Cap Fund, the Total Return Bond Fund, the Capital
Manager Conservative Growth Fund, the Capital Manager Moderate Growth Fund, the
Capital Manager Growth Fund and the Capital Manager Equity Fund recorded net
realized gains and losses of $1,074,298; $845,172; $584,613; $842,687,
($72,192); ($905,097) and $406,868, respectively, in connection with the
transactions. However, for tax purposes, the transactions received tax-free
treatment. These permanent book to tax differences were reclassified within the
components of net assets in accordance with the Funds' accounting policies more
fully disclosed in note 2.
Continued
144
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
Under the Funds' organizational documents, its Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Funds. In addition, in the normal course of business, the Funds
may enter into contracts with their vendors and others that provide for general
indemnifications. The Funds' maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Funds.
However, based on experience, the Funds expect that risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. The policies are in
conformity with United States generally accepted accounting principles ("GAAP").
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses for the reporting
period. Actual results could differ from those estimates.
NEW ACCOUNTING STANDARDS:
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The changes to current generally accepted accounting principles from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. As of September 30, 2006, the Funds do not believe the
adoption of SFAS No. 157 will impact the financial statement amounts, however,
additional disclosures may be required about the inputs used to develop the
measurements and the effect of certain of the measurements on changes in net
assets for the period.
On July 13, 2006, the Financial Accounting Standards Board (FASB) released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN
48). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Fund's tax return to determine whether the tax positions
are "more-likely-than-not" of being sustained by the applicable tax authority.
Tax positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the year of determination. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and is to
be applied to all open tax years as of the effective date. Management has not
completed their analysis on whether the adoption of FIN 48 will have an impact
to the financial statements.
SECURITIES VALUATION:
Investments of the Money Market Funds are valued in accordance with Rule
2a-7 of the 1940 Act, at amortized cost, which approximates fair 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 Variable Net Asset Value Funds, the principal market for which is a
securities exchange or an over-the-counter market, are valued at their latest
available sale price (except for those securities that are traded on NASDAQ,
which will be valued at the NASDAQ official closing price) or in the absence of
such a price, by reference to the latest available bid price in the principal
market in which such securities are normally traded. The Variable Net Asset
Value Funds may also use an independent pricing service approved by the Board of
Trustees to value certain securities. Such prices reflect fair values which may
be established through the use of electronic and matrix techniques. Short-term
obligations that mature in 60 days or less are valued at either amortized cost
or original cost plus interest, which approximates current value. Investments in
open-end investment companies, including the Fund of Funds, are valued at their
respective net asset values as reported by such companies. Investments in
closed-end investment companies are valued at their fair values based upon the
latest available bid prices in the principal market in which such securities are
normally traded. The differences between cost and fair values of investments are
Continued
145
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
reflected as either unrealized appreciation or depreciation. Securities for
which market quotations are not readily available or deemed unreliable (e.g., an
approved pricing service does not provide a price, a furnished price is in
error, certain stale prices, or an event occurs that materially effects the
furnished price) will be valued at fair value using methods determined in good
faith by the Pricing Committee under the supervision of the Board of Trustees.
Fair value pricing may be used if events materially affecting the value of
foreign securities occur between the time when the exchange on which they are
traded closes and the time when the International Equity Fund's net asset value
is calculated, such securities may be valued at fair value in accordance with
procedures adopted by the Board of Trustees. Management identifies possible
fluctuation in international securities by monitoring the increase or decrease
in the value of a designated benchmark index. In the event of an increase or
decrease greater than predetermined levels, the International Equity Fund may
use a systematic valuation model provided by an independent third party to fair
value their international equity securities.
FOREIGN CURRENCY TRANSLATION:
The accounting records of the International Equity Fund are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the
current rate of exchange to determine the fair value of investments, assets and
liabilities. Purchases and sales of securities, income and expenses are
translated at the prevailing rate of exchange, on the respective dates of such
transactions. The International Equity Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments and foreign currencies.
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 foreign investments may also be subject
to foreign withholding taxes.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS:
The International Equity Fund may enter into forward foreign currency
exchange contracts in connection with planned purchases or sales of securities
or to hedge the U.S. dollar value of Fund securities denominated in a particular
currency. The Fund could be exposed to risks if the counter-parties to the
contracts are unable to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar. The
forward foreign currency exchange contracts are adjusted by the daily exchange
rate of the underlying currency and any gains or losses are recorded for
financial statement purposes as unrealized gains or losses until the contract
settlement date.
FUTURES CONTRACTS:
The Variable Net Asset Value Funds may invest in financial futures
contracts for the purpose of hedging their existing securities or securities it
intends to purchase against fluctuations in fair value caused by changes in
prevailing markets. Upon entering into a financial futures contract, the Fund is
required to pledge to the broker an amount of cash and/or other assets equal to
a certain percentage of the contract amount (initial margin deposit). Subsequent
payments, known as "variation margin," are made or received by the Fund each
day, depending on the daily fluctuations in the fair value of the underlying
security. The Fund recognizes a gain or loss equal to the daily variation
margin. Should market conditions move unexpectedly, the Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts and the underlying hedged assets.
The Funds held no financial futures contracts as of September 30, 2006.
SECURITIES TRANSACTIONS AND RELATED INCOME:
During the period, security transactions are accounted for no later than
one business day following the trade date. For financial reporting purposes,
however, security transactions are accounted for on trade date of the last
business day of the reporting period. Interest income is recognized on the
accrual basis and includes, where applicable, the amortization/accretion 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.
Continued
146
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
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 Large Cap Fund, the Large Cap
Growth Fund, the Mid Cap Value Fund, the Mid Cap Growth Fund, the Small Cap
Fund, the International Equity Fund, the Special Opportunities Equity Fund, the
Equity Income Fund and the Prime Money Market Fund may also purchase or sell
securities on a forward commitment basis. The Funds record when-issued
securities on the trade date and pledge assets with a value at least equal to
the purchase commitment for payment of 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.
REPURCHASE AGREEMENTS AND COLLATERALIZED LOAN AGREEMENTS:
The Funds may enter into agreements with member banks of the Federal
Deposit Insurance Corporation and with registered broker/dealers that BB&T Asset
Management, Inc. ("BB&T") or a sub-advisor 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 Fund securities. The seller, under these types
of agreements, 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 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
fair value of the underlying securities during the period while the Fund seeks
to assert its rights.
WRITTEN OPTIONS:
The risk associated with purchasing an option is that the Fund pays a
premium whether or not the option is exercised. Additionally, the Funds bear the
risk of loss of the premium and change in fair value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as other securities owned. The cost of securities acquired
through the exercise of call options is increased by the premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
In writing an option, the Funds contract with a specified counterparty to
purchase (put options written) or sell (call options written) a specified
quantity (notional amount) of an underlying asset at a specified price during a
specified period upon demand of the counterparty. The risk associated with
writing an option is that the Funds bear the market risk of an unfavorable
change in the price of an underlying asset and may be required to buy or sell an
underlying asset under the contractual terms of the option at a price different
from the current fair value.
The Large Cap Fund, the Large Cap Growth Fund, the Mid Cap Value Fund, the
Mid Cap Growth Fund, the Small Cap Fund, the International Equity Fund, the
Special Opportunities Equity Fund, the Equity Income Fund and the Fund of Funds
each may sell call options and the Large Cap Growth Fund and International
Equity Fund may purchase put options that are traded on recognized U.S.
exchanges and enter into closing transactions with respect to such options. The
Special Opportunities Equity Fund and the Equity Income Fund had the following
transactions in call options during the year ended September 30, 2006.
SPECIAL OPPORTUNITIES
EQUITY FUND EQUITY INCOME FUND
---------------------- ---------------------
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
COVERED CALL OPTIONS CONTRACTS RECEIVED CONTRACTS RECEIVED
-------------------- --------- ---------- --------- ---------
Balance at beginning of period .. 895 $ 51,170 -- $ --
Options written ................. 12,872 1,582,477 2,402 416,001
Options closed .................. (1,960) (485,894) (370) (80,317)
Options expired ................. (3,081) (148,253) (712) (164,935)
Options exercised ............... (1,511) (88,925) -- --
------ ---------- ----- ---------
Balance at end of period ........ 7,214 $ 910,575 1,320 $ 170,749
====== ========== ===== =========
Continued
147
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
The following is a summary of options outstanding as of September 30, 2006:
NUMBER OF
SECURITY CONTRACTS FAIR VALUE
-------- --------- ----------
SPECIAL OPPORTUNITIES EQUITY FUND
ATI Technologies, Inc., $22.50, 11/18/06 ..... 2,070 $ 82,800
Checkfree Corp., $50.00, 11/18/06 ............ 1,135 45,400
Consol Energy, Inc., $47.50, 1/20/07 ......... 1,340 13,400
Consol Energy, Inc., $50.00, 1/20/07 ......... 860 4,300
KOS Pharmaceuticals, $55.00, 11/18/06 ........ 310 49,600
PACCAR, Inc., $60.00, 11/18/06 ............... 1,500 165,000
----------
$360,500
==========
EQUITY INCOME FUND
KB Home Corp., $60.00, 1/20/07 ............... 900 $ 31,500
Petroleo Brasileiro S.A., $110.00, 10/21/06 .. 245 3,675
Petroleo Brasileiro S.A., $110.00, 1/20/07 ... 175 5,250
----------
$ 40,425
==========
SECURITY LOANS:
To generate additional income, the Funds may lend up to 33 1/3% of their
respective total assets pursuant to agreements requiring that the loan be
continuously secured by any combination of cash, U.S. Government or U.S.
Government agency securities, equal at all times to at least 100% of the fair
value.
Pursuant to an exemptive order from the Securities and Exchange Commission,
the cash collateral received by the Funds was pooled and at September 30, 2006
was invested in Commercial Paper, Corporate Bonds, Mutual Funds, and Repurchase
Agreements (with interest rates ranging from 5.30% to 5.48% and maturity dates
ranging from October 2006 through December 2015). These investments are managed
by U.S. Bank National Association. The Funds receive payments from borrowers
equivalent to the dividends and interest that would have been earned on
securities lent while simultaneously seeking to earn income on the investment of
collateral. Collateral is marked to market daily to provide a level of
collateral at least equal to the fair value of securities lent. 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, such as broker-dealers, banks or
institutional borrowers of securities, deemed by the Funds to be of good
standing and creditworthy under guidelines established by the Board of Trustees
and when, in the judgement of the Funds, 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, 2006,
the following Funds had loans outstanding:
AVERAGE VALUE
ON LOAN
VALUE FOR THE PERIOD
OF LOANED VALUE ENDED
SECURITIES OF COLLATERAL SEPTEMBER 30, 2006
------------ ------------- ------------------
Large Cap Fund ..................... $122,511,470 $126,591,112 $179,921,206
Large Cap Growth Fund .............. 97,859,740 101,006,062 113,851,334
Mid Cap Value Fund ................. 59,151,395 62,152,094 63,296,752
Mid Cap Growth Fund ................ 53,993,107 55,773,608 65,104,001
Small Cap Fund ..................... 27,427,088 28,786,261 30,361,130
Special Opportunities Equity Fund .. 59,886,231 61,799,055 60,606,332
Equity Income Fund ................. 29,578,851 30,739,802 28,234,016
Short U.S. Government Fund ......... 33,937,870 34,618,745 70,444,555
Intermediate U.S. Government Fund .. 35,279,800 35,975,000 169,457,244
Total Return Bond Fund ............. 95,486,370 97,576,279 160,209,168
U.S. Treasury Money Market Fund .... -- -- 183,494,888
Continued
148
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
ALLOCATION METHODOLOGY:
Expenses directly attributable to a Fund are charged to that Fund. Expenses
not directly attributable to a Fund are allocated proportionately among all
Funds daily in relation to the net assets of each Fund or on another reasonable
basis. Each class of shares bears its pro-rata portion of expenses attributable
to its series, except that each class separately bears expenses related
specifically to that class, such as distribution fees. Expenses that are
attributable to more than one Trust are allocated across the Funds and BB&T
Variable Insurance Funds, based upon relative net assets or on another
reasonable basis. BB&T serves as the Investment Advisor for each of the Funds
and BB&T Variable Insurance Funds. Income and realized and unrealized gains or
losses on investments are allocated to each class of shares based on its
relative net assets or another appropriate basis.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly
for the Short U.S. Government Fund, the Intermediate U.S. Government Fund, the
Total Return Bond Fund, the Tax-Free Funds and the Money Market Funds. Dividends
from net investment income are declared and paid monthly for the Large Cap Fund,
the Mid Cap Value Fund and the Small Cap Fund. Dividends from net investment
income are declared and paid quarterly for the Large Cap Growth Fund, the Mid
Cap Growth Fund, the International Equity Fund, the Special Opportunities Equity
Fund, the Equity Income Fund and the Fund of Funds. Distributable net realized
gains, if any, are declared and distributed at least annually.
The character of income and gains distributed are determined in accordance
with federal income tax regulations, which may differ from GAAP. These
"book/tax" differences are either considered temporary or permanent in nature.
To the extent these differences are permanent in nature (e.g. reclass of market
discounts, gain/loss, paydowns and distributions), such amounts are reclassified
within the composition of net assets based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends to shareholders
which exceed net investment income and net realized gains for tax purposes are
reported as distributions of capital.
FEDERAL INCOME TAXES:
It is the policy of the Funds to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections 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. Accordingly, no provision for federal income tax is required.
REDEMPTION FEES:
Effective November 4, 2005, the holding period for shares redeemed or
exchanged was reduced from 30 days to 7 days. For shares of the Funds that were
redeemed or exchanged in less than 7 days a fee of 2% of the total redemption
amount may be assessed subject to certain exceptions or limitations. These
exceptions include but are not limited to redemptions or exchanges in the Money
Market Funds, automatic non-discretionary rebalancing programs and systematic
withdrawal plans. The fee is applied to shares redeemed or exchanged in the
order in which they were purchased, and is retained by the Funds for the benefit
of remaining shareholders to defray Fund portfolio transaction expenses and
facilitate portfolio management. For financial statement purposes, these amounts
are included in the Statements of Changes in Net Assets as "Proceeds from Shares
Issued". Effective
Continued
149
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
July 24, 2006, the Funds no longer assess redemption fees. Fees for the Funds
during the fiscal years ended September 30, 2005 and September 30, 2006,
respectively, were as follows:
FOR THE FOR THE
YEAR ENDED YEAR ENDED
FUND SEPTEMBER 30, 2005 SEPTEMBER 30, 2006
---- ------------------ ------------------
Large Cap Fund .............................. $4,386 $ 745
Large Cap Growth Fund ....................... 243 3
Mid Cap Value Fund .......................... 3,315 254
Mid Cap Growth Fund ......................... 2,070 1,003
Small Cap Fund .............................. 252 107
International Equity Fund ................... 121 --
Special Opportunities Equity Fund ........... 3,382 2,322
Equity Income Fund .......................... 1,029 300
Short U.S. Government Fund .................. 2,362 872
Intermediate U.S. Government Fund ........... 2,308 2,240
Total Return Bond Fund ...................... 6,570 7,373
Kentucky Intermediate Tax-Free Fund ......... -- --
Maryland Intermediate Tax-Free Fund ......... -- --
North Carolina Intermediate Tax-Free Fund ... 564 386
South Carolina Intermediate Tax-Free Fund ... -- --
Virginia Intermediate Tax-Free Fund ......... -- --
West Virginia Intermediate Tax-Free Fund .... 2 1,646
Prime Money Market Fund ..................... -- --
U.S. Treasury Money Market Fund ............. -- --
National Tax-Free Money Market Fund ......... -- --
Capital Manager Conservative Growth Fund .... 1,484 124
Capital Manager Moderate Growth Fund ........ 567 --
Capital Manager Growth Fund ................. 204 135
Capital Manager Equity Fund ................. 208 5
3. CONVERSION OF THE SMALL CAP FUND AND THE SMALL CAP GROWTH FUND:
On March 27, 2006, net assets of the Small Cap Growth Fund managed by BB&T
were exchanged in a tax-free conversion for shares of the Small Cap Fund and
BB&T incurred all merger related expenses. The following is summary of shares
issued, net assets converted, net asset value per share issued and unrealized
appreciation/depreciation of assets acquired as of the conversion date:
NET ASSET UNREALIZED
SHARES NET ASSETS VALUE PER APPRECIATION
ISSUED CONVERTED SHARE ISSUED (DEPRECIATION)
--------- ----------- ------------ --------------
Small Cap Fund
A Shares .............. 519,217 $ 8,076,416 $15.56 $ 3,875,617
B Shares .............. 320,692 4,879,881 15.22 (1,836,336)
C Shares .............. 1,265 19,229 15.20 (2,775)
Institutional Shares... 2,617,536 40,922,638 15.63 (940,425)
Continued
150
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
4. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding securities maturing less than
one year from acquisition) for the fiscal year ended September 30, 2006 were as
follows:
PURCHASES SALES
-------------- ------------
Large Cap Fund .............................. $ 230,193,817 $270,842,971
Large Cap Growth Fund ....................... 627,234,783 739,785,130
Mid Cap Value Fund .......................... 117,910,343 109,183,117
Mid Cap Growth Fund ......................... 211,142,474 195,682,263
Small Cap Fund .............................. 56,397,924 35,643,608
International Equity Fund ................... 87,987,392 94,855,773
Special Opportunities Equity Fund ........... 103,153,784 106,548,251
Equity Income Fund .......................... 65,548,327 42,508,194
Short U.S. Government Fund .................. 70,250,597 117,762,007
Intermediate U.S. Government Fund ........... 304,984,420 605,572,922
Total Return Bond Fund ...................... 1,014,234,331 894,680,102
Kentucky Intermediate Tax-Free Fund ......... 10,056,737 13,635,797
Maryland Intermediate Tax-Free Fund ......... 22,271,219 23,861,141
North Carolina Intermediate Tax-Free Fund ... 103,556,086 111,659,712
South Carolina Intermediate Tax-Free Fund ... 15,451,560 16,092,412
Virginia Intermediate Tax-Free Fund ......... 58,441,733 60,554,929
West Virginia Intermediate Tax-Free Fund .... 33,018,011 35,374,963
Capital Manager Conservative Growth Fund .... 8,308,488 4,555,000
Capital Manager Moderate Growth Fund ........ 18,052,284 6,870,000
Capital Manager Growth Fund ................. 17,844,499 4,585,000
Capital Manager Equity Fund ................. 8,472,477 585,000
Purchases and sales of U.S. Government Securities (excluding securities
maturing less than one year from acquisition) for the fiscal year ended
September 30, 2006 were as follows:
PURCHASES SALES
-------------- ------------
Short U.S. Government Fund .................. $ 56,602,786 $ 73,158,155
Intermediate U.S. Government Fund ........... 269,840,412 242,029,270
Total Return Bond Fund ...................... 306,065,575 297,012,318
RESTRICTED SECURITIES:
A restricted security is a security which has been purchased through a
private offering and cannot be resold to the general public without prior
registration under the Securities Act of 1933 (The "1933 Act") or pursuant to
the resale limitations provided by Rule 144 under the 1933 Act, or an exemption
from the registration requirements of the 1933 Act. Whether a restricted
security is illiquid is determined pursuant to guidelines established by the
Board of Trustees. Not all restricted securities are considered illiquid. At
September 30, 2006, the North Carolina Intermediate Tax-Free Fund and the Prime
Money Market Fund held illiquid restricted securities representing 3.7% and 3.6%
of net assets, respectively. The illiquid restricted securities held as of
September 30, 2006 are identified below:
ACQUISITION ACQUISITION PRINCIPAL
SECURITY DATE COST AMOUNT FAIR VALUE
-------- ----------- ----------- ----------- -----------
BB&T NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
North Carolina Capital Facilities Finance Agency, 5.25%, 5/1/15,
Callable 11/1/06 @ 102 ...................................... 5/15/2003 $2,096,517 $2,092,897 $2,134,755
North Carolina Medical Care Commission Hospital Revenue,
4.60%, 8/15/07 .............................................. 3/2/2002 1,764,467 1,795,000 1,798,734
Continued
151
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
ACQUISITION ACQUISITION PRINCIPAL
SECURITY DATE COST AMOUNT FAIR VALUE
-------- ----------- ----------- ----------- -----------
BB&T PRIME MONEY MARKET FUND
Genworth Life Insurance Co., 5.53%, 11/9/06 .................... 5/9/2006 $ 5,000,000 $ 5,000,000 $ 5,000,000
Metlife Insurance Co. of Connecticut, 5.50%, 11/21/06 .......... 8/19/2005 5,000,000 5,000,000 5,000,000
Metropolitan Life Insurance Co., 5.61%, 11/1/06 ................ 2/10/2003 5,000,000 5,000,000 5,000,000
Monet Trust, 2000-1, 5.43%, 12/28/06 ........................... 3/28/2005 30,000,000 30,000,000 30,000,000
New York Life Insurance Co., 5.48%, 11/25/06 ................... 8/25/2006 5,000,000 5,000,000 5,000,000
5. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Funds 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 daily net assets of the Funds. These fees
are accrued daily and payable on a monthly basis and are reflected on the
Statements of Operations as "Investment advisory fees". BB&T waived investment
advisory fees and certain expenses for the Small Cap Fund and the National
Tax-Free Money Market Fund which are not subject to recoupment and are included
on the Statements of Operations as "Less expenses waived by the Investment
Advisor".
Information regarding these transactions is as follows for the period ended
September 30, 2006:
FEE RATE AFTER FEE RATE AFTER
CONTRACTURAL CONTRACTUAL CONTRACTUAL
FEE RATE WAIVERS(1) WAIVERS(2)*
------------ -------------- --------------
Large Cap Fund ................................. 0.74% 0.67% 0.70%
Large Cap Growth Fund .......................... 0.74% 0.67% 0.70%
Mid Cap Value Fund ............................. 0.74% 0.67% 0.70%
Mid Cap Growth Fund ............................ 0.74% 0.67% 0.70%
Small Cap Fund(3) .............................. 1.00% 0.80% 0.80%
International Equity Fund ...................... 1.00% 0.90% 0.90%
Special Opportunities Equity Fund .............. 0.80% 0.80% 0.80%
Equity Income Fund ............................. 0.70% 0.70% 0.70%
Short U.S. Government Fund ..................... 0.60% 0.45% 0.45%
Intermediate U.S. Government Fund .............. 0.60% 0.50% 0.48%
Total Return Bond Fund ......................... 0.60% 0.50% 0.48%
Kentucky Intermediate Tax-Free Fund(3) ......... 0.60% 0.40% 0.40%
Maryland Intermediate Tax-Free Fund(3) ......... 0.60% 0.30% 0.30%
North Carolina Intermediate Tax-Free Fund ...... 0.60% 0.45% 0.45%
South Carolina Intermediate Tax-Free Fund(3) ... 0.60% 0.45% 0.45%
Virginia Intermediate Tax-Free Fund ............ 0.60% 0.45% 0.45%
West Virginia Intermediate Tax-Free Fund ....... 0.45% 0.45% 0.45%
Prime Money Market Fund ........................ 0.40% 0.29% 0.29%
U.S. Treasury Money Market Fund ................ 0.40% 0.28% 0.26%
National Tax-Free Money Market Fund ............ 0.25% N/A 0.20%
Capital Manager Conservative Growth Fund ....... 0.25% 0.00% 0.00%
Capital Manager Moderate Growth Fund ........... 0.25% 0.00% 0.00%
Capital Manager Growth Fund .................... 0.25% 0.00% 0.00%
Capital Manager Equity Fund .................... 0.25% 0.00% 0.00%
* Effective February 1, 2006, BB&T contractually agreed to waive a portion of
the investment advisory fee as disclosed in the table above. All
contractual investment advisory fee waivers are not subject to recoupment
in subsequent fiscal periods.
(1) For the period October 1, 2005 through January 31, 2006.
(2) For the period February 1, 2006 through September 30, 2006.
(3) For all or a portion of the fiscal year ended September 30, 2006 BB&T
voluntarily waived additional investment advisory fees for the Small Cap
Fund, Kentucky Intermediate Tax-Free Fund, Maryland Intermediate Tax-Free
Fund, South Carolina Intermediate Tax-Free Fund and National Tax-Free Money
Market Fund. All voluntary investment advisory fee waivers are not subject
to recoupment in subsequent fiscal periods, and may be discontinued at any
time.
Continued
152
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
Pursuant to a Sub-Advisory agreement with BB&T, UBS Global Asset Management
(Americas), Inc. ("UBS") serves as the Sub-Advisor to the International Equity
Fund, subject to the general supervision of the Funds' Board of Trustees and
BB&T. Pursuant to a Sub-Advisory agreement with BB&T, Federated Investment
Management Company ("Federated") serves as the Sub-Advisor to the Prime Money
Market Fund and the National Tax-Free Money Market Fund, subject to the general
supervision of the Funds' Board of Trustees and BB&T. Pursuant to a Sub-Advisory
agreement with BB&T, Scott & Stringfellow, Inc., a wholly owned subsidiary of
BB&T Corporation, serves as the Sub-Advisor to the Special Opportunities Equity
Fund and the Equity Income Fund, subject to the general supervision of the
Funds' Board of Trustees and BB&T. Pursuant to a Sub-Advisory agreement with
BB&T, Sterling Capital Management LLC, a wholly owned subsidiary of BB&T
Corporation, serves as the Sub-Advisor to the Mid Cap Value Fund and the Total
Return Bond Fund, subject to the general supervision of the Funds' Board of
Trustees and BB&T. For their services, Sub-Advisors are entitled to a fee,
payable by BB&T.
BB&T serves the Funds as administrator. BB&T receives compensation for
providing administration services at a rate of 0.12% of the BB&T Funds and BB&T
Variable Insurance Funds aggregate average daily net assets up to $5 billion and
a rate of 0.08% of the aggregate average daily net assets in excess of $5
billion. This fee is accrued daily and payable on a monthly basis. Expenses
incurred are reflected on the Statements of Operations as "Administration fees".
BB&T voluntarily waived administration fees of $94,547, $111,212, $87,546 and
$47,541, respectively, of the Capital Manager Conservative Growth Fund, the
Capital Manager Moderate Growth Fund, the Capital Manager Growth Fund and the
Capital Manager Equity Fund for the fiscal year ended September 30, 2006.
Administration fee waivers are included on the Statements of Operations as "Less
expenses waived by the Administrator" and these waivers are not subject to
recoupment in subsequent fiscal periods. Pursuant to a Sub-Administration
Agreement with BB&T, BISYS Fund Services Ohio, Inc. (BISYS Ohio) serves as
sub-administrator to the Funds subject to the general supervision of the Funds'
Board of Trustees and BB&T. For these services, BISYS Ohio is entitled to a fee,
payable by BB&T. BISYS Ohio is a subsidiary of BISYS Group, Inc.
BISYS Ohio serves the Funds as fund accountant and transfer agent and
receives compensation for providing fund accounting and transfer agency services
at a rate of 0.02% (0.01% for each service) of the average daily net assets of
each Fund, plus certain out of pocket expenses. Expenses incurred are reflected
on the Statements of Operations as "Fund accounting fees" and "Transfer agency
fees", respectively.
Under a Compliance Services Agreement between the Trust and BISYS Ohio (the
"CCO Agreement"), BISYS Ohio makes an employee available to serve as the Trusts'
Chief Compliance Officer (the "CCO"). Under the CCO Agreement, BISYS Ohio also
provides infrastructure and support in implementing the written policies and
procedures comprising the Funds' compliance program, including support services
to the CCO. For the services provided under the CCO Agreement, the Funds paid
BISYS Ohio $100,000 for the reporting period ended September 30, 2006, plus
certain out of pocket expenses. Expenses incurred for the Funds are reflected on
the Statements of Operations as "Compliance service fees". BISYS Ohio pays the
salary and other compensation earned by any such individuals as employees of
BISYS Ohio.
For the year ended September 30, 2006, the Funds' paid $395,077 in
brokerage fees to Scott & Stringfellow, Inc., a wholly owned subsidiary of BB&T
Corporation, on the execution of purchases and sales of the Funds' portfolio
investments.
Effective November 1, 2005, BB&T Funds Distributor, Inc. ("BBTFDI") serves
as distributor to each Fund of the Funds pursuant to a Distribution Agreement
(the "Distribution Agreement"). BBTFDI has contractually agreed to waive a
portion of the Class A shares distribution fees throughout the year. Effective
February 1, 2006 and through January 31, 2007, BBTFDI has contractually agreed
to waive 0.25% of the Class A distribution fees of the Funds except for the Mid
Cap Value Fund, Mid Cap Growth Fund, West Virginia Intermediate Tax-Free Fund,
Prime Money Market Fund and the U.S. Treasury Money Market Fund. BBTFDI waived
fees totaling $812,110 of distribution fees for the period ended September 30,
2006. Distribution fee waivers are included in the Statements of Operations as
"Less expenses waived by the Distributor" and these waivers are not subject to
recoupment in subsequent fiscal periods. Prior to November 1, 2005, BISYS Fund
Services LP served as distributor to each Fund of BB&T Funds pursuant to a
Distribution Agreement dated October 1, 1993.
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%, 1.00% and 1.00% of the average daily
net assets of the Class A Shares, Class B Shares, and Class C Shares,
respectively, with exception of the Mid Cap Value Fund, the Mid Cap Growth
Continued
153
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
Fund and the West Virginia Intermediate Tax-Free Fund which receives payments of
up to 0.25% of the average daily net assets for Class A. The fees may be used by
BBTFDI to pay banks, broker dealers and other institutions, including affiliates
of the advisor. As distributor, BBTFDI, is entitled to receive commissions on
sales of shares of the Variable Net Asset Value Funds. For the period ended
September 30, 2006, BBTFDI received $2,357,878 from commissions earned on sales
of shares of the Funds' Variable Net Asset Value Funds. Commissions paid to
affiliated broker-dealers during the fiscal year ended September 30, 2006 were
$2,132,253.
The Advisor and/or its affiliates may pay out of their own assets
compensation to broker-dealers and other persons for the sale and distribution
of the shares and/or for the servicing of the shares. These are additional
payments over and above the sales charge (including Rule 12b-1 fees) and service
fees paid by the Funds. The payments, which may be different for different
financial institutions, will not change the price an investor will pay for
shares or the amount that a Fund will receive for the sale of shares.
Certain Officers and Trustees of the Funds are affiliated with the adviser,
the administrator, or the sub-administrator. Such Officers and Trustees receive
no compensation from the Funds for serving in their respective roles. Each of
the five non-interested Trustees who serve on both the Board and the Audit
Committee are compensated $6,000 per quarter and $2,400 for each regularly
scheduled meeting, plus reimbursement for certain expenses. During the year
ended September 30, 2006, actual Trustee compensation was $174,339 in total.
6. CONCENTRATION OF CREDIT RISK:
The Tax-Free Funds invest primarily in debt instruments of municipal
issuers in their respective states. The issuers' abilities to meet their
obligations may be affected by economic developments in a specific state or
region.
7. LINE OF CREDIT
U.S. Bank, N.A. has made available a credit facility to the Funds, pursuant
to a Credit Agreement (the "Agreement"). The primary purpose of the Agreement is
to allow the Funds to avoid security liquidation that BB&T believes are
unfavorable to shareholders. Outstanding principal amounts under the Agreement
bear interest at an interest rate equal to the Prime Rate minus 2.00%. The Funds
did not utilize this Agreement during the period ended September 30, 2006.
8. FEDERAL INCOME TAX INFORMATION:
At September 30, 2006, the following Funds have net capital loss
carryforwards available to offset future net capital gains, if any, to the
extent provided by the Treasury regulations. To the extent that these
carryforwards are used to offset future capital gains, it is probable that the
gains that are offset will not be distributed to shareholders.
AMOUNT EXPIRES
---------- -------
Large Cap Growth Fund .......................... $7,019,454 2011
Small Cap Fund* ................................ 7,051,245 2009
Small Cap Fund* ................................ 2,350,415 2010
International Equity Fund ...................... 636,946 2011
Short U.S. Government Fund ..................... 349,217 2008
Short U.S. Government Fund ..................... 498,342 2009
Short U.S. Government Fund ..................... 118,919 2012
Short U.S. Government Fund ..................... 2,094,190 2013
Short U.S. Government Fund ..................... 1,246,269 2014
Intermediate U.S. Government Fund .............. 222,709 2013
Intermediate U.S. Government Fund .............. 4,243,104 2014
Total Return Bond Fund ......................... 1,527,254 2014
Kentucky Intermediate Tax-Free Fund ............ 7,545 2011
Kentucky Intermediate Tax-Free Fund ............ 3,794 2014
Maryland Intermediate Tax-Free Fund ............ 14,230 2011
Maryland Intermediate Tax-Free Fund ............ 113,581 2013
Capital Manager Conservative Growth Fund ....... 1,243,302 2012
Capital Manager Conservative Growth Fund ....... 164,216 2013
* The amount of these losses that may be utilized are limited to $2,350,415
on annual basis as a result of certain ownership changes in 2006.
Continued
154
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
The tax character of dividends paid to shareholders during the fiscal year
ended September 30, 2006, were as follows:
DISTRIBUTIONS PAID FROM CURRENT YEAR
------------------------- DISTRIBUTIONS TOTAL
ORDINARY NET LONG- TOTAL TAXABLE TAX EXEMPT OF EARNINGS DISTRIBUTIONS
INCOME TERM GAINS DISTRIBUTIONS DISTRIBUTIONS AND PROFITS PAID *
----------- ----------- ------------- ------------- ------------- -------------
Large Cap Fund ........................ $16,180,152 $43,804,755 $59,984,907 $ -- $ -- $59,984,907
Large Cap Growth Fund ................. 1,582,511 -- 1,582,511 -- -- 1,582,511
Mid Cap Value Fund .................... 11,456,392 9,945,224 21,401,616 -- -- 21,401,616
Mid Cap Growth Fund ................... 1,262,723 13,009,021 14,271,744 -- 188,060 14,459,804
Small Cap Fund ........................ 845,622 7,693,220 8,538,842 -- 24,778 8,563,620
International Equity Fund ............. 2,763,161 -- 2,763,161 -- -- 2,763,161
Special Opportunities Equity Fund ..... 3,037,182 6,658,012 9,695,194 -- -- 9,695,194
Equity Income Fund .................... 3,534,406 507,611 4,042,017 -- -- 4,042,017
Short U.S. Government Fund ............ 4,796,925 -- 4,796,925 -- -- 4,796,925
Intermediate U.S. Government Fund ..... 20,142,563 -- 20,142,563 -- -- 20,142,563
Total Return Bond Fund ................ 22,226,099 2,176,080 24,402,179 -- -- 24,402,179
Kentucky Intermediate Tax-Free Fund ... -- -- -- 521,519 -- 521,519
Maryland Intermediate Tax-Free Fund ... 106 -- 106 326,935 -- 327,041
North Carolina Intermediate Tax-Free
Fund ............................... 104,708 911,150 1,015,858 3,962,871 -- 4,978,729
South Carolina Intermediate Tax-Free
Fund ............................... -- 347,206 347,206 694,356 -- 1,041,562
Virginia Intermediate Tax-Free Fund ... -- 447,855 447,855 2,890,792 -- 3,338,647
West Virginia Intermediate Tax-Free
Fund ............................... 15,699 409,576 425,275 2,631,959 -- 3,057,234
Prime Money Market Fund ............... 44,000,932 -- 44,000,932 -- -- 44,000,932
U.S. Treasury Money Market Fund ....... 25,302,481 -- 25,302,481 -- -- 25,302,481
National Tax-Free Money Market Fund ... -- -- -- 267,647 -- 267,647
Capital Manager Conservative Growth
Fund ............................... 2,156,986 -- 2,156,986 -- -- 2,156,986
Capital Manager Moderate Growth Fund .. 1,857,732 -- 1,857,732 -- -- 1,857,732
Capital Manager Growth Fund ........... 1,244,704 -- 1,244,704 -- -- 1,244,704
Capital Manager Equity Fund ........... 1,277,116 -- 1,277,116 -- -- 1,277,116
The tax character of dividends paid to shareholders during the fiscal year
ended September 30, 2005, were as follows:
DISTRIBUTIONS PAID FROM CURRENT YEAR
------------------------- DISTRIBUTIONS TOTAL
ORDINARY NET LONG- TOTAL TAXABLE TAX EXEMPT OF EARNINGS DISTRIBUTIONS
INCOME TERM GAINS DISTRIBUTIONS DISTRIBUTIONS AND PROFITS PAID *
----------- ----------- ------------- ------------- ------------- -------------
Large Cap Fund ........................ $12,372,558 $ -- $12,372,558 $ -- $ -- $12,372,558
Large Cap Growth Fund ................. 1,454,437 -- 1,454,437 -- -- 1,454,437
Mid Cap Value Fund .................... 2,320,084 59,006,677 61,326,761 -- 17,825 61,344,586
Mid Cap Growth Fund ................... -- 1,527,268 1,527,268 -- -- 1,527,268
Small Cap Fund ........................ 1,794,045 839,331 2,633,376 -- 5,259 2,638,635
International Equity Fund ............. 2,762,795 -- 2,762,795 -- 874,327 3,637,122
Special Opportunities Equity Fund ..... 1,015,239 -- 1,015,239 -- -- 1,015,239
Equity Income Fund .................... 1,541,950 -- 1,541,950 -- -- 1,541,950
Short U.S. Government Fund ............ 6,397,474 -- 6,397,474 -- -- 6,397,474
Intermediate U.S. Government Fund ..... 24,780,721 2,537,308 27,318,029 -- -- 27,318,029
Total Return Bond Fund ................ 15,603,344 894,698 16,498,042 -- -- 16,498,042
Kentucky Intermediate Tax-Free Fund ... -- -- -- 489,873 -- 489,783
Maryland Intermediate Tax-Free Fund ... -- -- -- 296,788 -- 296,788
North Carolina Intermediate Tax-Free
Fund ............................... 5,069 192,982 198,051 3,991,284 -- 4,189,335
South Carolina Intermediate Tax-Free
Fund ............................... -- 146,124 146,124 709,878 -- 856,002
Virginia Intermediate Tax-Free Fund ... 1,568 158,443 160,011 2,884,720 -- 3,044,731
West Virginia Intermediate Tax-Free
Fund ............................... 3,853 555,579 559,432 2,681,496 -- 3,240,928
Prime Money Market Fund ............... 20,623,971 296 20,624,267 -- -- 20,624,267
U.S. Treasury Money Market Fund ....... 17,575,264 -- 17,575,264 -- -- 17,575,264
Capital Manager Conservative Growth
Fund ............................... 2,347,405 -- 2,347,405 -- -- 2,347,405
Capital Manager Moderate Growth
Fund ............................... 1,436,022 -- 1,436,022 -- -- 1,436,022
Capital Manager Growth Fund ........... 756,722 -- 756,722 -- -- 756,722
Capital Manager Equity Fund ........... 242,213 -- 242,213 -- -- 242,213
----------
* Total Distributions paid may differ from the Statements of Changes in Net
Assets because distributions are recognized when actually paid for tax
purposes.
Continued
155
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
As of September 30, 2006, the components of accumulated earnings (deficit)
on a tax basis was as follows:
UNDISTRIBUTED UNDISTRIBUTED TOTAL
ORDINARY LONG TERM ACCUMULATED UNREALIZED ACCUMULATED
INCOME/TAX CAPITAL GAINS ACCUMULATED DIVIDENDS CAPITAL AND APPRECIATION EARNINGS
EXEMPT INCOME (LOSSES) EARNINGS PAYABLE* OTHER LOSSES (DEPRECIATION) (DEFICIT)
------------- ------------- ----------- ----------- ------------ -------------- ------------
Large Cap Fund ............ $6,041,345 $70,414,557 $76,455,902 $ (783,804) $ -- $160,326,236 $235,998,334
Large Cap Growth Fund ...... 484,026 -- 484,026 (253,153) (7,019,454) 31,844,053 25,055,472
Mid Cap Value Fund ......... 6,958,982 1,115,592 8,074,574 (143,586) -- 18,114,339 26,045,327
Mid Cap Growth Fund ........ -- 16,286,520 16,286,520 -- -- 20,783,667 37,070,187
Small Cap Fund ............. -- 3,598,280 3,598,280 (27,923) (9,401,660) 13,522,220 7,690,917
International Equity Fund .. 820,876 -- 820,876 (1,414,301) (716,946) 63,129,987 61,819,616
Special Opportunities Equity
Fund .................... 1,779,078 7,901,155 9,680,233 -- -- 37,622,395 47,302,628
Equity Income Fund ......... 483,827 2,979,473 3,463,300 (636,097) -- 15,635,465 18,462,668
Short U.S. Government
Fund .................... 850,380 -- 850,380 (272,055) (8,244,574) (757,819) (8,424,068)
Intermediate U.S. Government
Fund .................... 4,628,534 -- 4,628,534 (1,293,561) (14,952,855) (4,556,907) (16,174,789)
Total Return Bond Fund ..... 4,328,179 -- 4,328,179 (2,137,064) (10,356,412) (533,970) (8,699,267)
Kentucky Intermediate Tax-
Free Fund ............... 43,896 -- 43,896 (38,763) (80,022) 302,229 227,340
Maryland Intermediate Tax-
Free Fund ............... 25,627 -- 25,627 (26,107) (143,744) 142,826 (1,398)
North Carolina Intermediate
Tax-Free Fund ........... 370,719 15,453 386,172 (317,922) -- 3,156,509 3,224,759
South Carolina Intermediate
Tax-Free Fund ........... 72,147 9,845 81,992 (56,389) -- 526,597 552,200
Virginia Intermediate Tax-
Free Fund ............... 264,659 25,902 290,561 (232,785) -- 2,512,038 2,569,814
West Virginia Intermediate
Tax-Free Fund ........... 161,128 188,044 349,172 (216,502) -- 1,752,947 1,885,617
Prime Money Market Fund .... 5,136,281 4,504 5,140,785 (5,135,097) -- -- 5,688
U.S. Treasury Money Market
Fund .................... 2,497,403 -- 2,497,403 (2,497,157) -- -- 246
National Tax-Free Money
Market Fund ............. 261,198 -- 261,198 (258,170) -- -- 3,028
Capital Manager Conservative
Growth Fund ............. 669,925 -- 669,925 (615,051) (1,407,518) 5,493,699 4,141,055
Capital Manager Moderate
Growth Fund ............. 610,542 348,321 958,863 (515,660) -- 8,778,167 9,221,370
Capital Manager Growth
Fund .................... 388,051 951,905 1,339,956 (304,206) -- 6,593,327 7,629,077
Capital Manager Equity
Fund .................... 160,409 1,535,846 1,696,255 (112,928) -- 5,018,527 6,601,854
* Dividends Payable may differ from the Statements of Assets and Liabilities
because distributions are recognized when actually paid for tax purposes.
Continued
156
BB&T Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED SEPTEMBER 30, 2006
Under current tax law, capital losses realized after October 31 of a Fund's
fiscal year may be deferred and treated as occurring on the first business day
of the following fiscal year for tax purposes. The following Funds had deferred
post October capital and currency losses, which will be treated as arising on
the first business day of the fiscal year ending September 30, 2007:
POST-OCTOBER
LOSSES
------------
International Equity Fund ................. $ 80,000
Short U.S. Government Fund ................ 3,937,637
Intermediate U.S. Government Fund ......... 10,487,042
Total Return Bond Fund .................... 8,829,158
Kentucky Intermediate Tax-Free Fund ....... 68,683
Maryland Intermediate Tax-Free Fund ....... 15,933
At September 30, 2006 the cost, gross unrealized appreciation and gross
unrealized depreciation on securities for federal income tax purposes, were as
follows:
NET
TAX TAX UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
-------------- ------------ ------------ --------------
Large Cap Fund .............................. $ 690,800,740 $164,421,587 $(4,095,351) $160,326,236
Large Cap Growth Fund ....................... 292,435,343 34,462,311 (2,618,258) 31,844,053
Mid Cap Value Fund .......................... 274,285,432 22,592,005 (4,477,666) 18,114,339
Mid Cap Growth Fund ......................... 177,419,024 22,556,307 (1,772,640) 20,783,667
Small Cap Fund .............................. 139,360,425 17,167,389 (3,645,169) 13,522,220
International Equity Fund ................... 190,057,765 68,116,464 (4,991,015) 63,125,449
Special Opportunities Equity Fund ........... 230,135,825 38,091,039 (468,644) 37,622,395
Equity Income Fund .......................... 133,763,507 16,620,702 (985,237) 15,635,465
Short U.S. Government Fund .................. 107,091,582 157,947 (915,766) (757,819)
Intermediate U.S. Government Fund ........... 306,139,170 486,538 (5,043,445) (4,556,907)
Total Return Bond Fund ...................... 536,325,709 3,565,692 (4,099,662) (533,970)
Kentucky Intermediate Tax-Free Fund ......... 14,050,843 304,637 (2,408) 302,229
Maryland Intermediate Tax-Free Fund ......... 9,761,338 145,038 (2,212) 142,826
North Carolina Intermediate Tax-Free Fund ... 104,508,426 3,156,509 -- 3,156,509
South Carolina Intermediate Tax-Free Fund ... 18,843,916 527,489 (892) 526,597
Virginia Intermediate Tax-Free Fund ......... 74,741,644 2,513,969 (1,931) 2,512,038
West Virginia Intermediate Tax-Free Fund .... 64,031,776 1,753,582 (635) 1,752,947
Prime Money Market Fund ..................... 1,370,562,242 -- -- --
U.S. Treasury Money Market Fund ............. 650,126,695 -- -- --
National Tax-Free Money Market Fund ......... 95,640,945 -- -- --
Capital Manager Conservative Growth Fund .... 56,048,842 6,305,739 (812,040) 5,493,699
Capital Manager Moderate Growth Fund ........ 72,028,809 10,048,641 (1,270,474) 8,778,167
Capital Manager Growth Fund ................. 55,755,262 8,049,005 (1,455,678) 6,593,327
Capital Manager Equity Fund ................. 25,616,926 5,125,518 (106,991) 5,018,527
9. SUBSEQUENT EVENT
At the August 29, 2006 board meeting, the Board of Trustees approved,
subject to shareholders' approval, a fund merger between the Large Cap Fund and
the Large Cap Growth Fund, which is scheduled to be completed during the first
quarter of 2007.
10. LEGAL AND REGULATORY MATTERS
On September 26, 2006 BISYS Fund Services, Inc. ("BISYS"), an affiliate of
BISYS Fund Services Ohio, Inc. which provides various services to the Funds as
described in footnote 5, announced a settlement with the Securities and Exchange
Commission ("SEC") regarding the SEC's investigation related to BISYS' past
payment of certain marketing and other expenses with respect to certain of its
mutual fund clients. Although BISYS has reached a settlement with the SEC, the
Funds' management is not aware that any determination has been made as to how
the BISYS settlement monies will be distributed. The SEC's examination of BISYS'
mutual fund clients and their advisers has not been completed. Accordingly, the
Funds' management is currently unable to determine the impact, if any, of such
matters on the Funds or the Funds' financial statements.
157
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
BB&T Funds:
We have audited the accompanying statements of assets and liabilities of BB&T
Funds -- Large Cap Fund, Large Cap Growth Fund, Mid Cap Value Fund, Mid Cap
Growth Fund, Small Cap Fund, International Equity Fund, Special Opportunities
Equity Fund, Equity Income Fund, Short U.S. Government Fund, Intermediate U.S.
Government Fund, Total Return Bond Fund, Kentucky Intermediate Tax-Free Fund,
Maryland Intermediate Tax-Free Fund, North Carolina Intermediate Tax-Free Fund,
South Carolina Intermediate Tax-Free Fund, Virginia Intermediate Tax-Free Fund,
West Virginia Intermediate Tax-Free Fund, Prime Money Market Fund, U.S. Treasury
Money Market Fund, National Tax-Free Money Market Fund, Capital Manager
Conservative Growth Fund, Capital Manager Moderate Growth Fund, Capital Manager
Growth Fund, and Capital Manager Equity Fund (collectively, the Funds),
including the schedules of portfolio investments, as of September 30, 2006, and
the related statements of operations for the period then ended, the statements
of changes in net assets for each of the periods in the two-year period then
ended, and the financial highlights for each of the periods in the five-year
period then ended. These financial statements and financial highlights are the
responsibility of the Funds' 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 the standards of the Public Company
Accounting Oversight Board (United States). 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 confirmation of
securities owned as of September 30, 2006, by correspondence with the custodian,
transfer agent of the underlying funds, or brokers; where replies were not
received from brokers, we performed other auditing 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 the
Funds as of September 30, 2006, the results of their operations for the period
then ended, the changes in their net assets for each of the periods in the
two-year period then ended, and the financial highlights for each of the periods
in the five-year period then ended, in conformity with U.S. generally accepted
accounting principles.
KPMG LLP
Columbus, Ohio
November 27, 2006
158
BB&T Funds
OTHER FEDERAL INCOME TAX INFORMATION (UNAUDITED) SEPTEMBER 30, 2006
For the fiscal year ended September 30, 2006, certain dividends paid by the
Funds may be subject to a maximum tax rate of 15% as provided for by the Jobs
and Growth Tax Reconciliation Act of 2003. The Funds intend to designate the
maximum amount allowable as taxed at a maximum rate of 15%. Complete information
will be reported in conjunction with your 2006 Form 1099-DIV.
For the period ended September 30, 2006, the following Funds have a
qualified dividend income of :
QUALIFIED
DIVIDEND
INCOME
-----------
Large Cap Fund .............................. $15,068,256
Large Cap Growth Fund ....................... 1,582,511
Mid Cap Value Fund .......................... 3,108,892
Mid Cap Growth Fund ......................... 303,123
Small Cap Fund .............................. 611,982
Special Opportunities Equity Fund ........... 945,171
Equity Income Fund .......................... 2,713,008
Capital Manager Conservative Growth Fund .... 2,079,158
Capital Manager Moderate Growth Fund ........ 59,216
Capital Manager Growth Fund ................. 87,689
Capital Manager Equity Fund ................. 714,274
For corporate shareholders, the following percentage of the total ordinary
income dividends paid during the fiscal year ended September 30, 2006, qualify
for the corporate dividends received deduction for the following Funds:
DIVIDENDS
REDUCTION
DEDUCTION
-----------
Large Cap Fund .............................. 93.13%
Large Cap Growth Fund ....................... 100.00%
Mid Cap Value Fund .......................... 27.20%
Mid Cap Growth Fund ......................... 24.59%
Small Cap Fund .............................. 72.54%
Special Opportunities Equity Fund ........... 31.15%
Equity Income Fund .......................... 77.04%
Capital Manager Conservative Growth Fund .... 96.25%
Capital Manager Moderate Growth Fund ........ 2.63%
Capital Manager Growth Fund ................. 5.79%
Capital Manager Equity Fund ................. 45.18%
During the fiscal year ended September 30, 2006, the following Funds
declared tax-exempt income distributions:
AMOUNT
-----------
Kentucky Intermediate Tax-Free Fund ......... $ 521,519
Maryland Intermediate Tax-Free Fund ......... 326,935
North Carolina Intermediate Tax-Free Fund ... 3,962,871
South Carolina Intermediate Tax-Free Fund ... 694,356
Virginia Intermediate Tax-Free Fund ......... 2,890,792
West Virginia Intermediate Tax-Free Fund .... 2,631,959
National Tax-Free Money Market Fund ......... 264,647
159
BB&T Funds
SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED) SEPTEMBER 30, 2006
On November 11, 2005, there was a special meeting of the shareholders of
the BB&T Small Cap Fund. The purpose of the meeting was: (1) to approve an
amendment to the investment objective of the BB&T Small Cap Fund. A description
of the proposal and the number of shares voted is as follows:
1. Approve an amendment to the investment objective of the Small Cap Fund
to seek "long-term capital appreciation" by investing the Fund's
assets primarily in a diversified portfolio of equity and
equity-related securities of small capitalization companies.
AFFIRMATIVE AGAINST ABSTAIN
----------- --------- -------
3,070,854 5,170 1,855
On March 23, 2006, there was a special meeting of the shareholders of the
BB&T Small Company Growth Fund and the BB&T Small Cap Fund. The purpose of the
meeting was: (1) to consider and act upon a Plan of Reorganization
("Reorganization Plan") adopted by BB&T Funds providing for the transfer of all
the assets of the BB&T Small Company Growth Fund in exchange the BB&T Small Cap
Fund and the assumption by the BB&T Small Cap Fund of all the liabilities of the
BB&T Small Company Growth Fund, followed by the dissolution and liquidation of
the BB&T Small Company Growth Fund and the distribution of Shares of the BB&T
Small Cap Fund to the shareholders of the BB&T Small Company Growth Fund, and
(2) to transact such other business as may properly come before the Special
Meeting or any adjournment thereof. A description of the proposal and the number
of shares voted is as follows:
1. To consider and act upon a Plan of Reorganization ("Reorganization
Plan") adopted by BB&T Funds providing for the transfer of all the
assets of the BB&T Small Company Growth Fund in exchange the BB&T
Small Cap Fund and the assumption by the BB&T Small Cap Fund of all
the liabilities of the BB&T Small Company Growth Fund, followed by the
dissolution and liquidation of the BB&T Small Company Growth Fund and
the distribution of Shares of the BB&T Small Cap Fund to the
shareholders of the BB&T Small Company Growth Fund.
AFFIRMATIVE AGAINST ABSTAIN
----------- --------- -------
2,496,986 2,431 4,552
2. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
AFFIRMATIVE AGAINST ABSTAIN
----------- --------- -------
121,024 2,377,025 5,920
160
OTHER INFORMATION (UNAUDITED)
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities is available (i)
without charge, upon request, by calling 1-800-228-1872; and (ii) on the
Securities and Exchange Commission's (the "Commission") website at
http://www.sec.gov.
Information regarding how the Funds voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available
(i) without charge, upon request, by calling 1-800-228-1872 and (ii) on the
Commission's website at http://www.sec.gov.
The Funds file complete Schedules of Portfolio Holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Funds'
Forms N-Q are available without charge on the Commission's website at
http://www.sec.gov, or may be reviewed and copied at the Commission's Public
Reference Roon in Washington, D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
161
BOARD CONSIDERATION OF ADVISORY AND SUB-ADVISORY AGREEMENTS (UNAUDITED)
The Board of Trustees, at a meeting held on August 29, 2006, formally
considered the Trust's investment advisory agreement with BB&T Asset Management,
Inc. ("BB&TAM" or the "Adviser") with respect to all funds of the Trust and
sub-advisory agreements of BB&TAM with Scott & Stringfellow, Inc. ("Scott &
Stringfellow"), with respect to the BB&T Special Opportunities Equity Fund and
the Equity Income Fund; UBS Global Asset Management (Americas), Inc., with
respect to the International Equity Fund; Federated Investment Management
Company, with respect to the National Tax-Free Money Market Fund and the Prime
Money Market Fund; and Sterling Capital Management LLC ("Sterling Capital"),
with respect to the Mid Cap Value Fund and the Total Return Bond Fund
(collectively, the "Advisory Agreements"). Scott & Stringfellow, UBS Global
Asset Management (Americas), Inc., Federated Investment Management Company and
Sterling Capital are referred to as "Sub-Advisers" and, collectively with the
Adviser, the "Advisers."
The Trustees reviewed extensive material in connection with their review of
the Advisory Agreements, including data from an independent provider of mutual
fund data (as assembled by the Funds' sub-administrator) which included
comparisons with industry averages for comparable funds for advisory fees and
total fund expenses. The data reflected BB&TAM fee waivers in place, as well as
BB&TAM's contractual investment advisory fee levels. The Board was assisted in
its review by independent legal counsel, who provided a memorandum detailing the
legal standards for review of the Advisory Agreements. The Board received a
detailed presentation by BB&TAM, which included a fund-by-fund analysis of
performance. Presentations were also provided by each Sub-Adviser. The Board
also received fund-by-fund profitability information from the Adviser, Scott &
Stringfellow and Sterling Capital. The Board also deliberated outside the
presence of management and the Advisers.
In their deliberations, each Trustee attributed different weights to
various factors involved in an analysis of whether each Advisory Agreement
should be continued, and no factor alone was considered determinative. The
Trustees determined that the overall arrangements between the Trust and the
Advisers, as provided in the Advisory Agreements, were fair and reasonable and
that the continuance of the Advisory Agreements was in the best interests of
each Fund and its shareholders.
The matters addressed below were considered and discussed by the Trustees
in reaching their conclusions.
Nature, Extent and Quality of Services Provided by the Adviser
The Trustees received and considered information regarding the nature,
extent, and quality of the services provided to each Fund under the Advisory
Agreements. The Trustees took into account information furnished throughout the
year at Trustee meetings, as well as materials furnished specifically in
connection with the annual review process. The Trustees considered the
background and experience of each Adviser's senior management and the expertise
of investment personnel of each Adviser responsible for the day-to-day
management of each Fund. The Trustees considered the overall reputation, and the
capabilities and commitment of the Advisers to provide high quality service to
the Trust, and the Trustees' overall confidence in each Adviser's integrity.
The Trustees received information concerning the investment philosophy and
investment processes applied by the Advisers in managing the Funds. The Trustees
also considered information regarding regulatory compliance and compliance with
the investment policies of the Funds. The Trustees evaluated the trading
practices of Scott & Stringfellow, which engages in affiliated brokerage for a
majority of the portfolio trades for the Funds it sub-advises. As part of this
evaluation, the Trustees received information regarding safeguards employed,
such as prohibitions on principal and cross-agency trades. The Trustees also
evaluated the procedures of the Advisers designed to fulfill the Advisers'
fiduciary duty to the Funds with respect to possible conflicts of interest,
including the Advisers' codes of ethics (regulating the personal trading of its
officers and employees).
Based on their review, the Trustees concluded that, with respect to the
quality and nature of services to be provided by the Advisers, the scope of
responsibilities was consistent with mutual fund industry norms, and that the
quality of the services was wholly acceptable.
Investment Performance
The Trustees considered performance results of each Fund in absolute terms
and relative to each Fund's peer group. It was noted that performance of the
equity funds over the last three years had improved considerably over the prior
year, although the one-year average percentile had declined. With respect to the
fixed income funds, it was noted that the average percentile ranking for
one-year performance was generally quite improved over that of the prior year.
With respect to the asset allocation funds, it was noted that each asset
allocation fund had received a Morningstar rating of at least three stars and
was performing in a satisfactory manner.
162
BOARD CONSIDERATION OF ADVISORY AND SUB-ADVISORY AGREEMENTS (UNAUDITED),
CONTINUED
In the Trustees' review of performance, long and short-term performance
were considered. In conducting their review, the Trustees particularly focused
on Funds where performance compared unfavorably with peers over the most recent
one year period. The Trustees noted that the performance of each of the
International Equity Fund and the Large Cap Growth Fund was lagging, but that
the Adviser was seeking to address the situation, either through monitoring, in
the case of the International Equity Fund, or consolidation, in the case of the
Large Cap Growth Fund.
After reviewing the performance of each Fund, and taking into consideration
the management style, investment strategies, and prevailing market conditions
during the prior year and for longer periods, the Trustees concluded that the
performance of each of the Funds was generally strong and that in cases where
performance issues were encountered, the Adviser was properly addressing the
situation.
Cost of Services, Including the Profits Realized by the Advisers and Affiliates
The Trustees considered peer group comparable information with respect to
the advisory fees charged by BB&TAM to each of the Funds, taking into
consideration both contractual and actual (i.e., after waiver) fee levels. The
Trustees concluded that the investment advisory fees fell within an acceptable
range as compared to peer groups, particularly in light of the fee waivers that
would be continued in the upcoming year.
As part of their review, the Trustees considered benefits to the Adviser
aside from investment advisory fees. The Trustees reviewed administration fees
received by BB&TAM and considered the fallout benefits to BB&TAM such as the
research services available to the Adviser by reason of brokerage commissions
generated by the Funds' turnover. The Trustees also considered benefits to
BB&TAM's affiliates, including brokerage commissions received by Scott &
Stringfellow for executing trades on behalf of the Special Opportunities Equity
Fund and the Equity Income Fund and sub-advisory fees received by its affiliate,
Sterling Capital, for its management of the Mid Cap Value Fund and the Total
Return Bond Fund. With respect to Scott & Stringfellow, the Trustees noted that
brokerage commissions were paid at a standard commission rate, which was
consistent with that used by the Adviser with respect to all equity funds of the
Trust and that such brokerage arrangements were considered by the Sub-Adviser to
be advantageous.
Consideration of the reasonableness of advisory fees also took into
account, where relevant, the profitability of the Advisers. In determining
whether all other investment advisory and sub-advisory fees (collectively, the
"investment advisory fees") were reasonable, the Trustees reviewed profitability
information provided by the Adviser, Scott & Stringfellow and Sterling Capital
with respect to investment advisory services. With respect to such information,
the Trustees recognized that such profitability data was generally unaudited and
represented an Adviser's own determination of its and its affiliates' revenues
from the contractual services provided to the Funds, less expenses of providing
such services. Expenses include direct and indirect costs and were calculated
using an allocation methodology developed by the Adviser. The Trustees also
recognized that it is difficult to make comparisons of profitability from fund
investment advisory and sub-advisory contracts, because comparative information
is not generally publicly available and is affected by numerous factors. Based
on their review, the Trustees concluded that the profitability to BB&TAM and its
affiliates as a result of their relationships with the Funds was acceptable.
With respect to non-affiliated Sub-Adviser profitability, the Trustees noted
that while information regarding the profitability of non-affiliated
Sub-Advisers was not available, it also was not helpful in assessing the
continuance of the Advisory Agreements. The Board also concluded that the fees
under the Advisory Agreements were fair and reasonable, in light of the services
and benefits provided to each Fund.
Economies of Scale
The Trustees also considered whether fee levels reflect economies of scale
and whether economies of scale would be produced by the growth of the Trust's
assets. The Trustees found that the Adviser over the last two years, had
generally reduced fund total expense ratios through contract negotiations and
fee waivers. The Trustees found that fee waivers entered into by the Adviser
allowed investors to enjoy economies of scale appropriately and concluded that
contractual breakpoints would not necessarily be required at this time to assure
that future economies of scale, when and if achieved, would be shared with
shareholders based on the Adviser's current record of responsible action in this
regard.
163
BB&T Funds
INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED)
Overall responsibility for the management of the Funds rests with its Board of
Trustees' ("Trustees"), who are elected by the Shareholders of the BB&T Funds
("Funds"). The Trustees' elect the officers of the Funds to supervise actively
its day-to-day operations. The names of the Trustees', their addresses,
birthdate, Term of office and length of time served, principal occupations
during the past five years, number of portfolios overseen and directorships held
outside of the Funds are set below:
NUMBER OF
TERM OF PORTFOLIOS
POSITION(S) OFFICE/ IN FUND
HELD WITH LENGTH OF PRINCIPAL OCCUPATION COMPLEX
NAME, ADDRESS AND BIRTHDATE BB&T FUNDS TIME SERVED DURING THE PAST 5 YEARS BY TRUSTEE
---------------------------------- ------------ ------------ ------------------------------------- ----------
Thomas W. Lambeth ................ Trustee, Indefinite, From January 2001 to present, Senior 31
700 Yorkshire Road Chairman of 8/92 - Fellow, Z. Smith Reynolds Foundation;
Winston-Salem, NC 27106 the Board of Present From 1978 to January 2001, Executive
Birthdate: 1/35 Trustees Director, Z. Smith Reynolds
Foundation.
Drew T. Kagan .................... Trustee Indefinite, From December 2003 to present, 31
Montecito Advisors, Inc. 8/00 - President and Director, Montecito
810 N. Jefferson St., Ste 101. Present Advisors, Inc; from March 1996 to
Lewisburg, WV 24901 December 2003, President, Investment
Birthdate: 2/48 Affiliate, Inc.
Laura C. Bingham ................. Trustee Indefinite, From July 1998 to present, President 31
Peace College 2/01 - of Peace College.
Office of the President Present
15 East Peace Street
Raleigh, NC 27604-1194
Birthdate: 11/56
Douglas R. Van Scoy .............. Trustee Indefinite, Retired; From November 1974 to July 31
841 Middle St. 5/04 - 2001, Deputy Director of Private
Sullivans Island, SC 26481 Present Client Group and Senior Executive
Birthday: 11/43 Vice President of Smith Barney
(investment banking).
James L. Roberts ................. Trustee Indefinite, Retired; From January 1999 to 31
207 Highland Terrace 11/04 - December 2003 President, CEO and
Breckenridge, CO 80424 Present Director, Covest Bancshares, Inc.
Birthday: 11/42
The following table shows information for trustees who are "interested Persons"
of BB&T Funds as defined in the 1940 Act:
TERM OF
POSITION(S) OFFICE/
HELD WITH LENGTH OF PRINCIPAL OCCUPATION OVERSEEN
NAME, ADDRESS AND BIRTHDATE BB&T TIME SERVED DURING THE PAST 5 YEARS COMPLEX
---------------------------------- ------------ ------------ ------------------------------------- ----------
*Keith F. Karlawish .............. Trustee and Indefinite, From May 2002 to present, President, 31
434 Fayetteville Street, 5th Floor President 6/06 - BB&T Asset Management, Inc.; from
Raleigh, NC 27601 Present 2/05 1996 to 2002, Senior Vice President
Birthdate: 8/64 - Present and Director of Fixed Income, BB&T
Asset Management, Inc.
* Mr. Karlawish is treated by the Funds as an "interested person" (as defined
in Section 2(a)(19) of the 1940 Act) of the Funds. Mr. Karlawish is an
"interested person" because he owns shares of BB&T Corporation and is the
President of BB&T Asset Management, Inc., the Adviser.
164
BB&T Funds
INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED), CONTINUED
The following table shows information for officers of BB&T Funds:
TERM OF
POSITION(S) OFFICE/
HELD WITH LENGTH OF PRINCIPAL OCCUPATION
NAME AND BIRTHDATE BB&T FUNDS TIME SERVED DURING THE PAST 5 YEARS
---------------------------------- ------------ ------------ -------------------------------------
E.G. Purcell, III ................ Vice Indefinite, From 1995 to present, Senior Vice
Birthdate: 1/55 President 11/00 - President, BB&T Asset
Present Management, Inc. and its
predecessors
James T. Gillespie ............... Vice Indefinite, From February 2005 to present,
Birthdate: 11/66 President 5/02 - Vice President of BB&T Asset
Present Management, Inc.; from 1992 to
2005, Director, BISYS Fund
Services
Todd M. Miller ................... Vice Indefinite, From June 2005 to Present,
Birthdate: 9/71 President 8/05 - Investment Officer and Mutual
Present Fund Administrator, BB&T Asset
Management, Inc.; from May 1993
to May 2005, Manager, BISYS
Fund Services
Rodney Ruehle .................... Anti-Money Indefinite, From August 1995 to present,
Birthdate: 4/68 Laundering 2/06 - Fund Compliance Officer, BISYS
Officer and Present Fund Services
Chief
Compliance
Officer
Troy A. Sheets ................... Treasurer Indefinite, From April 2002 to present, Vice
Birthdate: 5/71 5/02 - President, BISYS Fund Services;
Present from September 1993 to April
2002, Senior Manager, KPMG
LLP
Christopher E. Sabato ............ Assistant Indefinite From February 1993 to present,
Birthdate: 12/68 Treasurer 11/02 - Vice President, BISYS Fund
Present Services
The Funds' Statement of Additional Information includes information about
the Funds' Trustees. To receive your free copy of the Statement of Additional
Information, call toll free: 1-800-453-7348.
165
ANNUAL REPORT September 30, 2006
INVESTMENT ADVISER
BB&T Asset Management, Inc.
P.O. Box 29575
Raleigh, NC 27626-0575
DISTRIBUTOR
BB&T Funds Distributors, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
LEGAL COUNSEL
Ropes & Gray LLP
One Metro Center
700 12th Street, N.W.
Suite 900
Washington D. C. 20005
TRANSFER AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
AUDITORS
KPMG LLP
191 W. Nationwide Blvd.
Suite 500
Columbus, OH 43215
11/06