<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21682
-----------------
BB&T Variable Insurance Funds
-----------------------------
(Exact name of registrant as specified in charter)
3435 Stelzer Road Columbus, OH 43219
-------------------------------------------
(Address of principal executive offices) (Zip code)
BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219
----------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 228-1872
--------------------
Date of fiscal year end: December 31, 2005
---------------------------
Date of reporting period: June 30, 2005
-------------------------
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
BB&T VARIABLE INSURANCE FUNDS
SUMMARY OF PORTFOLIO HOLDINGS
JUNE 30, 2005 (UNAUDITED)
THE BB&T VARIABLE INSURANCE FUNDS PORTFOLIO COMPOSITION IS AS FOLLOWS AT JUNE
30, 2005:
<Table>
<Caption>
PERCENTAGE
OF NET ASSETS
-------------
BB&T LARGE CAP VALUE VIF
Consumer Discretionary 8.4%
Consumer Staples 5.8
Energy 12.9
Financials 27.9
Health Care 9.7
Industrials 7.6
Information Technology 7.6
Materials 4.8
Repurchase Agreement 3.4
Telecommunication Services 5.9
Utilities 5.6
-------------
99.6%
=============
BB&T MID CAP GROWTH VIF
Consumer Discretionary 22.6%
Consumer Staples 1.5
Energy 11.0
Financials 6.0
Health Care 18.7
Industrials 6.1
Information Technology 22.5
Materials 2.8
Repurchase Agreement 4.5
Telecommunication Services 4.0
-------------
99.7%
=============
BB&T LARGE COMPANY GROWTH VIF
Consumer Discretionary 13.9%
Consumer Staples 12.9
Energy 1.9
Exchange Traded Funds 4.5
Financials 5.5
Health Care 24.1
Industrials 9.2
Information Technology 23.7
Telecommunication Services 0.2
Repurchase Agreement 4.2
-------------
100.1%
=============
BB&T CAPITAL MANAGER EQUITY VIF
Equity Index 12.6%
International Equity 13.8
Large Company Equity 50.5
Mid Cap Equity 11.9
Money Market 3.5
Small Cap Equity 7.8
-------------
100.1%
=============
BB&T SPECIAL OPPORTUNITIES EQUITY VIF
Commercial Services 6.9%
Consumer Discretionary 21.9
Energy 10.8
Financials 8.2
Health Care 16.6
Industrials 3.7
Information Technology 23.6
Insurance 2.6
Repurchase Agreement 7.0
-------------
101.3%
=============
BB&T TOTAL RETURN BOND VIF
Corporate Bonds 19.5%
Fedral Farm Credit Bank 1.7
Federal Home Loan Bank 7.5
Federal Home Loan Mortgage Corporation 10.0
Federal National Mortgage Association 42.8
Repurchase Agreement 2.7
U.S. Treasury Notes 15.0
-------------
99.2%
=============
</Table>
<Page>
EXPENSE EXAMPLES
JUNE 30, 2005 (UNAUDITED)
As a shareholder of the BB&T Variable Insurance Funds, you incur two types of
costs: (1) transaction costs; (2) ongoing costs, including management fees; and
other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the BB&T Variable Insurance Funds and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from January 1, 2005 through June 30,
2005.
ACTUAL EXPENSES
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.
<Table>
<Caption>
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
1/1/05 6/30/05 1/1/05 - 6/30/05 1/1/05 - 6/30/05
------------- ------------- ---------------- ----------------
BB&T Large Cap Value VIF $ 1,000.00 $ 1,013.90 $ 3.94 0.79%
BB&T Mid Cap Growth VIF 1,000.00 1,013.10 3.89 0.78%
BB&T Large Company Growth VIF 1,000.00 988.00 4.04 0.82%
BB&T Capital Manager Equity VIF 1,000.00 1,004.90 1.64 0.33%
BB&T Special Opportunities Equity VIF 1,000.00 1,033.00 6.45 1.28%
BB&T Total Return Bond VIF 1,000.00 1,024.10 5.72 1.14%
</Table>
- ----------
* Expenses are equal to the average account value times 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.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account values and
hypothetical expenses based on each BB&T Variable Insurance 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. 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.
<Table>
<Caption>
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
1/1/05 6/30/05 1/1/05 - 6/30/05 1/1/05 - 6/30/05
------------- ------------- ---------------- ----------------
BB&T Large Cap Value VIF $ 1,000.00 $ 1,020.88 $ 3.96 0.79%
BB&T Mid Cap Growth VIF 1,000.00 1,020.93 3.91 0.78%
BB&T Large Company Growth VIF 1,000.00 1,020.73 4.11 0.82%
BB&T Capital Manager Equity VIF 1,000.00 1,023.16 1.66 0.33%
BB&T Special Opportunities Equity VIF 1,000.00 1,018.45 6.41 1.28%
BB&T Total Return Bond VIF 1,000.00 1,019.14 5.71 1.14%
</Table>
- ----------
* Expenses are equal to the average account value times 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.
<Page>
BB&T LARGE CAP VALUE VIF
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
SHARES FAIR VALUE
- --------- -------------
COMMON STOCKS (96.2%):
CONSUMER DISCRETIONARY (8.4%):
37,000 Gannett Company, Inc. $ 2,631,810
60,000 Mattel, Inc. (a) 1,098,000
26,400 May Department Stores Co. 1,060,224
20,475 V.F. Corp. 1,171,580
89,000 Walt Disney Co. (The) 2,241,020
16,100 Whirlpool Corp. 1,128,771
-------------
9,331,405
-------------
CONSUMER STAPLES (5.8%):
55,400 Albertson's, Inc. 1,145,672
29,000 Altria Group, Inc. 1,875,140
34,000 Kimberly-Clark Corp. 2,128,060
67,452 Sara Lee Corp. 1,336,224
-------------
6,485,096
-------------
ENERGY (12.9%):
26,000 Anadarko Petroleum Corp. 2,135,900
9,000 Burlington Resources, Inc. 497,160
50,800 ChevronTexaco Corp. 2,840,736
67,400 ConocoPhillips 3,874,826
27,632 Exxon Mobil Corp. 1,588,011
38,500 Royal Dutch Petroleum Co. -- NY Shares 2,498,650
12,000 Schlumberger, Ltd. 911,280
-------------
14,346,563
-------------
FINANCIALS (27.9%):
8,000 American International Group, Inc. 464,800
63,000 Bank of America Corp. 2,873,430
30,000 Bank of New York Co., Inc. 863,400
62,333 Citigroup, Inc. 2,881,655
15,000 Equity Residential, REIT 552,300
22,000 Fannie Mae 1,284,800
17,500 Franklin Resources, Inc. 1,347,150
44,677 ING Groep NV -- ADR 1,253,190
74,490 J.P. Morgan Chase & Co. 2,630,987
23,200 Lincoln National Corp. 1,088,544
30,000 Merrill Lynch & Company, Inc. 1,650,300
52,000 Northern Trust Corp. 2,370,680
45,000 Old Republic International Corp. 1,138,050
38,000 PNC Financial Services Group 2,069,480
61,600 St. Paul Companies, Inc. (The) 2,435,048
28,000 SunTrust Banks, Inc. 2,022,720
52,000 Washington Mutual, Inc. 2,115,880
32,000 Wells Fargo & Co. 1,970,560
-------------
31,012,974
-------------
HEALTH CARE (9.7%):
29,200 Abbott Laboratories 1,431,092
12,500 Becton, Dickinson & Co. 655,875
43,600 Bristol-Myers Squibb Co. 1,089,128
22,000 Cigna Corp. 2,354,660
25,000 HCA, Inc. 1,416,750
15,400 Johnson & Johnson 1,001,000
59,000 Merck & Company, Inc. 1,817,200
38,000 Pfizer, Inc. 1,048,040
-------------
10,813,745
-------------
INDUSTRIALS (7.6%):
20,000 CSX Corp. 853,200
18,500 Emerson Electric Co. 1,158,655
46,000 General Electric Co. 1,593,900
<Caption>
SHARES OR
PRINCIPAL
AMOUNT FAIR VALUE
- --------- -------------
COMMON STOCKS -- (CONTINUED)
INDUSTRIALS -- (CONTINUED)
18,200 Norfolk Southern Corp. $ 563,472
18,900 Parker-Hannifin Corp. 1,171,989
25,600 Pitney Bowes, Inc. 1,114,880
50,000 Raytheon Co. 1,956,000
-------------
8,412,096
-------------
INFORMATION TECHNOLOGY (7.6%):
47,424 Agilent Technologies, Inc. (a) 1,091,700
25,400 Automatic Data Processing, Inc. 1,066,038
30,000 First Data Corp. 1,204,200
94,200 Hewlett-Packard Co. 2,214,642
4,800 IBM Corp. 356,160
40,000 Microsoft Corp. (a) 993,600
87,000 Nokia Corp. -- ADR 1,447,680
-------------
8,374,020
-------------
MATERIALS (4.8%):
17,000 Air Products & Chemicals, Inc. 1,025,100
41,000 Alcoa, Inc. 1,071,330
5,000 E.I. DuPont de Nemours & Co. 215,050
3,500 Phelps Dodge Corp. 323,750
39,800 Sonoco Products Co. 1,054,700
25,000 Weyerhaeuser Co. 1,591,250
-------------
5,281,180
-------------
TELECOMMUNICATION SERVICES (5.9%):
12,830 AT&T Corp. 244,283
70,800 BellSouth Corp. 1,881,156
63,400 SBC Communications, Inc. 1,505,750
60,000 Sprint Corp. 1,505,400
81,000 Time Warner, Inc. 1,353,510
-------------
6,490,099
-------------
UTILITIES (5.6%):
16,000 Dominion Resources, Inc. 1,174,240
30,000 Duke Energy Corp. 891,900
38,200 National Fuel Gas Co. 1,104,362
65,000 NiSource, Inc. 1,607,450
3,000 TXU Corp. 249,270
61,910 Xcel Energy, Inc. 1,208,483
-------------
6,235,705
-------------
Total Common Stocks (Cost $88,699,056) 106,782,883
-------------
REPURCHASE AGREEMENT (3.4%):
$ 3,732,801 U.S. Bank N.A., 2.80%, dated 6/30/05,
maturing 7/1/05, with a maturing value
of $3,733,091 (Collateralized fully by
U.S. Government Agencies) 3,732,801
-------------
Total Repurchase Agreement
(Cost $3,732,801) 3,732,801
-------------
Total Investments (Cost $92,431,857) -- 99.6% 110,515,684
Net Other Assets (Liabilities -- 0.4% 455,034
-------------
NET ASSTS -- 100.0% $ 110,970,718
=============
</Table>
- ----------
(a)Represents non-income producing securities.
ADR -- American Depositary Receipt.
REIT -- Real Estate Investment Trust.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
BB&T MID CAP VALUE VIF
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
SHARES FAIR VALUE
- --------- -------------
COMMON STOCKS (95.2%):
CONSUMER DISCRETIONARY (22.6%):
5,600 Abercrombie & Fitch Co. -- Class A $ 384,720
8,300 Advance Auto Parts, Inc. (a) 535,765
19,000 American Eagle Outfitters, Inc. 582,350
16,400 Chico's FAS, Inc. 562,192
22,200 Coach, Inc. (a) 745,254
6,900 Federated Department Stores, Inc. 505,632
5,700 Getty Images, Inc. (a) 423,282
3,625 Harman International Industries, Inc. 294,930
28,000 Hilton Hotels Corp. 667,800
27,000 Host Marriott Corp. 472,500
16,400 Staples, Inc. (a) 349,648
7,200 Starwood Hotels & Resorts
Worldwide, Inc. (a) 421,704
6,250 Toll Brothers, Inc. (a) 634,688
17,500 Urban Outfitters, Inc. (a) 992,074
-------------
7,572,539
-------------
CONSUMER STAPLES (1.5%):
16,600 United Natural Foods, Inc. (a) 504,142
-------------
ENERGY (11.0%):
8,900 Arch Coal, Inc. 484,783
7,200 Baker Hughes, Inc. 368,352
17,000 Chesapeake Energy Corp. 387,600
9,000 Massey Energy Co. 339,480
7,700 National-Oilwell Varco, Inc. (a) 366,058
5,300 Noble Corp. 326,003
18,000 Patterson-UTI Energy, Inc. 500,940
9,600 Peabody Energy Corp. 499,584
11,401 XTO Energy, Inc. 387,520
-------------
3,660,320
-------------
FINANCIALS (6.0%):
2,400 Chicago Mercantile Exchange
Holdings, Inc. 709,200
8,125 HDFC Bank, Ltd. -- ADR 377,894
5,400 Legg Mason, Inc. 562,194
5,500 T. Rowe Price Group, Inc. 344,300
-------------
1,993,588
-------------
HEALTH CARE (18.7%):
8,300 Aetna Inc. 687,406
13,300 Caremark Rx, Inc. (a) 592,116
12,250 Celgene Corp. (a) 499,433
6,900 Cerner Corp. (a) 468,993
18,000 Community Health Systems, Inc. (a) 680,220
11,000 Covance, Inc. (a) 493,570
7,000 Coventry Health Care, Inc. (a) 495,250
8,000 Dade Behring Holdings, Inc. 520,080
7,200 Fisher Scientific International,
Inc. (a) 467,280
8,800 Genzyme Corp. (a) 528,792
6,000 Kinetic Concepts, Inc. (a) 360,000
6,700 ResMed, Inc. (a) 442,133
-------------
6,235,273
-------------
INDUSTRIALS (6.1%):
11,800 Canadian Pacific Railway, Ltd. 407,218
12,250 Gol-Linhas Aereas Inteligentes -- ADR 368,235
11,600 Pentair, Inc. 496,596
<Caption>
SHARES OR
PRINCIPAL
AMOUNT FAIR VALUE
- --------- -------------
COMMON STOCKS -- (CONTINUED)
INDUSTRIALS -- (CONTINUED)
5,700 Precision Castparts Corp. $ 444,030
6,800 Rockwell Automation, Inc. 331,228
-------------
2,047,307
-------------
INFORMATION TECHNOLOGY (22.5%):
11,000 Adobe Systems, Inc. 314,820
12,500 Amphenol Corp. -- Class A 502,125
22,500 AutoDesk, Inc. (a) 773,324
15,100 Cognizant Technology Solutions
Corp. -- Class A (a) 711,663
24,700 Comverse Technology, Inc. (a) 584,155
10,500 F5 Networks, Inc. (a) 495,968
11,000 Harris Corp. 343,310
6,800 International Rectifier Corp. (a) 324,496
26,500 Intersil Corp. -- Class A 497,405
15,700 Jabil Circuit, Inc. (a) 482,461
16,500 Lam Research Corp. (a) 477,510
16,500 Marvell Technology Group, Ltd. (a) 627,660
37,000 MEMC Electronic Materials, Inc. (a) 583,490
19,000 Seagate Technology 333,450
17,000 VeriSign, Inc. (a) 488,920
-------------
7,540,757
-------------
MATERIALS (2.8%):
8,000 Florida Rock Industries, Inc. 586,800
3,700 Potash Corporation of Saskatchewan, Inc. 353,646
-------------
940,446
-------------
TELECOMMUNICATION SERVICES (4.0%):
18,400 American Tower Corp. -- Class A (a) 386,768
22,300 Nextel Partners, Inc. -- Class A (a) 561,291
5,300 SpectraSite, Inc. (a) 394,479
-------------
1,342,538
-------------
Total Common Stocks (Cost $24,251,052) 31,836,910
-------------
REPURCHASE AGREEMENT (4.5%):
$ 1,488,008 U.S. Bank N.A., 2.80%, dated 6/30/05,
maturing 7/1/05, with a maturing value
of $1,488,124 (Collateralized fully by
U.S. Government Agencies) 1,488,008
-------------
Total Repurchase Agreement
(Cost $1,488,008) 1,488,008
-------------
Total Investments (Cost $25,739,060) -- 99.7% 33,324,918
Net Other Assets (Liabilities) -- 0.3% 92,397
-------------
NET ASSETS -- 100.0% $ 33,417,315
=============
</Table>
- ----------
(a) Represents non-income producing securities.
ADR -- American Depositary Receipt.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
BB&T LARGE COMPANY GROWTH VIF
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
SHARES FAIR VALUE
- --------- ------------
COMMON STOCKS (91.4%):
CONSUMER DISCRETIONARY (13.9%):
15,109 Chico's FAS, Inc. (a) $ 517,937
10,200 Coach, Inc. (a) 342,414
2,200 eBay, Inc. (a) 72,622
1,550 Getty Images, Inc. (a) 115,103
3,733 Hershey Foods Corp. 231,819
5,795 Home Depot, Inc. 225,426
6,294 Kohl's Corp. (a) 351,898
5,450 Starbucks Corp. (a) 281,547
9,650 Target Corp. 525,056
1,386 Toll Brothers, Inc. (a) 140,748
1,543 Viacom, Inc. -- Class B 49,407
3,578 Walt Disney Co. (The) 90,094
6,100 Williams-Sonoma, Inc. (a) 241,377
------------
3,185,448
------------
CONSUMER STAPLES (12.9%):
10,397 Coca-Cola Co. 434,075
2,029 Colgate-Palmolive Co. 101,267
10,032 CVS Corp. 291,630
9,650 Estee Lauder Co., Inc. (The) -- Class A 377,605
11,808 PepsiCo, Inc. 636,805
11,901 Procter & Gamble Co. 627,778
8,725 Sysco Corp. 315,758
3,492 Wal-Mart Stores, Inc. 168,314
------------
2,953,232
------------
ENERGY (1.9%):
1,850 Anadarko Petroleum Corp. 151,978
1,800 Apache Corp. 116,280
600 Baker Hughes, Inc. 30,696
1,200 Devon Energy Corp. 60,816
930 Valero Energy Corp. 73,572
------------
433,342
------------
FINANCIALS (5.5%):
8,575 American Express Co. 456,447
3,801 American International Group, Inc. 220,838
1,235 Citigroup, Inc. 57,095
1,471 Franklin Resources, Inc. 113,238
3,125 J.P. Morgan Chase & Co. 110,375
4,413 Morgan Stanley 231,550
1,400 PNC Financial Services Group 76,244
------------
1,265,787
------------
HEALTH CARE (24.1%):
7,760 Abbott Laboratories 380,318
5,273 Amgen, Inc. (a) 318,806
3,570 Caremark Rx, Inc. (a) 158,936
4,940 Eli Lilly & Co. 275,207
2,400 Genentech, Inc. (a) 192,672
2,785 Genzyme Corp. (a) 167,351
5,172 Gilead Sciences, Inc. (a) 227,516
4,230 GlaxoSmithKline plc -- ADR 205,197
4,778 HCA, Inc. 270,769
6,690 Health Management Associates, Inc. --
Class A 175,144
13,600 Johnson & Johnson 884,000
7,000 Medtronic, Inc. 362,530
<Caption>
SHARES OR
PRINCIPAL
AMOUNT FAIR VALUE
- --------- ------------
COMMON STOCKS -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
20,038 Pfizer, Inc. $ 552,648
4,000 St. Jude Medical, Inc. (a) 174,440
12,813 UnitedHealth Group, Inc. 668,070
5,410 WellPoint, Inc. (a) 376,752
2,750 Wyeth 122,375
------------
5,512,731
------------
INDUSTRIALS (9.2%):
5,509 Boeing Co. 363,594
1,200 Danaher Corp. 62,808
2,578 FedEx Corp. 208,844
19,927 General Electric Co. 690,471
3,200 Honeywell International, Inc. 117,216
2,250 Illinois Tool Works, Inc. 179,280
2,500 Masco Corp. 79,400
3,542 Tyco International, Ltd. 103,425
5,800 United Technologies Corp. 297,830
------------
2,102,868
------------
INFORMATION TECHNOLOGY (23.7%):
6,836 Adobe Systems, Inc. 195,646
7,000 Affiliated Computer Services, Inc. --
Class A (a) 357,700
3,000 Analog Devices, Inc. 111,930
41,454 Cisco Systems, Inc. (a) 792,186
14,303 Dell, Inc. (a) 565,112
13,400 Flextronics International, Ltd. (a) 177,014
2,300 IBM Corp. 170,660
29,438 Intel Corp. 767,154
30,900 Microsoft Corp. 767,556
22,407 Motorola, Inc. 409,152
29,500 Oracle Corp. (a) 389,400
2,925 QUALCOMM, Inc. 96,554
5,720 SAP -- ADR 247,676
13,263 Texas Instruments, Inc. 372,292
------------
5,420,032
------------
TELECOMMUNICATION SERVICES (0.2%):
1,454 Nextel Communications, Inc. --
Class A (a) 46,979
------------
Total Common Stocks (Cost $18,977,252) 20,920,419
------------
EXCHANGE TRADED FUNDS (4.5%):
21,194 iShares Russell 1000 Growth Index Fund 1,017,313
------------
Total Exchange Traded Funds
(Cost $995,566) 1,017,313
------------
REPURCHASE AGREEMENT (4.2%):
$ 962,816 U.S. Bank N.A., 2.80%, dated 6/30/05,
maturing 7/1/05, with a maturing value
of $962,891 (Collateralized fully by
U.S. Government Agencies) 962,816
------------
Total Repurchase Agreement
(Cost $962,816) 962,816
------------
Total Investments (Cost $20,935,634) -- 100.1% 22,900,548
Net Other Assets (Liabilities) -- (0.1)% (17,329)
------------
NET ASSETS -- 100.0% $ 22,883,219
============
</Table>
- ----------
(a) Represents non-income producing securities.
ADR -- American Depositary Receipt.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
BB&T CAPITAL MANAGER EQUITY VIF
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
SHARES FAIR VALUE
- --------- ------------
INVESTMENT COMPANIES (100.1%):
417,216 BB&T Equity Index Fund -- Class A $ 3,341,896
406,615 BB&T International Equity Fund --
Institutional Class 3,675,801
606,321 BB&T Large Company Growth Fund --
Institutional Class 5,432,637
423,490 BB&T Large Company Value Fund --
Institutional Class 7,982,789
97,832 BB&T Mid Cap Growth Fund --
Institutional Class (a) 1,283,555
106,279 BB&T Mid Cap Value Fund --
Institutional Class 1,871,568
58,419 BB&T Small Company Growth Fund --
Institutional Class (a) 823,119
78,167 BB&T Small Company Value Fund --
Institutional Class $ 1,246,770
940,805 BB&T U.S. Treasury Money Market Fund --
Institutional Class 940,805
------------
Total Investment Companies
(Cost $24,851,189) 26,598,940
------------
Total Investments in Affiliates (Cost
$24,851,189) -- 100.1% 26,598,940
Net Other Assets (Liabilities) -- (0.1)% (19,015)
------------
NET ASSETS -- 100.0% $ 26,579,925
============
</Table>
- ----------
(a) Represents non-income producing securities.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
BB&T SPECIAL OPPORTUNITIES EQUITY VIF
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
SHARES FAIR VALUE
- --------- ------------
COMMON STOCKS (94.3%):
COMMERCIAL SERVICES (6.9%):
40,000 Cendant Corp. $ 894,800
29,900 WCI Communities, Inc. (a) 957,697
------------
1,852,497
------------
CONSUMER DISCRETIONARY (21.9%):
19,000 Anheuser-Busch Companies, Inc. 869,250
16,500 Costco Wholesale Corp. 739,530
36,700 Hain Celestial Group, Inc. (a) 715,650
13,800 Lexmark International Group, Inc. 894,654
51,840 News Corp. -- Class A 838,771
36,500 Smithfield Foods, Inc. (a) 995,355
16,200 YUM! Brands, Inc. 843,696
------------
5,896,906
------------
ENERGY (10.8%):
15,000 Apache Corp. 969,000
21,100 Pioneer Natural Resources Co. 887,888
18,062 Weatherford International Ltd. (a) 1,047,235
------------
2,904,123
------------
FINANCIALS (8.2%):
5,400 Allstate Corp. 322,650
16,000 MBIA, Inc. 948,960
15,200 Wells Fargo & Co. 936,016
------------
2,207,626
------------
HEALTH CARE (16.6%):
14,500 Coventry Health Care, Inc. (a) 1,025,875
17,000 Laboratory Corporation of
America Holdings (a) 848,300
20,050 Manor Care, Inc. 796,587
36,799 MedCath Corp. (a) 1,022,644
26,500 Watson Pharmaceuticals, Inc. (a) 783,340
------------
4,476,746
------------
<Caption>
SHARES OR
PRINCIPAL
AMOUNT FAIR VALUE
- --------- ------------
COMMON STOCKS -- (CONTINUED)
INDUSTRIALS (3.7%):
13,200 L-3 Communications Holdings, Inc. $ 1,010,856
------------
INFORMATION TECHNOLOGY (23.6%):
14,000 Activision, Inc. (a) 231,280
157,280 ARM Holdings PLC -- ADR 965,699
42,000 ATI Technologies, Inc. (a) 497,700
31,750 Comcast Corp. -- Class A (a) 974,725
40,300 Digital Insight Corp. (a) 963,976
24,300 Fair Issac Corp. 886,950
23,740 First Data Corp. 952,923
36,000 VERITAS Software Corp. (a) 878,400
------------
6,351,653
------------
INSURANCE (2.6%):
2,100 Markel Corp. (a) 711,900
------------
Total Common Stocks (Cost $22,039,683) 25,412,307
------------
REPURCHASE AGREEMENT (7.0%):
$ 1,899,161 U.S. Bank N.A., 2.80%, dated 6/30/05,
maturing 7/1/05, with a maturing value
of $1,899,309 (Collateralized fully by
U.S. Government Agencies) 1,899,161
------------
Total Repurchase Agreement
(Cost $1,899,161) 1,899,161
------------
Total Investments (Cost $23,938,844) -- 101.3% 27,311,468
Net Other Assets (Liabilities) -- (1.3)% (351,589)
------------
NET ASSETS -- 100.0% $ 26,959,879
============
</Table>
- ----------
(a) Represents non-income producing securities.
ADR -- American Depositary Receipt.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
BB&T TOAL RETURN BOND VIF
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
PRINCIPAL
AMOUNT FAIR VALUE
- --------- ------------
CORPORATE BONDS (19.5%):
BANKING & FINANCIAL SERVICES (0.9%):
$ 150,000 Ford Motor Credit Co., 6.50%, 1/25/07 $ 151,077
------------
CONSUMER DISCRETIONARY (1.8%):
300,000 Target Corp., 5.50%, 4/1/07 307,759
------------
CONSUMER STAPLES (0.9%):
150,000 Kraft Foods, Inc., 5.25%, 10/1/13 156,089
------------
FINANCIALS (3.5%):
300,000 Citigroup, Inc., 6.75%, 12/1/05 303,560
300,000 Goldman Sachs Group, Inc.,
4.125%, 1/15/08 299,828
------------
603,388
------------
HEALTH CARE (5.1%):
300,000 Abbott Laboratories, 5.625%, 7/1/06 305,018
250,000 Boston Scientific Corp., 5.125%, 1/12/17 254,243
300,000 Caremark Rx, Inc., 7.375%, 10/1/06 309,941
------------
869,202
------------
INFORMATION TECHNOLOGY (2.3%):
300,000 IBM Corp., 4.875%, 10/1/06 303,197
100,000 SunGard Data Systems, Inc.,4.875%,
1/15/14 80,000
------------
383,197
------------
MATERIALS (1.4%):
200,000 Alcoa, Inc., 7.375%, 8/1/10 227,509
------------
TELECOMMUNICATION SERVICES (1.8%):
300,000 Verizon Global Funding Corp.,
6.125%, 6/15/07 311,077
------------
UTILITIES (1.8%):
300,000 Carolina Power & Light, 6.80%, 8/15/07 315,285
------------
Total Corporate Bonds (Cost $3,347,532) 3,324,583
------------
MORTGAGE-BACKED SECURITIES (34.0%):
FEDERAL NATIONAL MORTGAGE ASSOC.
(34.0%):
2,309,578 4.50%, 10/1/18, Pool #752030 2,300,413
1,739,420 5.50%, 1/1/34, Pool #757571 1,764,266
1,737,603 5.50%, 3/1/35, Pool #787561 1,762,423
------------
Total Mortgage-Backed Securities
(Cost $5,811,391) 5,827,102
------------
U.S. GOVERNMENT AGENCIES (28.0%):
FEDERAL FARM CREDIT BANK (1.7%):
$ 300,000 2.625%, 12/15/05 $ 298,697
------------
FEDERAL HOME LOAN BANK (7.5%):
1,300,000 2.50%, 3/13/06 1,289,032
------------
FEDERAL HOME LOAN
MORTGAGE CORP. (10.0%):
1,150,000 4.875%, 3/15/07 1,170,929
500,000 5.875%, 3/21/11 539,111
------------
1,710,040
------------
FEDERAL NATIONAL
MORTGAGE ASSOC. (8.8%):
1,500,000 5.50%, 7/18/12 1,501,479
------------
Total U.S. Government Agencies
(Cost $4,839,064) 4,799,248
------------
U.S. TREASURY NOTES (15.0%):
400,000 6.25%, 8/15/23 498,484
1,750,000 5.375%, 2/15/31 (a) 2,065,000
------------
Total U.S. Treasury Notes
(Cost $2,283,986) 2,563,484
------------
REPURCHASE AGREEMENT (2.7%):
463,580 U.S. Bank N.A., 2.80%, dated 6/30/05,
maturing 7/1/05, with a maturing value
of $463,616 (Collateralized fully by
U.S. Government Agencies) 463,580
------------
Total Repurchase Agreement
(Cost $463,580) 463,580
------------
Total Investments (Cost $16,745,553) -- 99.2% 16,977,997
Net Other Assets (Liabilities) -- 0.8% 142,782
------------
NET ASSETS -- 100.0% $ 17,120,779
============
</Table>
- ----------
(a) At June 30, 2005 all or part of this security was pledged as collateral for
securities purchased on a when-issued basis.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
BB&T VARIABLE INSURANCE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
BB&T BB&T
BB&T BB&T BB&T CAPITAL SPECIAL BB&T
LARGE CAP MID CAP LARGE COMPANY MANAGER OPPORTUNITIES TOTAL RETURN
VALUE VIF GROWTH VIF GROWTH VIF EQUITY VIF EQUITY VIF BOND VIF
-------------- ------------ ------------- ------------ ------------- ------------
ASSETS:
Investments:
Investments, at cost $ 88,699,056 $ 24,251,052 $ 19,972,818 $ -- $ 22,039,683 $ 16,281,973
Investment in affiliates, at cost -- -- -- 24,851,189 -- --
Unrealized appreciation
(depreciation) 18,083,827 7,585,858 1,964,914 1,747,751 3,372,624 232,444
-------------- ------------ ------------- ------------ ------------- ------------
Investments, at fair value 106,782,883 31,836,910 21,937,732 26,598,940 25,412,307 16,514,417
Repurchase agreements,
at amortized cost 3,732,801 1,488,008 962,816 -- 1,899,161 463,580
Interest and dividends receivable 185,902 15,237 16,245 64,048 11,292 199,909
Receivable for investments sold 1,098,596 96,615 -- -- 60,391 --
Deferred offering costs -- -- -- -- 759 759
Prepaid expenses 1,175 179 105 218 39 75
-------------- ------------ ------------- ------------ ------------- ------------
Total Assets 111,801,357 33,436,949 22,916,898 26,663,206 27,383,949 17,178,740
-------------- ------------ ------------- ------------ ------------- ------------
LIABILITIES:
Dividends payable 519,516 -- 19,668 80,721 -- 47,132
Payable for investments purchased 243,526 -- -- -- 399,191 --
Accrued expenses and other
payables:
Investment advisory fees 46,126 12,311 8,525 -- 17,458 5,118
Administration fees 11,550 3,419 2,370 -- 2,727 1,749
Transfer agency and fund
accounting fees 1,845 547 379 439 436 280
Trustee fees 538 156 106 124 114 77
Other 7,538 3,201 2,631 1,997 4,144 3,605
-------------- ------------ ------------- ------------ ------------- ------------
Total Liabilities 830,639 19,634 33,679 83,281 424,070 57,961
-------------- ------------ ------------- ------------ ------------- ------------
NET ASSETS:
Capital 97,028,827 24,633,620 21,295,153 25,285,920 22,624,524 16,838,010
Accumulated net investment
income (loss) 10,552 (44,488) (280) (2) (70,430) 44,894
Accumulated realized
gains (losses) from investment
transactions (4,152,488) 1,242,325 (376,568) (453,744) 1,033,161 5,431
Net unrealized appreciation
(depreciation) of investments 18,083,827 7,585,858 1,964,914 1,747,751 3,372,624 232,444
-------------- ------------ ------------- ------------ ------------- ------------
Net Assets $ 110,970,718 $ 33,417,315 $ 22,883,219 $ 26,579,925 $ 26,959,879 $ 17,120,779
-------------- ------------ ------------- ------------ ------------- ------------
Outstanding Units of Beneficial
Interest (Shares) 8,276,278 2,408,153 2,287,657 2,660,154 2,153,728 1,682,820
============== ============ ============= ============ ============= ============
Net Asset Value -- offering and
redemption price per share $ 13.41 $ 13.88 $ 10.00 $ 9.99 $ 12.52 $ 10.17
============== ============ ============= ============ ============= ============
</Table>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
BB&T BB&T
BB&T BB&T BB&T CAPITAL SPECIAL BB&T
LARGE CAP MID CAP LARGE COMPANY MANAGER OPPORTUNITIES TOTAL RETURN
VALUE VIF GROWTH VIF GROWTH VIF EQUITY VIF EQUITY VIF BOND VIF
------------ ------------ -------------- ------------ -------------- ------------
INVESTMENT INCOME:
Interest income $ 43,010 $ 24,892 $ 10,209 $ -- $ 11,141 $ 334,685
Dividend income 1,445,470 54,905 120,120 -- 71,690 --
Dividend income from affiliates -- -- -- 171,194 -- --
------------ ------------ -------------- ------------ -------------- ------------
Total Investment Income 1,488,480 79,797 130,329 171,194 82,831 334,685
------------ ------------ -------------- ------------ -------------- ------------
EXPENSES:
Investment advisory fees 408,299 117,641 81,670 32,036 95,571 48,412
Administration, transfer agency, and
fund accounting fees (See Note 4) 93,267 38,338 31,486 14,888 32,320 27,649
Administration fees (See Note 4) 22,205 6,459 4,529 5,245 5,138 3,353
Fund accounting fees (See Note 4) 2,222 901 740 440 791 781
Transfer agency fees (See Note 4) 4,338 1,076 695 446 792 379
Custodian fees 6,223 2,057 1,513 1,537 1,574 1,094
Professional fees 33,932 11,101 8,155 8,376 10,976 8,293
Trustee fees 6,988 2,023 1,379 1,610 1,510 990
Other 9,788 1,109 184 2,647 4,589 4,110
------------ ------------ -------------- ------------ -------------- ------------
Total expenses before waivers 587,262 180,705 130,351 67,225 153,261 95,061
Less expenses waived by the
Investment Advisor (95,858) (56,420) (39,851) (19,409) -- (3,268)
Less expenses waived by the
Administrator and its affiliates (54,844) -- -- (5,245) -- --
------------ ------------ -------------- ------------ -------------- ------------
Net Expenses 436,560 124,285 90,500 42,571 153,261 91,793
------------ ------------ -------------- ------------ -------------- ------------
Net Investment Income (Loss) 1,051,920 (44,488) 39,829 128,623 (70,430) 242,892
------------ ------------ -------------- ------------ -------------- ------------
REALIZED/UNREALIZED GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains on written options -- -- -- -- 24,517 --
Net realized gains (losses) from
investment securities 2,407,323 1,512,175 442,401 -- 582,706 (17,116)
Net realized losses on investments
with affiliates -- -- -- (2,392) -- --
Change in unrealized appreciation/
depreciation from investments (1,950,017) (1,023,203) (743,541) 18,997 327,831 178,283
------------ ------------ -------------- ------------ -------------- ------------
Net realized/unrealized gains
(losses) on investments 457,306 488,972 (301,140) 16,605 935,054 161,167
------------ ------------ -------------- ------------ -------------- ------------
Change in net assets from
operations $ 1,509,226 $ 444,484 $ (261,311) $ 145,228 $ 864,624 $ 404,059
============ ============ ============== ============ ============== ============
</Table>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
BB&T BB&T
LARGE CAP MID CAP
VALUE VIF GROWTH VIF
------------------------------------- -------------------------------------
FOR THE FOR THE
SIX MONTHS FOR THE YEAR SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
JUNE 30, 2005 DECEMBER 31, 2004 JUNE 30, 2005 DECEMBER 31, 2004
-------------- -------------------- -------------- --------------------
(UNAUDITED) (UNAUDITED)
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 1,051,920 $ 1,778,050 $ (44,488) $ (117,831)
Net realized gains (losses) from investment
transactions 2,407,323 890,277 1,512,175 1,562,831
Change in unrealized appreciation/depreciation
from investments (1,950,017) 10,154,949 (1,023,203) 3,098,166
-------------- -------------------- -------------- --------------------
Change in net assets from operations 1,509,226 12,823,276 444,484 4,543,166
-------------- -------------------- -------------- --------------------
DIVIDENDS TO SHAREHOLDERS:
Net investment income (1,041,329) (1,778,089) -- --
-------------- -------------------- -------------- --------------------
Change in net assets from shareholder dividends (1,041,329) (1,778,089) -- --
-------------- -------------------- -------------- --------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 1,584,593 8,206,444 1,684,916 5,075,670
Dividends reinvested 1,071,518 1,648,020 -- --
Value of shares redeemed (3,765,274) (3,970,967) (1,119,415) (1,114,583)
-------------- -------------------- -------------- --------------------
Change in net assets from capital transactions (1,109,163) 5,883,497 565,501 3,961,087
-------------- -------------------- -------------- --------------------
Change in net assets (641,266) 16,928,684 1,009,985 8,504,253
-------------- -------------------- -------------- --------------------
NET ASSETS:
Beginning of period 111,611,984 94,683,300 32,407,330 23,903,077
-------------- -------------------- -------------- --------------------
End of period $ 110,970,718 $ 111,611,984 $ 33,417,315 $ 32,407,330
============== ==================== ============== ====================
SHARE TRANSACTIONS:
Issued 119,616 657,552 126,458 415,359
Reinvested 80,381 134,624 -- --
Redeemed (283,178) (322,025) (84,520) (93,117)
-------------- -------------------- -------------- --------------------
Change in Shares (83,181) 470,151 41,938 322,242
============== ==================== ============== ====================
Accumulated net investment income (loss) $ 10,552 $ (39) $ (44,488) $ --
============== ==================== ============== ====================
</Table>
- ----------
(a) Period from commencement of operations.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
<Table>
<Caption>
BB&T BB&T
LARGE COMPANY CAPITAL MANAGER
GROWTH VIF EQUITY VIF
------------------------------------- -------------------------------------
FOR THE FOR THE
SIX MONTHS FOR THE YEAR SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
JUNE 30, 2005 DECEMBER 31, 2004 JUNE 30, 2005 DECEMBER 31, 2004
-------------- -------------------- -------------- --------------------
(UNAUDITED) (UNAUDITED)
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 39,829 $ 93,252 $ 128,623 $ 169,566
Net realized gains (losses) from investment
transactions 442,401 1,043,147 (2,392) 17,252
Change in unrealized appreciation/depreciation
from investments (743,541) 62,677 18,997 2,482,753
-------------- -------------------- -------------- --------------------
Change in net assets from operations (261,311) 1,199,076 145,228 2,669,571
-------------- -------------------- -------------- --------------------
DIVIDENDS TO SHAREHOLDERS:
Net investment income (40,114) (93,247) (128,625) (169,566)
-------------- -------------------- -------------- --------------------
Change in net assets from shareholder dividends (40,114) (93,247) (128,625) (169,566)
-------------- -------------------- -------------- --------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 1,185,488 3,514,255 1,178,107 3,400,142
Dividends reinvested 112,011 1,683 119,365 134,465
Value of shares redeemed (412,547) (786,493) (344,985) (1,029,876)
-------------- -------------------- -------------- --------------------
Change in net assets from capital transactions 884,952 2,729,445 952,487 2,504,731
-------------- -------------------- -------------- --------------------
Change in net assets 583,527 3,835,274 969,090 5,004,736
-------------- -------------------- -------------- --------------------
NET ASSETS:
Beginning of period 22,299,692 18,464,418 25,610,835 20,606,099
-------------- -------------------- -------------- --------------------
End of period $ 22,883,219 $ 22,299,692 $ 26,579,925 $ 25,610,835
============== ==================== ============== ====================
SHARE TRANSACTIONS:
Issued 120,325 363,360 119,489 369,676
Reinvested 11,123 179 12,017 14,730
Redeemed (41,958) (81,015) (35,092) (112,905)
-------------- -------------------- -------------- --------------------
Change in Shares 89,490 282,524 96,414 271,501
============== ==================== ============== ====================
Accumulated net investment income (loss) $ (280) $ 5 $ (2) $ --
============== ==================== ============== ====================
<Caption>
BB&T BB&T
SPECIAL OPPORTUNITIES TOTAL RETURN
EQUITY VIF BOND VIF
------------------------------------- -------------------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE PERIOD
SIX MONTHS JULY 22, 2004 SIX MONTHS JULY 22, 2004
ENDED THROUGH ENDED THROUGH
JUNE 30, 2005 DECEMBER 31, 2004 (a) JUNE 30, 2005 DECEMBER 31, 2004 (a)
-------------- --------------------- -------------- ---------------------
(UNAUDITED) (UNAUDITED)
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (70,430) $ (57,905) $ 242,892 $ 157,989
Net realized gains (losses) from investment
transactions 607,223 480,367 (17,116) 51,592
Change in unrealized appreciation/depreciation
from investments 327,831 3,044,793 178,283 54,161
-------------- -------------------- -------------- --------------------
Change in net assets from operations 864,624 3,467,255 404,059 263,742
-------------- -------------------- -------------- --------------------
DIVIDENDS TO SHAREHOLDERS:
Net investment income -- -- (243,632) (144,938)
-------------- -------------------- -------------- --------------------
Change in net assets from shareholder dividends -- -- (243,632) (144,938)
-------------- -------------------- -------------- --------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 5,274,933 17,578,780 1,111,276 15,425,182
Dividends reinvested -- -- 232,307 109,130
Value of shares redeemed (223,416) (2,297) (35,826) (521)
-------------- -------------------- -------------- --------------------
Change in net assets from capital transactions 5,051,517 17,576,483 1,307,757 15,533,791
-------------- -------------------- -------------- --------------------
Change in net assets 5,916,141 21,043,738 1,468,184 15,652,595
-------------- -------------------- -------------- --------------------
NET ASSETS:
Beginning of period 21,043,738 -- 15,652,595 --
-------------- -------------------- -------------- --------------------
End of period $ 26,959,879 $ 21,043,738 $ 17,120,779 $ 15,652,595
============== ==================== ============== ====================
SHARE TRANSACTIONS:
Issued 435,933 1,736,446 110,366 1,542,200
Reinvested -- -- 23,037 10,818
Redeemed (18,448) (203) (3,549) (52)
-------------- -------------------- -------------- --------------------
Change in Shares 417,485 1,736,243 129,854 1,552,966
============== ==================== ============== ====================
Accumulated net investment income (loss) $ (70,430) $ -- $ 44,894 $ 45,634
============== ==================== ============== ====================
</Table>
<Page>
BB&T VARIABLE INSURANCE FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT THE
PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
--------------------------------------------
NET ASSET NET REALIZED/
VALUE, NET UNREALIZED GAINS TOTAL FROM
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT
OF PERIOD INCOME (LOSS) INVESTMENTS ACTIVITIES
--------- ------------- ---------------- ----------
BB&T LARGE CAP VALUE VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 13.35 0.13 0.06 0.19
Year Ended December 31, 2004 $ 12.00 0.22 1.35 1.57
Year Ended December 31, 2003 $ 9.88 0.19 2.12 2.31
Year Ended December 31, 2002 $ 12.50 0.17 (2.62) (2.45)
Year Ended December 31, 2001 $ 12.66 0.17 (0.16) 0.01
Year Ended December 31, 2000 $ 12.46 0.39 0.63 1.02
BB&T MID CAP GROWTH VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 13.70 (0.02) 0.20 0.18
Year Ended December 31, 2004 $ 11.69 (0.05) 2.06 2.01
Year Ended December 31, 2003 $ 8.56 (0.06) 3.19 3.13
Year Ended December 31, 2002 $ 10.70 (0.09) (2.05) (2.14)
October 15, 2001 to December 31, 2001 (a) $ 10.00 (0.01) (0.71) 0.70
BB&T LARGE COMPANY GROWTH VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 10.14 0.02 (0.14) (0.12)
Year Ended December 31, 2004 $ 9.64 0.04 0.50 0.54
Year Ended December 31, 2003 $ 7.53 (0.02) 2.13 2.11
Year Ended December 31, 2002 $ 10.83 (0.06) (3.24) (3.30)
October 15, 2001 to December 31, 2001 (a) $ 10.00 (0.01) 0.84 0.83
BB&T CAPITAL MANAGER EQUITY VIF***
For the Six Months Ended June 30, 2005 (Unaudited) $ 9.99 0.05 0.00(b) 0.05
Year Ended December 31, 2004 $ 8.99 0.07 1.00 1.07
Year Ended December 31, 2003 $ 7.19 0.03 1.80 1.83
Year Ended December 31, 2002 $ 9.28 0.01 (1.98) (1.97)
May 1, 2001 to December 31, 2001 (a) $ 10.00 0.01 (0.72) (0.71)
BB&T SPECIAL OPPORTUNITIES EQUITY VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 12.12 (0.04) 0.44 0.40
July 22, 2004 to December 31, 2004 (a) $ 10.00 (0.04) 2.16 2.12
BB&T TOTAL RETURN BOND VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 10.08 0.15 0.09 0.24
July 22, 2004 to December 31, 2004 (a) $ 10.00 0.10 0.08 0.18
</Table>
- ----------
* During the period certain fees were reduced. If such reductions had not
occurred, the ratios would have been as indicated.
** Total return ratios are based on a share outstanding throughout the period
and assume reinvestment of distributions at a net asset value. Total return
ratios do not reflect charges persuant to the terms of the insurance
contracts funded by separate accounts that invest in the Fund's shares.
*** The expense ratios exclude the impact of fees/expenses paid indirectly at
the underlying fund level.
(a) Period from commencement of operations.
(b) Amount is less than $0.005.
(c) Not annualized for periods less than one year.
(d) Annualized for periods less than one year.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<Page>
<Table>
<Caption>
DISTRIBUTIONS
----------------------------------------------------
NET ASSET
NET NET REALIZED VALUE,
INVESTMENT RETURN OF GAINS ON TOTAL END OF TOTAL
INCOME CAPITAL INVESTMENTS DISTRIBUTIONS PERIOD RETURN** (c)
---------- --------- ------------ ------------- --------- ------------
BB&T LARGE CAP VALUE VIF
For the Six Months Ended June 30, 2005 (Unaudited) (0.13) -- -- (0.13) $ 13.41 1.39%
Year Ended December 31, 2004 (0.22) -- -- (0.22) $ 13.35 13.18%
Year Ended December 31, 2003 (0.19) (0.00)(b) -- (0.19) $ 12.00 23.62%
Year Ended December 31, 2002 (0.17) -- -- (0.17) $ 9.88 (19.64)%
Year Ended December 31, 2001 (0.17) -- -- (0.17) $ 12.50 0.16%
Year Ended December 31, 2000 (0.42) -- (0.40) (0.82) $ 12.66 8.45%
BB&T MID CAP GROWTH VIF
For the Six Months Ended June 30, 2005 (Unaudited) -- -- -- -- $ 13.88 1.31%
Year Ended December 31, 2004 -- -- -- -- $ 13.70 17.19%
Year Ended December 31, 2003 -- -- -- -- $ 11.69 36.57%
Year Ended December 31, 2002 -- -- -- -- $ 8.56 (20.00)%
October 15, 2001 to December 31, 2001 (a) -- -- -- -- $ 10.70 7.00%
BB&T LARGE COMPANY GROWTH VIF
For the Six Months Ended June 30, 2005 (Unaudited) (0.02) -- -- (0.02) $ 10.00 (1.20)%
Year Ended December 31, 2004 (0.04) -- -- (0.04) $ 10.14 5.63%
Year Ended December 31, 2003 -- -- -- -- $ 9.64 28.02%
Year Ended December 31, 2002 -- -- -- -- $ 7.53 (30.47)%
October 15, 2001 to December 31, 2001 (a) -- -- -- -- $ 10.83 8.30%
BB&T CAPITAL MANAGER EQUITY VIF***
For the Six Months Ended June 30, 2005 (Unaudited) (0.05) -- -- (0.05) $ 9.99 0.49%
Year Ended December 31, 2004 (0.07) -- -- (0.07) $ 9.99 11.91%
Year Ended December 31, 2003 (0.03) -- -- (0.03) $ 8.99 25.47%
Year Ended December 31, 2002 (0.01) -- (0.11) (0.12) $ 7.19 (21.25)%
May 1, 2001 to December 31, 2001 (a) (0.01) -- -- (0.01) $ 9.28 (7.08)%
BB&T SPECIAL OPPORTUNITIES EQUITY VIF
For the Six Months Ended June 30, 2005 (Unaudited) -- -- -- -- $ 12.52 3.30%
July 22, 2004 to December 31, 2004 (a) -- -- -- -- $ 12.12 21.20%
BB&T TOTAL RETURN BOND VIF
For the Six Months Ended June 30, 2005 (Unaudited) (0.15) -- -- (0.15) $ 10.17 2.41%
July 22, 2004 to December 31, 2004 (a) (0.10) -- -- (0.10) $ 10.08 1.76%
<Caption>
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------
RATIO OF NET
RATIO OF INVESTMENT RATIO OF
NET ASSETS, EXPENSES TO INCOME (LOSS) EXPENSES TO
END OF AVERAGE TO AVERAGE AVERAGE PORTFOLIO
PERIOD (000) NET ASSETS (d) NET ASSETS (d) NET ASSETS* (d) TURNOVER (c)
------------ -------------- -------------- --------------- ------------
BB&T LARGE CAP VALUE VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 110,971 0.79% 1.91% 1.06% 11.73%
Year Ended December 31, 2004 $ 111,612 0.81% 1.77% 1.10% 12.91%
Year Ended December 31, 2003 $ 94,683 0.88% 1.82% 1.17% 13.96%
Year Ended December 31, 2002 $ 63,667 0.84% 1.57% 1.13% 15.24%
Year Ended December 31, 2001 $ 77,796 0.86% 1.17% 1.15% 14.47%
Year Ended December 31, 2000 $ 60,675 0.86% 3.13% 1.13% 25.46%
BB&T MID CAP GROWTH VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 33,417 0.78% (0.28)% 1.14% 54.40%
Year Ended December 31, 2004 $ 32,407 0.83% (0.44)% 1.22% 135.55%
Year Ended December 31, 2003 $ 23,903 0.98% (0.78)% 1.37% 113.75%
Year Ended December 31, 2002 $ 10,864 1.23% (1.05)% 1.62% 96.89%
October 15, 2001 to December 31, 2001 (a) $ 10,713 1.19% (0.55)% 1.58% 3.82%
BB&T LARGE COMPANY GROWTH VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 22,883 0.82% 0.36% 1.18% 34.95%
Year Ended December 31, 2004 $ 22,300 0.86% 0.46% 1.26% 119.90%
Year Ended December 31, 2003 $ 18,464 1.04% (0.32)% 1.44% 90.57%
Year Ended December 31, 2002 $ 9,328 1.31% (0.73)% 1.71% 93.65%
October 15, 2001 to December 31, 2001 (a) $ 10,876 1.19% (0.32)% 1.59% 16.20%
BB&T CAPITAL MANAGER EQUITY VIF***
For the Six Months Ended June 30, 2005 (Unaudited) $ 26,580 0.33% 1.00% 0.52% 0.70%
Year Ended December 31, 2004 $ 25,611 0.34% 0.75% 0.54% 1.09%
Year Ended December 31, 2003 $ 20,606 0.56% 0.40% 0.66% 10.06%
Year Ended December 31, 2002 $ 14,804 0.64% 0.15% 0.74% 3.47%
May 1, 2001 to December 31, 2001 (a) $ 16,295 0.54% 0.18% 0.63% 9.18%
BB&T SPECIAL OPPORTUNITIES EQUITY VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 26,960 1.28% (0.59)% 1.28% 12.66%
July 22, 2004 to December 31, 2004 (a) $ 21,044 1.45% (0.76)% 1.45% 13.81%
BB&T TOTAL RETURN BOND VIF
For the Six Months Ended June 30, 2005 (Unaudited) $ 17,121 1.14% 3.01% 1.18% 13.91%
July 22, 2004 to December 31, 2004 (a) $ 15,653 1.29% 2.34% 1.29% 36.74%
</Table>
<Page>
BB&T VARIABLE INSURANCE FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2005 (UNAUDITED)
1. ORGANIZATION:
The BB&T Variable Insurance Funds (the "Trust") was organized on November
8, 2004, and is 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 Trust commenced operations on May 1,
2005 and the Trust presently offers shares of the BB&T Large Cap Value VIF,
the BB&T Mid Cap Growth VIF, the BB&T Large Company Growth VIF, the BB&T
Capital Manager Equity VIF, the BB&T Special Opportunities Equity VIF, and
the BB&T Total Return Bond VIF (referred to individually as a "Fund" and
collectively as the "Funds"). The Trust is authorized to issue an unlimited
number of shares of beneficial interest without par value. Shares of the
Funds are offered through variable annuity contracts offered through the
separate accounts of participating insurance companies. The BB&T Capital
Manager Equity VIF (the "Fund of Fund") invests in other Fund Portfolios as
opposed to individual securities. Prior to May 1, 2005 the Funds operated
as a separate series of the Variable Insurance Funds, an investment company
organized as a Massachusetts business trust and registered under the 1940
Act as a diversified, open-end management investment company.
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 Trust in the preparation of its financial statements. The policies are
in conformity with accounting principles generally accepted in the United
States of America ("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 period. Actual results
could differ from those estimates. The Fund of Fund seeks its investment
objective of capital appreciation by investing solely in a diversified
portfolio of mutual funds (the "Underlying Funds"). The Fund purchases
shares of the Underlying Funds at net asset value and without sales charge.
SECURITIES VALUATION--Investments in common stocks, commercial paper,
corporate bonds, municipal securities, U.S. Government securities, and U.S.
Government agency securities, 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
quotations in the principal market in which such securities are normally
traded. The 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 fair value. Investments in open-end investment companies,
including the Fund of Fund, 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
reflected as either unrealized appreciation or depreciation. Securities for
which market quotations are not readily available 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
for significant events, such as securities whose trading has been
suspended, whose price has become stale or for which there is no currently
available price.
SECURITIES TRANSACTIONS AND RELATED INCOME--Securities transactions are
accounted for no later than one business day after trade date. However, for
financial reporting purposes, security transactions are accounted for on
trade date. Interest income is recognized on the accrual basis and
includes, where applicable, the pro-rata 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.
WHEN-ISSUED--The Funds, may purchase securities on a "when-issued" basis.
The Funds record when-issued securities on the trade date and pledge assets
with a value equal to the purchase commitment for payment of the securities
purchased. The value of the securities underlying when-issued securities
and any subsequent fluctuation in their fair 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 held no when-issued
securities at June 30, 2005.
<Page>
REPURCHASE AGREEMENTS--The Funds may acquire repurchase agreements from
member banks of the Federal Deposit Insurance Corporation and from
registered broker/dealers that BB&T Asset Management, Inc. ("BB&T") deems
creditworthy under guidelines approved by the Board of Trustees, subject to
the seller's agreement to repurchase such securities at a mutually
agreed-upon date and price. The repurchase price generally equals the price
paid by the Funds plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the underlying
collateral. The seller under a repurchase agreement is required to maintain
the value of collateral held pursuant to the agreement at not less than the
repurchase price, including accrued interest. Securities subject to
repurchase agreements are held by the Funds' custodian or another qualified
custodian or in the Federal Reserve/Treasury book-entry system.
OPTION CONTRACTS--The funds may write or purchase option contracts. These
transactions are to hedge against changes in interest rates, security
prices, currency fluctuations, and other market developments, or for the
purposes of earning additional income (i.e. speculation).
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 premium and change in market 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 premiums paid.
In writing an option, the Funds contract with a specified counterparty to
purchase (written put option) or sell (written call option) 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 following is a summary of option activity for the period ended June 30,
2005:
<Table>
<Caption>
BB&T
SPECIAL
OPPORTUNITIES
EQUITY VIF
------------------------
COVERED CALL OPTIONS CONTRACTS PREMIUMS
-------------------- --------- ---------
Balance at beginning of period 291 $ 43,616
Options written 584 24,943
Options closed 90 6,030
Options expired 429 19,208
Options exercised 356 43,321
--------- ---------
Balance at end of period -- $ --
========= =========
</Table>
DIVIDENDS AND DISTRIBUTIONS--Dividends from net investment income are
declared and paid quarterly for the Funds, with the exception of the Total
Return Bond Fund, in which case dividends from net investment income are
declared daily and paid monthly. 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 the accounting
principles generally accepted in the United States of America. These
"book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature (i.e.
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 Funds' policy to continue to comply with
the requirement of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its net
investment company taxable income and net capital gains to shareholders.
Therefore, no federal income tax provision is required.
OTHER--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. Expenses which are attributable to more than one
Trust are allocated across the BB&T Variable Insurance Funds and BB&T Funds
Trusts, based upon relative net assets or on another reasonable basis.
<Page>
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term and U.S. Government
securities) for the period ended June 30, 2005 are as follows:
<Table>
<Caption>
PURCHASES SALES
------------ ------------
BB&T Large Cap Value VIF $ 12,622,313 $ 14,835,169
BB&T Mid Cap Growth VIF 18,160,130 16,472,621
BB&T Large Company Growth VIF 7,899,765 7,369,229
BB&T Capital Manager Equity VIF 1,005,000 7,000
BB&T Special Opportunities Equity VIF 6,820,320 2,992,346
BB&T Total Return Bond VIF 3,151,177 2,186,246
</Table>
Purchases and sales of long-term U.S. Government Securities for the period
ended June 30, 2005 for the BB&T Total Return Bond VIF were $487,250 and
$0, respectively.
4. 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.
Information regarding these transactions is as follows for the period ended
June 30, 2005:
<Table>
<Caption>
FEE RATE AFTER
CONTRACTUAL CONTRACTUAL
FEE RATE WAIVERS
----------- --------------
BB&T Large Cap Value VIF 0.74% 0.50%
BB&T Mid Cap Growth VIF 0.74% 0.50%
BB&T Large Company Growth VIF 0.74% 0.50%
BB&T Capital Manager Equity VIF 0.25% 0.00%
BB&T Special Opportunities Equity VIF 0.80% 0.80%
BB&T Total Return Bond VIF 0.60% 0.50%
</Table>
Pursuant to a sub-advisory agreement with BB&T, Scott & Stringfellow, Inc.
serves as the sub-advisor to the BB&T Special Opportunities Equity VIF,
subject to the general supervision of the Trusts' Board of Trustees and
BB&T. Effective July 11, 2005, pursuant to a Sub-Advisory agreement with
BB&T, Sterling Capital Management LLC will serve as the Sub-Advisor to the
BB&T Total Return Bond VIF, subject to the general supervision of the
Trusts' Board of Trustees and BB&T. For their services, the Sub-Advisors
are entitled to a fee payable by BB&T.
For the period ended June 30, 2005, the Funds' paid $11,190 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 May 1, 2005, 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 Variable Insurance Funds and BB&T Funds aggregate average
daily net assets up to $5 billion, and a rate of 0.08% of the 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." During the period, BB&T waived
administration fees of $5,245 for the Capital Manager Equity VIF. Pursuant
to a Sub-Administration Agreement with BB&T, BISYS serves as
sub-administrator to the Trust subject to the general supervision of the
Trusts' Board of Trustees and BB&T. For these services, BISYS is entitled
to a fee payable by BB&T.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services
("BISYS"), an Ohio Limited Partnership, and BISYS Fund Services Ohio, Inc.
("BISYS Ohio") are subsidiaries of the BISYS Group, Inc. BISYS, with whom
certain officers of the Funds are affiliated, serves the Funds as
distributor. BISYS Ohio served the Funds as fund accountant and transfer
agent. Prior to May 1, 2005, BISYS and BISYS Ohio received compensation for
providing administration, fund accounting and transfer agency services fees
computed daily as a percentage of the average net assets of Funds. The fee
was accrued daily and payable on a monthly basis. During the period, BISYS
waived administration fees of $54,844 for the BB&T Large Cap Value VIF.
BISYS provided an employee to serve as Chief Compliance Officer for the
Funds including providing certain related services for which it received an
additional fee.
Effective May 1, 2005, BISYS Ohio serves the Funds as fund accountant and
transfer agent. BISYS Ohio 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
<Page>
of each Fund. The fee is accrued daily and payable on a monthly basis. In
addition, BISYS provides an employee to serve as Chief Compliance Officer
for the Funds including providing certain related services for which it
receives an additional fee.
The Trust has adopted a Variable Contract Owner Servicing Plan (the
"Service Plan") under which the Funds may pay a fee computed daily and paid
monthly, at an annual rate of up to 0.25% of the average daily net assets
of the Funds. A servicing agent may periodically waive all or a portion of
its servicing fees. For the period ended June 30, 2005, the Funds did not
participate in any service plans.
Certain Officers and Trustees of the Trust 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, except the Chief Compliance Officer. Each of the 5 non-interested
Trustees who serve both on the Board and the audit committee are
compensated $1,750 ($14,500 in total) for meeting and retainer fees, plus
reimbursement for certain expenses.
5. FEDERAL INCOME TAX INFORMATION
As of the latest tax year end of December 31, 2004, the following Funds had
net realized loss carryforwards to offset future net realized 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.
<Table>
<Caption>
AMOUNT EXPIRES
----------- -------
BB&T Large Cap Value VIF $ 1,429,625 2009
BB&T Large Cap Value VIF 3,680,446 2010
BB&T Large Cap Value VIF 1,449,740 2011
BB&T Mid Cap Growth VIF 261,557 2010
BB&T Large Company Growth VIF 658,956 2010
BB&T Large Company Growth VIF 69,106 2011
BB&T Capital Manager Equity VIF 101,476 2010
BB&T Capital Manager Equity VIF 338,725 2011
</Table>
At June 30, 2005 the cost, gross unrealized appreciation and gross
unrealized depreciation on securities, for federal income tax purposes,
were as follows:
<Table>
<Caption>
NET
TAX TAX UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------- ------------- -------------
BB&T Large Cap Value VIF $ 92,451,399 $ 20,235,930 $ (2,171,645) $ 18,064,285
BB&T Mid Cap Growth VIF 25,771,386 7,791,281 (237,749) 7,553,532
BB&T Large Company Growth VIF 21,029,264 2,480,956 (609,672) 1,871,284
BB&T Capital Manager Equity VIF 24,863,802 1,959,058 (223,920) 1,735,138
BB&T Special Opportunities Equity VIF 23,938,844 3,861,461 (488,837) 3,372,624
BB&T Total Return Bond VIF 16,794,247 325,359 (141,609) 183,750
</Table>
6. BOARD CONSIDERATION OF ADVISORY AND SUB-ADVISORY ARRANGEMENTS
The Board of Trustees approved the Investment Advisory Agreement and the
Sub-Advisory Agreement at a meeting held on February 28, 2005. In
determining whether it was appropriate to approve the Investment Advisory
Agreement and Sub-Advisory Agreement, the Board of Trustees requested
information, provided by BB&T Asset Management and the Sub-Adviser, that it
believed to be reasonably necessary to reach its conclusion. The Board of
Trustees carefully evaluated this information, and was advised by legal
counsel with respect to its deliberations. Based on its review of the
information requested and provided, the Board of Trustees determined that
the Investment Advisory Agreement and the Sub-Advisory Agreement is
consistent with the best interests of each Fund to which it applies and its
shareholders, and enables each Fund to receive high quality services at a
cost that is appropriate, reasonable, and in the best interests of the
Funds and their shareholders. The Board of Trustees made these
determinations on the basis of the following considerations, among others:
- The investment advisory fees payable to BB&T Asset Management and the
Sub-Adviser under the Investment Advisory Agreement and the
Sub-Advisory Agreement are fair and reasonable in light of the
services to be provided, the anticipated costs of these services, the
profitability of BB&T Asset Management's and the Sub-Adviser's
relationship with the Funds, and the comparability of the proposed
fees to fees paid by comparable mutual funds;
- The Investment Advisory Agreement and the Sub-Advisory Agreement did
not increase current investment advisory fees or overall operating
expenses of each then operational Fund to which it applies over
historical fee and expense levels;
<Page>
- The continuity of each then operational Fund's current portfolio
manager and other persons responsible for management of the Fund,
which should help ensure continuity of management and consistency of
performance;
- The nature, quality and extent of the investment advisory services
provided by BB&T Asset Management and the Sub-Adviser, in light of the
high quality services provided to the then operational Funds in the
past and the other mutual funds advised by BB&T Asset Management and
the Sub-Adviser and the then operational Funds' historic performance,
including achievement of stated investment objectives;
- BB&T Asset Management's and the Sub-Adviser's representations
regarding its staffing and capabilities to manage the Funds, including
the retention of personnel with significant portfolio management
experience;
- BB&T Asset Management's and the Sub-Adviser's entrepreneurial
commitment to the management and success of the Funds, which could
entail a substantial commitment of resources to the successful
operation of the Funds;
- The overall high quality of the personnel, operations, financial
condition, investment management capabilities, methodologies, and
performance of BB&T Asset Management and the Sub-Adviser.
Accordingly, in light of the above considerations and such other factors
and information it considered relevant, the Board of Trustees unanimously
approved the Investment Advisory Agreement and the Sub-Advisory Agreement.
7. OTHER INFORMATION
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 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.
Schedules of Portfolio Investments for quarters ending March 31 and
September 30 are available without charge, on the Securities and Exchange
Commission's website at http://www.sec.gov.
<Page>
ITEM 2. CODE OF ETHICS.
Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or a
third party. If the registrant has not adopted such a code of ethics,
explain why it has not done so.
The registrant must briefly describe the nature of any amendment, during
the period covered by the report, to a provision of its code of ethics that
applies to the registrant's principal executive officer, principal
financial officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of
this Item. The registrant must file a copy of any such amendment as an
exhibit pursuant to Item 12(a)(1), unless the registrant has elected to
satisfy paragraph (f) of this Item by posting its code of ethics on its
website pursuant to paragraph (f)(2) of this Item, or by undertaking to
provide its code of ethics to any person without charge, upon request,
pursuant to paragraph (f)(3) of this Item.
If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of
ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, that relates
to one or more items set forth in paragraph (b) of this Item, the
registrant must briefly describe the nature of the waiver, the name of the
person to whom the waiver was granted, and the date of the waiver.
NOT APPLICABLE - ONLY FOR ANNUAL REPORTS.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of directors has
determined that the registrant either:
(i) Has at least one audit committee financial expert
serving on its audit committee; or
(ii) Does not have an audit committee financial expert
serving on its audit committee.
(2) If the registrant provides the disclosure required by
paragraph (a)(1)(i) of this Item, it must disclose the name of
the audit committee financial expert and whether that person is
"independent." In order to be considered "independent" for
purposes of this Item, a member of an audit committee may not,
other than in his or her capacity as a member of the audit
committee, the board of directors, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory,
or other compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as
defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-
2(a)(19)).
(3) If the registrant provides the disclosure required by
paragraph (a)(1)(ii) of this Item, it must explain why it does
not have an audit committee financial expert.
NOT APPLICABLE - ONLY FOR ANNUAL REPORTS.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed
for each of the last two fiscal years for professional services rendered by the
principal accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees
billed in each of the last two fiscal years for assurance and related services
by the principal accountant that are reasonably related to the performance of
the audit of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in
each of the last two fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning.
Registrants shall describe the nature of the services comprising the fees
disclosed under this category.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees
billed in each of the last two fiscal years for products and services provided
by the principal accountant, other than the services reported in paragraphs (a)
through (c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
(e) (1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by the audit
committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
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(f) If greater than 50 percent, disclose the percentage of hours
expended on the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were attributed to
work performed by persons other than the principal accountant's full-time,
permanent employees.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant for
each of the last two fiscal years of the registrant.
(h) Disclose whether the registrant's audit committee of the board of
directors has considered whether the provision of nonaudit services that were
rendered to the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling, controlled
by, or under common control with the investment adviser that provides ongoing
services to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the
principal accountant's independence.
NOT APPLICABLE - ONLY FOR ANNUAL REPORTS.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) If the registrant is a listed issuer as defined in Rule 10A-3 under
the Exchange Act (17CFR 240.10A-3), state whether or not the
registrant has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Exchange
Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a
committee, however designated, identify each committee member. If
the entire board of directors is acting as the registrant's audit
committee as specified in Section 3(a)(58)(B) of the Exchange Act
(15 U.S.C. 78c(a)(58)(B)), so state.
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17CFR 240.10A-3(d)) regarding an exemption
from the listing standards for all audit committees.
NOT APPLICABLE.
ITEM 6. SCHEDULE OF INVESTMENTS.
File Schedule I - Investments in securities of unaffiliated issuers as of the
close of the reporting period as set forth in Section 210.12-12 of Regulation
S-X, unless the schedule is included as part of the report to shareholders filed
under Item 1 of this Form.
NOT APPLICABLE.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual
report on this Form N-CSR must, unless it invests exclusively in non-voting
securities, describe the policies and procedures that it uses to determine how
to vote proxies relating to portfolio securities, including the procedures that
the company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
NOT APPLICABLE.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
If the registrant is a closed-end management investment company that is filing
an annual report on this Form N-CSR, provide the information specified in
paragraphs (a) and (b) of this Item with respect to portfolio managers.
NOT APPLICABLE.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
If the registrant is a closed-end management investment company, provide the
information specified in paragraph (b) of this Item with respect to any purchase
made by or on behalf of the registrant or any "affiliated purchaser," as defined
in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares
or other units of any class of the registrant's equity securities that is
registered by the registrant pursuant to Section 12 of the Exchange Act (15
U.S.C. 781).
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NOT APPLICABLE.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Describe any material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors, where those changes
were implemented after the registrant last provided disclosure in response to
the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or
this Item.
DURING THE PERIOD COVERED BY THE REPORT, WITH RESPECT TO THE REGISTRANT'S
PROCEDURES BY WHICH SHAREHOLDERS MAY RECOMMEND NOMINEES TO THE REGISTRANT'S
BOARD OF DIRECTORS, THERE HAVE BEEN NO AMENDMENTS TO, NOR ANY WAIVERS GRANTED
FROM, A PROVISION THAT RELATES TO ANY ELEMENTS OF THIS ITEM 10.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive
and principal financial officers, or persons performing similar functions,
regarding the effectiveness of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as
of a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph, based on the evaluation of these controls
and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and
Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or
240.15d-15(b)).
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
HAVE CONCLUDED, BASED ON THEIR EVALUATION OF THE REGISTRANT'S DISCLOSURE
CONTROLS AND PROCEDURES AS CONDUCTED WITHIN 90 DAYS OF THE FILING DATE OF THIS
REPORT, THAT THESE DISCLOSURE CONTROLS AND PROCEDURES ARE ADEQUATELY DESIGNED
AND ARE OPERATING EFFECTIVELY TO ENSURE THAT INFORMATION REQUIRED TO BE
DISCLOSED BY THE REGISTRANT ON FORM N-CSR IS (i) ACCUMULATED AND COMMUNICATED TO
THE INVESTMENT COMPANY'S MANAGEMENT, INCLUDING ITS CERTIFYING OFFICERS, TO ALLOW
TIMELY DECISIONS REGARDING REQUIRED DISCLOSURE; AND (ii) RECORDED, PROCESSED,
SUMMARIZED AND REPORTED WITHIN THE TIME PERIODS SPECIFIED IN THE SECURITIES AND
EXCHANGE COMMISSION'S RULES AND FORMS.
(b) Disclose any change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that
occurred during the second fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
THERE WERE NO CHANGES IN THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL
REPORTING THAT OCCURRED DURING THE SECOND FISCAL QUARTER OF THE PERIOD COVERED
BY THIS REPORT THAT HAVE MATERIALLY AFFECTED OR ARE REASONABLY LIKELY TO
MATERIALLY AFFECT, THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL REPORTING.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or
number the exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject
of the disclosure required by Item 2, to the extent that the registrant intends
to satisfy the Item 2 requirements through filing of an exhibit. NOT APPLICABLE
- - ONLY EFFECTIVE FOR ANNUAL REPORTS.
(a)(2) A separate certification for each principal executive officer
and principal financial officer of the registrant as required by Rule 30a-2(a)
under the Act (17 CFR 270.30a-2). CERTIFICATIONS PURSUANT TO RULE 30A-2(a) ARE
ATTACHED HERETO.
(a)(3) Any written solicitation to purchase securities under Rule
23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered
by the report by or on behalf of the registrant to 10 or more persons. NOT
APPLICABLE.
(b) If the report is filed under Section 13(a) or 15(d) of the
Exchange Act, provide the certifications required by rule 30a-2(b) under the Act
as an exhibit. A certification furnished pursuant to this paragraph will not be
deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise
subject to the liability of that section. Such certification will not be deemed
to be incorporated by reference into any filing under the Securities Act of 1933
or the Exchange Act, except to the extent that the registrant incorporates it by
reference. CERTIFICATIONS PURSUANT TO RULE 30A-2(b) ARE FURNISHED HEREWITH.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) BB&T Variable Insurance Funds
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By (Signature and Title)* /s/Troy A. Sheets, Treasurer
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Troy A. Sheets, Treasurer
Date August 26, 2005
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Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Keith F. Karlawish, President
--------------------------------------------------
Keith F. Karlawish, President
Date August 26, 2005
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By (Signature and Title)* /s/Troy A. Sheets, Treasurer
--------------------------------------------------
Troy A. Sheets, Treasurer
Date August 26, 2005
------------------------------------