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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 15, 1997
FILE NO. 33-45671
FILE NO. 811-6557
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 22 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 24 /X/
STI CLASSIC FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
2 OLIVER STREET
BOSTON, MASSACHUSETTS 02109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE (800) 342-5734
DAVID G. LEE
C/O SEI INVESTMENTS COMPANY
ONE FREEDOM VALLEY ROAD
OAKS, PENNSYLVANIA 19456
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copies to:
RICHARD W. GRANT, ESQ. JOHN H. GRADY, JR., ESQ.
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE 1800 M STREET, N.W.
PHILADELPHIA, PA 19103 WASHINGTON, D.C. 20036
It is proposed that this filing will become effective (check appropriate
box)
X Immediately upon filing pursuant to paragraph (b), or
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On [DATE] pursuant to paragraph (b), or
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60 days after filing pursuant to paragraph (a) or
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75 days after filing pursuant to paragraph (a) or
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On [DATE] pursuant to paragraph (a) of Rule 485.
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STI CLASSIC FUNDS
CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT #22
N-1A ITEM NO. LOCATION
- ------------- --------
PART A - ALL FUNDS
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Summary
Item 3. Condensed Financial Information *
Item 4. General Description of Funds and Investment Objectives;
Registrant Investment Policies and Strategies;
General Investment Policies and
Strategies; Investment Risks;
Investment Limitations; Appendix
Item 5. Management of the Fund Board of Trustees; Investment
Advisor; Distribution;
Administration
Item 5a. *
Item 6. Capital Stock and Other Voting Rights; Shareholder
Securities Inquiries; Dividends and
Distributions; Tax Information
Item 7. Purchase of Securities Being Cover Page; Purchase of Fund
Offered Shares; Redemption of Fund Shares
Item 8. Redemption or Repurchase Purchase of Fund Shares; Redemption
of Fund Shares; Distribution
Item 9. Pending Legal Proceedings *
PART B - ALL FUNDS
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust
Item 13. Investment Objectives and Description of Permitted
Policies Investments; Investment Limitations
Item 14. Management of the Registrant Trustees and Officers of the Trust;
The Administrator
Item 15. Control Persons and Principal Trustees and Officers of the Trust
Holders of Securities
Item 16. Investment Advisory and Other Investment Advisor; The
Services Administrator; The Distributor;
Legal Counsel (Prospectus);
Independent Auditors (Prospectus);
Experts
Item 17. Brokerage Allocation Fund Transactions
Item 18. Capital Stock and Other Description of Shares
Securities
Item 19. Purchase, Redemption, and Purchase and Redemption of
Pricing of Securities Being Shares;
Offered Determination of Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Yield Quotations Computation of Yield; Calculation
of Total Return
Item 23. Financial Statements Financial Information
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PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration
Statement.
* Not applicable
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The Prospectuses for the:
Trust Shares of the Investment Grade Bond Fund, Investment Grade
Tax-Exempt Bond Fund, U.S. Government Securities Fund, Limited-Term
Federal Mortgage Securities Fund, Short-Term Bond Fund, Short-Term
U.S. Treasury Securities Fund, Florida Tax-Exempt Bond Fund, Georgia
Tax-Exempt Bond Fund, Tennessee Tax-Exempt Bond Fund, Prime Quality
Money Market Fund, U.S. Government Securities Money Market Fund,
Tax-Exempt Money Market Fund, Capital Growth Fund, Value Income Stock
Fund, Small Cap Equity Fund, Mid-Cap Equity Fund, Balanced Fund,
Sunbelt Equity Fund, International Equity Index Fund, International
Equity Fund, and Emerging Markets Equity Fund;
Investor Shares and Flex Shares of the Investment Grade Bond Fund,
Investment Grade Tax-Exempt Bond Fund, U.S. Government Securities
Fund, Limited-Term Federal Mortgage Securities Fund, Short-Term Bond
Fund, Short-Term U.S. Treasury Securities Fund, Florida Tax-Exempt
Bond Fund, Georgia Tax-Exempt Bond Fund, Tennessee Tax-Exempt Bond
Fund, Capital Growth Fund, Value Income Stock Fund, Small Cap Equity
Fund, Mid-Cap Equity Fund, Balanced Fund, Sunbelt Equity Fund,
International Equity Index Fund, and International Equity Fund;
Investor Shares of the Prime Quality Money Market Fund, U.S.
Government Securities Money Market Fund, Tax-Exempt Money Market Fund;
and
Trust Shares of the Classic Institutional Cash Management Money Market
Fund and Classic Institutional U.S. Treasury Securities Money Market
Fund
included as part of Post-Effective Amendment No. 21 to the Registrant's
Registration Statement on Form N-1A (File No. 33-45671) filed with the
Securities and Exchange Commission on September 30, 1997, are hereby
incorporated by reference as if set forth in full herein.
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STI CLASSIC FUNDS
INVESTMENT ADVISORS:
STI CAPITAL MANAGEMENT, N.A.
TRUSCO CAPITAL MANAGEMENT, INC.
SUNTRUST BANK, CHATTANOOGA, N.A.
SUNTRUST BANK, ATLANTA
This Statement of Additional Information is not a prospectus. It is intended
to provide additional information regarding the activities and operations of
the Trust and should be read in conjunction with the Trust's prospectuses
dated October 1, 1997. Prospectuses may be obtained through the Distributor,
SEI Investments Distribution Co., One Freedom Valley Road, Oaks, Pennsylvania
19456.
TABLE OF CONTENTS
PAGE
THE TRUST.................................................................B-
DESCRIPTION OF PERMITTED INVESTMENTS......................................B-
INVESTMENT LIMITATIONS....................................................B-
INVESTMENT ADVISORS.......................................................B-
THE ADMINISTRATOR.........................................................B-
THE DISTRIBUTOR...........................................................B-
TRUSTEES AND OFFICERS OF THE TRUST........................................B-
PERFORMANCE INFORMATION...................................................B-
COMPUTATION OF YIELD......................................................B-
CALCULATION OF TOTAL RETURN...............................................B-
PURCHASE AND REDEMPTION OF SHARES.........................................B-
DETERMINATION OF NET ASSET VALUE..........................................B-
TAXES.....................................................................B-
FUND TRANSACTIONS.........................................................B-
TRADING PRACTICES AND BROKERAGE...........................................B-
DESCRIPTION OF SHARES.....................................................B-
SHAREHOLDER LIABILITY.....................................................B-
LIMITATION OF TRUSTEES' LIABILITY.........................................B-
5% AND 25% SHAREHOLDERS...................................................B-
EXPERTS...................................................................B-
FINANCIAL STATEMENTS......................................................B-
October 1, 1997
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THE TRUST
STI Classic Funds (the "Trust") is a diversified, open-end management
investment company established under Massachusetts law as a Massachusetts
business trust under a Declaration of Trust dated January 15, 1992. The
Declaration of Trust permits the Trust to offer separate series ("Funds") of
units of beneficial interest ("shares") and different classes of shares of
each Fund. Shareholders at present may purchase shares of the Trust's money
market funds through two separate classes (Trust Shares and Investor Shares)
and shares of the Trust's other funds through three separate classes (Trust
Shares, Investor Shares and Flex Shares), which provide for variations in
sales charges, distribution costs, transfer agent fees, voting rights and
dividends. Except for these differences, each Trust Share, Investor Share
and Flex Share, if any, of each Fund represents an equal proportionate
interest in that portfolio. See "Description of Shares." This Statement of
Additional Information relates to the:
- Trust Shares and Investor Shares of the Trust's Prime Quality
Money Market Fund, U.S. Government Securities Money Market Fund
and Tax-Exempt Money Market Fund (the "Money Market Funds"):
- Trust Shares, Investor Shares and Flex Shares of the Trust's
Investment Grade Bond Fund, Short-Term U.S. Treasury Securities
Fund, Short-Term Bond Fund, U.S. Government Securities Fund and
Limited-Term Federal Mortgage Securities Fund (the "Bond Funds");
Investment Grade Tax-Exempt Bond Fund, Florida Tax-Exempt Bond
Fund, Georgia Tax-Exempt Bond Fund and Tennessee Tax-Exempt Bond
Fund (the "Tax-Exempt Bond Funds"); Capital Growth Fund, Value
Income Stock Fund, Mid-Cap Equity Fund, Sunbelt Equity Fund,
International Equity Index Fund, International Equity Fund, (the
"Equity Funds"); and the Balanced Fund:
- Trust Shares and Flex Shares of the Small Cap Equity Fund (an
"Equity Fund"); and
- Trust Shares of the Emerging Markets Fund (an "Equity Fund").
These various series are collectively referred to herein as the "Funds."
The Trust pays its expenses, including fees of its service providers, audit
and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to Shareholders, costs of custodial services, and
registering the shares under federal and state securities laws, pricing,
insurance expenses, litigation, and other extraordinary expenses, brokerage
costs, interest charges, taxes, and organization expenses.
DESCRIPTION OF PERMITTED INVESTMENTS
CUSTODIAL RECEIPTS
The custodian arranges for the issuance of the certificates or receipts
evidencing ownership and maintains the register. Receipts include "Treasury
Receipts" ("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"), and
"Certificates of Accrual on Treasury Securities" ("CATS"). TRs, TIGRs and
CATS are sold as zero coupon securities.
STRIPS
Separately Traded Interest and Principal Securities ("STRIPS") are component
parts of U.S. Treasury Securities traded through the Federal Book-Entry
System. An Advisor will only purchase STRIPS that it determines are liquid
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or, if illiquid, do not violate the affected Fund's investment policy
concerning investments in illiquid securities. Consistent with Rule 2a-7
under the Investment Company Act of 1940, as amended, (the "1940 Act"), the
Money Market Funds' Advisor will only purchase STRIPS for Money Market Funds
that have a remaining maturity of 397 days or less; therefore, the Money
Market Funds currently may only purchase interest component parts of U.S.
Treasury Securities. While there is no limitation on the percentage of a
Fund's assets that may be comprised of STRIPS, the Money Market Funds'
Advisor will monitor the level of such holdings to avoid the risk of
impairing shareholders' redemption rights and of deviations in the value of
shares of the Money Market Funds.
VARIABLE RATE MASTER DEMAND NOTES
The Tax-Exempt Money Market Fund, Balanced Fund, Tax-Exempt Bond Funds and
Value Income Stock Fund may invest in variable rate master demand notes which
may or may not be backed by bank letters of credit. These notes permit the
investment of fluctuating amounts at varying market rates of interest
pursuant to direct arrangements between a Fund, as lender, and a borrower.
Such notes provide that the interest rate on the amount outstanding varies on
a daily, weekly or monthly basis depending upon a stated short-term interest
rate index. Both the lender and the borrower have the right to reduce the
amount of outstanding indebtedness at any time. There is no secondary market
for the notes and it is not generally contemplated that such instruments will
be traded. The quality of the note or the underlying credit must, in the
opinion of the appropriate Advisor, be equivalent to the ratings applicable
to permitted investments for the particular Fund. The appropriate Advisor
will monitor on an ongoing basis the earning power, cash flow and liquidity
ratios of the issuers of such instruments and will similarly monitor the
ability of an issuer of a demand instrument to pay principal and interest on
demand.
U.S. GOVERNMENT AGENCY SECURITIES
Certain investments of each of the Funds except the Short-Term U.S. Treasury
Securities Fund may include U.S. Government Agency Securities. Agencies of
the United States Government which issue obligations consist of, among
others, the Export Import Bank of the United States, Farmers Home
Administration, Federal Farm Credit Bank, Federal Housing Administration,
Government National Mortgage Association ("GNMA"), Maritime Administration,
Small Business Administration and The Tennessee Valley Authority.
Obligations of instrumentalities of the United States Government include
securities issued by, among others, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation ("FHLMC"), Federal Intermediate Credit Banks,
Federal Land Banks, Fannie Mae and the United States Postal Service as well
as government trust certificates. Some of these securities are supported by
the full faith and credit of the United States Treasury (E.G., GNMA
securities), others are supported by the right of the issuer to borrow from
the Treasury and still others are supported only by the credit of the
instrumentality (E.G., Fannie Mae securities). Guarantees of principal by
agencies or instrumentalities of the U.S. Government may be a guarantee of
payment at the maturity of the obligation so that in the event of a default
prior to maturity there might not be a market and thus no means of realizing
the value of the obligation prior to maturity.
MORTGAGE-BACKED SECURITIES
MORTGAGE-BACKED SECURITIES--GOVERNMENT PASSTHROUGH SECURITIES
The primary issuers or guarantors of these mortgage-backed securities are the
Government National Mortgage Association ("GNMA"), Fannie Mae, and the
Federal Home Loan Mortgage Corporation ("FHLMC"). Fannie Mae and FHLMC
obligations are not backed by the full faith and credit of the U.S.
Government as GNMA certificates are, but Fannie Mae and FHLMC securities are
supported by the instrumentalities' right to borrow from the U.S. Treasury.
GNMA, Fannie Mae, and FHLMC each guarantees timely distributions of interest
to certificate holders. GNMA and Fannie Mae also guarantee timely
distributions of scheduled principal. In the past, FHLMC has only guaranteed
the
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ultimate collection of principal of the underlying mortgage loan; however,
FHLMC now issues mortgage-backed securities (FHLMC Gold PCS) which also
guarantee timely payment of monthly principal reductions.
Each of the Funds except the Short-Term U.S. Treasury Securities Fund,
Sunbelt Equity Fund, Mid-Cap Equity Fund and International Equity Index Fund
may invest in mortgage-backed securities issued or guaranteed by U.S.
Government agencies or instrumentalities such as GNMA, Fannie Mae and FHLMC.
Obligations of GNMA are backed by the full faith and credit of the United
States Government. Obligations of Fannie Mae and FHLMC are not backed by the
full faith and credit of the United States Government but are considered to
be of high quality since they are considered to be instrumentalities of the
United States. The market value and interest yield of these mortgage-backed
securities can vary due to market interest rate fluctuations and early
prepayments of underlying mortgages. These securities represent ownership in
a pool of federally insured mortgage loans with a maximum maturity of 30
years. However, due to scheduled and unscheduled principal payments on the
underlying loans, these securities have a shorter average maturity and,
therefore, less principal volatility than a comparable 30-year bond. Since
prepayment rates vary widely, it is not possible to accurately predict the
average maturity of a particular mortgage-backed security. The scheduled
monthly interest and principal payments relating to mortgages in the pool
will be "passed through" to investors. Government mortgage-backed securities
differ from conventional bonds in that principal is paid back to the
certificate holders over the life of the loan rather than at maturity. As a
result, there will be monthly scheduled payments of principal and interest.
In addition, there may be unscheduled principal payments representing
prepayments on the underlying mortgages. Although these securities may offer
yields higher than those available from other types of U.S. Government
securities, mortgage-backed securities may be less effective than other types
of securities as a means of "locking in" attractive long-term rates because
of the prepayment feature. For instance, when interest rates decline, the
value of these securities likely will not rise asmuch as comparable debt
securities due to the prepayment feature. In addition, these prepayments can
cause the price of a mortgage-backed security originally purchased at a
premium to decline in price to its par value, which may result in a loss.
The Bond Funds, Prime Quality Money Market Fund and the Balanced Fund may
also invest in privately issued mortgage-backed securities. Two principal
types of mortgage-backed securities are collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs"), which are
rated in one of the two highest categories by Standard & Poor's Corporation
("S&P") or Moody's Investors Service, Inc. ("Moody's"). CMOs are securities
collateralized by mortgages, mortgage pass-throughs, mortgage pay-through
bonds (bonds representing an interest in a pool of mortgages where the cash
flow generated from the mortgage collateral pool is dedicated to bond
repayment), and mortgage-backed bonds (general obligations of the issuers
payable out of the issuers' general funds and additionally secured by a first
lien on a pool of single family detached properties). Many CMOs are issued
with a number of classes or series which have different expected maturities.
Investors purchasing such CMOs are credited with their portion of the
scheduled payments of interest and principal on the underlying mortgages plus
all unscheduled prepayments of principal based on a predetermined priority
schedule. Accordingly, the CMOs in the longer maturity series are less
likely than other mortgage pass-throughs to be prepaid prior to their stated
maturity. Although some of the mortgages underlying CMOs may be supported by
various types of insurance, and some CMOs may be backed by GNMA certificates
or other mortgage pass-throughs issued or guaranteed by U.S. Government
agencies or instrumentalities, the CMOs themselves are not generally
guaranteed.
MORTGAGE-BACKED SECURITIES--REMICS
REMICs, which were authorized under the Tax Reform Act of 1986, are private
entities formed for the purpose of holding a fixed pool of mortgages secured
by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.
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Investors may purchase beneficial interests in REMICs, which are known as
"regular" interests, or "residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by Fannie Mae or FHLMC represent
beneficial ownership interests in a REMIC trust consisting principally of
mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed mortgage pass-through
certificates. For FHLMC REMIC Certificates, FHLMC guarantees the timely
payment of interest.
DETERMINING MATURITIES OF MORTGAGE-BACKED SECURITIES
Due to prepayments of the underlying mortgage instruments, mortgage-backed
securities do not have a known actual maturity. In the absence of a known
maturity, market participants generally refer to an estimated average life.
The Advisors believe that the estimated average life is the most appropriate
measure of the maturity of a mortgage-backed security. Accordingly, in order
to determine whether such security is a permissible investment for a Fund, it
will be deemed to have a remaining maturity equal to its average life as
estimated by that Fund's Advisor. An average life estimate is a function of
an assumption regarding anticipated prepayment patterns. The assumption is
based upon current interest rates, current conditions in the relevant housing
markets and other factors. The assumption is necessarily subjective, and
thus different market participants could produce somewhat different average
life estimates with regard to the same security. There can be no assurance
that the average life as estimated by an Advisor will be the actual average
life.
STRIPPED MORTGAGE-BACKED SECURITIES
The Limited-Term Federal Mortgage Securities Fund may also invest in stripped
mortgage-backed securities, which are securities that are created when a U.S.
Government agency or a financial institution separates the interest and
principal components of a mortgage-backed security and sells them as
individual securities. The holder of the "principal-only" security (PO)
receives the principal payments made by the underlying mortgage-backed
security, while the holder of the "interest-only" security (IO) receives
interest payments from the same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall, prepayment
rates tend to increase, which tends to reduce prices of IOs and increase
prices of POs. Rising interest rates can have the opposite effect.
DOLLAR ROLLS
Dollar rolls may be renewed prior to cash settlement and initially may
involve only a firm commitment agreement by the Fund to buy a security.
If the broker-dealer to whom the Fund sells the security becomes insolvent,
the Fund's right to repurchase the security may be restricted. Other risks
involved in entering into dollar rolls include the risk that the value of the
security may change adversely over the term of the dollar roll and that the
security the Fund is required to repurchase may be worth less than the
security that the Fund originally held. To avoid any leveraging concerns,
the Fund will place U.S. Government or other liquid, high grade assets in a
segregated account in an amount sufficient to cover its repurchase
obligation.
GICS
A GIC is a general obligation of the issuing insurance company and not a
separate account. The purchase price paid for a GIC becomes part of the
general assets of the issuer, and the contract is paid at maturity from the
general assets of the issuer.
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Generally, GICs are not assignable or transferable without the permission of
the issuing insurance company. For this reason, an active secondary market
in GICs does not currently exist and GICs are considered to be illiquid
investments.
LOAN PARTICIPATIONS
In the event of bankruptcy or insolvency of the corporate borrower, a loan
participation may be subject to certain defenses that can be asserted by the
borrower as a result of improper conduct by the intermediary bank. In
addition, in the event the underlying corporate borrower fails to pay
principal and interest when due, the Fund may be subject to delays, expenses,
and risks that are greater than those that would have been involved if the
Fund had purchased a direct obligation of the borrower. Under the terms of a
Loan Participation, the Fund may be regarded as a creditor of the
intermediary bank (rather than of the underlying corporate borrower), so that
the Fund may also be subject to the risk that the intermediary bank may
become insolvent.
The secondary market for loan participations is limited and any such
participation purchased by the Fund may be regarded as illiquid.
ASSET-BACKED SECURITIES
In addition to mortgage-backed securities, the Bond Funds, Prime Quality
Money Market Fund, Limited-Term Federal Mortgage Securities Fund and Balanced
Fund may invest in other asset-backed securities rated in one of the two
highest rating categories by S&P or Moody's, including company receivables,
truck and auto loans, leases and credit card receivables. The Bond Funds may
invest in other asset-backed securities that may be created in the future if
the Advisor determines they are suitable. These issues may be traded
over-the-counter and typically have a short-intermediate maturity structure
depending on the paydown characteristics of the underlying financial assets
which are passed through to the security holder.
Asset-backed securities are not issued or guaranteed by the U.S. Government,
its agencies or instrumentalities; however, the payment of principal and
interest on such obligations may be guaranteed up to certain amounts and, for
a certain period, by a letter of credit issued by a financial institution
(such as a bank or insurance company) unaffiliated with the issuers of such
securities. The purchase of asset-backed securities raises risk
considerations peculiar to the financing of the instruments underlying such
securities. For example, there is a risk that another party could acquire an
interest in the obligations superior to that of the holders of the
asset-backed securities. There also is the possibility that recoveries on
repossessed collateral may not, in some cases, be available to support
payments on those securities.
Asset-backed securities entail prepayment risk, which may vary depending on
the type of asset, but is generally less than the prepayment risk associated
with mortgage-backed securities. In addition, credit card receivables are
unsecured obligations of the card holder.
The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.
REPURCHASE AGREEMENTS
Each of the Funds, except the Short-Term U.S. Treasury Securities Fund, may
enter into repurchase agreements. Repurchase agreements are agreements by
which a person (E.G., a Fund) obtains a security and simultaneously commits
to return the security to the seller (a primary securities dealer as
recognized by the Federal Reserve Bank of New York or a national member bank
as defined in Section 3(d)(1) of the Federal Deposit Insurance Act, as
amended)
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at an agreed upon price (including principal and interest) on an agreed upon
date within a number of days (usually not more than seven) from the date of
purchase. The resale price reflects the purchase price plus an agreed upon
market rate of interest which is unrelated to the coupon rate or maturity of
the underlying security. A repurchase agreement involves the obligation of
the seller to pay the agreed upon price, which obligation is, in effect,
secured by the value of the underlying security.
Repurchase agreements are considered to be loans by a Fund for purposes of
its investment limitations. The repurchase agreements entered into by a Fund
will provide that the underlying security at all times shall have a value at
least equal to 102% of the resale price stated in the agreement (the Advisors
monitor compliance with this requirement). Under all repurchase agreements
entered into by a Fund, the appropriate Custodian or its agent must take
possession of the underlying collateral. However, if the seller defaults, a
Fund could realize a loss on the sale of the underlying security to the
extent that the proceeds of the sale including accrued interest are less than
the resale price provided in the agreement including interest. In addition,
even though the Bankruptcy Code provides protection for most repurchase
agreements, if the seller should be involved in bankruptcy or insolvency
proceedings, a Fund may incur delay and costs in selling the underlying
security or may suffer a loss of principal and interest if the Fund is
treated as an unsecured creditor and required to return the underlying
security to the seller's estate.
MUNICIPAL SECURITIES
MUNICIPAL SECURITIES include both municipal notes and municipal bonds.
Municipal notes include general obligation notes, tax anticipation notes,
revenue anticipation notes, bond anticipation notes, certificates of
indebtedness, demand notes and participation interests in municipal notes.
Municipal bonds include general obligation bonds, revenue or special
obligation bonds, private activity and industrial development bonds and
participation interests in municipal bonds.
MUNICIPAL NOTES in which the Short-Term Bond Fund, Tax-Exempt Money Market
Fund and Tax-Exempt Bond Funds may invest, consist of general obligation
notes, tax anticipation notes (notes sold to finance working capital needs of
the issuer in anticipation of receiving taxes on a future date), revenue
anticipation notes (notes sold to provide needed cash prior to receipt of
expected non-tax revenues from a specific source), bond anticipation notes,
certificates of indebtedness, demand notes and construction loan notes. A
Fund's investments in any of the notes described above will be limited to
those obligations (i) where both principal and interest are backed by the
full faith and credit of the United States, (ii) which are rated MIG-2 or
V-MIG-2 at the time of investment by Moody's, (iii) which are rated SP-2 at
the time of investment by S&P, or (iv) which, if not rated by S&P or Moody's,
are in the Advisor's judgement, of at least comparable quality to MIG-2,
VMIG-2 or SP-2.
MUNICIPAL BONDS must be rated at least BBB or better by S&P or at least Baa or
better by Moody's at the time of purchase for the Tax-Exempt Bond Funds or in
one of the two highest short-term rating categories by S&P or Moody's for the
Tax-Exempt Money Market Fund or, if not rated by S&P or Moody's, must be deemed
by the Advisor to have essentially the same characteristics and quality as bonds
having the above ratings. A Fund may purchase industrial development and
pollution control bonds if the interest paid is exempt from Federal income tax.
These bonds are issued by or on behalf of public authorities to raise money to
finance various privately-operated facilities for business and manufacturing,
housing, sports and pollution control. These bonds are also used to finance
public facilities such as airports, mass transit systems, ports and parking.
The payment of the principal and interest on such bonds is dependent solely on
the ability of the facility's user to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for such
payment.
OTHER TYPES OF TAX-EXEMPT INSTRUMENTS which are permissible investments for
the Short-Term Bond Fund, Tax-Exempt Money Market Fund and Tax-Exempt Bond
Funds include floating rate notes. Investments in such
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floating rate instruments will normally involve industrial development or
revenue bonds which provide that the rate of interest is set as a specific
percentage of a designated base rate (such as the prime rate) at a major
commercial bank, and that the Fund can demand payment of the obligation at
all times or at stipulated dates on short notice (not to exceed 30 days) at
par plus accrued interest. Such obligations are frequently secured by
letters of credit or other credit support arrangements provided by banks.
The quality of the underlying credit or of the bank, as the case may be,
must, in the Advisor's opinion be equivalent to the long-term bond or
commercial paper ratings stated above. The Advisor will monitor the earning
power, cash flow and liquidity ratios of the issuers of such instruments and
the ability of an issuer of a demand instrument to pay principal and interest
on demand. The Funds may also purchase participation interests in municipal
securities (such as industrial development bonds and municipal lease/purchase
agreements). A participation interest gives a Fund an undivided interest in
the underlying municipal security. If it is unrated, the participation
interest will be backed by an irrevocable letter of credit or guarantee of a
credit-worthy financial institution or the payment obligations otherwise will
be collateralized by U.S. Government Securities. Participation interests may
have fixed, variable or floating rates of interest and may include a demand
feature. A participation interest without a demand feature or with a demand
feature exceeding seven days may be deemed to be an illiquid security subject
to the Funds' investment limitations restricting their purchases of illiquid
securities. A Fund may purchase other types of tax-exempt instruments as
long as they are of a quality equivalent to the bond or commercial paper
ratings stated above.
Opinions relating to the validity of municipal securities and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the Funds
nor an Advisor will review the proceedings relating to the issuance of
municipal securities or the basis for such opinions.
STANDBY COMMITMENTS AND PUTS
The Prime Quality Money Market Fund, Tax-Exempt Money Market Fund, Balanced
Fund, Tax-Exempt Bond Funds and the Bond Funds may purchase securities at a
price which would result in a yield to maturity lower than that generally
offered by the seller at the time of purchase when they can simultaneously
acquire the right to sell the securities back to the seller, the issuer or a
third party (the "writer") at an agreed-upon price at any time during a
stated period or on a certain date. Such a right is generally denoted as a
"standby commitment" or a "put." The purpose of engaging in transactions
involving puts is to maintain flexibility and liquidity to permit the Funds
to meet redemptions and remain as fully invested as possible in municipal
securities. The Funds reserve the right to engage in put transactions. The
right to put the securities depends on the writer's ability to pay for the
securities at the time the put is exercised. A Fund would limit its put
transactions to institutions which the Advisor believes present minimal
credit risks, and the Advisor would use its best efforts to initially
determine and continue to monitor the financial strength of the sellers of
the options by evaluating their financial statements and such other
information as is available in the marketplace. It may, however be difficult
to monitor the financial strength of the writers because adequate current
financial information may not be available. In the event that any writer is
unable to honor a put for financial reasons, a Fund would be a general
creditor (I.E., on a parity with all other unsecured creditors) of the
writer. Furthermore, particular provisions of the contract between the Fund
and the writer may excuse the writer from repurchasing the securities; for
example, a change in the published rating of the underlying securities or any
similar event that has an adverse effect on the issuer's credit or a
provision in the contract that the put will not be exercised except in
certain special cases, for example, to maintain portfolio liquidity. The
Fund could, however, at any time sell the underlying portfolio security in
the open market or wait until the portfolio security matures, at which time
it should realize the full par value of the security.
The securities purchased subject to a put may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the Fund.
Sale of the securities to third parties or lapse of
B-8
<PAGE>
time with the put unexercised may terminate the right to put the securities.
Prior to the expiration of any put option, the Fund could seek to negotiate
terms for the extension of such an option. If such a renewal cannot be
negotiated on terms satisfactory to the Fund, the Fund could, of course,
sell the portfolio security. The maturity of the underlying security will
generally be different from that of the put. There will be no limit to the
percentage of portfolio securities that the Fund may purchase subject to a
standby commitment or put, but the amount paid directly or indirectly for all
standby commitments or puts which are not integral parts of the security as
originally issued held in the Fund will not exceed 2 of 1% of the value of
the total assets of such Fund calculated immediately after any such put is
acquired.
FOREIGN SECURITIES
The Prime Quality Money Market Fund, Investment Grade Bond Fund, Short-Term
Bond Fund, Balanced Fund and each of the Equity Funds, except the Sunbelt
Equity Fund, may invest in U.S. dollar denominated obligations or securities
of foreign issuers. The International Equity Index and International Equity
Funds will invest primarily in certain obligations or securities of foreign
issuers. Possible investments include equity securities of foreign entities,
obligations of foreign branches of U.S. banks and of foreign banks,
including, without limitation, European Certificates of Deposit, European
Time Deposits, European Bankers' Acceptances, Canadian Time Deposits and
Yankee Certificates of Deposit, and investments in Canadian Commercial Paper
and foreign securities. Permissible investments may consist of obligations of
foreign branches of U.S. banks and of foreign banks, including European
Certificates of Deposit, European Time Deposits, Canadian Time Deposits and
Yankee Certificates of Deposits, Canadian Commercial Paper, and Europaper.
In addition, each of the above-mentioned Funds, except for the Short-Term
Bond Fund, may invest in American Depositary Receipts. These instruments may
subject the Funds to investment risks that differ in some respects from
those related to investments in obligations of U.S. domestic issuers. Such
risks include future adverse political and economic developments, the
possible imposition of withholding taxes on interest or other income,
possible seizure, nationalization, or expropriation of foreign deposits, the
possible establishment of exchange controls or taxation at the source,
greater fluctuations in value due to changes in exchange rates, or the
adoption of other foreign governmental restrictions which might adversely
affect the payment of principal and interest on such obligations. Such
investments may also entail higher custodial fees and sales commissions than
domestic investments. Foreign issuers of securities or obligations are often
subject to accounting treatment and engage in business practices different
from those respecting domestic issuers of similar securities or
obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks.
By investing in foreign securities, the International Equity Index,
International Equity, and Emerging Markets Equity Funds attempt to take
advantage of differences between both economic trends and the performance of
securities markets in the various countries, regions and geographic areas as
prescribed by each Fund's investment objective and policies. During certain
periods the investment return on securities in some or all countries may
exceed the return on similar investments in the United States, while at other
times the investment return may be less than that on similar U.S. securities.
Shares of the International Equity Index, International Equity, and Emerging
Markets Equity Funds, when included in appropriate amounts in a portfolio
otherwise consisting of domestic securities, may provide a source of
increased diversification. The International Equity Index, International
Equity, and Emerging Markets Equity Funds seek increased diversification by
combining securities from various countries and geographic areas that offer
different investment opportunities and are affected by different economic
trends. The international investments of the International Equity Index,
International Equity, and Emerging Markets Equity Funds may reduce the effect
that events in any one country or geographic area will have on its investment
holdings. Of course, negative movement by a Fund's investments in one
foreign market represented in its portfolio may offset potential gains from
the Fund's investments in another country's markets.
B-9
<PAGE>
The Emerging Markets Equity Fund considers countries having developing
markets to be all countries that are considered to be developing or emerging
countries by the World Bank or the International Finance Corporation, as well
as countries classified by the United Nations or otherwise regarded by the
international financial community as developing. Currently, the countries
excluded from this category are Ireland, Spain, New Zealand, Australia, the
United Kingdom, Italy, the Netherlands, Belgium, Austria, France, Canada,
Germany, Denmark, the United States, Sweden, Finland, Norway, Japan and
Switzerland.
ADRS
Holders of unsponsored depositary receipts generally bear all the costs of
the unsponsored facility. The depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through, to the
holders of the receipts, voting rights with respect to the deposited
securities.
SUPRANATIONAL AGENCY OBLIGATIONS
The Prime Quality Money Market Fund, U.S. Government Securities Fund,
Investment Grade Bond Fund, Balanced Fund and Short-Term Bond Fund may
purchase obligations of supranational agencies. Currently these Funds intend
to invest only in obligations issued or guaranteed by the Asian Development
Bank, Inter-American Development Bank, International Bank for Reconstruction
and Development (World Bank), African Development Bank, European Coal and
Steel Community, European Economic Community, European Investment Bank and
the Nordic Investment Bank.
WHEN-ISSUED SECURITIES AND MUNICIPAL FORWARDS
The Tax-Exempt Money Market Fund, Balanced Fund, Bond Funds, Tax-Exempt Bond
Funds, Value Income Stock Fund, U.S. Government Securities Fund, and the
Limited-Term Federal Mortgage Securities Fund may purchase when-issued
securities, in which case delivery and payment normally take place within 45
days (90 days with respect to the Limited-Term Federal Mortgage Security
Fund) after the date of commitment to purchase.
In addition, the Tax-Exempt Bond Funds may purchase municipal forwards for
which delivery of the underlying municipal security normally occurs after 45
days but before one year after the commitment date.
The Funds will only make commitments to purchase when-issued securities and
municipal forwards with the intention of actually acquiring the securities,
but may sell them before the settlement date. When-issued securities are
subject to market fluctuation, and accrue no interest to the purchaser during
this pre-settlement period. The payment obligation and the interest rate
that will be received on the securities are each fixed at the time the
purchaser enters into the commitment. Purchasing municipal forwards and
when-issued securities entails leveraging and can involve a risk that the
yields available in the market when the delivery takes place may actually be
higher than those obtained in the transaction itself. In that case, there
could be an unrealized loss at the time of delivery.
Segregated accounts will be established with the appropriate Custodian, and a
Fund will maintain high quality, liquid assets in an amount at least equal in
value to its commitments to purchase when-issued securities and municipal
forwards. If the value of these assets declines, the Fund will place
additional liquid assets in the account on a daily basis so that the value of
the assets in the account is equal to the amount of such commitments.
B-10
<PAGE>
RESTRICTED SECURITIES
Restricted Securities are securities that may not be sold to the public
without registration under the Securities Act of 1933 (the "1933 Act") absent
an exemption from registration. Permitted investments for the Balanced Fund,
Bond Funds, Tax-Exempt Bond Funds and Equity Funds include restricted
securities, and each such Fund may invest up to 15% of its net assets in
illiquid securities, subject to each Fund's investment limitations on the
purchase of illiquid securities. Restricted Securities, including securities
eligible for re-sale under 1933 Act Rule 144A, that are determined to be
liquid are not subject to this limitation. This determination is to be made
by a Fund's Advisor pursuant to guidelines adopted by the Board of Trustees.
Under these guidelines, the particular Advisor will consider the frequency of
trades and quotes for the security, the number of dealers in, and potential
purchasers for, the securities, dealer undertakings to make a market in the
security, and the nature of the security and of the marketplace trades. In
purchasing such Restricted Securities, each Advisor intends to purchase
securities that are exempt from registration under Rule 144A under the 1933
Act.
SECURITIES LENDING
Each Fund may lend securities pursuant to agreements which require that the
loans be continuously secured by collateral at all times equal to 100% of the
market value of the loaned securities which consists of: cash, securities of
the U.S. Government or its agencies, or any combination of cash and such
securities. Such loans will not be made if, as a result, the aggregate
amount of all outstanding securities loans for a Fund exceed one-third of the
value of the Fund's total assets taken at fair market value. A Fund will
continue to receive interest on the securities lent while simultaneously
earning interest on the investment of the cash collateral in U.S. Government
securities. However, a Fund will normally pay lending fees to such
broker-dealers and related expenses from the interest earned on invested
collateral. There may be risks of delay in receiving additional collateral
or 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 are made only to borrowers deemed by the appropriate Advisor to be of
good standing and when, in the judgment of that Advisor, the consideration
which can be earned currently from such securities loans justifies the
attendant risk. Any loan may be terminated by either party upon reasonable
notice to the other party. The Funds may use the Distributor or a
broker-dealer affiliate of an Advisor as a broker in these transactions.
FUTURES CONTRACTS AND OPTIONS ON FUTURES
The Balanced Fund, Bond Funds, Tax-Exempt Bond Funds, International Equity
Index Fund, International Equity Fund, Value Income Stock Fund, and Emerging
Markets Equity Fund may invest in futures contracts and options on futures.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are
closed out before the settlement date without the making or taking of
delivery. Closing out an open futures position is done by taking an opposite
position ("buying" a contract which has previously been "sold" or "selling" a
contract which has previously been "purchased") in an identical contract to
terminate the position. Brokerage commissions are incurred when a futures
contract is bought or sold.
Futures traders are required to make a good faith margin deposit in cash or
government securities with or for the account of a broker or custodian to
initiate and maintain open secondary market will exist for any particular
futures contract at any specific time. Thus, it may not be possible to close
a futures position. In the event of adverse price movements, a Fund would
continue to be required to make daily cash payments to maintain its required
margin. In such situations, if a Fund has insufficient cash, it may have to
sell portfolio securities to meet daily margin requirements at a time when it
may be disadvantageous to do so. In addition, the Funds may be required to
make delivery of the instruments underlying the futures contracts they hold.
The inability to close options and futures positions also could have an
adverse impact on the ability to effectively hedge the underlying securities.
B-11
<PAGE>
The Funds will minimize the risk that they will be unable to close out a
futures contract by entering into futures contracts that are traded on
national futures exchanges and for which there appears to be a liquid
secondary market.
The risk of loss in trading futures contracts can be substantial, due both to
the low margin deposits required and the extremely high degree of leverage
involved in futures pricing. As a result, a relatively small price movement
in a futures contract may result in immediate and substantial loss (or gain)
to a Fund. For example, if at the time of purchase, 10% of the value of the
futures contract is deposited as margin, a subsequent 10% decrease in the
value of the futures contract would result in a total loss of the margin
deposit, before any deduction for the transaction costs, if the account were
then closed out. A 15% decrease would result in a loss equal to 150% of the
original margin deposit if the contract were closed out. Thus, a purchase or
sale of a futures contract may result in losses in excess of the amount
invested in the contract. However, because the Funds will be engaged in
futures transactions only for hedging purposes, the Advisors do not believe
that the Funds will generally be subject to the risks of loss frequently
associated with futures transactions. The Funds presumably would have
sustained comparable losses if, instead of the futures contract, they had
invested in the underlying financial instrument and sold it after the
decline. The risk of loss from the purchase of options is less as compared
with the purchase or sale of futures contracts because the maximum amount at
risk is the premium paid for the option.
Utilization of futures transactions by the Funds does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the fund securities being hedged. It is also
possible that the Funds could both lose money on futures contracts and
experience a decline in value of its fund securities. There is also the risk
of loss by the Funds of margin deposits in the event of the bankruptcy of a
broker with whom the Funds have an open position in a futures contract or
related option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of a trading
session. Once the daily limit has been reached in a particular type of
contract, no trades may be made on that day at a price beyond that limit.
The daily limit governs only price movement during a particular trading day
and therefore does not limit potential losses because the limit may prevent
the liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days
with little or no trading, thereby preventing prompt liquidation of future
positions and subjecting some futures traders to substantial losses.
OPTIONS
The Balanced Fund, Bond Funds, Tax-Exempt Bond Funds, International Equity
Index Fund, International Equity Fund, Value Income Stock Fund, Small Cap
Equity Fund, and Emerging Markets Equity Fund may write call options on a
covered basis only, and will not engage in option writing strategies for
speculative purposes. A call option gives the purchaser of such option the
right to buy, and the writer, in this case the Fund, the obligation to sell
the underlying security at the exercise price during the option period. The
advantage to the Funds of writing covered calls is that the Funds receive a
premium which is additional income. However, if the security rises in value,
the Funds may not fully participate in the market appreciation.
During the option period, a covered call option writer may be assigned an
exercise notice by the broker-dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of
the exercise price. This obligation is terminated upon the expiration of the
option period or at such earlier time in which the writer effects a closing
purchase transaction. A closing purchase transaction is one in which the
Fund, when obligated as a writer of an option, terminates its obligation by
purchasing an option of the same series as the option previously written.
B-12
<PAGE>
A closing purchase transaction cannot be effected with respect to an option
once the option writer has received an exercise notice for such option.
Closing purchase transactions will ordinarily be effected to realize a profit
on an outstanding call option, to prevent an underlying security from being
called, to permit the sale of the underlying security or to enable a Fund to
write another call option on the underlying security with either a different
exercise price or expiration date or both. A Fund may realize a net gain or
loss from a closing purchase transaction depending upon whether the net
amount of the original premium received on the call option is more or less
than the cost of effecting the closing purchase transaction. Any loss
incurred in a closing purchase transaction may be partially or entirely
offset by the premium received from a sale of a different call option on the
same underlying security. Such a loss may also be wholly or partially offset
by unrealized appreciation in the market value of the underlying security.
If a call option expires unexercised, a Fund will realize a short-term
capital gain in the amount of the premium on the option, less the commission
paid. Such a gain, however, may be offset by depreciation in the market
value of the underlying security during the option period. If a call option
is exercised, a Fund will realize a gain or loss from the sale of the
underlying security equal to the difference between the cost of the
underlying security, and the proceeds of the sale of the security plus the
amount of the premium on the option, less the commission paid.
The market value of a call option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the price volatility of the underlying
security and the time remaining until the expiration date.
The Funds will write call options only on a covered basis, which means that a
Fund will own the underlying security subject to a call option at all times
during the option period. Unless a closing purchase transaction is effected,
a Fund would be required to continue to hold a security which it might
otherwise wish to sell, or deliver a security it would want to hold. Options
written by the Funds will normally have expiration dates between one and nine
months from the date written. The exercise price of a call option may be
below, equal to or above the current market value of the underlying security
at the time the option is written.
SWAPS/FLOORS/COLLARS
In a typical interest rate swap, one party agrees to make regular payments
equal to a floating interest rate times a "notional principal amount." This
is done in return for payments equal to a fixed rate times the same amount,
for a specific period of time. If a swap agreement provides for payment in
different currencies, the parties might agree to exchange the notional
principal amount as well. Swaps may also depend on other prices or rates,
such as the value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances. This is usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap
obtains the right to receive payments to the extent that a specific interest
rate exceeds an agreed-upon level. Meanwhile, the seller of an interest rate
floor is obligated to make payments to the extent that a specified interest
rate falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements are subject to risks related to the counterparty's ability to
perform, and may decline in value if the counterparty's creditworthiness
deteriorates. The Fund may also suffer losses if it is unable to terminate
outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation the Fund may have under these types of
arrangements will be covered by setting aside liquid high-grade securities in
a segregated account. The Fund will enter into swaps only with
counterparties believed to be creditworthy.
B-13
<PAGE>
INVESTMENT COMPANY SHARES
Investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. A Fund's purchase of such investment company
securities results in the layering of expenses, such that Shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.
VARIABLE AND FLOATING RATE SECURITIES
The interest rates on these securities may be reset daily, weekly, quarterly,
or some other reset period, and may have a set floor or ceiling on interest
rate changes. There is a risk that the current interest rate on such
obligations may not accurately reflect existing market interest rates. A
demand instrument with a demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such security.
OTHER INVESTMENTS
The Trust is not prohibited from investing in obligations of banks which are
clients of SEI Investments Company ("SEI Investments"), the parent company of
the Administrator and the Distributor. However, the purchase of shares of
the Funds by such banks or by their customers will not be a consideration in
determining which bank obligations the Funds will purchase. The Funds will
not purchase obligations issued by the Advisors.
Investors will receive written notification at least thirty days prior to any
change in a Fund's investment objective.
INVESTMENT LIMITATIONS
The following are fundamental policies of each Fund and cannot be changed
with respect to a Fund without the consent of the holders of a majority of
that Fund's outstanding shares.
A Fund may not:
1. Acquire more than 10% of the voting securities of any one issuer.
2. Invest in companies for the purpose of exercising control.
3. Borrow money except for temporary or emergency purposes and then only
in an amount not exceeding one-third of the value of total assets. Any
borrowing will be done from a bank and, to the extent that such
borrowing exceeds 5% of the value of the Fund's assets, asset coverage
of at least 300% is required. In the event that such asset coverage
shall at any time fall below 300%, the Fund shall, within three days
thereafter or such longer period as the Securities and Exchange
Commission may prescribe by rules and regulations, reduce the amount of
its borrowings to such an extent that the asset coverage of such
borrowings shall be at least 300%. This borrowing provision is included
solely to facilitate the orderly sale of portfolio securities to
accommodate heavy redemption requests if they should occur and is not
for investment purposes. All borrowings in excess of 5% of the value
of a Fund's total assets will be repaid before making additional
investments and any interest paid on such borrowings will reduce income.
4. Make loans, except that (a) a Fund may purchase or hold debt
instruments in accordance with its investment objective and policies;
(b) a Fund may enter into repurchase agreements, and (c) the Bond
Funds, Balanced Fund, U.S. Government Securities Fund, Limited-Term
Federal Mortgage Securities Fund, International Equity Index Fund,
International Equity Fund, Value Income Stock Fund, Small Cap Equity
Fund and
B-14
<PAGE>
Emerging Markets Equity Fund may engage in securities lending
as described in the Prospectuses and in this Statement of Additional
Information.
5. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (3) above in aggregate amounts not to exceed
10% of the Fund's total assets, taken at current value at the time of
the incurrence of such loan, except as permitted with respect to
securities lending.
6. Purchase or sell real estate, real estate limited partnership
interests, commodities or commodities contracts (except for financial
futures contracts) and interests in a pool of securities that are
secured by interests in real estate (except that each Bond Fund may
purchase mortgage-backed and other mortgage-related securities,
including collateralized mortgage obligations and REMICs). However,
subject to their permitted investment spectrum, any Fund may invest in
companies which invest in real estate, commodities or commodities
contracts.
7. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term
credits as necessary for the clearance of security transactions.
8. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a security.
9. Purchase securities of other investment companies except for money
market funds and CMOs and REMICs deemed to be investment companies and
then only as permitted by the Investment Company Act of 1940 (the "1940
Act") and the rules and regulations thereunder, except that the Mid-Cap
Equity, Sunbelt Equity, Balanced, Georgia Tax-Exempt Bond, Florida
Tax-Exempt Bond, Tennessee Tax-Exempt Bond, U.S. Government Securities,
Limited-Term Federal Mortgage Securities, International Equity Index,
International Equity, Small Cap Equity and Emerging Market Equity
Funds' purchases of investment company shares are not limited to money
market funds. Under these rules and regulations, a Fund is prohibited
from acquiring the securities of other investment companies if, as a
result of such acquisition, the Fund owns more than 3% of the total
voting stock of the company; securities issued by any one investment
company represent more than 5% of the total assets of a Fund; or
securities (other than treasury stock) issued by all investment
companies represent more than 10% of the total assets of the Fund.
10. Issue senior securities (as defined in the 1940 Act) except in
connection with permitted borrowings as described above or as permitted
by rule, regulation or order of the SEC.
NON-FUNDAMENTAL POLICIES
No Fund may purchase or hold illiquid securities (I.E., securities that
cannot be disposed of for their approximate carrying value in seven days or
less (which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
(10% for the Prime Quality Money Market, U.S. Government Securities Money
Market, and Tax-Exempt Money Market Funds) would be invested in illiquid
securities.
With the exception of the limitations on liquidity standards, the foregoing
percentages will apply at the time of the purchase of a security and shall
not be considered violated unless an excess occurs or exists immediately
after and as a result of a purchase of such security.
INVESTMENT ADVISORS
B-15
<PAGE>
The Trust and STI Capital Management, N.A., Trusco Capital Management, Inc.,
SunTrust Bank, Atlanta and SunTrust Bank, Chattanooga, N.A. (the "Advisors")
have entered into advisory agreements with the Trust (the "Advisory
Agreements"). The Advisory Agreements provide that each Advisor shall not be
protected against any liability to the Trust or its Shareholders by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder.
Each Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of any Fund (including amounts payable to an Advisor but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by certain states, the Advisor and/or the
Administrator will bear the amount of such excess. The Advisor will not be
required to bear expenses of the Trust to an extent which would result in a
Fund's inability to qualify as a regulated investment company under
provisions of the Internal Revenue Code.
The continuance of each Advisory Agreement, after the first two years, must
be specifically approved at least annually (i) by the vote of the Trustees,
and (ii) by the vote of a majority of the Trustees who are not parties to
each Agreement or "interested persons" of any party thereto, cast in person
at a meeting called for the purpose of voting on such approval. Each
Advisory Agreement will terminate automatically in the event of its
assignment, and is terminable at any time without penalty by the Trustees of
the Trust or, with respect to the Funds, by a majority of the outstanding
shares of the Funds, on not less than 30 days' nor more than 60 days' written
notice to the Advisor, or by the Advisor on 90 days' written notice to the
Trust.
For the fiscal years ended May 31, 1997, 1996, and 1995, the Funds paid the
following advisory fees:
<TABLE>
<CAPTION>
FEES PAID FEES WAIVED
OR REIMBURSED
----------------------------------------- --------------------------------------
FUND 1997 1996 1995 1997 1996 1995
---- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Prime Quality Money Market $ 7,586,108 $ 5,346,850 $ 4,052,982 $2,181,008 $1,602,546 $1,215,895
Fund
U.S. Government Securities $ 1,935,898 $ 2,068,133 $ 1,729,860 $ 518,656 $ 577,384 $ 507,624
Money Market Fund
Tax-Exempt Money Market Fund $ 1,687,976 $ 1,422,777 $ 910,742 $ 673,486 $ 685,205 $ 583,588
Investment Grade Bond Fund $ 4,147,888 $ 3,868,222 $ 3,274,146 $ 644,859 $ 709,139 $ 636,033
Investment Grade Tax-Exempt $ 1,081,635 $ 917,948 $ 627,607 $ 190,250 $ 202,552 $ 138,553
Bond Fund
Short-Term Bond Fund $ 485,613 $ 361,936 $ 212,070 $ 138,732 $ 149,827 $ 118,030
Florida Tax-Exempt Bond Fund1 $ 220,701 $ 107,618 $ 10,562 $ 72,605 $ 72,476 $ 45,986
Georgia Tax-Exempt Bond Fund2 $ 181,715 $ 83,243 $ 35,579 $ 63,837 $ 63,991 $ 50,699
Tennessee Tax-Exempt Bond Fund3 $ 0 $ 0 $ 0 $ 35,475 $ 46,809 $ 14,014
U.S. Government Securities $ 91,748 $ 16,097 $ 0 $ 58,637 $ 53,312 $ 7,817
Fund4
Short-Term U.S. Treasury $ 83,694 $ 36,729 $ 26,399 $ 72,064 $ 72,116 $ 64,786
Securities Fund
</TABLE>
B-16
<PAGE>
<TABLE>
<CAPTION>
FEES PAID FEES WAIVED
OR REIMBURSED
----------------------------------------- --------------------------------------
FUND 1997 1996 1995 1997 1996 1995
---- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Limited-Term Federal Mortgage $ 540,017 $ 224,595 $ 78,778 $ 150,604 $ 119,538 $ 74,494
Securities Fund
Capital Growth Fund $12,775,800 $12,099,047 $11,023,563 $1,227,247 $1,408,275 $1,393,475
Sunbelt Equity Fund $ 4,399,351 $ 3,424,453 $ 2,353,943 $ 442,535 $ 465,317 $ 407,677
Value Income Stock Fund $12,025,425 $ 9,447,738 $ 6,976,518 $ 392 $ 318,958 $ 28,394
Mid-Cap Equity Fund $ 3,008,690 $ 2,057,932 $ 940,045 $ 318,871 $ 318,958 $ 195,873
Balanced Fund $ 1,025,089 $ 823,692 $ 823,692 $ 151,557 $ 166,361 $ 149,133
Small Cap Equity Fund $ 273,710 * * $ 48,251 * *
Emerging Markets Equity Fund $ 84,210 * * $ 52,769 * *
International Equity Fund $ 4,336,172 $ 746,780 * $ 157,567 $ 151,947 *
International Equity Index Fund $ 578,197 $ 740,676 $ 340,065 $ 80,147 $ 144,349 $ 135,043
</TABLE>
* Not in operation during the period.
(1) STI Capital Management, advisor to the Florida Tax Exempt Bond Fund
reimbursed expenses of $7,846 for the fiscal year ended May 31, 1994
(2) SunTrust Bank, Atlanta, advisor to the Georgia Tax-Exempt Bond Fund
reimbursed expenses of $4,536 for the fiscal year ended May 31, 1994
(3) SunTrust Bank, Chattanooga, advisor to the Tennessee Tax-Exempt Bond
Fund, reimbursed expenses of $10,011 for the fiscal year ended
May 31, 1994, $19,803 for the fiscal year ended May 31, 1995 $17,277
for the fiscal year ended May 31, 1996 and $9,933 for the fiscal year
ended May 31, 1997
(4) Trusco Capital Management, Inc., advisor to the U.S. Government
Securities Fund, reimbursed expenses of $27,216.
BANKING LAWS
Current interpretations of federal banking laws and regulations:
- - prohibit SunTrust and the Advisors from sponsoring, organizing,
controlling, or distributing the Funds= shares;
- - but, do not prohibit SunTrust or the Advisors generally from acting as
an investment advisor, transfer agent, or custodian to the Funds or from
purchasing Fund shares as agent for and upon the order of a customer.
The Advisors believe that they may perform advisory and related services for
STI Classic Funds without violating applicable banking laws or regulations.
However, the legal requirements and interpretations about the permissible
activities of banks and their affiliates may change in the future. These
changes could prevent the Advisors from continuing to perform services for
STI Classic Funds. If this happens, the Board of Trustees would consider
selecting other qualified firms. Shareholders would approve any new
investment advisory agreements would be subject to Shareholder approval.
If current restrictions on bank activities with mutual funds were relaxed,
the Advisors, or their affiliates, would consider performing additional
services for STI Classic Funds. We cannot predict whether these changes will
be enacted. We also cannot predict the terms that the Advisors, or their
affiliates, might offer to provide additional services.
B-17
<PAGE>
THE ADMINISTRATOR
The Trust and SEI Fund Resources (the "Administrator") are parties to an
Administrative Agreement. The Administration Agreement provides that the
Administrator shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the matters to which
the Administration Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Administrator
in the performance of its duties or from reckless disregard by it of its
duties and obligations thereunder. The Administration Agreement shall remain
in effect for a period of five years after the date of the Agreement and
shall continue in effect for successive periods of two years subject to
review at least annually by the Trustees of the Trust unless terminated by
either party on not less than ninety days= written notice to the other party.
The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("ASEI
Investments"), is the owner of all beneficial interest in the Administrator.
SEI Investments and its subsidiaries and affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers. The Administrator
and its affiliates also serve as administrator to the following other mutual
funds: The Achievement Funds Trust, The Advisors' Inner Circle Fund, The
Arbor Fund, ARK Funds, Bishop Street Funds, Boston 1784 Funds-Registered
Trademark-, CoreFunds, Inc., CrestFunds, Inc., CUFUND, The Expedition Funds,
FMB Funds, Inc., First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., HighMark Funds, Marquis
Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell Investment Trust,
The PBHG Funds, Inc., The PBHG Insurance Series Fund, Inc., The Pillar Funds,
Profit Funds Investment Trust, Rembrandt Funds-Registered Trademark-, Santa
Barbara Group of Mutual Funds, Inc., SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI International Trust, SEI Liquid Asset Trust,
SEI Tax Exempt Trust, STI Classic Variable Trust, and TIP Funds.
For the fiscal years ended May 31, 1997, 1996, and 1995, the Funds paid the
following administration fees:
<TABLE>
<CAPTION>
FEES PAID FEES WAIVED
----------------------------------------- --------------------------------------
FUND 1997 1996 1995 1997 1996 1995
---- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Prime Quality Money Market Fund $ 661,962 $315,880 $155,054 $347,518 $449,492 $465,158
U.S. Government Securities $ 212,454 $219,380 $129,165 $ 41,257 $ 72,463 $134,192
Money Market Fund
Tax-Exempt Money Market Fund $ 288,647 $274,701 $128,912 $ 0 $ 0 $ 79,032
Investment Grade Bond Fund $ 435,278 $443,569 $404,413 $ 0 $ 0 $ 0
Investment Grade Tax-Exempt $ 115,500 $108,204 $ 77,499 $ 0 $ 0 $ 1,745
Bond Fund
Florida Tax-Exempt Bond Fund $ 30,279 $ 19,989 $ 6,645 $ 0 $ 0 $ 0
Georgia Tax-Exempt Bond Fund $ 25,353 $ 16,304 $ 10,140 $ 0 $ 0 $ 0
Tennessee Tax-Exempt Bond Fund $ 3,669 $ 3,148 $ 1,648 $ 0 $ 0 $ 0
Short-Term Bond Fund $ 64,664 $ 56,317 $ 38,813 $ 0 $ 0 $ 0
</TABLE>
B-18
<PAGE>
<TABLE>
<CAPTION>
FEES PAID FEES WAIVED
----------------------------------------- --------------------------------------
FUND 1997 1996 1995 1997 1996 1995
---- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government Securities Fund $ 13,641 $ 7,311 $ 807 $ 0 $ 0 $ 0
Short-Term U.S. Treasury $ 16,075 $ 12,012 $ 10,761 $ 0 $ 0 $ 0
Securities Fund
Limited-Term Federal Mortgage $ 71,264 $ 37,854 $ 17,962 $ 0 $ 0 $ 0
Securities Fund
Capital Growth Fund $ 817,905 $842,411 $826,735 $ 0 $ 0 $ 0
Sunbelt Equity Fund $ 283,101 $842,411 $183,657 $ 0 $ 0 $ 0
Value Income Stock Fund $1,009,167 $845,706 $669,692 $ 0 $ 0 $ 0
Mid-Cap Equity Fund $ 194,430 $147,613 $ 75,507 $ 0 $ 0 $ 0
Balanced Fund $ 83,063 $ 74,634 $ 64,645 $ 0 $ 0 $ 0
Small Cap Equity Fund $ 18,406 * * $ 0 * *
Emerging Markets Equity Fund * * * *
International Equity Fund $ 50,404 * $ 0 *
International Equity Index Fund $ 70,690 $ 40,223 $ 0 $ 0
</TABLE>
* Not in operation during the period.
THE DISTRIBUTOR
SEI Investments Distribution Co. (formerly SEI Financial Services Company)
(the "Distributor"), a wholly-owned subsidiary of SEI, and the Trust have
entered into a distribution agreement (the "Distribution Agreement") dated
May 29, 1992. The Distributor will receive no compensation for distribution
of Trust Shares. In addition, the Investor Shares of the Funds have a
distribution plan ("Investor Plan"), and the Flex Shares of the Funds have a
distribution and service plan ("Flex Plan").
The Distribution Agreement is renewable annually and may be terminated by the
Distributor, the Qualified Trustees, or by a majority vote of the outstanding
securities of the Trust upon not more than 60 days' written notice by either
party.
For the fiscal years ended May 31, 1997, 1996, and 1995, the aggregate sales
charges payable to the Distributor with respect to the Investor Shares of the
Funds were as follows:
B-19
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE SALES
CHARGE PAYABLE TO AMOUNT RETAINED BY
FUND DISTRIBUTOR DISTRIBUTOR
--------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Grade Bond Fund $ 50,016 $ 61,948 $ 143 $ 0
Georgia Tax-Exempt Bond Fund $ 1,208 $ 1,495 $ 6 $ 762
Florida Tax-Exempt Bond Fund $ 1,386 $ 8,271 $ 14 $ 0
Tennessee Tax-Exempt Bond Fund $ 515 $ 0 $ 0 $ 0
Short-Term Bond Fund $ 1,204 $ 0 $ 0 $ 0
Investment Grade Tax-Exempt Bond Fund $ 12,005 $ 13,613 $ 30 $ 2,133
U.S. Government Securities Fund $ 7,279 $ 4,006 $ 0 $ 0
Short-Term U.S. Treasury Securities Fund $ 2,641 $ 4,241 $ 9 $ 0
Limited-Term Federal Mortgage Securities Fund $ 4,067 $ 1,541 $ 50 $ 100
Capital Growth Fund $258,267 $373,314 $ 243 $ 2,078
Sunbelt Equity Fund $ 46,854 $135,566 $ 61 $ 1,981
Value Income Stock Fund $306,061 $406,633 $ 3,104 $ 3,774
International Equity Fund $ 29,032 * $ 85 *
International Equity Index Fund $ 19,058 $ 59,784 $ 50 $ 1,620
Mid-Cap Equity Fund $ 91,344 $ 63,337 $ 197 $ 858
Balanced Fund $ 16,540 $ 37,732 $ 22 $ 0
</TABLE>
*Not in operation during the period.
For the fiscal years ended May 31, 1997, 1996, and 1995, the aggregate sales
charges payable to the Distributor with respect to the Flex Shares of the
Funds were as follows:
B-20
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE SALES CHARGE AMOUNT RETAINED
FUND PAYABLE TO DISTRIBUTOR BY DISTRIBUTOR
----------------------------------- -----------------------------------
1997 1996 1995 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Grade Bond Fund $ 4,329 $ 0
Georgia Tax-Exempt Bond Fund $ 2,896 $ 0
Florida Tax-Exempt Bond Fund $ 153 $ 0
Tennessee Tax-Exempt Bond Fund $ 1,008 $ 0
Short-Term Bond Fund $ 344 $ 0
Investment Grade Tax-Exempt Bond Fund $ 2,782 $ 0
U.S. Government Securities Fund $ 1,067 $ 0
Short-Term U.S. Treasury Securities Fund $ 3,687 $ 0
Limited-Term Federal Mortgage Securities Fund $ 1,442 $ 0
Capital Growth Fund $ 6,283 $ 0
Sunbelt Equity Fund $ 324 $ 0
Value Income Stock Fund $ 10,574 $ 0
International Equity Fund $ 60 $ 0
International Equity Index Fund $ 392 $ 0
Mid-Cap Equity Fund $ 5,222 $ 0
Balanced Fund $ 713 $ 0
</TABLE>
*Not in operation during the period.
INVESTOR SHARES AND FLEX SHARES DISTRIBUTION PLANS
The Distribution Agreement and the Investor Plan adopted by the Trust
provide that Investor Shares of the Fund will pay the Distributor fees of up
to the following respective levels: .20% of the average daily net assets of
the Prime Quality Money Market Fund; .17% of the average daily net assets of
the U.S. Government Securities Money Market Fund; .15% of the average daily
net assets of the Tax-Exempt Money Market Fund; .18% of the average daily net
assets of the Short-Term U.S. Treasury Securities Fund; .23% of the average
daily net assets of the Short-Term Bond Fund; .43% of the average daily net
assets of the Investment Grade Bond Fund; .43% of the average daily net
assets of the Investment Grade Tax-Exempt Bond Fund; .68% of the average
daily net assets of the Capital Growth Fund; .33% of the average daily net
assets of the Value Income Stock Fund; .43% of the average daily net assets
of the Mid-Cap Equity Fund; .43% of the average daily net assets of the
Sunbelt Equity Fund; .28% of the average daily net assets of the
Balanced Fund; .18% of the average daily net assets of the Florida Tax-Exempt
Bond Fund; .18% of the average daily net assets of the Georgia Tax-Exempt Bond
Fund; .18% of the average daily net assets of the Tennessee
B-21
<PAGE>
Tax-Exempt Bond Fund; .38% of the average daily net assets of the U.S.
Government Securities Fund; .38% of the average daily net assets of the
International Equity Index Fund; .33% of the average daily net assets of the
International Equity Fund; and .23% of the average daily net assets of the
Limited-Term Federal Mortgage Securities Fund.
The Distribution Agreement and the Flex Plan adopted by the Trust provide
that each Flex Shares Fund will pay the Distributor a fee of up to .75% of
the average daily net assets of that Fund. The Distributor can use these
fees to compensate broker-dealers and service providers, including SunTrust
and its affiliates, which provide administrative and/or distribution services
to Investor Shares or Flex Shares Shareholders or their customers who
beneficially own Investor Shares or Flex Shares. In addition, Flex Shares
are subject to a service fee of up to .25% of the average daily net assets of
the Flex Shares of each Fund. This service fee will be used for services
provided and expenses incurred in maintaining shareholder accounts,
responding to shareholder inquiries and providing information on their
investments.
Services for which broker-dealers and service providers may be compensated
include establishing and maintaining customer accounts and records;
aggregating and processing purchase and redemption requests from customers;
placing net purchase and redemption orders with the Distributor;
automatically investing customer account cash balances; providing periodic
statements to customers; arranging for wires; answering customer inquiries
concerning their investments; assisting customers in changing dividend
options, account designations, and addresses; performing sub-accounting
functions; processing dividend payments from the Trust on behalf of
customers; and forwarding Shareholder communications from the Trust (such as
proxies, Shareholder reports, and dividend distribution and tax notices) to
these customers with respect to investments in the Trust. Certain state
securities laws may require those financial institutions providing such
distribution services to register as dealers pursuant to state law. Although
banking laws and regulations prohibit banks from distributing shares of
open-end investment companies such as the Trust, according to an opinion
issued to the staff of the SEC by the Office of the Comptroller of the
Currency, financial institutions are not prohibited from acting in other
capacities for investment companies, such as providing shareholder services.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of financial institutions in connection with
providing shareholder services, the Trust may be required to alter materially
or discontinue its arrangements with such financial institutions.
The Trust has adopted the Investor Plan and the Flex Plan in each case in
accordance with the provisions of Rule 12b-1 under the 1940 Act, which Rule
regulates circumstances under which an investment company may directly or
indirectly bear expenses relating to the distribution of its shares.
Continuance of the Investor Plan and the Flex Plan must be approved annually
by a majority of the Trustees of the Trust and by a majority of the Qualified
Trustees. The Investor Plan and the Flex Plan require that quarterly written
reports of amounts spent under the Investor Plan and the Flex Plan,
respectively, and the purposes of such expenditures be furnished to and
reviewed by the Trustees. The Investor Plan and the Flex Plan may not be
amended to increase materially the amount which may be spent thereunder
without approval by a majority of the outstanding shares of the affected
class of shares of the Trust. All material amendments of the Plans will
require approval by a majority of the Trustees of the Trust and of the
Qualified Trustees.
There is no sales charge on purchases of Flex Shares, but Flex Shares are
subject to a contingent deferred sales charge if they are redeemed within one
year of purchase. Pursuant to the Distribution Agreement and the Flex Plan,
Flex Shares are subject to an ongoing distribution and service fee calculated
on each of the Bond Funds', State Tax-Exempt Bond Funds', Equity Funds' and
Balanced Fund's aggregate average daily net assets attributable to its Flex
Shares.
For the fiscal years ended May 31, 1997, 1996, and 1995, the Funds paid the
following amounts pursuant to the Investor Plan:
B-22
<PAGE>
DISTRIBUTION FEES
AMOUNT PAID
---------------------------------
FUND 1997 1996 1995
--- ---------- -------- --------
Prime Quality Money Market Fund $ 342,798 $273,316 $179,128
U.S. Government Securities Money Market
Fund $ 66,016 $ 44,107 $ 16,661
Tax-Exempt Money Market Fund $ 89,912 $ 80,845 $ 44,182
Investment Grade Bond Fund $ 94,495 $ 78,963 $ 54,455
Investment Grade Tax-Exempt Bond
Fund $ 100,819 $113,467 $107,645
Short-Term Bond Fund $ 0 $ 5,067 $ 2,141
Florida Tax-Exempt Bond Fund $ 0 $ 6,021 $ 1,471
Georgia Tax-Exempt Bond Fund $ 0 $ 5,001 $ 1,548
Tennessee Tax-Exempt Bond Fund $ 2,177 $ 1,266 $ 1,347
U.S. Government Securities Fund $ 1,150 $ 4,218 $ 386
Short-Term U.S. Treasury Securities Fund $ 0 $ 8,499 $ 5,291
Limited-Term Federal Mortgage Securities
Fund $ 0 $ 2,360 $ 241
Capital Growth Fund $1,109,436 $912,685 $806,373
Sunbelt Equity Fund $ 80,282 $ 99,366 $ 49,826
Value Income Stock Fund $ 437,882 $304,282 $217,152
Mid-Cap Equity Fund $ 56,187 $ 51,485 $ 8,123
Balanced Fund $ 2,390 $ 10,808 $ 3,233
Small Cap Equity Fund $ 0 * *
Emerging Markets Equity Fund * * *
International Equity Fund $ 10,778 $ 0
International Equity Index Fund $ 8,005 $ 369 $ 1,649
*Not in operation during the period.
For the fiscal years ended May 31, 1997 and 1996, the Funds paid the
following amounts pursuant to the Flex Plan:
B-23
<PAGE>
DISTRIBUTION FEES
AMOUNT PAID
---------------------
FUND 1997 1996
---- -------- -------
Investment Grade Bond Fund $ 29,558 $ 9,277
Investment Grade Tax-Exempt Bond Fund $ 36,489 $21,786
Short-Term Bond Fund $ 0 $ 0
Florida Tax-Exempt Bond Fund $ 5,962 $ 2,675
Georgia Tax-Exempt Bond Fund $ 20,094 $ 7,409
Tennessee Tax-Exempt Bond Fund $ 14,991 $ 7,238
U.S. Government Securities Fund $ 15,260 $ 4,460
Short-Term U.S. Treasury Securities Fund $ 510 $ 321
Limited-Term Federal Mortgage Securities Fund $ 0 $ 169
Capital Growth Fund $201,520 $37,344
Sunbelt Equity Fund $ 27,568 $ 1,560
Value Income Stock Fund $433,655 $99,703
Mid-Cap Equity Fund $ 53,907 $10,115
Balanced Fund $ 28,723 $ 6,985
Small Cap Equity Fund N/A *
Emerging Markets Equity Fund N/A N/A
International Equity Fund $ 18,519 $ 0
International Equity Index Fund $ 0 $ 580
*Not in operation during the period.
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during
that period. The business address of each Trustee and each Executive Officer
is SEI Investments Company, Oaks, Pennsylvania 19456. Certain officers of
the Trust also serve as officers of some or all of the following: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK
Funds, Bishop Street Funds, Boston 1784 Funds7, CoreFunds, Inc., CrestFunds,
Inc., CUFUND, The Expedition Funds, FMB Funds, Inc., First American Funds,
Inc., First American Investment Funds, Inc., First American Strategy Funds,
Inc., HighMark Funds, Marquis Funds7, Monitor Funds, Morgan Grenfell
Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The
Pillar Funds, Profit Funds Investment Trust, Rembrandt Funds7, Santa Barbara
Group of Mutual Funds, Inc., SEI Asset Allocation Trust, SEI Daily Income
Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI International Trust, SEI Liquid Asset Trust,
SEI Tax Exempt Trust, STI Classic Variable Trust and TIP Funds, each of which
is an open-end management investment company managed by SEI Fund Resources or
its affiliates and, except for Profit Funds Investment Trust, Rembrandt
Fund-REGISTRATION TRADEMARK-, and Santa Barbara Group of Mutual Funds, Inc.,
are distributed by SEI Investments Distribution Co.
DANIEL S. GOODRUM (7/11/26) - Trustee - Chairman & CEO, SunBank/South
Florida, N.A., 1985-1991; Chairman Audit Committee and Director, Holy Cross
Hospital; Executive Committee Member and Director, Honda Classic Foundation;
Director, Broward Community College Foundation.
WILTON LOONEY (4/18/19) - Trustee - President of Genuine Parts Company,
1961-1964; Chairman of the Board, 1964-1990; Honorary Chairman of the Board,
1990 to present. Director, Rollins, Inc.; Director, RPC Energy Services, Inc.
CHAMPNEY A. MCNAIR (10/30/24) - Trustee - Director and Chairman of Investment
Committee and member of Executive Committee, Cotton States Life and Health
Insurance Company; Director and Chairman of Investment Committee and member
of Executive Committee, Cotton States Mutual Insurance Company; Chairman,
Trust Company of Georgia Advisory Council.
F. WENDELL GOOCH (12/3/32) - Trustee - Retired. President, Orange County
Publishing Co., Inc., 1981-1997, publisher of the Paoli News and the Paoli
Republican and Editor of the Paoli Republican, 1981-1997, President, H & W
Distribution, Inc., 1984-1997. Current Trustee on the Board of Trustees for
the SEI Family of Funds and The Capitol Mutual Funds. Executive Vice
President, Trust Department, Harris Trust and Savings Bank and Chairman of
the Board of Directors of The Harris Trust Company of Arizona before January
1981.
T. GORDY GERMANY (11/28/25) -Trustee - Retired President, Chairman, and CEO
of Crawford & Company; held these positions, 1973-1987. Member of the Board
of Directors, 1970-1990, joined company in 1948; spent entire career at
Crawford, currently serves on Boards of Norrell Corporation and Mercy Health
Services, the latter being the holding company of St. Joseph's Hospitals.
DR. BERNARD F. SLIGER (9/30/24) - Trustee - Currently on sabbatical leave
from Florida State University (1991-92); now serves as visiting professor at
the University of New Orleans. President of Florida State University,
1976-91; previous four years EVP and Chief Academic Officer. During
educational career, taught at Florida State, Michigan State, Louisiana State
and Southern University. Spent 19 years as faculty member and administrator
at Louisiana State University and served as Head of Economics Department,
member and Chairman of the Graduate Council, Dean of Academic Affairs and
Vice Chancellor. Member of Board of Directors of Federal Reserve Bank of
Atlanta, 1983-1988.
JESSE HALL (9/26/29) - Trustee* - Executive Vice President, SunTrust Banks,
Inc., 1985-1994; Director of Crawford & Company since 1979; Member, Atlanta
Estate Planning Council, 1988-1993.
DAVID G. LEE (4/16/52) - President, Chief Executive Officer - Senior Vice
President of the Administrator and Distributor since 1993. Vice President of
the Administrator and Distributor (1991-1993). President, GW Sierra Trust
Funds before 1991.
CAROL ROONEY (5/8/64) - Controller, Chief Financial Officer - A Director of
SEI Fund Resources since 1992.
RICHARD W. GRANT (10/25/45) - Secretary - 2000 One Logan Square,
Philadelphia, Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law
firm). Counsel to the Trust, Administrator and Distributor.
B-25
<PAGE>
SANDRA K. ORLOW (10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor since
1983.
KEVIN P. ROBINS (4/15/61) - Vice President, Assistant Secretary - Senior Vice
President & General Counsel of SEI Investments, the Administrator and the
Distributor since 1994. Vice President of SEI, the Administrator and the
Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm)
prior to 1992.
KATHRYN L. STANTON (11/19/58) - Vice President, Assistant Secretary - Vice
President, Assistant Secretary of SEI Investments, the Administrator and
Distributor since 1994. Associate, Morgan, Lewis & Bockius LLP (law firm),
1989-1994.
TODD CIPPERMAN (2/14/66) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor
since 1995. Associate, Dewey Ballantine (law firm), 1994-1995. Associate,
Winston & Strawn (law firm), 1991-1994.
BARBARA NUGENT (6/18/56) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of SEI Investments, the Distributor and
Administrator, Associate, Drinker Biddle & Reath (law firm), 1994-1996.
Assistant Vice President/Administration, Delaware Service Company, Inc.,
1981-1994.
MARC H. CAHN (6/19/57) - Vice President, Assistant Secretary - Vice President
and Assistant Secretary of SEI Investments, the Distributor and
Administrator, Associate General Counsel, Barclays Bank PLC., 1995-1996.
Counsel for First Fidelity Bancorporation prior to 1995.
JOHN H. GRADY, JR. (6/1/61) - Assistant Secretary - 1800 M Street, N.W.
Washington, DC 20036. Partner, Morgan, Lewis & Bockius LLP (law firm) since
1995. Associate, Morgan, Lewis & Bockius LLP, 1993-1995. Associate, Ropes &
Gray (law firm), 1988-1993.
- -----------------
* Jesse S. Hall may be deemed to be an "interested person" of the Trust as
defined in the Investment Company Act of 1940.
The Trustees and officers of the Trust own, in the aggregate, less than 1% of
the outstanding shares of the Trust.
For the fiscal year end May 31, 1997, the Trust paid the following amounts to
Trustees and Officers of the Trust:
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION PENSION OR TOTAL COMPENSATION
FROM RETIREMENT ESTIMATED FROM REGISTRANT AND
REGISTRANT FOR BENEFITS ACCRUED ANNUAL FUND COMPLEX PAID TO
FISCAL YEAR AS PART OF FUND BENEFITS UPON DIRECTORS FOR FISCAL YEAR
NAME OF PERSON, POSITION ENDED 1997 EXPENSES RETIREMENT ENDED 1997
- ------------------------ -------------- ---------------- ------------- -------------------------
<S> <C> <C> <C> <C>
Daniel S. Goodrum, Trustee $15,625 N/A N/A $15,625 for service on two boards
Wilton Looney, Trustee $16,750 N/A N/A $16,750 for service on two boards
Champney A. McNair, Trustee $15,625 N/A N/A $15,625 for service on two boards
</TABLE>
B-26
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION PENSION OR TOTAL COMPENSATION
FROM RETIREMENT ESTIMATED FROM REGISTRANT AND
REGISTRANT FOR BENEFITS ACCRUED ANNUAL FUND COMPLEX PAID TO
FISCAL YEAR AS PART OF FUND BENEFITS UPON DIRECTORS FOR FISCAL YEAR
NAME OF PERSON, POSITION ENDED 1997 EXPENSES RETIREMENT ENDED 1997
- ------------------------ -------------- ---------------- ------------- -------------------------
<S> <C> <C> <C> <C>
F. Wendell Gooch, Trustee $15,625 N/A N/A $15,625 for service on two boards
T. Gordy Germany,
Trustee $15,625 N/A N/A $15,625 for service on two boards
Dr. Bernard F. Sliger, Trustee $15,625 N/A N/A $15,625 for service on two boards
Jesse S. Hall, Trustee $15,625 N/A N/A $15,625 for service on two boards
</TABLE>
PERFORMANCE INFORMATION
From time to time a Fund may advertise its performance. Performance figures
are based on historical earnings and are not intended to indicate future
performance.
CLASSES OF SHARES AND PERFORMANCE
The performance of the Trust's Investor Shares and Flex Shares will normally
be lower than for Trust Shares because Investor Shares and Flex Shares are
subject to distribution, service, and certain transfer agent fees not charged
to Trust Shares. Because of their differing distribution expense
arrangements, the performance of Flex Shares in comparison to Investor Shares
will vary depending upon the investor's investment time horizon.
PERFORMANCE COMPARISONS
Each Fund may periodically compare its performance to other mutual funds
tracked by mutual fund rating services, to broad groups of comparable mutual
funds, or to unmanaged indices. These comparisons may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.
COMPUTATION OF YIELD
The current yield of the Money Market Funds will be calculated daily based
upon the seven days ending on the date of calculation ("base period"). The
yield is computed by determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing shareholder account
having a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing such net change by the value of the account at the beginning of the
same period to obtain the base period return and multiplying the result by
(365/7). Realized and unrealized gains and losses are not included in the
calculation of the yield. The effective compound yield of the Funds is
determined by computing the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the
value of the account at the beginning of the base period to obtain the base
period return, and then compounding
B-27
<PAGE>
the base period return by adding 1, raising the sum to a power equal to 365
divided by 7, and subtracting 1 from the result, according to the following
formula: Effective Yield = [Base Period Return + 1]. The current and the
effective yields reflect the reinvestment of net income earned daily on
portfolio assets.
For the 7-day period ended May 31, 1997 the Money Market Funds' current
effective and tax-equivalent yields were as follows:
<TABLE>
<CAPTION>
7-DAY 7-DAY
7-DAY TAX-EQUIVALENT TAX-EQUIVALENT
FUND CLASS 7-DAY YIELD EFFECTIVE YIELD YIELD EFFECTIVE YIELD
---- -------- ----------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Prime Quality Money Investor 4.91% 5.03% N/A N/A
Market Fund Trust 5.08% 5.20% N/A N/A
U.S. Government Investor 4.77% 4.86% N/A N/A
Securities Money Trust 4.91% 5.00% N/A N/A
Market Fund
Tax-Exempt Money Investor 3.23% 3.28% 5.35% 5.43%
Market Fund Trust 3.35% 3.40% 5.55% 5.63%
</TABLE>
The yields of these Funds fluctuate, and the annualization of a week's
dividend is not a representation by the Trust as to what an investment in the
Fund will actually yield in the future. Actual yields will depend on such
variables as asset quality, average asset maturity, the type of instruments a
Fund invests in, changes in interest rates on money market instruments,
changes in the expenses of the Fund and other factors.
Yields are one basis upon which investors may compare the Funds with other
money market funds; however, yields of other money market funds and other
investment vehicles may not be comparable because of the factors set forth
above and differences in the methods used in valuing portfolio instruments.
The Tax-Exempt Money Market and Tax-Exempt Bond Fund's "tax equivalent yield"
is calculated by determining the rate of return that would have to be
achieved on a fully taxable investment to produce the after-tax equivalent of
the Fund's yield, assuming certain tax brackets for a Shareholder.
Tax-exempt yield is calculated according to the same formula except that a =
interest exempt from federal income tax earned during the period. This
tax-exempt yield is then translated into tax-equivalent yield according to
the following formula:
TAX-EQUIVALENT YIELD = ( E ) + t
_________
1-P
E = tax-exempt yield
p = stated income tax rate
t = taxable yield
Tax equivalent yields assume the payment of federal income taxes at a rate of
39.6% and, for the Georgia Tax-Exempt Bond Fund, Georgia income taxes at a
rate of 6.0% and, for the Tennessee Tax-Exempt Bond Fund, Tennessee income
taxes at a rate of 6.0%.
B-28
<PAGE>
For the 30-day period ended May 31, 1997, the tax-equivalent yields for the
Trust Shares were as follows: for the Investment Grade Tax-Exempt Bond Fund
- -6.62%, Georgia Tax-Exempt Bond Fund - 8.14%, Florida Tax-Exempt Bond Fund
- -8.00%, and Tennessee Tax-Exempt Bond Fund - 8.24%.
For the 30-day period ended May 31, 1997, the tax-equivalent yields for the
Investor Shares of the Tax-Exempt Funds were as follows: for the Investment
Grade Tax-Exempt Bond Fund - 5.75%, Georgia Tax-Exempt Bond Fund -7.50%,
Florida Tax-Exempt Bond Fund - 7.32% and Tennessee Tax-Exempt Bond Fund -
7.54%.
For the 30-day period ended May 31, 1997, the tax-equivalent yields for the
Flex Shares of the Tax-Exempt Funds were as follows: for the Investment
Grade Tax-Exempt Bond Fund - 5.15%, Georgia Tax-Exempt Bond Fund - 6.91%,
Florida Tax-Exempt Bond Fund - 6.73% and Tennessee Tax-Exempt Bond Fund -
6.91%.
The Bond, Short-Term U.S. Treasury, Tax-Exempt Bond and Equity Funds may
advertise a 30-day yield. In particular, yield will be calculated according
to the following formula:
6
Yield = (2 (a-b/cd + 1) - 1) where a = dividends and interest earned during
the period; b = expenses accrued for the period (net of reimbursement); c =
the current daily number of shares outstanding during the period that were
entitled to receive dividends; and d = the maximum offering price per share
on the last day of the period.
For the 30-day period ended May 31, 1997, yields on the Funds other than the
Money Market Funds were as follows:
FUND CLASS YIELD
- ---------------------------------------------------------------------
Investment Grade Bond Trust Class 6.31%
Fund Investor Class 5.68%
Flex Shares 5.42%
Investment Grade Tax- Trust Class 4.00%
Exempt Bond Fund Investor Class 3.47%
Flex Shares 3.11%
Short-Term Bond Fund Trust Class 5.97%
Investor Class 5.65%
Flex Shares 5.42%
B-29
<PAGE>
FUND CLASS YIELD
- ---------------------------------------------------------------------
Florida Tax-Exempt Bond Trust Class 4.35%
Fund Investor Class 3.98%
Flex Shares 3.66%
Georgia Tax-Exempt Bond Trust Class 4.43%
Fund Investor Class 4.08%
Flex Shares 3.76%
Tennessee Tax-Exempt Trust Class 4.48%
Bond Fund Investor Class 4.10%
Flex Shares 3.76%
Short-Term U.S. Treasury Trust Class 5.64%
Securities Fund Investor Class 5.43%
Flex Shares 5.20%
U.S. Government Trust Class 6.21%
Securities Fund Investor Class 5.56%
Flex Shares 5.28%
Limited-Term Federal Trust Class 5.91%
Mortgage Securities Fund Investor Class 5.50%
Flex Shares 5.29%
Capital Growth Fund Trust Class .70%
Investor Class .08%
Flex Shares 0%
Sunbelt Equity Fund Trust Class 0%
Investor Class 0%
Flex Shares 0%
Value Income Stock Fund Trust Class 2.24%
Investor Class 1.82%
Flex Shares 1.22%
Mid-Cap Equity Fund Trust Class 0%
Investor Class 0%
Flex Shares 0%
B-30
<PAGE>
FUND CLASS YIELD
- ---------------------------------------------------------------------
Balanced Fund Trust Class 2.98%
Investor Class 2.59%
Flex Shares 1.95%
Small Cap Equity Fund Trust Class 1.31%
Investor Class N/A
Flex Class N/A
Emerging Markets Equity Trust Class
Fund
International Equity Trust Class
Fund Investor Class
Flex Shares
International Equity Trust Class
Index Fund Investor Class
Flex Shares
*Not in operation during the period.
CALCULATION OF TOTAL RETURN
From time to time, the Bond, Short-Term U.S. Treasury, Tax-Exempt Bond,
Balanced and Equity Funds may advertise total return. In particular, total
return will be calculated according to the following formula: P (1 + T)n =
ERV, where P = a hypothetical initial payment of $1,000; T = average annual
total return; n = number of years; and ERV = ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the designated time
period as of the end of such period.
From time to time, the Trust may include the names of clients of the Advisors
in advertisements and/or sales literature for the Trust. The SEI Funds
Evaluation database tracks the total return of numerous tax-exempt pension
accounts. The range of returns in these accounts determines the percentile
rankings. SunTrust Bank's investment advisory affiliates, STI Capital
Management, N.A. and Trusco Capital Management, have been in the top 1% of
the SEI Funds Evaluation database for equity managers over the past ten
years. SEI Investment's database includes research data on over 1,000
investment managers responsible for over $450 billion in assets.
Based on the foregoing, the average annual total returns for the Funds from
inception through May 31, 1997 and for the one year period ended May 31, 1997
were as follows:
B-31
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
---------------------------
FUND CLASS ONE YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------
Prime Quality Money Trust(1) 5.01% 4.17%
Market Fund
Investor(1) 4.84% 4.00%
U.S. Government Trust(1) 4.83% 4.04%
Securities Money
Market Fund Investor(1) 4.69% 3.90%
Tax-Exempt Money Trust(1) 3.09% 2.74%
Market Fund
Investor(1) 2.97% 2.62%
Investment Grade Bond Trust(3) 6.99% 6.26%
Fund
Investor--With 2.68% 5.18%
Sales Load(2)
Investor--Without 6.66% 5.99%
Sales Load(2)
Flex--With Sales 4.16% 4.33%
Load(25)
Flex--Without 6.16% 4.33%
Sales Load(25)
Investment Grade Tax- Trust(5) 7.13% 6.04%
Exempt Bond Fund
Investor--With 2.72% 6.98%
Sales Load(4)
Investor--Without 6.69% 7.80%
Sales Load(4)
Flex--With Sales 4.19% 5.55%
Load(26)
Flex--Without 6.19% 5.55%
Sales Load(26)
Short-Term Bond Fund Trust(7) 6.30% 5.04%
Investor--With 3.87% 4.18%
Sales Load(8)
Investor--Without 5.97% 4.69%
Sales Load(8)
Flex--With Sales 3.62% 4.70%
Load(28)
Flex-Without Sales 5.62% 4.70%
Load(28)
Florida Tax-Exempt Trust(10) 7.22% 5.66%
Bond Fund
Investor--With 3.01% 4.27%
Sales Load(9)
Investor--Without 7.00% 5.46%
Sales Load(9)
Flex--With Sales 4.48% 4.86%
Load(26)
Flex--Without 6.48% 4.86%
Sales Load(26)
B-32
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
---------------------------
FUND CLASS ONE YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------
Georgia Tax-Exempt Trust(9) 6.79% 3.81%
Bond Fund
Investor--With 2.51% 2.46%
Sales Load(11)
Investor--Without 6.47% 3.63%
Sales Load(11)
Flex--With Sales 4.06% 4.15%
Load(31)
Flex--Without 6.06% 4.15%
Sales Load(31)
Tennessee Tax-Exempt Trust(12) 7.16% 3.47%
Bond Fund
Investor--With 2.89% 2.23%
Sales Load(11)
Investor--Without 6.93% 3.40%
Sales Load(11)
Flex--With Sales 4.42% 4.19%
Load(29)
Flex--Without 6.42% 4.19%
Sales Load(29)
Short-Term U.S. Trust(7) 5.76% 4.56%
Treasury Securities
Fund Investor--With 4.53% 4.15%
Sales Load(6)
Investor--Without 5.59% 4.40%
Sales Load(6)
Flex--With Sales 3.19% 4.48%
Load(27)
Flex--Without 5.19% 4.48%
Sales Load(27)
U.S. Government Trust(21) 7.54% 6.67%
Securities Fund
Investor--With 3.14% 4.74%
Sales Load(20)
Investor--Without 7.21% 6.09%
Sales Load(20)
Flex-With Sales 4.57% 3.98%
Load(25)
Flex--Without 6.57% 3.98%
Sales Load(25)
Limited-Term Federal Trust(23) 6.43% 6.29%
Mortgage Fund
Investor--With 3.47% 5.40%
Sales Load(22)
Investor--Without 6.17% 6.35%
Sales Load(22)
Flex--With Sales 3.80% 4.95%
Load(25)
Flex--Without 5.80% 4.95%
Sales Load(25)
B-33
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
---------------------------
FUND CLASS ONE YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------
Capital Growth Fund Trust(13) 24.66% 15.98%
Investor--With 19.10% 14.98%
Sales Load(4)
Investor--Without 23.74% 15.86%
Sales Load(4)
Flex--With Sales 21.24% 25.34%
Load(26)
Flex--Without 23.24% 25.34%
Sales Load(26)
Sunbelt Equity Fund Trust(19) 1.48% 11.83%
Investor--With (2.71)% 10.08%
Sales Load(18)
Investor--Without 1.05% 11.32%
Sales Load(18)
Flex--With Sales (1.40)% 18.46%
Load(29)
Flex--Without 0.46% 18.46%
Sales Load(29)
Value Income Stock Trust(15) 22.18% 18.87%
Fund
Investor--With 17.14% 18.14%
Sales Load(14)
Investor--Without 21.69% 19.20%
Sales Load(14)
Flex--With Sales 18.91% 23.68%
Load(26)
Flex--Without 20.91% 23.68%
Sales Load(26)
Mid-Cap Equity Fund Trust(17) 14.23% 15.01%
Investor--With 9.46% 13.11%
Sales Load(16)
Investor--Without 13.76% 14.42%
Sales Load(16)
Flex--With Sales 11.06% 17.91%
Load(29)
Flex--Without 13.06% 17.91%
Sales Load(29)
Balanced Fund Trust(19) 16.66% 11.77%
Investor--With 11.92% 10.07%
Sales Load(18)
Investor--Without 16.27% 11.32%
Sales Load(18)
Flex--With Sales 13.40% 15.51%
Load(30)
Flex--Without 15.40% 15.51%
Sales Load(30)
B-34
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
---------------------------
FUND CLASS ONE YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------
Small Cap Equity Fund Trust * 10.97%
Flex--With Sales * *
Load
Flex--Without * *
Sales Load
Emerging Markets Trust(35) * 7.90%
Equity Fund
International Equity Trust(33) 23.29% 25.50%
Fund
Investor--With 18.28% 19.68%
Sales Load(32)
Investor--Without 22.85% 22.99%
Sales Load(32)
Flex--With Sales 19.98% 22.30%
Load(32)
Flex--Without 21.98% 22.30%
Sales Load(32)
International Equity Trust(24) 7.48% 6.48%
Index Fund
Investor--With 3.14% 4.71%
Sales Load(24)
Investor--Without 7.12% 6.06%
Sales Load(24)
Flex--With Sales 4.41% 7.34%
Load(34)
Flex--Without 6.41% 7.34%
Sales Load(34)
(1) Commenced operations 6/8/92
(2) Commenced operations 6/11/92
(3) Commenced operations 7/16/92
(4) Commenced operations 6/9/92
(5) Commenced operations 10/21/93
(6) Commenced operations 3/18/93
(7) Commenced operations 3/15/93
(8) Commenced operations 3/22/93
(9) Commenced operations 1/18/94
(10) Commenced operations 1/25/94
(11) Commenced operations 1/19/94
(12) Commenced operations 1/27/94
(13) Commenced operations 7/1/92
(14) Commenced operations 2/17/93
(15) Commenced operations 2/12/93
(16) Commenced operations 2/1/94
(17) Commenced operations 2/2/94
(18) Commenced operations 1/4/94
(19) Commenced operations 1/3/94
(20) Commenced operations 6/9/94
(21) Commenced operations 7/31/94
(22) Commenced operations 7/17/94
(23) Commenced operations 6/7/94
(24) Commenced operations 6/6/94
(25) Commenced operations 6/2/95
(26) Commenced operations 6/2/95
(27) Commenced operations 6/23/95
(28) Commenced operations 6/21/95
(29) Commenced operations 6/6/95
(30) Commenced operations 6/15/95
(31) Commenced operations 6/7/95
(31) Commenced operations 6/7/95
(32) Commenced operations 1/2/96
(33) Commenced operations 12/1/95
(34) Commenced operations 6/8/95
(35) Commenced operations 1/31/97
*Not in operation during period.
Flex Shares of the Trust commenced operations after May 31, 1995.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions of shares of the Funds may be made on any day the
New York Stock Exchange ("NYSE") is open for business. Currently, the NYSE
is closed on the days the following holidays are observed: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
It is currently the Trust's policy to pay for all redemptions in cash.
The Trust retains the right, however, to alter this policy to provide
for redemptions in whole or in part by a distribution in-kind of readily
marketable securities held by
B-35
<PAGE>
the Funds in lieu of cash. Shareholders may incur brokerage charges on the
sale of any such securities so received in payment of redemptions. A
Shareholder will at all times be entitled to aggregate cash redemptions from
all Funds of the Trust during any 90-day period of up to the lesser of
$250,000 or 1% of the Trust's net assets.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading
on the NYSE is restricted, or during the existence of an emergency (as
determined by the Securities and Exchange Commission by rule or regulation)
as a result of disposal or valuation of a Fund's securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission has by order permitted. The Trust also reserves the right to
suspend sales of shares of a Fund for any period during which the NYSE, an
Advisor, the Administrator and/or, the Custodian are not open for business.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Money Market Funds is calculated daily
by the Administrator by adding the value of securities and other assets,
subtracting liabilities and dividing by the number of outstanding shares.
Securities will be valued by the amortized cost method which involves valuing
a security at its cost on the date of purchase and thereafter (absent unusual
circumstances) assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuations in general market rates
of interest on the value of the instrument. While this method provides
certainty in valuation, it may result in periods during which a security's
value, as determined by this method, is higher or lower than the price a Fund
would receive if it sold the instrument. During periods of declining
interest rates, the daily yield of a Fund may tend to be higher than a like
computation made by a company with identical investments utilizing a method
of valuation based upon market prices and estimates of market prices for all
of its portfolio securities. Thus, if the use of amortized cost by a Fund
resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in a Fund would be able to obtain a somewhat higher
yield than would result from investment in a company utilizing solely market
values, and existing investors in a Fund would experience a lower yield. The
converse would apply in a period of rising interest rates.
A Fund's use of amortized cost and the maintenance of a Fund's net asset
value at $1.00 are permitted by regulations promulgated by Rule 2a-7 under
the 1940 Act, provided that certain conditions are met. The regulations
also require the Trustees to establish procedures which are reasonably
designed to stabilize the net asset value per share at $1.00 for the Funds.
Such procedures include the determination of the extent of deviation, if any,
of the Funds current net asset value per share calculated using available
market quotations from the Funds amortized cost price per share at such
intervals as the Trustees deem appropriate and reasonable in light of market
conditions and periodic reviews of the amount of the deviation and the
methods used to calculate such deviation. In the event that such deviation
exceeds 1/2 of 1%, the Trustees are required to consider promptly what action,
if any, should be initiated, and, if the Trustees believe that the extent of
any deviation may result in material dilution or other unfair results to
Shareholders, the Trustees are required to take such corrective action as
they deem appropriate to eliminate or reduce such dilution or unfair results
to the extent reasonably practicable. Such actions may include the sale of
portfolio instruments prior to maturity to realize capital gains or losses or
to shorten average portfolio maturity; withholding dividends; redeeming
shares in kind; or establishing a net asset value per share by using
available market quotations. In addition, if the Funds incur a significant
loss or liability, the Trustees have the authority to reduce pro rata the
number of shares of the Funds in each Shareholder's account and to offset
each Shareholder's pro rata portion of such loss or liability from the
Shareholder's accrued but unpaid dividends or from future dividends while
each other Fund must annually distribute at least 90% of its investment
company taxable income.
The securities of the Bond, Short-Term U.S. Treasury Securities and Equity
Funds are valued by the Administrator pursuant to valuations provided by an
independent pricing service. The pricing service relies primarily on prices
of actual market transactions as well as trader quotations. However, the
service may also use a matrix system to
B-36
<PAGE>
determine valuations of fixed income securities, which system considers such
factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. The
procedures of the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the Trustees.
Although the methodology and procedures are identical, the net asset value
per share of Trust Shares, Flex Shares and Investor Shares of the Bond,
Short-Term U.S. Treasury Securities and Equity Funds may differ because of
variations in the distribution and service fees and transfer agent fees
charged to Investor Shares.
TAXES
The following is a summary of certain Federal income tax considerations
generally affecting the Funds and their shareholders that are not described
in the Funds' prospectus. No attempt is made to present a detailed
explanation of the Federal tax treatment of the funds or their Shareholders,
and the discussion here and in the Funds' prospectus is not intended as a
substitute for careful tax planning.
This discussion of Federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional
Information. New legislation, as well as administrative changes or court
decisions, may change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated herein.
FEDERAL INCOME TAX
In order to qualify for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended ("Code"), each Fund must
distribute annually to its Shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment
company taxable income (generally, net investment income plus net short-term
capital gain) ("Distribution Requirement") and also must meet several
additional requirements. Among these requirements are the following: (i) at
least 90% of a Fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans, and gains
from the sale or other disposition of stock or securities, or certain other
income; (ii) a Fund must derive less than 30% of its gross income each
taxable year from the sale or other disposition of stocks or securities held
for less than three months; (iii) at the close of each quarter of a Fund's
taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RIC's and other securities, with such other securities limited, in
respect of any one issuer, to an amount that does not exceed 5% of the value
of a Fund's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iv) at the close of each
quarter of a Fund's taxable year, not more than 25% of the value of its
assets may be invested in securities (other than U.S. Government securities
or the securities of other RIC's) of any one issuer, or of two or more
issuers engaged in same or similar businesses if the Fund owns at least 20%
of the voting power of such issuers. Requirement (ii) no longer applies for
tax years beginning after August 5, 1997.
Notwithstanding the Distribution Requirement described above, which only
requires a Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital
gains (the excess of net long-term capital gains over net short-term capital
loss), a Fund will be subject to a nondeductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year 98% of its ordinary
income for that year and 98% of its capital gain net income for the one-year
period ending on October 31 of that calendar year, plus certain other
amounts. Each Fund intends to make sufficient distributions prior to the end
of each calendar year to avoid liability for the federal excise tax
applicable to regulated investment companies.
B-37
<PAGE>
If, at the close of each quarter of its taxable year, at least 50% of the
value of a Fund's total assets consists of obligations the interest on which
is excludable from gross income, a Fund may pay "exempt-interest dividends,"
as defined in Section 852(b)(5) of the Code, to its shareholders.
As noted in the Prospectus, the Tax-Exempt Money Market Fund, the Investment
Grade Tax-Exempt Bond Fund, and the State Tax-Exempt Bond Funds intend to pay
exempt-interest dividends. Exempt-interest dividends are excludable from a
Shareholder's gross income for regular Federal income tax purposes, but may
nevertheless be subject to the alternative minimum tax (the "Alternative
Minimum Tax") imposed by Section 55 of the Code or the environmental tax (the
"Environmental Tax") imposed by Section 59A of the Code. The Alternative
Minimum Tax is imposed at the rate of 26% (with a maximum rate of 28%) in the
case of non-corporate taxpayers and at the rate of 20% in the case of
corporate taxpayers, to the extent it exceeds the taxpayer's regular tax
liability. The Environmental Tax is imposed at the rate of 0.12% and
applies only to corporate taxpayers. The Alternative Minimum Tax and the
Environmental Tax may be imposed in two circumstances. First,
exempt-interest dividends derived from certain "private activity bonds"
issued after August 7, 1986, will generally be an item of tax preference and
therefore potentially subject to the Alternative Minimum Tax for both
corporate and non-corporate taxpayers and the Environmental Tax for corporate
taxpayers only. Second, in the case of exempt-interest dividends received by
corporate Shareholders, all exempt-interest dividends, regardless of when the
bonds from which they are derived were issued or whether they are derived
from private activity bonds, will be included in the corporation's "adjusted
current earnings," as defined in Section 56(g) of the Code, in calculating
the corporation's alternative minimum taxable income for purposes of
determining the Alternative Minimum Tax and the Environmental Tax. For tax
years beginning after December 31, 1997, the Alternative Minimum Tax is
repealed for certain corporations.
Distributions of exempt-interest dividends may result in additional Federal
income tax consequences to shareholders in Tax-Exempt Funds. For example,
interest on indebtedness incurred by Shareholders to purchase or carry shares
of a Tax-Exempt Fund will not be deductible for Federal income tax purposes
to the extent that the Fund distributes exempt interest dividends during the
taxable year. The deduction otherwise allowable to property and casualty
insurance companies for "losses incurred" will be reduced by an amount equal
to a portion of exempt-interest dividends received or accrued during any
taxable year. Certain foreign corporations engaged in a trade or business in
the United States will be subject to a "branch profits tax" on their
"dividend equivalent amount" for the taxable year, which will include
exempt-interest dividends. Certain Subchapter S corporations may also be
subject to taxes on their "passive investment income," which could include
exempt-interest dividends. Up to 85% of the Social Security benefits or
railroad retirement benefits received by an individual during any taxable
year will be included in the gross income of such individual if the
individual's "modified adjusted gross income" (which includes exempt-interest
dividends) plus one-half of the Social Security benefits or railroad
retirement benefits received by such individual during that taxable year
exceeds the base amount described in Section 86 of the Code.
A Tax-Exempt Fund may not be an appropriate investment for persons (including
corporations and other business entities) who are "substantial users" (or
persons related to such users) of facilities financed by industrial
development or private activity bonds. A "substantial user" is defined
generally to include certain persons who regularly use in a trade or business
a facility financed from the proceeds of industrial development bonds or
private activity bonds. Such entities or persons should consult their tax
advisors before purchasing shares of a Tax-Exempt Fund.
Issuers of bonds purchased by a Tax-Exempt Fund (or the beneficiary of
such bonds) may have made certain representations or covenants in
connection with the issuance of such bonds to satisfy certain
requirements of the Code that must be satisfied subsequent to the
issuance of such bonds. Investors should be aware that exempt-interest
dividends derived from such bonds may become subject to Federal income
taxation retroactively to the date of issuance of the bonds to which
such dividends are attributable thereof if such representations are
determined to have been inaccurate or if the issuer of such bonds (or
the beneficiary of such bonds) fails to comply with such covenants.
B-38
<PAGE>
Any gain or loss recognized on a sale or redemption of shares of a Fund by a
Shareholder who is not a dealer in securities will generally be treated as
long-term capital gain or loss if the shares have been held for more than
eighteen months, mid-term if the shares have been held for over one year but
not for over eighteen months, and short-term if for a year or less.*
Long-term capital gains are currently taxed at a maximum rate or 20%;
mid-term capital gains are currently taxed at a maximum rate of 28%; and
short-term gains are currently taxed at ordinary income tax rates.] If
shares held for six months or less are sold or redeemed for a loss, two
special rules apply: First, if shares on which a net capital gain
distribution has been received are subsequently sold or redeemed, and such
shares have been held for six months or less, any loss recognized will be
treated as long-term capital loss to the extent of the long-term capital gain
distributions. Second, any loss recognized by a Shareholder upon the sale or
redemption of shares of a Tax-Exempt Fund held for six months or less will be
disallowed to the extent of any exempt-interest dividends received by the
Shareholder with respect to such shares.
The Funds will make annual reports to Shareholders of the Federal income tax
status of all distributions.
FOREIGN TAXES
Dividends and interests received by a Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on the Fund's stock or securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these taxes. Foreign countries generally do not impose taxes on
capital gains with respect to investments by foreign investors.
If any of the International Equity Index, International Equity, and Emerging
Markets Equity Funds meets the Distribution Requirement, and if more than 50%
of the value of such Fund's total assets at the close of its taxable year
consists of stock or securities of foreign corporations, such Fund will be
eligible to, and will, file an election with the Internal Revenue Service
that will enable Shareholders, in effect, to receive the benefit of the
foreign tax credit with respect to any foreign and U.S. possessions income
taxes paid by the Fund. Pursuant to the election, each Fund will treat those
taxes as dividends paid to its Shareholders. Each Shareholder will be
required to include a proportionate share of those taxes in gross income as
income received from a foreign source and must treat the amount so included
as if the Shareholder had paid the foreign tax directly. The Shareholder may
then either deduct the taxes deemed paid by him or her in computing his or
her taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against the Shareholders' Federal income
tax. In no event shall a Shareholder be allowed a foreign tax credit with
respect to shares in a Fund if such shares are held by the Shareholder for 15
days or less during the 30-day period beginning on the date which is 15 days
before the date on which such shares become ex-dividend with respect to such
dividend. If any of the three above-mentioned Funds make the election, such
Fund will report annually to its Shareholders the respective amounts per
share of the Fund's income from sources within, and taxes paid to, foreign
countries and U.S. possessions.
The International Equity Index, International Equity, and Emerging
Markets Equity Funds' transactions in foreign currencies and forward
foreign currency contracts will be subject to special provisions of the
Code that, among other things, may affect the character of gains and
losses realized by Funds (I.E., may effect whether gains or losses are
ordinary or capital), accelerate recognition of income to the fund and
defer Fund losses. These rules could therefore affect the character,
amount and timing of distributions to Shareholders. These provisions
also may require the Funds to mark-to-market certain types of the
positions in its portfolio (I.E., treat them as if they were closed out)
which may cause the Funds to recognize income without receiving cash
with which to make distributions in amounts necessary to satisfy the 90%
and 98% distribution requirements for avoiding income and excise taxes.
Each Fund will monitor its transactions, will make the appropriate tax
elections, and will make the appropriate entries in the books and
records when it acquires any foreign currency or forward foreign
currency contract in order to mitigate the effect of these rules and
prevent disqualification of the Fund as a RIC and minimize the
imposition of income and excise taxes.
B-39
<PAGE>
FUND TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trustees, an Advisor is responsible for placing the
orders to execute transactions for a Fund. In placing orders, it is the
policy of the Trust to seek to obtain the best net results taking into
account such factors as price (including the applicable dealer spread), the
size, type and difficulty of the transaction involved, the firm's general
execution and operational facilities, and the firm's risk in positioning the
securities involved. While an Advisor generally seeks reasonably competitive
spreads or commissions, the Trust will not necessarily be paying the lowest
spread or commission available.
The money market securities in which the Funds invest are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, an
Advisor will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Money market securities are generally traded on a
net basis and do not normally involve either brokerage commissions or
transfer taxes. The cost of executing portfolio securities transactions of
the Trust will primarily consist of dealer spreads and underwriting
commissions.
TRADING PRACTICES AND BROKERAGE
The Trust selects brokers or dealers to execute transactions for the purchase
or sale of portfolio securities on the basis of its judgment of their
professional capability to provide the service. The primary consideration is
to have brokers or dealers provide transactions at best price and execution
for the Trust. Best price and execution includes many factors, including the
price paid or received for a security, the commission charged, the promptness
and reliability of execution, the confidentiality and placement accorded the
order and other factors affecting the overall benefit obtained by the account
on the transaction. The Trust's determination of what are reasonably
competitive rates is based upon the professional knowledge of its trading
department as to rates paid and charged for similar transactions throughout
the securities industry. In some instances, the Trust pays a minimal share
transaction cost when the transaction presents no difficulty. Some trades
are made on a net basis where the Trust either buys securities directly from
the dealer or sells them to the dealer. In these instances, there is no
direct commission charged but there is a spread (the difference between the
buy and sell price) which is the equivalent of a commission.
The Trust may allocate out of all commission business generated by all of the
funds and accounts under management by an Advisor, brokerage business to
brokers or dealers who provide brokerage and research services. These
research services include advice, either directly or through publications or
writings, as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing of analyses and reports
concerning issuers, securities or industries; providing information on
economic factors and trends, assisting in determining portfolio strategy,
providing computer software used in security analyses, and providing
portfolio performance evaluation and technical market analyses. Such
services are used by an Advisor in connection with its investment
decision-making process with respect to one or more funds and accounts
managed by it, and may not be used exclusively with respect to the fund or
account generating the brokerage.
As provided in the Securities Exchange Act of 1934 (the "1934 Act") higher
commissions may be paid to broker-dealers who provide brokerage and research
services than to broker-dealers who do not provide such services if such
higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. Although transactions are directed
to broker-dealers who provide such brokerage and research services, the Trust
believes that the commissions paid to such broker-dealers are not, in
general, higher than commissions that would be paid to broker-dealers not
providing such services and that such commissions are reasonable in relation
to the value of
B-40
<PAGE>
the brokerage and research services provided. In addition, portfolio
transactions which generate commissions or their equivalent are directed to
broker-dealers who provide daily portfolio pricing services to the Trust.
Subject to best price and execution, commissions used for pricing may or may
not be generated by the funds receiving the pricing service.
An Advisor may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment,
joint execution is in the best interest of each participant and will result
in best price and execution. Transactions involving commingled orders are
allocated in a manner deemed equitable to each account or fund. It is
believed that the ability of the accounts to participate in volume
transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or Fund may obtain, it is the opinion of each Advisor and the Trust's
Board of Trustees that the advantages of combined orders outweigh the
possible disadvantages of separate transactions.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Funds, at
the request of the Distributor, give consideration to sales of shares of the
Trust as a factor in the selection of brokers and dealers to execute Trust
portfolio transactions.
It is expected that the Trust may execute brokerage or other agency
transactions through the Distributor or an affiliate of an Advisor, both of
which are registered broker-dealers, for a commission in conformity with the
1940 Act, the 1934 Act and rules promulgated by the SEC. Under these
provisions, the Distributor or an affiliate of an Advisor is permitted to
receive and retain compensation for effecting portfolio transactions for the
Trust on an exchange if a written contract is in effect between the
Distributor and the Trust expressly permitting the Distributor or an
affiliate of an Advisor to receive and retain such compensation. These rules
further require that commissions paid to the Distributor by the Trust for
exchange transactions not exceed "usual and customary" brokerage commissions.
The rules define "usual and customary" commissions to include amounts which
are "reasonable and fair compared to the commission, fee or other
renumeration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold
on a securities exchange during a comparable period of time." In addition,
the Trust may direct commission business to one or more designated
broker-dealers in connection with such broker/dealer's provision of services
to the Trust or payment of certain Trust expenses (e.g., custody, pricing and
professional fees). The Trustees, including those who are not "interested
persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor, and will review these
procedures periodically.
For the fiscal year ended May 31, 1997, the Funds paid the following
brokerage commissions with respect to portfolio transactions:
B-41
<PAGE>
<TABLE>
<CAPTION>
TOTAL
BROKERAGE
COMMISSIONS
% OF TOTAL % OF TOTAL PAID TO
BROKERAGE BROKERED SFS IN
TOTAL $ TOTAL $ COMMISSIONS TRANSACTIONS CONNECTION
TOTAL $ AMOUNT TOTAL $ AMOUNT OF PAID TO EFFECTED WITH
AMOUNT OF BROKERED AMOUNT OF BROKERAGE AFFILIATED THROUGH REPURCHASE
OF BROKERED TRANSACTIONS BROKERAGE COMMISSIONS BROKERS AFFILIATED AGREEMENT
TRANSACTIONS THROUGH COMMISSIONS PAID TO IN BROKERS TRANSACTIONS
FOR FYE AFFILIATES FOR PAID IN AFFILIATES IN FYE FYE FOR FYE
PORTFOLIO 5/31/97 FYE 5/31/97 FYE 5/31/97 FYE 5/31/97 5/31/97 5/31/97 5/31/97
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Prime Quality $33,193,764,625 $9,634,801,779 $ 122,053 $ 122,053 100% 29% $122,053
Money Market
Fund
U.S. $ 7,444,430,857 $3,325,557,692 $ 141,850 $ 141,850 100% 45% $141,850
Government
Securities
Money Market
Fund
Tax-Exempt $ 2,204,750,530 -- $ 0 $ 0 0% 0% --
Money Market
Fund
Investment $ 8,374,366,900 $2,344,004,813 $ 17,502 $ 17,502 100% 28% $ 17,502
Grade Bond
Fund
Investment $ 3,131,088,439 $ 563,350,800 $ 3,552 $ 3,552 100% 18% $ 3,552
Grade Tax-
Exempt Bond
Fund
Capital $ 2,855,601,252 $1,175,677,501 $ 3,228,364 $ 3,228,364 1% 41% $ 39,856
Growth Fund
Value Income $ 2,597,768,470 $1,261,283,784 $ 4,600,079 $ 4,600,079 1% 49% $ 47,933
Stock Fund
Short-Term $ 79,710,242 -- $ 0 $ 0 0% 0% --
Bond Fund
Short-Term $ 318,014,674 -- $ 0 $ 0 0% 0% --
U.S. Treasury
Securities
Fund
Sunbelt $ 1,315,787,519 $ 508,559,524 $ 903,669 $ 903,669 .49% 39% $ 4,453
Equity Fund
Balanced Fund $ 926,906,986 $ 313,685,467 $ 195,918 $ 195,918 3% 34% $ 5,475
Mid-Cap $ 984,028,459 $ 401,976,085 $ 1,090,599 $ 1,090,599 1% 41% $ 12,836
Equity Fund
Florida Tax- $ 284,768,149 $ 35,224,997 $ 169 $ 169 100% 12% $ 169
Exempt Bond
Fund
</TABLE>
B-42
<PAGE>
<TABLE>
<CAPTION>
TOTAL
BROKERAGE
COMMISSIONS
% OF TOTAL % OF TOTAL PAID TO
BROKERAGE BROKERED SFS IN
TOTAL $ TOTAL $ COMMISSIONS TRANSACTIONS CONNECTION
TOTAL $ AMOUNT TOTAL $ AMOUNT OF PAID TO EFFECTED WITH
AMOUNT OF BROKERED AMOUNT OF BROKERAGE AFFILIATED THROUGH REPURCHASE
OF BROKERED TRANSACTIONS BROKERAGE COMMISSIONS BROKERS AFFILIATED AGREEMENT
TRANSACTIONS THROUGH COMMISSIONS PAID TO IN BROKERS TRANSACTIONS
FOR FYE AFFILIATES FOR PAID IN AFFILIATES IN FYE FYE FOR FYE
PORTFOLIO 5/31/97 FYE 5/31/97 FYE 5/31/97 FYE 5/31/97 5/31/97 5/31/97 5/31/97
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Georgia Tax- $ 101,269,058 $ 18,350,406 $ 201 $ 201 100% 18% $ 201
Exempt Bond
Fund
Tennessee $ 9,344,425 $ 1,881,035 $ 36 $ 36 100% 20% $ 36
Tax-Exempt
Bond Fund
U.S. $ 60,753,621 $ 60,753,621 $ 0 $ 0 0% 0% --
Government
Securities
Fund
Limited-Term $ 798,951,267 $ 798,951,267 $ 2,053 $ 2,053 100% 28% $ 2,053
Federal
Mortgage
Securities
Fund
Small Cap $ 227,315,887 $ 227,315,887 $ 229,856 $ 229,856 .38% 35% $ 867
Equity Fund
Emerging $ 26,947,913 $ 0 $ 144,635 $ 0 0% 0% --
Markets
Equity Fund
International $ 44,036,638 $ 0 $ 94,672 $ 0 0% 0% --
Equity Index
Fund
International $ 999,491,675 $ 0 $ 2,875,911 $ 0 0% 0% --
Equity Fund
</TABLE>
For the fiscal years ended May 31, 1996 and 1995, the Funds paid the
following brokerage commissions with respect to portfolio
transactions:
<TABLE>
<CAPTION>
TOTAL $ AMOUNT OF BROKERAGE TOTAL $ AMOUNT OF BROKERED
COMMISSIONS PAID COMMISSIONS PAID TO AFFILIATES
--------------------------- ------------------------------
FUND 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prime Quality Money Market Fund $ 0 $ 108,992
</TABLE>
B-43
<PAGE>
<TABLE>
<CAPTION>
TOTAL $ AMOUNT OF BROKERAGE TOTAL $ AMOUNT OF BROKERED
COMMISSIONS PAID COMMISSIONS PAID TO AFFILIATES
--------------------------- ------------------------------
FUND 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Securities Money Market Fund $ 0 $ 173,038
Tax-Exempt Money Market Fund $ 0 $ 0
Investment Grade Bond Fund $ 0 $ 18,536
Investment Grade Tax-Exempt Bond Fund $ 0 $ 3,392
Short-Term Bond Fund $ 0 $ 0
Florida Tax-Exempt Bond Fund $ 0 $ 200
Georgia Tax-Exempt Bond Fund $ 0 $ 135
Tennessee Tax-Exempt Bond Fund $ 0 $ 69
U.S. Government Securities Fund $ 0 $ 0
Limited-Term Federal Mortgage Securities Fund $ 0 $ 73
Capital Growth Fund $3,399,393 $2,641,999 $ 34,827 $46,411
Sunbelt Equity Fund $ 904,698 $ 654,499 $ 5,202 $ 4,802
Value Income Stock Fund $4,325,977 $3,542,773 $ 37,379 $17,510
Mid-Cap Equity Fund $ 528,220 $ 191,298 $ 18,224 $11,418
Balanced Fund $ 169,222 $ 140,109 $ 4,280 $ 4,063
Small Cap Equity Fund * * * *
Emerging Markets Equity Fund * * * *
International Equity Index Fund $1,532,834 $ 176,784 $ 71 $ 0
International Equity Fund $ 129,411 * $ 0 *
</TABLE>
*Not in operation during the period.
For the fiscal years ended May 31, 1997 and 1996, the portfolio
turnover rate for each of the non-money market Funds was as follows:
<TABLE>
<CAPTION>
TURNOVER RATE
----------------------
FUND 1997 1996
- ------------------------------------------------------------------
<S> <C> <C>
Investment Grade Bond Fund 298% 184%
Investment Grade Tax-Exempt Bond Fund 489% 514%
</TABLE>
B-44
<PAGE>
<TABLE>
<CAPTION>
TURNOVER RATE
----------------------
FUND 1997 1996
- ------------------------------------------------------------------
<S> <C> <C>
Short-Term U.S. Treasury Securities Fund 93% 94%
Short-Term Bond Fund 118% 163%
U.S. Government Securities Fund 21% 83%
Limited-Term Federal Mortgage Securities 133% 83%
Fund
Florida Tax-Exempt Bond Fund 135% 63%
Georgia Tax-Exempt Bond Fund 15% 60%
Tennessee Tax-Exempt Bond Fund 16% 41%
Capital Growth Fund 141% 156%
Value Income Stock Fund 105% 134%
Mid-Cap Equity Fund 152% 116%
Balanced Fund 197% 155%
Sunbelt Equity Fund 72% 106%
Emerging Markets Equity 24% *
International Equity Fund 139% 113%
International Equity Index Fund 2% 30%
</TABLE>
*Not in operation during the period.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited
number of shares and classes of shares of the Funds each of which
represents an equal proportionate interest in that Fund with each
other share. Shares are entitled upon liquidation to a PRO RATA share
in the net assets of the Funds. Shareholders have no preemptive
rights. The Declaration of Trust provides that the Trustees of the
Trust may create additional series of shares or classes of series.
All consideration received by the Trust for shares of any additional
series and all assets in which such consideration is invested would
belong to that series and would be subject to the liabilities related
thereto. Share certificates representing shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust
could, under certain circumstances, be held personally liable as partners for
the obligations of the trust. Even if, however, the Trust were held to be a
partnership, the possibility of the Shareholders' incurring financial loss
for that reason appears remote because the Trust's Declaration of Trust
contains an express disclaimer of Shareholder liability for obligations of
the Trust and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by or on behalf
of the Trust or the Trustees, and
B-45
<PAGE>
because the Declaration of Trust provides for indemnification out of the Trust
property for any Shareholder held personally liable for the obligations of the
Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisors, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the
Trust unless it is determined in the manner provided in the Declaration of Trust
that they have not acted in good faith in the reasonable belief that their
actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his willful misfeasance, bad faith, gross negligence or reckless disregard
of his duties.
5% AND 25% SHAREHOLDERS
As of September 2, 1997, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% and
25% or more of the shares of the Funds. Persons who owned of record or
beneficially more than 25% of a Fund's outstanding shares may be deemed to
control the Fund within the meaning of the Act. The Trust believes that most of
the shares of the Trust Class of the Funds were held for the record owner's
fiduciary, agency or custodial customers.
TRUST SHARES
<TABLE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Prime Quality Money Market Fund SunTrust Bank, Atlanta 1,501,684,056.9000 95.94%
P.O. Box 105504
Atlanta, GA 30348
US Government Securities Money SunTrust Bank, Atlanta 330,351,631.2500 97.98%
Market Fund P.O. Box 105504
Atlanta, GA 30348
Tax Exempt Money Market Fund SunTrust Bank, Atlanta 403,515,749.3900 100.00%
P.O. Box 105504
Atlanta, GA 30348
Investment Grade Bond Fund Trustman 50,816,431.0230 76.11%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Investment Grade Tax Exempt Bond Trustman 7,062,669.8730 55.42%
Fund Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman 3,255,166.6420 25.55%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
B-46
<PAGE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Capital Growth Fund Trustman 59,831,226.6850 75.79%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Value Income Stock Fund Trustman 76,452,547.3750 69.72%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Short-Term U.S. Treasury Securities Trustman 1,192,275.2610 55.44%
Fund Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Short-Term Bond Fund Trustman 5,818,699.3640 57.44%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman 3,747,105.6450 36.99%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Sunbelt Equity Fund Trustman 19,850,769.7470 73.41%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Mid-Cap Equity Fund Trustman 13,599,373.2790 59.37%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman 7,723,553.0810 33.72%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Balanced Fund Trustman 11,817,880.0600 96.56%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Florida Tax-Exempt Bond Fund Trustman 4,399,572.5730 67.99%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Georgia Tax-Exempt Bond Fund Trustman 2,097,210.1470 46.40%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman 1,789,602.1880 39.59%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
B-47
<PAGE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Tennessee Tax-Exempt Bond Fund Trustman 107,883.8000 53.83%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman 57,878.6610 28.88%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
International Equity Index Fund Trustman 3,735,378.7720 84.59%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
International Equity Fund Trustman 23,156,973.4110 61.10%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman 12,280,833.8800 32.40%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
U.S. Government Securities Fund Trustman 967,116.5540 40.72%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman 834,048.3510 35.12%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Limited Term Federal Mortgage Trustman 8,717,381.5800 67.34%
Securities Fund Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman 3,555,214.8200 27.46%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Emerging Markets Equity Fund Trustman 3,412,803.7780 74.46%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Small Cap Equity Fund Trustman 13,615,497.0400 63.94%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman 6,720,125.4650 31.56%
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-48
<PAGE>
INVESTOR SHARES
<TABLE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Prime Quality Money Market Fund BHC Securities Inc 255,429,882.7100 79.02%
Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square, 11th Floor
Philadelphia, PA 19103-7042
STCM 19,725,000.0000 6.10%
Omnibus Account
Attn: Melinda Felice
P.O. Box 4418, Ctr. 3910
Atlanta, GA 30302-4418
U.S. Government Securities Money BHC Securities Inc 32,197,846.6100 53.36%
Market Fund Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square, 11th Floor
Philadelphia, PA 19103-7042
Akerman, Senterfitt & Eidson 4,896,620.4900 8.11%
Attorney Account
P.O. Box 231
Orlando, FL 32802-0231
Tax Exempt Money Market Fund BHC Securities Inc 89,444,549.9300 69.41%
Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square, 11th Floor
Philadelphia, PA 19103-7042
STCM 15,400,000.0000 11.95%
Omnibus Account
P.O. Box 4418, Ctr.3910
Atlanta, GA 30302-4418
Investment Grade Bond Fund BHC Securities Inc. 1,474,597.4460 46.96%
Trade House Account
Attn: Mutual Funds
One Commerce Square,
2005 Market Street
Philadelphia, PA 19103-7042
Investment Grade Tax-Exempt Bond BHC Securities Inc. 623,246.3210 23.95%
Fund Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
B-49
<PAGE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Capital Growth Fund BHC Securities Inc. 4,778,120.0840 33.41%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Value Income Stock Fund BHC Securities Inc. 5,882,796.8910 47.61%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Short-Term U.S. Treasury BHC Securities Inc. 139,953.9270 38.27%
Securities Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Clarence A. Rittenhouse 61,601.4910 16.84%
Margaret S. Rittenhouse JT WROS
700 Golden Beach Blvd #126
Venice, FL 34285-3311
Georgia Academy for Children 53,632.6810 14.66%
and Youth Prof
100 Peachtree Street, Suite 500
Atlanta, GA 30303-1908
International Investment 47,744.7470 13.05%
Conference Inc.
Attn: Sandy Lawrence
6310 Sunset Drive
Miami, FL 33143-4823
Short-Term Bond Fund BHC Securities Inc. 143,685.2460 67.67%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Bartow Memorial Hospital 12,193.5780 5.74%
Foundation Inc.
1239 East Main Street
Bartow, FL 33830-5005
Betty H. Anderson 10,671.5260 5.03%
207 Suburban Drive
Brunswick, GA 31520-2920
Sunbelt Equity Fund BHC Securities Inc. 1,003,585.5730 49.39%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
B-50
<PAGE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Mid-Cap Equity Fund BHC Securities Inc. 887,258.4840 57.94%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Anthony R. Gray 75,450.4840 57.94%
460 Virginia Drive
Winter Park, FL 32789-5805
Balanced Fund BHC Securities Inc. 20,751.8530 47.40%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Florida Tax-Exempt Bond Fund BHC Securities Inc. 111,335.3360 35.79%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Mildred Meinhart Rast 30,176.0880 9.70%
1303 South 8th Street
Leesburg, FL 34748-6822
Georgia Tax-Exempt Bond Fund BHC Securities Inc. 191,213.4220 53.07%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Patrick J. Doran & 29,577.3030 8.21%
Norma R. Doran JTTEN
2024 Fisher Trail NE
Atlanta, GA 30345-3429
Tennessee Tax-Exempt Bond Fund BHC Securities, Inc. 75,554.0850 58.10%
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Grace M. Bryan 18,894.1970 14.53%
P.O. Box 176
St. Joseph, TN 38481-0176
Ralph Laine 13,213.5310 10.16%
2823 Lumar Lane
Nashville, TN 37214-1834
B-51
<PAGE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
International Equity Index Fund BHC Securities Inc. 315,159.4950 64.54%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Community First National Bank 27,151.2400 5.56%
RPO Tyler 401(k) RSP
Attn: Kathy Lindstrom
Main At Broadway
Fargo, ND 58103-1906
International Equity Fund BHC Securities Inc. 674,984.7650 70.82%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
U.S. Government Securities Fund BHC Securities, Inc. 206,382.1450 91.35%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Limited-Term Federal Mortgage BHC Securities Inc. 200,361.6770 84.30%
Securities Fund Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
</TABLE>
FLEX SHARES
<TABLE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF SHARES
---- ---------------- ---------------- -----------
<S> <C> <C> <C>
Short-Term Bond Fund BHC Securities Inc. 26,775.8010 20.24%
FAO21549889
Attn: Mutual FundsDept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 16,110.4250 12.18%
FAO 21180400
Attn: Mutual FundsDept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 8,109.6240 6.13%
FAO 21107805
Attn: Mutual FundsDept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
B-52
<PAGE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF SHARES
---- ---------------- ---------------- -----------
<S> <C> <C> <C>
Florida Tax-Exempt Bond Fund BHC Securities, Inc. 48,493.6580 10.75%
FAO 20951046
Attn: Mutual Funds
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
H. Lorene Kleinlein TTEE 28,183.2200 6.25%
H. Lorene Kleinlein Trust
9519 Sun Point Drive
Boynton Beach, FL 33437-3343
BHC Securities Inc. 27,413.4470 6.08%
FAO 21471055
Attn: Mutual Funds
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 25,661.0310 5.69%
FAO 21738535
Attn: Mutual Funds
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
Tennessee Tax-Exempt Bond Fund BHC Securities Inc. 41,152.2630 12.24%
FAO 21627721
Attn: Mutual Funds
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 32,630.8020 9.70%
FAO 21610240
Attn: Mutual Funds
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 32,154.3410 9.56%
FAO 20931807
Attn: Mutual Funds
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
International Equity Index Fund BHC Securities Inc. 7,594.1720 8.74%
FAO 21547376
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
B-53
<PAGE>
<CAPTION>
FUND NAME AND ADDRESS NUMBER OF SHARES % OF SHARES
---- ---------------- ---------------- -----------
<S> <C> <C> <C>
BHC Securities, Inc. 5,208.0800 5.99%
FAO 21549889
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
BHC Securities, Inc. 4,814.00 5.54%
FAO 21119083
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
U.S. Government Securities Fund BHC Securities, Inc. 26,852.5970 9.62%
FAO 21180443
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 16,088.2850 5.76%
FAO 21180400
Attn: Mutual FundsDept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
BHC Securities Inc. 16,026.7870 5.74%
FAO 21531479
Attn: Mutual Funds
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
Ralph L. Struever 14,519.5660 5.20%
5350 Woodland Lakes Drive
Palm Beach Gardens, FL 33418
Limited-Term Federal Mortgage BHC Securities Inc. 10,648.2850 6.93%
Security Fund FAO 21838525
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Viola T. High 10,398.8620 6.77%
Richard T. High TEN ENT
528 Hearthstone Circle
Brentwood, TN 37027-4323
</TABLE>
B-54
<PAGE>
EXPERTS
The financial statements as of May 31, 1997 have been audited by Arthur Andersen
LLP, Independent Public Accountants, as indicated in their report dated July 11,
1997 with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
B-55
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
STI Classic Funds:
We have audited the accompanying statements of net assets of the Value Income
Stock, Mid-Cap Equity, Small Cap Equity, Capital Growth, Balanced, Emerging
Markets Equity, International Equity Index, International Equity, Sunbelt
Equity, Investment Grade Tax-Exempt Bond, Florida Tax-Exempt Bond, Tennessee
Tax-Exempt Bond, Georgia Tax-Exempt Bond, Investment Grade Bond, Short-Term
Bond, Short-Term U.S. Treasury Securities, Limited-Term Federal Mortgage
Securities, U.S. Government Securities, Prime Quality Money Market, U.S.
Government Securities Money Market, and Tax-Exempt Money Market Funds of STI
Classic Funds (the "Trust") as of May 31, 1997, and the related statements of
operations, changes in net assets, and financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1997, by correspondence with the custodian and the application of
alternative auditing procedures with respect to unsettled securities
transactions. 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
Value Income Stock, Mid-Cap Equity, Small Cap Equity, Capital Growth, Balanced,
Emerging Markets Equity, International Equity Index, International Equity,
Sunbelt Equity, Investment Grade Tax-Exempt Bond, Florida Tax-Exempt Bond,
Tennessee Tax-Exempt Bond, Georgia Tax-Exempt Bond, Investment Grade Bond,
Short-Term Bond, Short-Term U.S. Treasury Securities, Limited-Term Federal
Mortgage Securities, U.S. Government Securities, Prime Quality Money Market,
U.S. Government Securities Money Market, and Tax-Exempt Money Market Funds of
STI Classic Funds as of May 31, 1997, the results of their operations, changes
in their net assets, and financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
July 11, 1997
41
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
VALUE INCOME STOCK FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (92.6%)
BASIC MATERIALS (14.8%)
Consolidated Papers 233,700 $ 12,737
Cyprus AMAX Minerals 707,200 17,238
Eastman Chemical 119,700 7,122
Ethyl 1,428,100 13,388
Georgia Pacific 246,700 21,771
Hercules 617,800 28,959
Imperial Chemical Industries 315,900 17,217
International Flavors & Fragrances
592,100 26,274
International Paper 531,300 25,502
Nalco Chemical 394,600 14,650
Olin 464,700 19,053
Reynolds Metals 247,100 16,772
Union Camp 338,100 17,750
Witco Chemical 467,200 17,286
----------
Total Basic Materials 255,719
----------
CAPITAL GOODS (12.8%)
AMP 1,034,400 42,540
Cooper Industries 329,100 16,784
Federal Signal 198,300 5,057
Foster Wheeler 544,000 21,080
General Signal 563,300 23,729
National Service Industries 278,100 12,202
Pall 556,500 13,147
Tenneco 770,100 34,462
Thomas & Betts 362,200 18,427
Trinity Industries 319,800 9,594
Waste Management 769,100 24,419
----------
Total Capital Goods 221,441
----------
COMMUNICATIONS SERVICES (7.7%)
Alltel 538,700 17,710
BellSouth 460,200 20,882
Frontier 984,100 18,083
GTE 899,600 39,695
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Southern New England Telecommunications 577,200 $ 22,511
Sprint 269,400 13,167
----------
Total Communication Services 132,048
----------
CONSUMER CYCLICALS (15.9%)
American Greetings, Cl A 514,900 17,635
Dana 617,300 22,300
Echlin 597,300 19,935
Ford Motor 455,500 17,081
H & R Block 497,800 16,427
ITT Industries 1,291,700 31,970
J.C. Penney 767,200 39,511
Masco 428,800 16,670
May Department Stores 532,100 25,075
Maytag 683,900 18,294
McGraw-Hill 307,300 16,786
Mercantile Stores 287,700 15,464
Reader's Digest, Cl A 200,800 4,970
Shaw Industries 1,033,200 12,915
----------
Total Consumer Cyclicals 275,033
----------
CONSUMER STAPLES (9.3%)
Cadbury Schweppes ADR 461,800 16,740
CPC International 271,900 23,383
Deluxe 261,600 8,502
Food Lion, Cl A 1,101,900 7,369
Kelly Services, Cl A 334,900 9,838
McCormick 617,100 16,122
R.R. Donnelley & Sons 660,200 24,510
Rubbermaid 896,400 24,987
UST 620,200 17,676
Whitman 495,500 11,954
----------
Total Consumer Staples 161,081
----------
ENERGY (9.2%)
Amoco 291,400 26,044
Chevron 358,900 25,123
Dresser Industries 753,100 25,794
Kerr-McGee 352,700 22,837
</TABLE>
42
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ENERGY--CONTINUED
Mobil 179,400 $ 25,094
Phillips Petroleum 612,900 26,048
Sun 278,200 8,311
----------
Total Energy 159,251
----------
FINANCIALS (8.2%)
American Financial Group 435,700 16,557
American General 397,500 17,589
AmSouth Bancorp 233,850 9,149
Central Fidelity Banks 292,000 8,541
Crestar Financial 259,600 9,865
First American Bank 127,400 8,775
First American of Tennessee 281,600 10,278
Hibernia, Cl A 651,800 8,636
Magna Group 273,000 8,804
Merchantile Bancorp 150,700 8,891
Signet Banking 260,900 8,577
Summit Bancorp 183,854 9,078
TIG Holdings 624,000 16,848
----------
Total Financials 141,588
----------
HEALTH CARE (6.2%)
American Home Products 345,600 26,352
Baxter International 490,800 25,890
C.R. Bard 525,400 16,813
Pharmacia Upjohn ADR 1,118,900 38,742
----------
Total Health Care 107,797
----------
TECHNOLOGY (1.5%)
Eastman Kodak 307,900 25,517
----------
TRANSPORTATION (2.2%)
KLM Royal Dutch Air* 664,000 19,505
Illinois Central 493,400 17,824
----------
Total Transportation 37,329
----------
UTILITIES (4.8%)
Central & South West 697,200 14,815
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Duke Power 201,300 $ 9,058
Pacificorp 873,000 17,351
Questar 445,900 17,502
Southern 1,124,800 23,902
----------
Total Utilities 82,628
----------
Total Common Stocks
(Cost $1,445,015) 1,599,432
----------
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000)
- --------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS (6.8%)
Deutsche Bank
5.56%, dated 05/30/97, matures 06/02/97, repurchase
price $70,160,347 (collateralized by FHLMC
obligation, par value $69,192,840, 6.63%, 05/15/08:
FNMA obligation, par value $54,184,000, 8.50%,
04/01/17: total market value $71,530,412) $ 70,128 70,128
Salomon Brothers
5.56%, dated 05/30/97, matures 06/02/97, repurchase
price $46,073,839 (collateralized by various FHLMC
obligations, total par value $68,587,421,
6.00%-9.50%, 11/01/01-05/01/27: various FNMA
obligations total par value $71,651,398,
5.50%-9.00%, 06/01/01-05/01/27: total market value
$44,159,361) 43,054 43,054
</TABLE>
43
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS--CONTINUED
Swiss Bank
5.56%, dated 05/30/97, matures 06/02/97, repurchase
price $4,954,044 (collateralized by FNMA
obligation, par value $6,319,000, 6.071%, matures
04/01/34: market value $5,075,690) $ 4,952 $ 4,952
----------
Total Repurchase Agreements
(Cost $118,134) 118,134
----------
Total Investments (99.4%)
(Cost $1,563,149) 1,717,566
----------
OTHER ASSETS AND LIABILITIES, NET (0.6%) 9,961
----------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 108,557,380
outstanding shares of beneficial interest 1,171,719
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 12,133,042
outstanding shares of beneficial interest 134,021
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 5,399,733
outstanding shares of beneficial interest 68,125
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
(000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Undistributed net investment income $ 6,428
Accumulated net realized gain on investments 192,817
Unrealized appreciation on investments 154,417
----------
Total Net Assets (100.0%) $1,727,527
----------
----------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 13.71
----------
----------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 13.68
----------
----------
Maximum Offering Price Per Share -- Investor Class
($13.68 DIVIDED BY 96.25%) $ 14.21
----------
----------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 13.61
----------
----------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
44
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
MID-CAP EQUITY FUND
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (92.6%)
BASIC MATERIALS (5.0%)
IMC Fertilizer Group 168,800 $ 6,604
James River 94,300 3,312
Potash of Saskatchewan 71,800 5,897
-----------
Total Basic Materials 15,813
-----------
CAPITAL GOODS (15.1%)
Agco 111,400 3,551
Fisher Scientific International 86,500 3,136
Foster Wheeler 79,400 3,077
Hubbell, Cl B 84,540 3,847
Molten Metal Technology* 203,300 1,449
Philip Services* 405,600 5,932
Solectron* 119,100 7,444
Sundstrand 90,200 4,487
United Waste Systems* 136,200 5,227
U.S. Filter* 156,900 4,942
York International 100,850 4,891
-----------
Total Capital Goods 47,983
-----------
COMMUNICATIONS SERVICES (1.1%)
Nextel Communications, Cl A* 243,500 3,592
-----------
CONSUMER CYCLICALS (15.5%)
Bed Bath and Beyond* 116,000 3,292
Dollar General 183,200 6,160
Harley-Davidson 158,900 7,111
International Speedway* 123,500 2,439
Men's Wearhouse* 123,600 4,125
Nine West Group* 113,000 4,350
Saks Holdings* 224,300 5,579
Stanley Works 87,700 3,596
Staples* 336,700 7,407
West Marine* 203,800 5,350
-----------
Total Consumer Cyclicals 49,409
-----------
CONSUMER STAPLES (12.0%)
Boston Chicken* 313,700 5,647
Cracker Barrel Old
Country Stores 182,700 5,298
Dial 186,500 3,124
Hannaford Brothers 137,600 4,799
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
JP Foodservice* 152,000 $ 4,408
McKesson 75,300 5,657
Nabisco Holdings, Cl A 130,200 5,159
Papa John's International* 122,400 3,902
-----------
Total Consumer Staples 37,994
-----------
ENERGY (6.3%)
Anadarko Petroleum 105,400 6,640
Kerr-McGee 47,400 3,069
Tosco 91,600 2,988
Western Atlas* 106,300 7,215
-----------
Total Energy 19,912
-----------
FINANCIALS (9.9%)
Crestar Financial 139,000 5,282
First Security 162,075 3,971
Hartford Life, Cl A* 62,400 2,090
North Fork Bancorporation 88,000 1,848
Regions Financial 57,500 3,436
SouthTrust 77,100 2,997
Summit Bancorp 111,000 5,481
Union Planters 66,700 3,152
PMI Group 56,600 3,106
-----------
Total Financials 31,363
-----------
HEALTH CARE (9.9%)
Allergan 112,200 3,324
Biogen* 187,300 6,216
DePuy* 136,500 3,310
Medpartners* 179,700 3,414
Pacificare Health Systems, Cl B* 91,400 7,243
Teva Pharmaceuticals ADR 65,600 3,936
Watson Pharmaceuticals* 105,100 4,112
-----------
Total Health Care 31,555
-----------
TECHNOLOGY (15.0%)
ADC Telecommunications* 177,500 6,079
Adobe Systems 110,300 4,922
Analog Devices* 240,133 6,424
Atmel* 151,900 4,367
Ceridian* 141,000 5,182
Flextronics International* 207,000 4,890
Micron Electronics* 193,600 2,940
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--CONTINUED
Network General* 226,600 $ 4,164
Teradyne* 214,400 8,790
-----------
Total Technology 47,758
-----------
TRANSPORTATION (1.4%)
ASA Holdings 172,300 4,501
-----------
UTILITIES (1.4%)
Wisconsin Energy 185,200 4,468
-----------
Total Common Stocks
(Cost $268,513) 294,348
-----------
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT
(000)
--------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS (6.8%)
Deutsche Bank 5.55%, dated 05/30/97, matures
06/02/97, repurchase price $12,270,617
(collateralized by FNMA obligation, par value
$13,389,534, 0.000%, 01/01/26: market value
$12,510,245) $ 12,265 12,265
Merrill Lynch 5.55%, dated 05/30/97, matures
06/02/97, repurchase price $9,389,853
(collateralized by FNMA obligation, par value
$465,000, 0.000%, 11/25/22; and various GNMA
obligations, total par value $10,608,368,
6.000%-8.500%, 05/20/06-05/15/26: total market
value $9,577,430) 9,386 9,386
-----------
Total Repurchase Agreements
(Cost $21,651) 21,651
-----------
Total Investments (99.4%)
(Cost $290,164) 315,999
-----------
OTHER ASSETS AND LIABILITIES, NET (0.6%) 1,736
-----------
<CAPTION>
--------------------------------------------------------------------------------
VALUE
(000)
--------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 21,752,271
outstanding shares of beneficial interest $ 239,440
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 1,537,279
outstanding shares of beneficial interest 17,180
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 776,273
outstanding shares of beneficial interest 9,538
Accumulated net investment loss (10)
Accumulated net realized gain on investments 25,752
Net unrealized appreciation on investments 25,835
-----------
Total Net Assets (100.0%) $ 317,735
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 13.21
-----------
-----------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 13.17
-----------
-----------
Maximum Offering Price Per Share -- Investor Shares
($13.17 DIVIDED BY 96.25%) $ 13.68
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 13.04
-----------
-----------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
46
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (95.2%)
BASIC MATERIALS (3.1%)
Columbus Mckinnon 63,700 $ 1,147
Commonwealth Industries 94,700 1,788
Lilly Industries Incorporated, Cl A 9,000 189
Schnitzer Steel Industries, Cl A 38,800 970
-----------
Total Basic Materials 4,094
-----------
CAPITAL GOODS (11.7%)
A.M. Castle 87,600 1,905
Applied Industrial Technology 45,500 1,598
Barnes Group 13,300 357
Fisher Scientific International 69,000 2,501
Regal Beloit 115,700 3,081
Valmont Industries 24,100 1,012
Thomas Industries 34,000 956
Zurn Industries 145,900 3,866
-----------
Total Capital Goods 15,276
-----------
CONSUMER CYCLICALS (27.4%)
Ameron 6,600 366
Angelica 104,900 1,888
Brown Group 107,000 1,926
Bush Industries 116,300 2,617
Cross A.T., Cl A 54,800 610
Guilford Mills 132,250 2,595
Hardinge 38,000 988
Harman International 84,800 3,540
K2 55,500 1,603
Libbey 74,800 2,497
LSI Industries 72,300 1,103
Movado Group 86,625 1,917
Optical Coating Laboratories 43,900 466
Rock Tenn, Cl A 63,000 953
Sotheby's Holdings, Cl A 124,000 1,922
Springs Industries, Cl A 75,200 3,807
Talbots 143,700 3,772
WD-40 32,700 1,856
Wellman 73,100 1,307
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
Winnebago Industries 20,400 $ 140
-----------
Total Consumer Cyclicals 35,873
-----------
CONSUMER STAPLES (15.4%)
ABM Industries 99,700 1,932
Banta 87,000 2,414
Bowne & Company 106,000 3,167
Earthgrains 34,200 1,949
Ingles Markets, Cl A 136,000 1,964
John H. Harland 163,300 3,736
Kelly Services, Cl A 61,000 1,792
Rykoff-Sexton 52,100 996
Smucker (J.M.), Cl B 115,100 2,144
TCA Cable Television 3,000 101
-----------
Total Consumer Staples 20,195
-----------
ENERGY (5.6%)
Giant Industries 44,700 648
Monterey Resources 118,500 1,866
Pittston Minerals Group 73,400 1,009
Quaker State 255,400 3,863
-----------
Total Energy 7,386
-----------
FINANCIALS (10.1%)
Banco Latinamericano de Exportaciones 46,600 2,196
Bank United, Cl A 28,700 997
GCR Holdings 7,800 209
Interwest Bancorp 26,700 935
IPC Holdings 79,300 2,022
Klamath First Bancorp 61,500 1,138
Lawyers Title 43,800 788
National Bancorp of Alaska 14,400 1,130
Seacoast Banking of Florida 49,000 1,286
West Coast Bancorp 40,625 1,016
Willis Corroon Public Limited 132,900 1,495
-----------
Total Financials 13,212
-----------
HEALTH CARE (8.9%)
Bindley Western Industries 75,600 1,663
</TABLE>
47
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE--CONTINUED
Chemed 26,300 $ 960
Invacare 117,000 2,516
Morrison Health Care 103,100 1,675
Vital Signs 101,000 2,007
West Company 96,100 2,835
-----------
Total Health Care 11,656
-----------
TECHNOLOGY (3.0%)
Methode Electronics, Cl A 231,200 3,902
-----------
TRANSPORTATION (4.3%)
Arnold Industries 107,300 1,797
Knightsbridge Tankers Limited* 50,000 1,231
Sea Containers 127,200 2,544
-----------
Total Transportation 5,572
-----------
UTILITIES (5.7%)
Eastern Enterprises 12,800 442
Enron Global Power & Pipelines 12,800 422
Minnesota Power & Light 65,300 1,894
Northwest Natural Gas 39,050 952
TNP Enterprises 56,000 1,232
United Water Resources 74,100 1,334
Wicor 33,900 1,246
-----------
Total Utilities 7,522
-----------
Total Common Stocks
(Cost $117,054) 124,688
-----------
PREFERRED STOCKS (1.9%)
PRECIOUS METALS (1.9%)
Coeur D'Alene Mines 151,100 2,512
-----------
Total Preferred Stocks
(Cost $2,502) 2,512
-----------
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (3.7%)
Deutsche Bank
5.56%, dated 05/30/97, matures 06/02/97, repurchase
price $4,900,504 (collateralized by FHLMC
obligation, total par value $5,062,244, 6.092%,
10/01/32, market value: $4,996,199) $ 4,898 $ 4,898
-----------
Total Repurchase Agreements
(Cost $4,898) 4,898
-----------
Total Investments (100.8%)
(Cost $124,454) 132,098
-----------
OTHER ASSETS AND LIABILITIES, NET (-0.8%) (1,049)
-----------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 11,836,719
outstanding shares of beneficial interest 121,332
Undistributed net investment income 316
Accumulated net realized gain on investments 1,757
Net unrealized appreciation on investments 7,644
-----------
Total Net Assets (100.0%) $ 131,049
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 11.07
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
48
<PAGE>
- --------------------------------------------------------------------------
CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (88.6%)
BASIC MATERIALS (4.7%)
Aluminum Company of America 117,500 $ 8,651
Air Products & Chemicals 27,100 2,107
Fort Howard* 179,000 8,223
Hercules 228,800 10,725
Monsanto 265,100 11,664
Morton International 198,000 6,386
Potash of Saskatchewan 54,100 4,443
Praxair 123,900 6,520
W.R. Grace 67,500 3,527
----------
Total Basic Materials 62,246
----------
CAPITAL GOODS (13.9%)
Allied Signal 361,100 27,714
Avery Dennison 62,300 2,344
Deere 163,000 8,333
Emerson Electric 285,000 15,390
Fluor 57,500 3,040
General Electric 688,700 41,580
General Signal 311,700 13,130
Keystone International 54,400 1,775
Lockheed Martin 96,000 8,988
McDonnell Douglas 58,200 3,747
Molten Metal Technology* 243,500 1,735
Pall 140,000 3,308
Rockwell International 171,400 11,055
Thomas & Betts 34,064 1,733
Tyco International 359,100 22,803
United Technologies 164,400 13,214
United Waste Systems* 8,700 334
USA Waste Services* 112,900 4,093
Waste Management 21,000 667
Wheelabrator Technologies 135,900 1,750
----------
Total Capital Goods 186,733
----------
COMMUNICATION SERVICES (1.6%)
Airtouch Communications* 12,700 354
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
BellSouth 71,700 $ 3,253
Ericsson Telephone ADR* 263,800 9,398
GTE 196,000 8,649
----------
Total Communication Services 21,654
----------
CONSUMER CYCLICALS (8.4%)
American Stores 157,900 7,184
Borders Group* 6,700 146
Carnival 282,300 10,727
Costco* 211,100 7,125
CUC International* 291,700 6,709
Federated Department Stores* 309,400 11,448
Ford Motor 82,100 3,079
Fruit of the Loom* 90,400 3,153
Gannett 44,500 4,116
Hollinger International 64,200 714
Home Depot 244,432 15,399
Intimate Brands 190,900 4,081
ITT* 33,400 1,991
Lear* 332,100 12,703
Marriott 27,100 1,565
Mattel 348,500 10,411
McGraw-Hill 35,900 1,961
Office Depot* 407,400 7,028
TJX 9,800 470
Tribune 46,900 2,028
----------
Total Consumer Cyclicals 112,038
----------
CONSUMER STAPLES (11.7%)
American Standard* 27,700 1,388
Avon Products 276,600 17,633
Colgate-Palmolive 24,400 1,513
CPC International 37,800 3,251
CVS 360,600 17,264
Dial 28,300 474
Gillette 171,817 15,270
Kimberly Clark 101,400 5,083
JP Foodservice* 132,900 3,854
Nabisco Holdings, Cl A 30,700 1,216
</TABLE>
49
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES--CONTINUED
PepsiCo 12,400 $ 456
Philip Morris 574,650 25,285
Ralston Purina Group 61,500 5,243
RJR Nabisco 105,600 3,419
Safeway* 259,300 11,669
Sara Lee 138,700 5,669
Sysco 335,700 11,708
Tele-Communications, Cl A* 375,800 5,684
Time Warner 57,500 2,674
Unilever ADR 12,400 2,403
Viacom, Cl B* 321,021 9,530
Walt Disney 55,366 4,533
Wendy's International 53,200 1,244
William Wrigley Jr. 11,300 670
----------
Total Consumer Staples 157,133
----------
ENERGY (5.7%)
Amoco 66,500 5,943
British Petroleum ADR 53,500 7,751
Dresser Industries 186,200 6,377
Halliburton 142,100 10,995
Kerr-McGee 49,200 3,186
Mobil 138,200 19,331
Royal Dutch Petroleum, ADR 26,800 5,233
Schlumberger 40,700 4,848
Tosco 88,100 2,874
Union Pacific Resources Group 330,358 9,539
----------
Total Energy 76,077
----------
FINANCIALS (12.9%)
American International Group 76,350 10,336
BankAmerica 126,300 14,761
Bank of New York 82,600 3,521
Capital One Financial 36,400 1,169
Chase Manhattan Bank 314,200 29,692
Citicorp 10,100 1,155
Conseco 19,100 764
Cullen/Frost Bankers 23,900 941
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Dean Witter Discover 50,800 $ 2,096
FHLMC 221,100 7,296
FNMA 206,100 8,991
First Union 59,300 5,092
First USA 267,800 13,256
GCR Holdings 60,000 1,605
General Re 53,500 9,376
Great Western Financial 191,900 9,307
Hartford Financial Services Group 266,800 20,810
Nationsbank 45,040 2,643
Norwest 24,400 1,305
PMI Group 104,100 5,713
Sphere Drake Holdings 214,900 1,907
Summit Bancorp 43,900 2,168
Travelers 160,296 8,796
Washington National 354,600 9,929
Wells Fargo 2,500 659
----------
Total Financials 173,288
----------
HEALTH CARE (13.6%)
Alza, Cl A* 7,900 233
American Home Products 427,000 32,559
Amgen* 71,200 4,762
Baxter International 173,100 9,131
Becton Dickinson 19,300 951
Boston Scientific* 83,111 4,436
Bristol-Myers Squibb 276,800 20,310
Columbia/HCA Healthcare 493,196 18,063
Eli Lilly 107,400 9,988
Healthsouth* 467,000 10,683
Horizon/CMS Healthcare* 50,000 913
Johnson & Johnson 386,888 23,165
Medpartners* 413,600 7,858
Medtronic 22,400 1,658
Merck 196,082 17,623
Pacificare Health Systems, Cl B* 39,200 3,107
Schering Plough 89,400 8,113
Tenet Healthcare* 222,800 6,127
</TABLE>
50
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE--CONTINUED
Warner Lambert 30,900 $ 3,113
----------
Total Health Care 182,793
----------
TECHNOLOGY (12.7%)
Atmel* 50,900 1,463
Automatic Data Processing 44,500 2,186
Cadence Design Systems* 28,000 931
Ceridian* 119,000 4,373
Cisco Systems* 243,600 16,504
Compaq Computer* 13,800 1,494
Eastman Kodak 137,200 11,370
First Data 390,100 15,604
Hewlett Packard 112,600 5,799
IBM 115,600 9,999
Intel 154,900 23,467
Lucent Technologies 136,131 8,661
Microsoft* 185,100 22,952
Motorola 163,300 10,839
Oracle* 165,450 7,714
Scientific-Atlanta 644,900 11,689
Xerox 231,600 15,691
----------
Total Technology 170,736
----------
TRANSPORTATION (1.0%)
Burlington Northern Santa Fe 102,800 8,532
Delta Air Lines 21,000 1,969
Union Pacific 39,500 2,676
----------
Total Transportation 13,177
----------
UTILITIES (0.4%)
Consolidated Natural Gas 23,700 1,259
Enron 64,000 2,608
Sonat 27,100 1,558
----------
Total Utilities 5,425
----------
Total Common Stocks
(Cost $982,524) 1,161,300
----------
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS (1.7%)
BASIC MATERIALS (0.2%)
International Paper,
CV to .9259 Shares 45,000 $ 2,278
----------
FINANCIALS (0.2%)
National Bank of Australia,
CV to .3273 Shares* 74,600 2,014
----------
TECHNOLOGY (1.2%)
Microsoft, CV to 1 share 186,700 16,080
----------
TRANSPORTATION (0.2%)
Continental Air Finance Trust,
CV to 2.0678 Shares* 28,500 2,230
----------
Total Preferred Stocks
(Cost $20,294) 22,602
----------
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS (5.0%)
Alza, CV to 12.987 Shares (A)
0.000%, 07/14/14 $ 11,500 5,103
Automatic Commercial Exchange
Security, CV to 0.8333 Shares
6.500%, 05/15/00 123 2,958
Continental Airlines,
CV to 16.559 Shares
6.750%, 04/15/06 3,600 4,707
Cuc International,
CV to 32.6531
3.000%, 02/15/02 7,000 6,913
Home Depot,
CV to 14.4665 Shares
3.250%, 10/01/01 9,000 9,630
Mariott LYON, (A) (B)
0.000%, 03/25/11 5,000 2,906
Molten Metal Technology,
CV to 25.8065 Shares (B)
5.750%, 05/01/06 5,500 2,365
Roche, CV to 3.5626 Shares (A)
0.000%, 05/06/12 19,000 7,648
</TABLE>
CAPITAL GROWTH FUND
<TABLE>
<S> <C> <C>
CONVERTIBLE BONDS--CONTINUED
Times Mirror, CV to 5.8280
Shares (A) (B)
0.000%, 04/15/17 $ 10,000 $ 3,925
U.S. Filter, CV to 25.3164 Shares,
Callable 12/15/99 @ 101.8
4.500%, 12/15/01 5,200 5,298
</TABLE>
51
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
USA Waste Services,
CV to 35.3243 Shares
5.000%, 03/01/06 2,350 3,243
USA Waste Services,
CV to 22.9594 Shares, Callable
02/01/2000 @101.6
4.000%, 02/01/02 3,000 3,116
WMX Technologies,
CV to 26.078 Shares
2.000%, 01/24/05 9,500 8,752
----------
Total Convertible Bonds
(Cost $66,837) 66,564
----------
REPURCHASE AGREEMENTS (8.2%)
Deutsche Bank
5.56%, dated 05/30/97, matures 06/02/97, repurchase
price $76,351,152 (collateralized by various FHLMC
obligations, total par value $41,261,658,
6.092%-6.230%, 12/15/23-10/01/32; and various FNMA
obligations, total par value $40,818,728, 0.000%,
01/01/26-04/25/27: total market value $77,842,108) 76,316 76,316
Salomon Brothers
5.56%, dated 05/30/97, matures 06/02/97, repurchase
price $33,282,808 (collateralized by various FHLMC
obligations, total par value $25,236,419,
5.500%-9.000%, 01/01/00-06/01/26; and various FNMA
obligations, total par value $37,520,630,
5.500%-9.500%, 04/01/01-04/01/27: total market
value $34,062,576) $ 33,267 $ 33,267
----------
Total Repurchase Agreements
(Cost $109,583) 109,583
----------
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Total Investments (101.5%)
(Cost $1,179,238) 1,360,049
----------
OTHER ASSETS AND LIABILITIES, NET (-1.5%) (19,508)
----------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 71,924,416
outstanding shares of beneficial interest 807,086
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 14,515,982
outstanding shares of beneficial interest 167,543
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 2,456,856
outstanding shares of beneficial interest 34,522
Undistributed net investment income 3,569
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
(000)
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:--CONTINUED
Accumulated net realized gain on investments $ 147,010
Net unrealized appreciation on investments 180,811
----------
Total Net Assets (100.0%) $1,340,541
----------
----------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 15.09
----------
----------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 15.06
----------
----------
</TABLE>
52
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
(000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Maximum Offering Price Per Share -- Investor Class
($15.06 DIVIDED BY 96.25%) $ 15.65
----------
----------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 14.96
----------
----------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (51.7%)
BASIC MATERIALS (2.7%)
Air Products & Chemicals 1,900 $ 148
Aluminum Company of America 7,800 574
Fort Howard* 12,000 551
Hercules 15,500 727
Monsanto 19,400 854
Morton International 13,900 448
Potash of Saskatchewan 3,600 296
Praxair 8,300 437
W.R. Grace 7,300 381
-------
Total Basic Materials 4,416
-------
CAPITAL GOODS (8.6%)
Allied Signal 27,800 2,134
Avery Dennison 8,200 309
Deere 11,600 593
Emerson Electric 20,500 1,107
Fisher Scientific International 5,000 181
Fluor 4,000 211
General Electric 50,100 3,025
General Signal 20,600 868
Keystone International 11,800 385
Lockheed Martin 7,000 655
McDonnell Douglas 6,600 425
Molten Metal Technology* 19,100 136
Pall 9,500 224
Rockwell International 12,500 806
Thomas & Betts 2,300 117
Tyco International 26,100 1,657
United Technologies 11,900 956
United Waste Systems* 400 15
USA Waste Services* 7,100 257
Waste Management 1,500 48
-------
Total Capital Goods 14,109
-------
COMMUNICATION SERVICES (1.2%)
Airtouch Communications* 8,600 240
BellSouth 8,100 368
Ericsson Telephone ADR* 19,200 684
<CAPTION>
- ------------------------------------------------------------------------------
SHARES
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
GTE 15,900 $ 702
-------
Total Communication Services 1,994
-------
CONSUMER CYCLICALS (4.7%)
American Standard* 2,000 100
Carnival 20,600 783
Costco* 14,200 479
CUC International* 21,200 488
Federated Department Stores* 21,000 777
Ford Motor 5,600 210
Fruit of the Loom* 8,600 300
Gannett 3,000 277
Home Depot 19,200 1,210
Intimate Brands 12,900 276
ITT* 2,400 143
Lear* 22,700 868
Marriott 1,700 98
Mattel 21,950 656
McGraw-Hill 2,900 158
Office Depot* 25,800 445
Tribune 10,000 432
-------
Total Consumer Cyclicals 7,700
-------
CONSUMER STAPLES (7.2%)
American Stores 10,700 487
Avon Products 19,800 1,262
Colgate-Palmolive 1,600 99
CPC International 2,600 224
CVS 25,700 1,230
Dial 1,900 32
Gillette 12,548 1,115
JP Foodservice* 11,900 345
Kimberly Clark 9,000 451
Nabisco Holdings, Cl A 1,200 48
PepsiCo 900 33
Philip Morris 41,800 1,839
Ralston Purina Group 4,500 384
RJR Nabisco 7,800 253
Safeway* 21,200 954
Sara Lee 9,400 384
</TABLE>
54
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES--CONTINUED
Sysco 24,500 $ 854
Tele-Communications, Cl A* 27,100 410
Time Warner 4,200 195
Unilever ADR 900 174
Viacom, Cl B* 20,944 622
Walt Disney 3,395 278
Wendy's International 6,900 161
-------
Total Consumer Staples 11,834
-------
ENERGY (3.4%)
Amoco 4,800 429
British Petroleum ADR 3,900 565
Dresser Industries 13,300 456
Halliburton 11,300 874
Kerr-McGee 7,100 460
Mobil 8,900 1,245
Royal Dutch Petroleum ADR 1,900 371
Schlumberger 2,800 334
Tosco 5,900 192
Union Pacific Resources Group 21,922 633
-------
Total Energy 5,559
-------
FINANCIALS (7.8%)
American International Group 5,200 704
Bank of New York 5,600 239
BankAmerica 9,100 1,064
BB&T 8,600 344
Capital One Financial 2,600 84
Chase Manhattan Bank 23,400 2,211
Citicorp 700 80
Conseco 1,400 56
Cullen/Frost Bankers 1,900 75
Dean Witter Discover 3,700 153
FHLMC 16,200 535
FNMA 13,400 585
First Union 4,300 369
First USA 18,700 926
GCR Holdings 7,000 187
General Re 3,600 631
<CAPTION>
- ------------------------------------------------------------------------------
SHARES
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Great Western Financial 13,900 $ 674
Hartford Financial Services Group 19,500 1,521
Norwest 5,500 294
PMI Group 7,600 417
Sphere Drake Holdings 21,000 186
Summit Bancorp 3,000 148
Travelers 11,133 611
U.S. Bancorp 700 43
Washington National 19,500 546
-------
Total Financials 12,683
-------
HEALTH CARE (7.9%)
American Home Products 28,400 2,165
Amgen* 6,500 435
Baxter International 12,600 665
Becton Dickinson 1,300 64
Boston Scientific* 5,910 315
Bristol-Myers Squibb 20,300 1,490
Columbia/HCA Healthcare 33,310 1,220
Healthsouth* 32,868 752
Johnson & Johnson 28,100 1,682
Eli Lilly 7,800 725
Medpartners* 27,600 524
Medtronic 1,600 118
Merck 14,200 1,276
Pacificare Health Systems, Cl B* 3,400 269
Schering Plough 6,600 599
Tenet Healthcare* 15,000 412
Warner Lambert 2,300 232
-------
Total Health Care 12,943
-------
TECHNOLOGY (7.4%)
Atmel* 3,600 103
Automatic Data Processing 2,270 112
Cadence Design Systems* 9,000 299
Ceridian* 6,300 232
Cisco Systems* 16,400 1,111
Compaq Computer* 600 65
Eastman Kodak 10,000 829
First Data 28,000 1,120
</TABLE>
55
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--CONTINUED
Hewlett Packard 7,900 $ 407
IBM 7,800 675
Intel 11,500 1,742
Lucent Technologies 9,214 586
Microsoft* 12,200 1,513
Motorola 11,000 730
Oracle* 10,900 508
Scientific-Atlanta 42,300 767
Xerox 18,200 1,233
-------
Total Technology 12,032
-------
TRANSPORTATION (0.6%)
Burlington Northern Santa Fe 7,400 614
Delta Air Lines 1,400 131
Union Pacific 2,800 190
-------
Total Transportation 935
-------
UTILITIES (0.2%)
Consolidated Natural Gas 1,500 80
Enron 4,200 171
Sonat 1,800 103
-------
Total Utilities 354
-------
Total Common Stocks
(Cost $72,954) 84,559
-------
PREFERRED STOCKS (1.1%)
AIR TRANSPORTATION (0.2%)
Continental Airline Financial (B) 5,000 391
-------
BANKS (0.2%)
National Bank of Australia, CV to 0.3273 shares* 10,000 270
-------
TECHNOLOGY (0.7%)
Microsoft, CV to 1 share 12,500 1,077
-------
Total Preferred Stocks
(Cost $1,573) 1,738
-------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE OBLIGATIONS (23.1%)
American General Finance
6.875%, 07/01/99 $ 1,000 $ 1,007
Aristar
6.750%, 05/15/99 1,500 1,507
Associates of North America, MTN
6.650%, 08/30/99 750 752
AT&T Capital, MTN
6.920%, 04/29/99 2,250 2,261
Bear Stearns
7.000%, 03/01/07 1,900 1,853
Ford Capital
9.500%, 06/01/10 1,350 1,558
General Electric Capital
6.660%, 05/01/18 1,000 1,003
General Motors Acceptance
7.125%, 05/01/01 1,900 1,914
6.750%, 11/04/04 1,500 1,459
Homeside Lending, MTN
6.875%, 05/15/00 2,000 1,998
Household Finance, MTN
7.150%, 06/15/00 1,000 1,010
International Lease Finance
6.700%, 04/30/99 1,900 1,910
Lockheed Martin
6.550%, 05/15/99 1,000 1,001
Marriott International, (A) (B)
0.000%, 03/25/11 1,000 581
Mascotech, Callable 12/22/96 @ 103
4.500%, 12/15/03 500 445
Merrill Lynch, MTN
6.640%, 04/09/99 1,500 1,506
Morgan Stanley Group
6.875%, 03/01/07 1,000 974
Philip Morris
7.250%, 09/15/01 2,100 2,108
6.800%, 12/01/03 500 488
7.500%, 04/01/04 1,000 1,005
</TABLE>
56
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE OBLIGATIONS--CONTINUED
RHG Finance
8.875%, 10/01/05 $ 1,500 $ 1,622
Salomon
6.500%, 03/01/00 2,500 2,478
6.750%, 02/15/03 1,150 1,118
Service International
7.375%, 04/15/04 1,750 1,772
SunAmerica
6.200%, 10/31/99 2,000 1,985
US West Capital Funding
7.300%, 01/15/07 2,500 2,484
--------
Total Corporate Obligations
(Cost $37,869) 37,799
--------
CONVERTIBLE BONDS (2.5%)
Alza, CV to 26.1840 Shares, Callable 05/01/00 @ 100
5.000%, 05/01/06 500 501
Automatic Commercial Exchange Security, CV to 0.8333
shares
6.500%, 05/15/00 9 215
Roche, CV to 3.5626 Shares (A)
0.000%, 05/06/12 1,000 403
Staples, CV to 30.303 Shares (B)
4.500%, 10/01/00 500 585
Time Warner Finance, CV to 7.7589 Shares (A) 0.000%,
06/22/13 900 411
U.S. Filter, CV to 25.3164 shares, Callable 12/15/99
@ 101.8
4.500%, 12/15/01 500 509
USA Waste Services, CV to 35.3243 Shares 5.000%,
03/01/06 355 490
WMX Technologies, CV to 26.078 shares 2.000%,
01/24/05 1,000 921
--------
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Total Convertible Bonds
(Cost $3,864) $ 4,035
--------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (1.2%)
FHLMC
8.000%, 06/01/02 $ 574 589
7.500%, 09/01/03 1,308 1,326
--------
Total U.S. Agency Mortgage-Backed Obligations
(Cost $1,916) 1,915
--------
U.S. TREASURY OBLIGATIONS (10.6%)
U.S. Treasury Bonds
7.500%, 11/15/16 3,000 3,163
8.125%, 08/15/19 7,800 8,775
6.625%, 02/15/27 3,450 3,324
U.S. Treasury Notes
6.750%, 04/30/00 2,000 2,020
--------
Total U.S. Treasury Obligations
(Cost $17,245) 17,282
--------
REPURCHASE AGREEMENT (8.9%)
Merrill Lynch
5.55%, dated 05/30/97, matures 06/02/97, repurchase
price $14,570,241 (collateralized by various GNMA
obligations, total par value $26,629,425,
7.000%-13.250%, 04/20/00-11/20/22: total market
value $14,856,427) 14,563 14,563
--------
Total Repurchase Agreement
(Cost $14,563) 14,563
--------
Total Investments (99.1%)
(Cost $149,984) 161,891
--------
OTHER ASSETS AND LIABILITIES, NET (0.9%) 1,546
--------
</TABLE>
57
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
BALANCED FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
(000)
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 12,674,232
outstanding shares of beneficial interest $131,876
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 501,289
outstanding shares of beneficial interest 5,143
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 509,658
outstanding shares of beneficial interest 5,720
Undistributed net investment income 781
Accumulated net realized gain on investments 8,010
Net unrealized appreciation on investments 11,907
--------
Total Net Assets (100.0%) $163,437
--------
--------
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
(000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 11.94
--------
--------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 11.99
--------
--------
Maximum Offering Price Per Share -- Investor Class
($11.99 DIVIDED BY 96.25%) $ 12.46
--------
--------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1)(2) $ 11.90
--------
--------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
(2) REPRESENTS NAV ON LAST BUSINESS DAY -- MAY 30, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
58
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN COMMON STOCKS (84.7%)
ARGENTINA (6.9%)
Banco Frances del Rio de la Plata ADR* 16,000 $ 526
Capex, Cl A 33,700 324
Massalin Particulares, Cl B 38,800 231
Metrogas ADR 32,204 314
Quilmes Industrial 37,000 430
Transportadora de Gas del Sur ADR 33,000 417
YPF ADR, Cl D 16,000 480
-----------
Total Argentina 2,722
-----------
BRAZIL (4.3%)
Makro Atacadista GDR 27,500 344
Souza Cruz 50,000 467
Telebras ADR 3,230 444
Votorantim Celelose Papel Receibos* 1,476,876 40
Unibanco 12,000 414
-----------
Total Brazil 1,709
-----------
CHILE (1.1%)
Administradora de Fondos de Pensiones Provida
ADR 21,500 441
-----------
COLOMBIA (1.6%)
Banco de Colombia GDS 24,700 152
Banco Ganadero ADR 15,600 476
-----------
Total Colombia 628
-----------
CZECH REPUBLIC (0.5%)
Komercni Banka GDR 8,400 204
-----------
ECUADOR (0.4%)
La Cemento Nacional GDR 800 158
-----------
GREECE (5.3%)
Greek Telecom 7,800 194
Hellas Can Packaging 25,500 467
Papastratos Cigarettes 15,400 316
Teletypos 130,000 533
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
Titan Cement Company 5,700 $ 568
-----------
Total Greece 2,078
-----------
HONG KONG (9.2%)
China Hong Kong Photo 1,086,000 315
Esprit Asia Holdings 616,000 354
First Pacific 142,000 181
National Mutual Asia 358,000 390
Peregrine Investment Holdings 137,000 244
Peregrine Investment Warrants* 6,600 2
Road King Infrastructure* 400,000 390
Seoul Horizon Trust 17,000 212
Shenzhen Express* 700,000 235
Sinocan 920,000 365
South China Morning Post Holdings 460,000 442
Wing Hang Bank 108,000 514
-----------
Total Hong Kong 3,644
-----------
HUNGARY (1.4%)
Egis* 6,000 353
Gedeon Richter GDR 2,500 207
-----------
Total Hungary 560
-----------
INDIA (4.5%)
Hindalco GDR 6,700 221
India Cements GDR 54,000 124
Indian Aluminum GDR 15,800 58
Indian Aluminum GDS 15,300 57
Tata Electric GDR 210 71
Videsh Sanchar Nigam GDR 60,000 1,236
-----------
Total India 1,767
-----------
INDONESIA (8.8%)
Budi Acid Jaya, F 185,000 228
Citra Marga Nusaphala 472,000 471
Dankos Laboratories, F 665,000 561
Indonesian Satellite ADR 13,500 403
Matahari Putra Prima 251,000 447
Modern Photo Film, F 150,000 546
</TABLE>
59
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
INDONESIA--CONTINUED
Tambang Timah, F 281,000 $ 451
Tempo Scan Pacific 164,000 351
-----------
Total Indonesia 3,458
-----------
ISRAEL (5.8%)
Blue Square Stores* 57,300 587
ECI Telecommunications 22,000 509
Koor Industries ADR 20,300 355
Nice Systems ADR* 18,000 549
Orbotech* 10,000 279
-----------
Total Israel 2,279
-----------
MALAYSIA (3.4%)
Aluminium of Malaysia 231,000 325
Edaran Otomobil 28,000 244
Petronas Dagangan 170,000 403
Southern Bank Warrants* 15,000 10
UMW Holdings 72,000 370
-----------
Total Malaysia 1,352
-----------
MEXICO (8.3%)
Femsa, Cl B 106,000 562
Grupo Carso 66,000 375
Grupo Continental 167,750 418
Grupo Elektra GDR 21,100 401
Herdez, Cl B 1,035,000 458
Kimberly Clark, Cl A 95,500 331
Nacional de Drogas, Cl L 139,000 459
Telefonos de Mexico ADR 6,500 288
-----------
Total Mexico 3,292
-----------
PANAMA (1.1%)
Banco Latinamericano de Exportaciones 9,000 424
-----------
PERU (2.1%)
Cerveceria Backus & Johnston 356,240 320
CPT Telefoncia del Peru 15,000 381
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
Telefonica del Peru, Cl B 50,500 $ 125
-----------
Total Peru 826
-----------
PHILIPPINES (3.6%)
Bacnotan Consolidated 135,600 250
Benpres GDR* 65,800 467
First Philippine Holdings 174,375 288
Philippine Long Distance 14,000 414
-----------
Total Philippines 1,419
-----------
PORTUGAL (2.5%)
Banco Totta & Acores 21,700 309
Cimentos de Portugal 15,020 330
Portugal Telecom 600 23
Portugal Telecom ADR 8,200 316
-----------
Total Portugal 978
-----------
SINGAPORE (2.0%)
Amtek Engineering 180,000 311
Elec & Eltek International 84,000 496
-----------
Total Singapore 807
-----------
SOUTH AFRICA (8.6%)
Amalgated Banks of South Africa 39,642 245
Anglo American Coal 3,260 216
Barlow 37,700 399
De Beers Consolidated Mines ADR 5,500 194
Gencor 44,000 193
Kersaf Investments 48,600 381
Liberty Life Association of Africa 14,000 392
Rembrandt Group 30,400 306
Richemont 26,500 360
Sasol 26,200 321
Suncrush 181,000 387
-----------
Total South Africa 3,394
-----------
SOUTH KOREA (1.5%)
Pohang Iron & Steel ADR 21,000 609
-----------
</TABLE>
60
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
THAILAND (1.7%)
K.R. Precision, F 46,500 $ 324
Nation Publishing 120,000 344
-----------
Total Thailand 668
-----------
TURKEY (0.1%)
Dogan Holding* 2,800,000 60
-----------
Total Foreign Common Stocks
(Cost $31,409) 33,477
-----------
FOREIGN PREFERRED STOCKS (6.2%)
BRAZIL (6.2%)
Banco Bradesco 42,150,000 336
Banco Itau SA 800,000 411
Brahma 440,000 319
Cemig 2,800,000 128
Centrais Eletricas de Santa Catarina, Cl B 103,000 124
Globex Utilidades 15,500 235
Lojas Renner 7,800,000 452
Multibras Eletrodomes* 228,400 233
Votorantim Celulose Papel* 7,500,000 203
-----------
Total Foreign Preferred Stocks
(Cost $2,386) 2,441
-----------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT (G)
(000)
--------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN CONVERTIBLE BOND (0.4%)
TURKEY (0.4%)
Medya Holdings Int'l 10.000%, 06/28/01 $ 200 160
-----------
Total Foreign Convertible Bond
(Cost $175) 160
-----------
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
TIME DEPOSIT (7.6%)
Cayman Island 5.250%, 06/02/97 $ 3,000 $ 3,000
-----------
Total Time Deposit
(Cost $3,000) 3,000
-----------
Total Investments (98.9%)
(Cost $36,970) 39,078
-----------
OTHER ASSETS AND LIABILITIES, NET (1.1%) 417
-----------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on
3,660,064 outstanding shares of beneficial
interest 37,181
Undistributed net investment income 144
Accumulated net realized gain on investments and
foreign currency transactions 62
Net unrealized appreciation on investments 2,108
-----------
Total Net Assets (100.0%) $ 39,495
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 10.79
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
61
<PAGE>
- --------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
U.S. AND FOREIGN COMMON STOCKS (95.4%)
AUSTRALIA (2.7%)
Amcor 13,361 $ 88
Broken Hill Proprietary 20,656 297
Coles Myer 30,235 141
CRA 5,542 91
CSR 27,994 103
Lend Lease 4,481 89
Mount Isa Mines Holdings 42,910 64
National Australia Bank 13,886 199
Newscorp 33,881 150
Pacific Dunlop 28,455 79
Western Mining 20,202 131
Westpac Banking 36,880 200
-------
Total Australia 1,632
-------
AUSTRIA (1.6%)
Bank of Austria 3,058 197
Creditanstalt Bankverein 3,535 209
Ea-Generali 343 85
Oest El Wirtsch, Cl A 2,245 161
OMV 1,715 218
Wienerberger Baustoff 401 82
-------
Total Austria 952
-------
BELGIUM (2.1%)
Bekaert 30 18
Delhaize Freres 1,000 50
Electrabel 1,000 224
Fortis 1,000 194
Generale Banque 470 186
Groupe Bruxelles Lambert 700 112
Kredietbank 290 119
Petrofina 500 176
Royale Belge 175 50
Solvay, Cl A 125 75
Union Minere* 680 55
-------
Total Belgium 1,259
-------
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
DENMARK (1.6%)
Carlsberg, Cl B 1,427 $ 84
D/S 1912, Cl B 6 209
D/S Svendborg, Cl B 4 200
Danisco 2,210 131
Novo Nordisk, Cl B 1,670 179
Sophus Berendsen, Cl B 251 38
Tele Danmark, Cl B 2,208 109
-------
Total Denmark 950
-------
FINLAND (0.8%)
Merita* 25,000 85
Nokia, Cl K 2,300 150
Outokumpu Oy Akt, Cl A 3,100 61
Rauma 303 7
UPM-Kymmene 8,500 195
-------
Total Finland 498
-------
FRANCE (11.4%)
Accor 847 117
Air Liquide 1,886 289
Alcatel Alsthom 2,238 242
Axa 4,748 284
Banque National Paris, Cl A 3,350 137
Bouygues 950 82
Carrefour 603 396
Cie Bancaire 710 78
Cie de Saint Gobain 2,265 312
Cie Financiara Paribas 958 62
Cie Generale des Eaux 2,045 251
Cie Generale des Eaux Warrants* 2,045 1
Compagnie de Suez 2,963 151
Elf Aquitaine 4,282 428
Elf Sanofi 2,573 223
Eridania Beghin-Say 1,209 169
Groupe Danone 1,764 265
Havas 1,300 87
L'Oreal 1,084 393
Lafarge Coppee 2,218 142
</TABLE>
62
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
FRANCE--CONTINUED
Legrand 950 $ 153
Louis Vuitton-Moet Hennessy 1,881 455
Lyonnaise des Eaux Dumez 1,650 162
Michelin, Cl B 2,844 155
Pernod-Ricard 2,179 104
Peugeot 1,790 177
Pinault-Printemps Redoute 400 168
Promodes 478 162
Rhone-Poulenc, Cl A 8,500 275
Schneider 3,877 186
Societe Generale 2,280 253
Total Compaigne, Cl B 4,470 408
Unibail 400 39
-------
Total France 6,806
-------
GERMANY (19.2%)
Aachener & Munchener Bete 166 154
Allianz 5,080 1,085
BASF 15,100 561
Bayer 21,960 857
Bayerische Hypotheken und Wechselbank 9,900 316
Bayerische Vereinsbank 2,360 98
Biersdorf 3,340 179
Colonia Konzern 310 31
Daimler-Benz 13,630 1,053
Degussa 2,490 121
Deutsche Bank 14,620 811
Dresdner Bank Frankfurt 10,600 372
Heidelberger Zement 2,490 235
Hochtief 260 11
Karstadt 625 219
Linde 391 271
Lufthansa 14,580 232
Man Muenchen 31 9
Mannesmann 853 349
Metro AG 3,063 333
Munchener Ruckvers 256 656
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Preussag 11 $ 3
RWE 6,340 273
SAP 1,900 339
Schering 1,810 182
Siemens 14,340 811
Thyssen 1,301 294
Veba 12,660 720
Viag 683 310
Volkswagen 961 624
-------
Total Germany 11,509
-------
HONG KONG (1.9%)
Cathay Pacific Airways 9,000 14
Cheung Kong Holdings 13,000 133
China Light & Power 15,000 75
Hang Seng Bank 10,200 122
Hong Kong Telecommunications 50,000 111
HSBC Holdings 13,068 396
Hutchison Whampoa 14,800 123
Sun Hung Kai Properties 6,600 81
Swire Pacific, Cl A 9,000 75
-------
Total Hong Kong 1,130
-------
ITALY (9.0%)
Assicurazioni Generali 42,670 731
Banca Commerciale Italiana 33,500 66
Benetton Group 9,448 132
Credito Italiano 23,000 34
Edison 42,500 201
ENI 76,000 379
Fiat 139,000 456
Fiat Non-Convertible 42,000 74
Istituto Bancario san Paolo di Torino 42,091 265
Istituto Nazionale 323,919 447
Italgas 5,000 15
Mediobanca 30,950 176
Montedison* 134,680 82
Olivetti* 142,500 41
</TABLE>
63
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
ITALY--CONTINUED
Parmalat Finanziaria 102,800 $ 147
Pirelli 120,000 261
RAS 10,135 77
Sirti 19,500 112
Telecom Italia 265,000 730
Telecom Italia di Risp 63,000 138
Telecom Italia Mobile 195,802 575
Telecom Italia Mobile di Risp 154,164 269
-------
Total Italy 5,408
-------
JAPAN (23.5%)
Ajinomoto 15,000 151
Asahi Bank 20,000 131
Asahi Chemical Industries 15,000 83
Asahi Glass 12,000 116
Bank of Tokyo-Mitsubushi 24,000 416
Bank of Yokohama 11,000 55
Bridgestone 9,000 203
Chiba Bank 12,000 62
Chiyoda 5,000 24
Citizen Watch 11,000 83
Cosmo Oil 12,000 55
Dai Nippon Printing 12,000 240
Daiei* 11,000 72
Daiwa Kosho Lease 5,000 38
Daiwa Securities 18,000 132
Ebara 8,000 116
Fanuc 900 32
Fuji Bank 24,000 309
Fuji Photo Film 5,000 194
Fujitsu 18,000 220
Furukawa Electric 15,000 89
Hankyu 2,000 10
Hitachi 32,000 341
Honda Motor 5,000 147
Industrial Bank of Japan 20,000 241
Ito Ham Foods 1,000 6
Ito Yokado 4,000 228
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Itochu 31,000 $ 158
Japan Air Lines* 16,000 68
Japan Energy 11,000 28
Joyo Bank 14,300 70
Jusco 3,000 101
Kansai Electric Power 9,800 184
Kao 7,000 95
Kawasaki Steel 19,000 56
Kinki Nippon Railway 26,000 156
Kirin Brewery 15,000 148
Komatsu 13,000 98
Kubota 23,000 106
Kyocera 3,000 216
Marui 4,000 75
Matsushita Electric 18,000 339
Mitsubishi 21,000 247
Mitsubishi Chemical 16,000 49
Mitsubishi Electric 23,000 130
Mitsubishi Estate 5,000 68
Mitsubishi Heavy Industries 43,000 310
Mitsubishi Materials 35,000 136
Mitsubishi Trust & Banking 13,000 186
Mitsui 17,000 150
Mitsui Trust & Banking 13,000 98
Mitsukoshi 7,000 49
Murata Manufacturing 1,000 40
NEC 15,000 209
New Oji Paper 9,000 52
Nichido Fire & Marine Insurance 15,000 91
Nippon Express 5,000 39
Nippon Oil 16,000 81
Nippon Paper Industries* 1,000 5
Nippon Sharyo 5,000 32
Nippon Steel 39,000 114
Nippon Yusen 27,000 111
Nippondenso 7,000 175
Nissan Motor 32,000 212
NKK 24,000 47
Nomura Securities 19,000 225
</TABLE>
64
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
JAPAN--CONTINUED
Obayashi 13,000 $ 80
Odakyu Electric Railway 24,000 133
Olympus Optical 8,000 68
Osaka Gas 44,000 116
Sakura Bank 25,000 150
Sankyo 7,000 222
Sanyo Electric 4,000 17
Sega Enterprises 1,600 54
Sekisui Chemical 7,000 73
Sekisui House 7,000 69
Sharp 10,000 129
Shimizu 3,000 18
Shin-Etsu Chemical 7,000 176
Shizuoka Bank 9,000 87
Skylark 3,000 50
Sony 3,500 295
Sumitomo Bank 28,000 387
Sumitomo Chemical 20,000 83
Sumitomo Metal 26,000 66
Taisei 35,000 150
Takeda Chemical 15,000 380
Tobu Railway 15,000 67
Tohoku Electric Power 5,300 91
Tokai Bank 20,000 165
Tokio Marine & Fire Insurance 34,000 400
Tokyo Electric Power 15,900 303
Tokyo Gas 26,000 66
Tokyu 10,000 57
Toppan Printing 11,000 151
Toray 24,000 163
Tostem 3,000 80
Toto 7,700 87
Toyo Seikan Kaisha 3,300 63
Toyoda Automatic Loom 4,000 87
Toyota Motor 31,000 889
Yamaichi Securities 15,000 43
Yamanouchi Pharmaceutical 1,000 25
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Yasuda Trust & Banking 5,000 $ 15
-------
Total Japan 14,103
-------
NETHERLANDS (3.1%)
ABN-Amro Holdings 10,668 197
Akzo Nobel 470 63
ING Groep 5,816 257
Koninklijke 3,789 132
Koninklijke Nederlanden Papierfabriek 960 20
Philips Electronics 2,550 139
Royal Dutch Petroleum 3,580 691
Unilever 1,065 205
Wolters Kluwer 1,479 178
-------
Total Netherlands 1,882
-------
NORWAY (1.2%)
Bergesen, Cl A 4,150 96
Hafslund Nycomed, Cl B 5,900 33
Kvaerner 2,000 115
Norsk Hydro 7,825 391
Nycomed Asa, Cl B 2,300 31
Uni Storebrand* 9,987 66
-------
Total Norway 732
-------
</TABLE>
INTERNATIONAL EQUITY INDEX FUND
<TABLE>
<S> <C> <C>
SPAIN (4.7%)
Argentaria Bancaria de Espana 2,916 145
Autopistas CESA 6,347 78
Banco Bilbao Vizcaya 4,571 324
Banco Central Hispano 4,255 137
Banco de Santander 3,510 299
Dragados Construccion 2,565 50
Empresa Nacional de Electricidad 5,473 418
Fomento de Construcciones Contratas 598 67
Gas Natural 828 158
Iberdola 16,206 199
Mapfre 1,018 55
Repsol 6,279 263
Telefonica de Espana 19,933 575
</TABLE>
65
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
SPAIN--CONTINUED
Union Electrica Fenosa 7,629 $ 68
-------
Total Spain 2,836
-------
SWEDEN (2.0%)
Asea, Cl A 12,000 162
Astra, Cl A 14,666 237
Diligentia* 1,350 15
Electrolux, Cl B 1,100 66
Ericsson, Cl B 8,100 284
Granges* 550 7
Skandinaviska Enskilda Banken 7,700 79
Skanska Rights* 1,800 --
Skanska, Cl B 1,800 72
Stora Kopparbergs Bergslags, Cl A 5,000 74
Svenska Cellulosa, Cl B 4,000 84
Swedish Match 4,500 15
Volvo, Cl B 3,950 109
-------
Total Sweden 1,204
-------
SWITZERLAND (2.3%)
Nestle 222 276
Novartis 244 331
Roche Holdings, Bearer 7 92
Roche Holdings, Genusshein 34 302
Schweizerische Bankgesellschaft 170 186
Swiss Bank* 875 210
-------
Total Switzerland 1,397
-------
UNITED KINGDOM (8.2%)
Abbey National 8,291 119
Barclays Bank 14,416 280
Bass 9,466 123
BAT Industries 22,460 201
BG 20,778 69
Blue Circle Industries 12,797 88
British Petroleum 41,753 495
British Telecommunications 20,475 148
BTR 43,929 143
Cable & Wireless 22,390 183
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Centrica* 20,778 $ 22
Energy Group* 9,677 87
General Electric 21,236 121
Glaxo Wellcome 19,999 399
Grand Metropolitan 23,365 217
Great Universal Stores 7,352 78
Guinness 18,085 168
Hanson 12,096 62
HSBC Holdings 7,895 245
Imperial Chemical 11,454 152
Marks & Spencer 40,514 337
National Power 9,177 83
Reuters 13,125 147
RMC Group 2,799 42
RTZ 13,785 236
Sainsbury, J. 11,344 65
Smithkline Beecham 20,334 350
Unilever 6,230 167
Vodafone Group 22,646 100
-------
Total United Kingdom 4,927
-------
UNITED STATES (0.1%)
Millennium Chemicals* 1,382 27
-------
Total U.S. and Foreign Common Stocks (Cost $48,937)
57,252
-------
FOREIGN PREFERRED STOCKS (1.3%)
FINLAND (0.3%)
Nokia, Cl A 2,400 157
-------
GERMANY (0.9%)
RWE 3,730 131
SAP 1,380 251
Volkswagen 297 146
-------
Total Germany 528
-------
ITALY (0.1%)
Fiat 42,800 72
-------
Total Foreign Preferred Stocks (Cost $571) 757
-------
</TABLE>
66
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Total Investments (96.7%)
(Cost $49,508) $58,009
-------
OTHER ASSETS AND LIABILITIES, NET (3.3%) 1,999
-------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 4,717,839
outstanding shares of beneficial interest 43,186
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 496,770
outstanding shares of beneficial interest 4,962
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 80,102
outstanding shares of beneficial interest 829
Undistributed net investment income 220
Accumulated net realized gain on investments and
foreign currency transactions 2,335
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Net unrealized appreciation on investments $ 8,501
Net unrealized depreciation on foreign currency and
translation of other assets and liabilities in
foreign currency (25)
-------
Total Net Assets (100.0%) $60,008
-------
-------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 11.34
-------
-------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 11.26
-------
-------
Maximum Offering Price Per Share -- Investor Shares
($11.26 DIVIDED BY 96.25%) $ 11.70
-------
-------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 11.24
-------
-------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
67
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN COMMON STOCKS (97.3%)
ARGENTINA (0.9%)
YPF ADR, Cl D 160,000 $ 4,800
-----------
AUSTRALIA (2.0%)
Australia & New Zealand Bank Group 350,000 2,396
Faulding (F.H.) &Co. 405,124 2,412
QBE Insurance 922,000 5,486
-----------
Total Australia 10,294
-----------
BRAZIL (2.8%)
Souza Cruz 838,000 7,827
Telecom Brasileiras ADR 47,800 6,567
-----------
Total Brazil 14,394
-----------
CANADA (3.3%)
Bank of Montreal 71,991 2,744
Bombardier, Cl B 201,000 4,220
CAE 436,729 3,431
Royal Bank of Canada 57,000 2,468
Suncor 158,000 3,918
-----------
Total Canada 16,781
-----------
DENMARK (0.9%)
Sophus Berendsen, Cl B 29,550 4,471
-----------
FINLAND (4.3%)
Cultor, Ser 2 82,400 4,129
Finnlines 100,000 2,777
Metra, Cl B 195,000 5,529
Nokia ADR, Cl A 41,000 2,706
Rauma 72,200 1,683
UPM - Kymmene 208,000 4,774
-----------
Total Finland 21,598
-----------
FRANCE (9.7%)
Accor 34,000 4,708
Christian Dior 30,850 4,832
Cie Generale d'Industrie et de Participations 23,000 6,524
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
Credit Local de France 55,000 $ 5,131
Lafarge Coppee 38,000 2,427
Lagardere Groupe 158,000 4,643
SGS-Thomson Microelectronics ADR* 66,000 5,511
Technip 153,113 15,714
-----------
Total France 49,490
-----------
GERMANY (3.3%)
Siemens 48,000 2,713
Veba 79,600 4,525
Volkswagen 14,300 9,288
-----------
Total Germany 16,526
-----------
GREECE (2.0%)
Greek Telecom 411,840 10,253
-----------
HONG KONG (1.2%)
HSBC Holdings 192,645 5,843
-----------
HUNGARY (0.6%)
Gedeon Richter 32,000 2,656
Gedeon Richter GDR 3,000 249
-----------
Total Hungary 2,905
-----------
INDONESIA (0.5%)
Modern Photo Film, F 736,500 2,681
-----------
ISRAEL (2.1%)
ECI Telecommunications 319,000 7,377
Technomatrix Technologies 105,500 3,244
-----------
Total Israel 10,621
-----------
ITALY (3.1%)
Banca Popolare di Milano 500,000 2,686
ENI 933,000 4,655
Istituto Bancario san Paolo di Torino 450,002 2,831
Saipem 1,057,000 5,376
-----------
Total Italy 15,548
-----------
</TABLE>
68
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (8.8%)
Canon 215,000 $ 5,448
FCC 97,000 2,516
Fuji Photo Film 139,000 5,385
Honda Motor 282,000 8,285
Sony 99,400 8,377
TDK 69,000 5,299
Terumo 546,000 9,615
-----------
Total Japan 44,925
-----------
MALAYSIA (0.9%)
UMW Holdings 844,000 4,334
-----------
MEXICO (2.5%)
Fomento Econo Mexicana, Cl B 1,676,000 8,906
Panamerican Beverage, Cl A 130,200 3,776
-----------
Total Mexico 12,682
-----------
NETHERLANDS (5.5%)
Akzo Nobel 53,000 7,051
Hollandsche Beton Groep 28,658 6,590
ING Groep 327,938 14,486
-----------
Total Netherlands 28,127
-----------
NEW ZEALAND (1.0%)
Fletcher Challenge Building Division 1,831,500 5,114
-----------
PANAMA (1.4%)
Banco Latinamericano de Exportaciones 150,400 7,088
-----------
PERU (1.1%)
CPT Telefoncia del Peru 109,000 2,766
Credicorp 124,449 2,816
-----------
Total Peru 5,582
-----------
PHILIPPINES (1.1%)
Benpres GDR* 775,961 5,509
-----------
PORTUGAL (1.5%)
Banco Espirito Santo 120,400 2,493
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
Portugal Telecom ADR 134,300 $ 5,171
-----------
Total Portugal 7,664
-----------
SINGAPORE (0.7%)
Elec & Eltek International 599,000 3,534
-----------
SOUTH AFRICA (5.0%)
Barlow 442,000 4,676
De Beers Consolidated Mines ADR 70,200 2,475
First National Bank 373,000 2,911
Gencor 1,048,000 4,599
Liberty Life Association of Africa 50,000 1,399
Rembrandt Group 446,000 4,494
Sasol 385,000 4,720
-----------
Total South Africa 25,274
-----------
SOUTH KOREA (3.4%)
Pohang Iron & Steel 107,531 9,209
Samsung Electronics 29,590 2,897
Samsung Electronics Rights* 490 11
Sindo Ricoh 91,400 5,282
-----------
Total South Korea 17,399
-----------
SPAIN (3.4%)
Corporacion Financiera Alba 49,000 5,391
Telefonica de Espana 414,000 11,946
-----------
Total Spain 17,337
-----------
SWEDEN (3.1%)
Castellum AB* 130,000 906
Ericsson, Cl B 168,100 5,899
Skandia Forsakrings 250,000 8,822
-----------
Total Sweden 15,627
-----------
SWITZERLAND (6.7%)
Asea Brown Boveri 4,215 5,785
Nestle 9,000 11,194
Novartis, Registered 12,640 17,151
-----------
Total Switzerland 34,130
-----------
</TABLE>
69
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (14.5%)
Avis Europe* 2,500,000 $ 5,356
Bank of Ireland 769,715 8,327
Bass 400,000 5,187
BOC Group 163,000 2,735
Granada Group 315,000 4,464
Halma 1,196,000 3,442
London Forfaiting 1,763,200 11,577
Morgan Crucible 717,432 5,344
Powerscreen 513,100 5,232
Railtrack Group* 462,000 4,835
Reckit & Colman 554,000 7,791
Smithkline Beecham 306,484 5,270
Vodafone Group 980,000 4,343
-----------
Total United Kingdom 73,903
-----------
Total Foreign Common Stocks
(Cost $429,604) 494,434
-----------
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT
(000)
--------------------------------------------------------------------------------
<S> <C> <C>
TIME DEPOSIT (2.8%)
Cayman Island
5.250%, 06/02/97 $ 14,500 14,500
-----------
Total Time Deposit
(Cost $14,500) 14,500
-----------
Total Investments (100.1%)
(Cost $444,104) 508,934
-----------
OTHER ASSETS AND LIABILITIES, NET (-0.1%) (560)
-----------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 35,898,515
outstanding shares of beneficial interest 399,733
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 786,012
outstanding shares of beneficial interest 9,162
<CAPTION>
--------------------------------------------------------------------------------
VALUE
(000)
--------------------------------------------------------------------------------
<S> <C> <C>
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 621,903
outstanding shares of beneficial interest $ 7,607
Undistributed net investment income 834
Accumulated net realized gain on investments and
foreign currency transactions 26,202
Net unrealized appreciation on investments 64,830
Net unrealized appreciation on foreign currency and
translation of other assets and liabilities in
foreign currency 6
-----------
Total Net Assets (100.0%) $ 508,374
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 13.63
-----------
-----------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 13.58
-----------
-----------
Maximum Offering Price Per Share -- Investor Shares
($13.58 DIVIDED BY 96.25%) $ 14.11
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 13.47
-----------
-----------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
70
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
SUNBELT EQUITY FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (94.3%)
BASIC MATERIALS (1.2%)
Blount International 100,649 $ 4,152
Citation* 65,268 971
--------
Total Basic Materials 5,123
--------
CAPITAL GOODS (9.2%)
Agco 145,197 4,628
American Buildings* 156,275 4,415
American Homestar* 156,914 3,138
Browning Ferris Industries 60,659 1,987
Greenfield Industries 143,198 3,723
Intermet 301,822 4,226
Maverick Tube* 126,699 3,833
Palm Harbor Homes* 126,814 3,583
Roper Industries 41,105 2,019
Tracor* 79,461 2,016
Watsco 164,769 4,778
--------
Total Capital Goods 38,346
--------
COMMUNICATION SERVICES (2.3%)
Premiere Technologies* 162,964 4,380
U.S. Long Distance* 335,286 5,197
--------
Total Communication Services 9,577
--------
CONSUMER CYCLICALS (19.1%)
Barnett* 251,979 5,607
Books-A-Million* 364,468 1,868
Central Parking 86,890 2,715
Claire's Stores 190,753 3,672
Dollar General 236,344 7,947
Family Dollar Stores 159,553 4,108
Heilig-Meyers 413,167 6,817
Home Depot 64,703 4,076
Miller Industries* 524,807 8,594
O'Charleys* 109,669 1,563
Pier 1 Imports 79,777 1,785
Play By Play Toys & Novelties* 90,204 1,409
Promus Hotel* 199,826 7,219
Rare Hospitality International* 221,310 3,486
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Richfood Holdings 275,860 $ 6,379
Stein Mart* 198,738 6,012
Tractor Supply* 169,673 3,478
Suburban Lodges of America* 119,666 2,513
--------
Total Consumer Cyclicals 79,248
--------
CONSUMER STAPLES (1.9%)
Flowers Industries 179,497 3,164
Tyson Foods 224,809 4,609
--------
Total Consumer Staples 7,773
--------
ENERGY (21.7%)
Anadarko Petroleum 74,294 4,681
BJ Services* 86,013 4,752
Baker Hughes 110,638 4,149
Cairn Energy USA* 70,547 833
Diamond Offshore Drilling* 122,095 8,684
Ensco International* 109,330 5,453
Global Industries* 264,743 5,824
Global Marine* 289,298 6,509
Nuevo Energy* 218,321 9,524
Oceaneering International* 104,407 1,775
Offshore Logistics* 167,668 3,039
Pride Petroleum Service* 365,188 8,125
Production Operators 80,518 5,385
St Mary Land & Exploration 79,777 2,533
Stone Energy* 288,296 8,072
Tidewater 126,926 5,347
Transocean Offshore 45,716 3,154
World Fuel Services 104,839 2,110
--------
Total Energy 89,949
--------
FINANCIALS (6.9%)
AmSouth Bancorp 60,660 2,373
BB&T 21,029 841
CCB Financial 52,650 3,699
Central Fidelity Banks 28,307 828
Cullen/Frost Bankers 22,646 892
Equity Inns REIT 222,416 2,919
Fairfield Communities* 131,638 4,393
</TABLE>
71
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
FINANCIALS--CONTINUED
First Enterprise Financial Group* 161,692 $ 950
First Virginia Banks 16,176 906
Regions Financial 13,749 822
Texas Regional Bancshares, Cl A 44,300 1,384
Triad Guaranty* 122,286 4,249
Union Planters 62,171 2,938
Winston Hotels REIT 117,435 1,541
--------
Total Financials 28,735
--------
HEALTH CARE (9.7%)
Beverly Enterprises* 487,197 6,882
Compdent* 186,165 3,374
Gulf South Medical Supply* 271,411 5,360
Healthsouth* 151,776 3,472
Owens & Minor Holding 197,426 2,493
Phycor* 255,733 7,320
Quorum Health Group* 241,231 8,534
Serologicals* 139,340 2,665
--------
Total Health Care 40,100
--------
SERVICE INDUSTRIES (5.5%)
Billing Information Concepts* 40,440 1,173
Education Medical* 159,694 1,437
Norrell 240,634 7,760
Nova* 198,384 3,596
PMT Services* 343,137 5,490
Staffmark* 183,054 3,432
--------
Total Service Industries 22,888
--------
TECHNOLOGY (12.5%)
Acxiom* 165,803 2,819
BDM International* 191,467 4,978
Benchmark Electronics* 136,047 4,779
Cybex Computer Products* 79,847 1,452
Harbinger* 155,395 4,817
Input/Output* 250,551 4,447
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
National Data 133,001 $ 5,835
Nichols Research* 252,683 4,927
SCB Computer Technology* 342,063 7,867
SCI Systems* 5,905 384
Sterling Commerce* 240,417 7,994
Wandel & Goltermann Technologies* 135,258 1,691
--------
Total Technology 51,990
--------
TRANSPORTATION (4.3%)
American Freightways* 388,181 5,338
Hunt J B Transportation Services 538,819 8,217
MTL* 85,327 1,963
USA Truck* 228,340 2,169
--------
Total Transportation 17,687
--------
Total Common Stocks (Cost $310,998) 391,416
--------
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000)
- -------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS (3.4%)
Career Horizons,
CV to 88.1340 Shares
7.000%, 11/01/02 $ 2,507 5,534
Pride Petroleum Services,
CV to 81.6327 Shares
6.250%, 02/15/06 792 1,465
SCI Finance LLC,
CV to 1.6617 Shares 37 4,247
Sci Systems,
CV to 20.5128 Shares
5.000%, 05/01/06 2,059 3,009
--------
Total Convertible Bonds
(Cost $13,110) 14,255
--------
</TABLE>
72
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (0.8%)
Deutsche Bank
5.51%, dated 05/30/97, matures 06/02/97, repurchase
price $3,328,353 (collateralized by U.S. Treasury
Note, par value $3,373,000, 5.125%, 12/31/98: total
market value $3,393,654) $ 3,327 $ 3,327
--------
Total Repurchase Agreement
(Cost $3,327) 3,327
--------
Total Investments (98.5%)
(Cost $327,435) 408,998
--------
OTHER ASSETS AND LIABILITIES, NET (1.5%) 6,157
--------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 28,714,327
outstanding shares of beneficial interest 292,778
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 2,151,656
outstanding shares of beneficial interest 21,236
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 437,822
outstanding shares of beneficial interest 5,505
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
(000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Undistributed net investment income $ 39
Accumulated net realized gain on investments 14,034
Net unrealized appreciation on investments 81,563
--------
Total Net Assets (100.0%) $415,155
--------
--------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 13.28
--------
--------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 13.06
--------
--------
Maximum Offering Price Per
Share -- Investor Class
($13.06 DIVIDED BY 96.25%) $ 13.57
--------
--------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1)(2) $ 13.00
--------
--------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A
DESCRIPTION OF A POSSIBLE SALES CHARGE, SEE NOTES TO THE
FINANCIAL STATEMENTS.
(2) REPRESENTS NAV ON LAST BUSINESS DAY -- MAY 30, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
73
<PAGE>
- --------------------------------------------------------------------------
INVESTMENT GRADE TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (102.3%)
ARIZONA (1.7%)
Northern Arizona University Revenue, RB,
Callable 06/01/02 @ 101 (FGIC)
6.300%, 06/01/05 $ 2,770 $ 2,948
------------
CALIFORNIA (4.2%)
Los Angeles, California Participation Note, COP,
Pre-Refunded 06/01/99 @ 102 (F)
7.000%, 06/01/09 3,765 4,039
Northern California, Power Agency, RB (AMBAC)
5.850%, 07/01/10 1,295 1,384
State University, California Public Works, RB,
Pre-Refunded 10/01/02 @ 102 (F)
6.700%, 10/01/17 1,800 2,012
------------
Total California 7,435
------------
FLORIDA (12.2%)
Hillsborough County, Capital Improvement
Program, Ser B, RB, Callable 07/01/06
@ 102 (MBIA)
5.125%, 07/01/22 3,300 3,073
Okeechobee Correctional Facility, COP (AMBAC)
5.800%, 03/01/03 1,000 1,044
Orange County, Health Facilities Authority, RB
(MBIA)
6.250%, 10/01/13 1,000 1,093
Reedy Creek, Improvement District Utility, Ser
1991-1, RB, Pre-Refunded 10/01/01 @ 101 (MBIA)
(F)
6.500%, 10/01/16 2,000 2,169
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
State Board of Education, Capital Outlay, Ser C,
GO, Pre-Refunded 06/01/02 @ 101 (F)
6.625%, 06/01/22 $ 1,950 $ 2,139
State Department of Natural Resources,
Environmental Preservation 2000 Project, Ser
A, RB, Callable 07/01/01 @ 102 (AMBAC)
6.750%, 07/01/13 2,000 2,164
Tampa, Allegany Health, RB, Pre-Refunded
12/01/99 @ 102 (FGIC) (F) 7.375%, 12/01/23 3,500 3,814
Tampa, Capital Improvement Program, Ser B, RB,
Callable 10/01/98 @ 100 (E)
8.375%, 10/01/18 1,000 1,051
Volusia County, Health Facility Authority, Aces
Pooled Hospital Program, RB, VRDN, (FGIC) (C)
(D)
3.900%, 11/01/15 2,700 2,700
Volusia County, Master Lease Program, COP,
Pre-Refunded 08/01/01 @ 102 (FSA) (F)
6.625%, 08/01/06 2,000 2,190
------------
Total Florida 21,437
------------
GEORGIA (5.7%)
Cobb County, School District, GO
6.000%, 02/01/01 5,900 6,194
Murray County, School District, GO
4.800%, 04/01/00 1,150 1,160
4.875%, 10/01/00 1,200 1,214
</TABLE>
74
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
GEORGIA--CONTINUED
State, GO
7.250%, 07/01/99 $ 1,305 $ 1,381
------------
Total Georgia 9,949
------------
HAWAII (3.1%)
State, GO
5.750%, 01/01/07 5,150 5,421
------------
ILLINOIS (3.6%)
Chicago, Board of Education, GO (AMBAC)
6.750%, 12/01/09 1,000 1,132
Chicago, State Board of Education, GO (MBIA)
6.250%, 12/01/09 2,745 3,021
State Health Facilities Authority, Trinity
Medical Center Project, RB, Callable 07/01/02
@ 102 (FSA)
7.000%, 07/01/12 2,000 2,189
------------
Total Illinois 6,342
------------
INDIANA (3.6%)
Beech Grove, School Building, RB (MBIA)
6.250%, 07/05/16 2,265 2,464
Health Facilities Financing Authority, Community
Hospitals of Indiana, RB, Pre-Refunded
07/01/01 @ 102 (MBIA) (F)
7.000%, 07/01/21 3,500 3,869
------------
Total Indiana 6,333
------------
MARYLAND (5.1%)
Baltimore, Metropolitan District, GO, Callable
07/01/02 @ 102
5.900%, 07/01/04 1,000 1,067
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Montgomery County Public Improvement, Ser A, GO
5.200%, 10/01/00 $ 5,725 $ 5,866
Montgomery County, Ser A, GO
5.100%, 04/01/99 2,000 2,032
------------
Total Maryland 8,965
------------
MASSACHUSETTS (4.8%)
Boston, City Hospital Project, RB, Callable
08/15/00 @ 102 (FHA)
7.650%, 02/15/10 1,275 1,410
Commonwealth of Massachusetts, GO, VRDN (C) (D)
4.000%, 12/01/97 7,010 7,010
------------
Total Massachusetts 8,420
------------
NEBRASKA (1.2%)
Omaha, Public Power & Electric Authority, Ser A,
RB, Pre-Refunded 02/01/02 @ 101.50 (F)
6.500%, 02/01/17 2,000 2,180
------------
NEW JERSEY (21.1%)
Economic Development Authority, Water
Facilities,
Ser PJ-B, RB, VRDN (AMBAC) (C) (D)
3.750%, 11/01/25 7,000 7,000
State, Transportation Anticipation Note, Ser A,
RB, Callable 03/01/01 @ 100 (FSA)
4.900%, 09/01/01 3,750 3,793
State, Transportation Anticipation Note, Ser A,
RB, Callable 03/01/03 @ 100 (FSA)
5.400%, 09/01/02 7,000 7,218
5.500%, 09/01/03 13,000 13,478
</TABLE>
75
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
NEW JERSEY--CONTINUED
State, Transportation Anticipation Note, Ser A,
RB, Callable 03/01/00 @ 100 (FSA)
4.800%, 09/01/00 $ 5,500 $ 5,546
------------
Total New Jersey 37,035
------------
NEW YORK (20.2%)
New York, Ser B, GO
5.600%, 08/15/06 1,500 1,513
New York, Ser J, GO (MBIA)
6.000%, 02/15/05 3,000 3,194
State, Pre-Refunded 03/01/00 @ 102 (AMBAC) (F)
7.100%, 03/01/20 1,650 1,794
State Dorm Authority, RB, Callable 07/01/14 @
100 (FSA)
5.750%, 07/01/18 1,800 1,860
State Dorm Authority, State University
Educational Facilities, RB (FGIC)
5.875%, 05/15/11 2,000 2,115
State Dorm Authority, State University
Educational Facilities, Ser A, RB,
Pre-Refunded 05/15/00 @ 102 (F)
7.700%, 05/15/12 5,000 5,539
State Local Assistance Corporation, Ser A, RB,
Pre-Refunded 04/01/01 @ 102 (F)
7.000%, 04/01/16 5,000 5,524
State Urban Development RB, Callable 01/01/03 @
102 (AMBAC)
5.625%, 01/01/07 2,300 2,391
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
State Urban Development, RB, Pre-Refunded
01/01/01 @ 102 (F)
7.875%, 01/01/10 $ 3,000 $ 3,383
State Urban Development, Ser A, RB (MBIA)
6.250%, 04/01/06 2,000 2,186
Triborough, New York, State Bridge & Tunnel
Authority, Ser S, RB, Pre-Refunded 01/01/01 @
101.5 (F)
7.000%, 01/01/11 2,000 2,191
Triborough, New York, State Bridge & Tunnel
Authority,
Ser X, RB, Callable 01/01/02 @ 101.50 6.250%,
01/01/04 3,550 3,802
------------
Total New York 35,492
------------
NORTH CAROLINA (0.8%)
Johnston County, COP (MBIA)
4.150%, 09/01/98 1,380 1,382
------------
PENNSYLVANIA (0.6%)
Philadelphia, Water & Waste, RB (MBIA)
6.250%, 08/01/12 1,050 1,150
------------
TENNESSEE (3.7%)
Shelby County, GO, Pre-Refunded 12/01/00 @ 102
(F)
6.250%, 12/01/09 2,000 2,149
State, GO
5.000%, 05/01/99 4,220 4,284
------------
Total Tennessee 6,433
------------
TEXAS (5.3%)
El Paso, GO, Callable 08/15/07 @ 100 (FGIC)
5.000%, 08/15/11 1,000 964
5.000%, 08/15/12 1,000 958
</TABLE>
76
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
INVESTMENT GRADE TAX-EXEMPT BOND FUND
<TABLE>
<S> <C> <C>
TEXAS--CONTINUED
Harris County, Health Facility Development, Ser
A, RB
6.000%, 06/01/12 $ 3,990 $ 4,234
Texas Water Development Board State Revolving
Fund - Senior Lien, RB, Callable 07/15/02 @
102
6.000%, 07/15/03 2,000 2,133
University of Texas, RB
6.300%, 08/15/99 1,000 1,041
------------
Total Texas 9,330
------------
UTAH (1.0%)
Intermountain Power Agency,
Ser E, RB (FSA)
6.250%, 07/01/09 1,545 1,699
------------
VIRGINIA (2.9%)
Fairfax County, Ser C, GO, Callable 05/01/03 @
102
5.250%, 05/01/07 5,000 5,107
------------
WASHINGTON (0.6%)
Grant County, Washington School District, GO
(FGIC)
6.000%, 12/01/08 1,000 1,073
------------
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
WISCONSIN (0.9%)
Milwaukee County, Ser A, GO (MBIA)
5.250%, 10/01/03 $ 1,550 $ 1,593
------------
Total Municipal Bonds
(Cost $178,251) 179,724
------------
CASH EQUIVALENTS (9.9%)
AIM Management Institutional Tax-Free Portfolio
(C) 8,685 8,685
SEI Tax Exempt Trust Institutional Tax Free
Portfolio (C) 8,753 8,753
------------
Total Cash Equivalents
(Cost $17,438) 17,438
------------
Total Investments (112.2%) (Cost $195,689) 197,162
------------
OTHER ASSETS AND LIABILITIES (-12.2%)
Investment securities purchased payable (24,673)
Other assets and liabilities, net 3,193
------------
Total Other Assets and Liabilities (21,480)
------------
</TABLE>
77
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
VALUE
(000)
- -----------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on
12,396,746 outstanding shares of beneficial
interest $ 137,067
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on
2,834,763 outstanding shares of beneficial
interest 30,459
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on
416,782 outstanding shares of beneficial
interest 4,716
Accumulated net realized gain on investments 1,967
Net unrealized appreciation on investments 1,473
------------
Total Net Assets (100.0%) $ 175,682
------------
------------
<CAPTION>
- -----------------------------------------------------------------------------
VALUE
(000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 11.22
------------
------------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 11.24
------------
------------
Maximum Offering Price Per Share -- Investor Class
($11.24 DIVIDED BY 96.25%) $ 11.68
------------
------------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 11.23
------------
------------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
78
<PAGE>
- --------------------------------------------------------------------------
FLORIDA TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (89.0%)
FLORIDA (78.7%)
Alachua County, State Health Facilities Authority,
Ser B, RB, VRDN (MBIA) (C) (D)
3.900%, 12/01/26 $2,300 $ 2,300
Brevard County, School Board, Ser A, COP (AMBAC)
5.400%, 07/01/12 1,500 1,510
Brevard County, State Health Facilities Authority,
Holmes Medical Center Project, RB, Callable
10/01/03 @ 102 (MBIA)
5.700%, 10/01/08 3,000 3,103
Brevard County, State Health Facilities Authority,
Wuesthoff Memorial Hospital Project, RB (MBIA)
6.250%, 04/01/06 930 1,018
Broward County, School District GO, Pre-Refunded
02/15/99 @ 102 (F)
7.125%, 02/15/08 400 426
Dade County, Aviation Revenue, Ser A, RB, Callable
10/01/05 @ 102 (AMBAC)
6.000%, 10/01/09 500 534
Dade County, School Board, COP (AMBAC)
5.750%, 08/01/03 600 631
Dade County, School District, GO Pre-Refunded
07/01/99 @ 102 (F)
7.200%, 07/01/02 2,000 2,151
7.375%, 07/01/08 250 270
Dade County, Seaport, RB (MBIA)
6.200%, 10/01/08 750 826
6.200%, 10/01/10 1,000 1,094
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Dade County, State Educational Facilities Authority,
University of Miami, Ser A, RB (MBIA)
6.000%, 04/01/08 $ 755 $ 814
Dade County, Water & Sewer System, RB (FGIC)
6.250%, 10/01/09 750 827
5.250%, 10/01/21 825 790
Deerfield Beach, Water & Sewer Revenue, RB (FGIC)
6.125%, 10/01/06 250 273
Gainsville, Utilities Systems,
Ser A, RB
5.750%, 10/01/04 1,300 1,379
5.750%, 10/01/09 500 529
Gulf Breeze, Local Government Lien, Ser B, RB,
Mandatory Tender 12/01/08 (FGIC)
5.650%, 12/01/15 460 472
Gulf Breeze, Local Government Lien, Ser B, RB,
Mandatory Tender 12/01/09 (FGIC)
5.750%, 12/01/15 410 421
Hillsborough County, Capital Improvement Program Ser
B, RB Callable 07/01/06 @ 102 (MBIA)
5.125%, 07/01/22 3,000 2,794
Hillsborough County, Capital Improvement Revenue, RB
(FGIC)
5.900%, 08/01/04 300 320
Hillsborough County, School Board Revenue, COP,
Callable 07/01/06 @ 100 (MBIA)
5.875%, 07/01/08 1,000 1,060
Hillsborough County, University Community Hospital,
RB (MBIA)
6.500%, 08/15/19 145 163
</TABLE>
79
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
FLORIDA--CONTINUED
Indian Trace Community, Water Management Split
Benefit, Ser A-1, RB, Callable 05/01/05 @ 102
(MBIA)
5.500%, 05/01/07 $ 455 $ 474
Jacksonville Excise Taxes, Ser B, RB, AMT, Callable
10/01/01 @ 101 (FGIC)
4.900%, 10/01/02 590 595
Jacksonville, Florida Excise Tax, Ser B, RB, AMT,
Callable 10/01/03 @ 100 (FGIC)
5.200%, 10/01/04 1,500 1,527
Lakeland, Electric & Water Revenue, RB (FGIC)
6.500%, 10/01/05 1,000 1,113
Lakeland, Electric & Water Revenue, RB
6.650%, 10/01/98 100 103
Manatee County, Community Redevelopment
Administration, Center Project, RB, Callable
04/01/00 @ 102.00 (MBIA)
7.000%, 04/01/08 1,000 1,076
North Broward, Hospital District Revenue, RB (MBIA)
5.950%, 01/01/01 1,000 1,044
Orange County, Health Facilities Authority, RB (MBIA)
6.250%, 10/01/13 1,000 1,093
Orange County, Public Facilities Revenue, Ser A, RB,
Callable 10/01/04 @ 102 (AMBAC)
5.650%, 10/01/07 200 210
Orlando, Community Water & Electric Revenue, RB (ETM)
9.625%, 10/01/03 450 569
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Orlando, Community Water & Electric Revenue, Ser D,
RB
6.750%, 10/01/17 $ 500 $ 582
Palm Beach, Health Facilities Revenue, JFK Medical
Center Project, RB, Pre-Refunded 12/01/03 @ 102
(FSA) (F)
5.750%, 12/01/14 165 177
Pinellas County, Morton Plant Health Systems Project,
RB, Callable 11/15/03 @ 102 (MBIA)
5.500%, 11/15/08 1,500 1,541
Plant City, Utility System Revenue, RB, Callable
10/01/04 @ 101 (MBIA)
6.000%, 10/01/15 400 426
Reedy Creek, Utility Revenue, Ser 1991-1, RB,
Pre-Refunded 10/01/01 @ 101 (MBIA) (F)
6.250%, 10/01/11 240 258
South Broward, Hospital District, RB, Callable
05/01/03 @ 102 (AMBAC)
7.500%, 05/01/08 1,920 2,195
State Board General Financial Services, Department of
Environmental Preservation, RB (AMBAC)
5.125%, 07/01/07 1,500 1,518
State Board of Education, Capital Outlay, RB
6.600%, 06/01/98 125 128
State Board of Education Capital Outlay, GO,
Pre-Refunded 06/01/00 @ 102 (F)
7.250%, 06/01/23 2,695 2,953
</TABLE>
80
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
FLORIDA--CONTINUED
State Board of Education, Capital Outlay, Ser B, GO,
Callable 06/01/02 @ 101
5.900%, 06/01/12 $ 450 $ 463
State Board of Education, Capital Outlay, Ser B, RB,
Callable 06/01/02 @ 101
6.000%, 06/01/15 170 175
State Board of Education, Ser C, GO, Pre-Refunded
06/01/97 @ 102 (ETM) (F)
7.100%, 06/01/07 190 194
State Board of Finance Department, General Services
Revenue, Environmental Preservation 2000, Ser A, RB
(AMBAC)
5.300%, 07/01/04 460 474
State Department of Natural Resources, Preservation
2000 Project, Ser A, RB, Callable 07/01/01 @ 102
(AMBAC)
6.750%, 07/01/06 80 87
State Keys, Aqueduct Authority Revenue, RB,
Pre-Refunded 09/01/01 @ 101 (AMBAC) (F)
6.750%, 09/01/21 170 186
State Pollution Control, Ser N, GO, Callable 07/01/96
@ 102
8.000%, 07/01/97 420 422
Tallahassee Construction Utility System, RB,
Pre-Refunded 10/01/99 @ 102 (F)
6.900%, 10/01/14 240 258
Tampa, RB, Callable 10/1/01 @ 102 (AMBAC)
7.050%, 10/01/07 1,000 1,105
-------
Total Florida 44,651
-------
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
PUERTO RICO (10.3%)
Commonwealth, Highway & Transportation Authority, Ser
Z, RB (MBIA)
6.250%, 07/01/14 $2,000 $ 2,193
Commonwealth, GO, (MBIA)
5.650%, 07/01/15 1,000 1,026
Electric Power Authority, Ser S, RB
5.500%, 07/01/00 200 205
Electric Power Authority, RB, (MBIA)
6.125%, 07/01/09 1,000 1,094
Public Buildings Authority, Guaranteed Government
Facilities, Ser A, RB (AMBAC)
6.250%, 07/01/14 750 822
Public Buildings Authority Revenue, Public Education
& Health Facilities, RB
5.300%, 07/01/03 475 483
-------
Total Puerto Rico 5,823
-------
Total Municipal Bonds
(Cost $49,674) 50,474
-------
CASH EQUIVALENTS (9.8%)
AIM Management Institutional Tax-Free Portfolio 2,782 2,782
SEI Tax Exempt Trust Institutional Tax Free Portfolio 2,767 2,767
-------
Total Cash Equivalents
(Cost $5,549) 5,549
-------
Total Investments (98.8%)
(Cost $55,223) 56,023
-------
OTHER ASSETS AND LIABILITIES, NET (1.2%) 690
-------
</TABLE>
81
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
FLORIDA TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 4,910,796
outstanding shares of beneficial interest $50,028
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 313,587
outstanding shares of beneficial interest 3,103
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 291,278
outstanding shares of beneficial interest 2,992
Accumulated net realized loss on investments (210)
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Net unrealized appreciation on investments $ 800
-------
Total Net Assets (100.0%) $56,713
-------
-------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 10.28
-------
-------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 10.29
-------
-------
Maximum Offering Price Per Share -- Investor Class
($10.29 DIVIDED BY 96.25%) $ 10.69
-------
-------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 10.30
-------
-------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
82
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
TENNESSEE TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (89.1%)
PUERTO RICO (11.9%)
Commonwealth, GO, Callable 07/01/05 @ 100 (MBIA)
5.500%, 07/01/13 $175 $ 176
Commonwealth, Highway & Transportation Authority, Ser
Z, RB (MBIA)
6.250%, 07/01/15 500 549
------
Total Puerto Rico 725
------
TENNESSEE (77.2%)
Chattanooga, GO, Callable 08/01/02 @ 102
5.900%, 08/01/05 50 53
Chattanooga, Health Facilities Board, Memorial
Hospital Project, Ser A, RB (MBIA)
6.300%, 09/01/05 20 22
Chattanooga-Hamilton County, Erlanger Medical Center
Project, RB (FSA)
5.600%, 10/01/08 50 52
Hamilton County, GO, Callable 07/01/04 @ 102
5.500%, 07/01/08 100 103
Harpeth Valley, Utility District Revenue, RB,
Callable 09/01/03 @ 102
5.625%, 09/01/07 100 104
Jackson, Water & Sewer Utilities Revenue, RB,
Callable 07/01/06 @ 100 (AMBAC)
5.250%, 07/01/11 200 198
Johnson City, Water & Sewer Regulation System, GO,
Callable 05/01/06 @ 100 (AMBAC)
5.800%, 05/01/09 100 104
Kingsport, GO
5.500%, 09/01/02 50 52
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Knox County, First Utility District Sewer Revenue,
RB, Callable 12/01/97 @ 100 (ETM)
7.250%, 12/01/05 $ 55 $ 64
Knox County, Health Facilities Board, Mercy Health
Systems, Ser B, RB, Callable 09/01/05 @ 100 (AMBAC)
5.875%, 09/01/15 50 51
Knoxville, Natural Gas Revenue, Ser E, RB, Callable
03/01/03 @ 100
5.900%, 03/01/10 100 103
Madison County, Ser A, GO, Callable 08/01/01 @ 102
6.000%, 08/01/05 40 42
Madison County, Water Revenue, RB, Callable 02/01/08
@ 100 (MBIA)
5.500%, 02/01/09 250 255
Memphis-Shelby County, Airport Authority, Ser B, RB,
AMT (MBIA)
6.500%, 02/15/09 85 94
Memphis-Shelby County, Airport Authority, RB,
Callable 09/01/05 @ 100 (MBIA)
5.550%, 09/01/08 50 52
Metro Government, Nashville & Davidson County,
Convention Center Project, GO (ETM)
6.250%, 03/01/10 200 219
Metro Government, Nashville & Davidson County,
Correctional Facility Improvements, RB, Callable
09/01/01 @ 102
7.000%, 09/01/11 100 109
Metro Government, Nashville & Davidson County,
Electric System Revenue, RB (ETM)
6.000%, 07/01/04 100 107
Metro Government, Nashville & Davidson County,
Electric System Revenue, RB
5.625%, 05/15/14 200 203
</TABLE>
83
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
TENNESSEE--CONTINUED
Metro Government, Nashville & Davidson County,
Vanderbilt University Hospital, RB, Callable
07/01/06 @ 100 (ETM)
6.100%, 07/01/10 $100 $ 106
Metro Government, Nashville & Davidson County,
Vanderbilt University, Ser A, RB
5.500%, 01/01/06 125 130
Metro Government, Nashville & Davidson County, Water
& Sewer Revenue, RB (ETM)
6.500%, 12/01/14 225 251
Metro Government, Nashville & Davidson County, Water
& Sewer, RB, Callable 01/01/04 @ 100 (AMBAC)
5.900%, 01/01/07 100 105
Nashville & Davidson County, State Sports Authority
Stadium Project, RB, Callable 07/01/06 @ 101
(AMBAC)
5.750%, 07/01/15 100 102
Shelby County, School Boards, GO, Callable 03/01/02 @
101
5.800%, 03/01/10 300 309
Shelby County, Ser A, GO
5.500%, 03/01/10 300 307
Shelby County, Ser B, GO
5.100%, 03/01/00 750 763
State GO, Ser A, Callable 03/01/07 @ 100
5.500%, 03/01/09 50 52
State GO, Ser C
5.000%, 03/01/04 100 102
State Housing Development Agency, Ser A, RB (AMBAC)
6.550%, 01/01/08 50 52
<CAPTION>
- -----------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
State Local Development Authority, State Loan
Program, Ser A, RB, Callable 03/01/04 @ 100
7.000%, 03/01/12 $ 50 $ 54
State Metropolitan Nashville Airport, Ser B, RB,
Pre-Refunded 07/01/01 @ 102 (FGIC)(F)
7.750%, 07/01/06 100 113
State School Board Authority, Higher Education
Facilities, Ser A, RB, Callable 05/01/02 @ 101.50
5.800%, 05/01/04 150 158
Sullivan County, Health Facilities Board, Holston
Valley Health, RB, Callable 02/15/03 @ 102 (MBIA)
5.750%, 02/15/13 50 51
Williamson County, Rural School, GO, Callable
09/01/06 @ 100
5.400%, 09/01/07 50 52
------
Total Tennessee 4,694
------
Total Municipal Bonds
(Cost $5,299) 5,419
------
CASH EQUIVALENTS (9.8%)
Aim Management Institutional Tax Free Portfolio 292 292
SEI Tax-Exempt Trust Institutional Tax-Free Portfolio 302 302
------
Total Cash Equivalents
(Cost $594) 594
------
Total Investments (98.9%)
(Cost $5,893) 6,013
------
OTHER ASSETS AND LIABILITIES, NET (1.1%) 67
------
</TABLE>
84
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------------------------
VALUE
(000)
- -----------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 204,829
outstanding shares of beneficial interest $1,913
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 166,059
outstanding shares of beneficial interest 1,570
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 259,932
outstanding shares of beneficial interest 2,489
Accumulated net realized loss on investments (12)
Net unrealized appreciation on investments 120
------
Total Net Assets (100.0%) $6,080
------
------
<CAPTION>
------------------------------------------------------------
VALUE
(000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 9.63
------
------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 9.65
------
------
Maximum Offering Price Per Share -- Investor Class
($9.65 DIVIDED BY 96.25%) $10.03
------
------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 9.64
------
------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A
DESCRIPTION OF A POSSIBLE SALES CHARGE, SEE NOTES TO THE
FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
85
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
GEORGIA TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (89.6%)
GEORGIA (89.6%)
Albany-Dougherty County, State Hospital Authority,
Ser B, Anticipation Certificate, Pre-Refunded
09/01/00 @ 102 (AMBAC)(F)
7.500%, 09/01/20 $ 255 $ 282
Athens, Water & Sewer Revenue, RB (ETM)(F)
5.700%, 07/01/00 165 171
Atlanta Airport Facility, RB
6.000%, 01/01/03 500 531
6.000%, 01/01/04 500 534
Augusta, Water & Sewer, RB, Callable 05/01/02 @ 102
6.200%, 05/01/03 130 141
Bibb County, GO
7.000%, 01/01/04 985 1,103
Bulloch County School District, GO
5.250%, 02/01/17 1,000 968
Clayton County, Water & Sewer Authority, RB (AMBAC)
5.350%, 05/01/09 1,500 1,519
Cobb County & Marietta, Coliseum & Exhibit Hall
Authority, RB (MBIA)
5.500%, 10/01/12 940 956
Cobb County & Marietta, Water Authority, RB
5.100%, 11/01/04 1,000 1,019
Cobb County, GO
5.000%, 02/01/03 1,025 1,040
Cobb County, Water & Sewer Authority, Callable
07/01/04 @ 102
5.125%, 07/01/05 345 352
Columbus Water & Sewer, RB (FGIC)
5.625%, 05/01/13 1,055 1,070
Dalton-Whitfield County, Hospital Authority, RB,
Pre-Refunded 07/01/00 @ 102 (F)
7.000%, 07/01/03 355 386
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
DeKalb County, Development Authority, Emory
University Project, RB (F)
5.375%, 11/01/05 $1,650 $ 1,710
DeKalb County, Development Authority, Emory
University Project, Ser A, RB
5.200%, 11/01/08 500 506
DeKalb County, School District, Ser A, GO
6.250%, 07/01/11 1,500 1,649
DeKalb County, Water & Sewer Authority, RB, Callable
10/01/03 @ 102
5.125%, 10/01/14 1,455 1,398
Douglas County, School District, GO (MBIA)
5.650%, 01/01/09 805 832
Douglasville -- Douglas County, Water and Sewer
Authority, RB (AMBAC)
5.625%, 06/01/15 350 357
East Point Building Authority, RB (AMBAC)
4.800%, 02/01/07 535 525
Fayette County, School District, GO
6.250%, 03/01/07 450 494
Fayette County, Water Authority, RB (MBIA) (ETM)
8.550%, 10/01/01 300 346
Forsyth County, School District, GO (MBIA)
5.350%, 07/01/10 680 685
Forsyth County, GO
6.500%, 07/01/06 1,000 1,113
Fulton County, Hospital Authority, Northside Hospital
Project, Ser B, RB, Pre-Refunded 10/01/02 @ 102
(MBIA)(F)
6.600%, 10/01/11 2,000 2,214
</TABLE>
86
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
GEORGIA--CONTINUED
Gwinnett County Recreation Authority, RB
5.800%, 02/01/06 $ 785 $ 835
5.875%, 02/01/07 1,390 1,489
Gwinnett County, School District, GO
6.400%, 02/01/06 500 553
Gwinnett County, School District, Ser B, GO
6.400%, 02/01/07 1,000 1,113
Hall County, GO
6.300%, 12/01/05 675 739
Hartwell, Combined Utility Revenue, RB, Callable
01/01/06 @ 102 (FSA)
5.500%, 01/01/16 1,000 991
Henry County, GO
6.300%, 08/01/08 300 331
Henry County, School District, School Improvements,
RB
6.450%, 08/01/11 500 555
Henry County, School District, Ser A, GO
6.150%, 08/01/06 150 163
Henry County, School District, Ser B, GO (MBIA)
5.500%, 08/01/01 350 363
Housing Authority, Single Family Mortgage, Ser B,
Sub-ser B-1, RB
5.550%, 12/01/07 550 561
Medical Center Hospital Authority, Columbus Regional
Healthcare System, RB (MBIA)
6.000%, 08/01/06 1,000 1,070
Meriwether County, School District, GO (FSA)
7.000%, 02/01/06 740 847
5.500%, 02/01/16 1,000 990
Milledgeville, Water & Sewer, RB (FSA)
6.000%, 12/01/16 1,000 1,069
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Paulding County, School District, Ser A, GO
6.625%, 02/01/07 $1,000 $ 1,123
6.625%, 02/01/08 500 563
Private Colleges & Universities Facilities Authority,
Emory University Project, Ser C, RB, Callable
10/01/02 @ 102
5.900%, 10/01/04 305 325
Private Colleges & Universities Facilities Authority,
Spelman College Project, RB (FGIC)
6.000%, 06/01/09 475 502
Richmond County Georgia Water & Sewer, Ser A, RB
(FGIC)
5.125%, 10/01/17 1,000 951
Rockdale County, School District, RB, Pre-Refunded
01/01/99 @ 102 (F)
6.400%, 01/01/05 150 157
Savannah, Water & Sewer Revenue, RB (ETM)(F)
6.450%, 12/01/04 1,000 1,104
State GO, Ser B, Pre-Refunded 07/01/99 @ 102 (F)
6.800%, 07/01/06 460 491
State GO, Ser C
6.500%, 04/01/08 1,000 1,127
State Housing & Financial Authority, Single Family
Mortgage, Ser B, Sub-ser B-1, RB (FHA)
5.550%, 12/01/10 325 325
State Housing & Financial Authority, Single Family
Mortgage, Ser B, Sub-ser B-1, RB (FHA)
5.600%, 12/01/11 450 450
State Municipal Electric Authority, RB (ETM)(F)
8.000%, 01/01/15 465 587
Vidalia, Water & Sewer Revenue, RB (ETM)(F)
6.000%, 07/01/07 605 654
</TABLE>
87
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
GEORGIA--CONTINUED
Walker County School District, GO
5.000%, 02/01/03 $1,000 $ 1,010
-------
Total Georgia 42,939
-------
Total Municipal Bonds
(Cost $42,637) 42,939
-------
REPURCHASE AGREEMENT (2.6%)
Lehman Brothers 5.02%, dated 05/30/97, matures
06/02/97, repurchase price $1,233,287
(collateralized by U.S. Treasury Note, par value
$1,247,488, 5.625%, 08/31/97: total market value
$1,265,810) 1,233 1,233
-------
Total Repurchase Agreement
(Cost $1,233) 1,233
-------
CASH EQUIVALENTS (8.4%)
AIM Management Institutional Tax-Free Portfolio (C) 2,025 2,025
SEI Tax Exempt Trust Institutional Tax Free Portfolio
(C) 2,007 2,007
-------
Total Cash Equivalents
(Cost $4,032) 4,032
-------
Total Investments (100.6%)
(Cost $47,902) 48,204
-------
OTHER ASSETS AND LIABILITIES, NET (-0.6%) (299)
-------
<CAPTION>
------------------------------------------------------------
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 4,084,294
outstanding shares of beneficial interest $39,434
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 360,308
outstanding shares of beneficial interest 3,511
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 479,124
outstanding shares of beneficial interest 4,651
Accumulated net realized gain on investments 7
Net unrealized appreciation on investments 302
-------
Total Net Assets (100.0%) $47,905
-------
-------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 9.73
-------
-------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 9.74
-------
-------
Maximum Offering Price Per Share -- Investor Class
($9.74 DIVIDED BY 96.25%) $ 10.12
-------
-------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 9.73
-------
-------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE
FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
88
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
INVESTMENT GRADE BOND FUND
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (21.2%)
U.S. Treasury Bonds
7.500%, 11/15/16 $36,100 $ 38,056
8.125%, 08/15/19 81,000 91,127
6.625%, 02/15/27 10,000 9,635
U.S. Treasury Note
6.750%, 04/30/00 4,000 4,039
-----------
Total U.S. Treasury Obligations
(Cost $141,586) 142,857
-----------
CORPORATE OBLIGATIONS (69.9%)
FINANCE (51.7%)
American General Finance
6.875%, 07/01/99 13,000 13,097
Aristar
6.750%, 05/15/99 23,000 23,115
Associates of North America, MTN
6.650%, 08/30/99 9,500 9,524
Bear Stearns
7.000%, 03/01/07 23,000 22,425
General Motors Acceptance, MTN
6.750%, 11/04/04 21,000 20,422
General Motors Acceptance
7.125%, 05/01/01 23,500 23,676
Homeside Lending, MTN
6.875%, 05/15/00 21,600 21,573
Household Finance, MTN
7.150%, 06/15/00 13,000 13,130
International Lease Finance
6.700%, 04/30/99 23,500 23,618
Merrill Lynch, MTN
6.640%, 04/09/99 19,000 19,071
Morgan Stanley Group
6.875%, 03/01/07 17,000 16,554
RHG Finance
8.875%,10/01/05 17,100 18,489
Salomon
6.500%, 03/01/00 28,000 27,755
6.750%, 02/15/03 23,000 22,368
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
Service International
7.375%, 04/15/04 $20,500 $ 20,756
Sunamerica
6.200%, 10/31/99 25,000 24,813
US West Capital Funding
7.300%, 01/15/07 27,500 27,328
-----------
Total Finance 347,714
-----------
INDUSTRIAL (11.3%)
Ford Capital
9.500%, 06/01/10 15,000 17,306
Lockheed Martin
6.550%, 05/15/99 16,000 16,020
Philip Morris
7.250%, 09/15/01 24,500 24,592
6.800%, 12/01/03 4,000 3,900
7.500%, 04/01/04 14,500 14,573
-----------
Total Industrial 76,391
-----------
UTILITIES (6.9%)
AT&T Capital, MTN
6.920%, 04/29/99 25,000 25,125
General Electric Capital (C)
6.660%, 05/01/18 21,000 21,052
-----------
Total Utilities 46,177
-----------
Total Corporate Obligations
(Cost $471,229) 470,282
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (4.2%)
FHLMC
8.000%, 06/01/02 8,047 8,244
7.500%, 09/01/03 19,625 19,896
-----------
Total U.S. Government Agency Obligations
(Cost $28,159) 28,140
-----------
</TABLE>
89
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (0.4%)
Deutsche Bank
5.51%, dated 05/30/97, matures 06/02/97, repurchase
price $2,739,802 (collateralized by U.S. Treasury
Note, par value $2,777,000, 5.125%, 12/31/98:
market value $2,794,004) $ 2,739 $ 2,739
-----------
Total Repurchase Agreement
(Cost $2,739) 2,739
-----------
Total Investments (95.7%)
(Cost $643,713) 644,018
-----------
OTHER ASSETS AND LIABILITIES, NET (4.3%) 28,556
-----------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 62,361,667
outstanding shares of beneficial interest 644,729
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 3,264,729
outstanding shares of beneficial interest 34,279
<CAPTION>
--------------------------------------------------------------------------------
VALUE
(000)
--------------------------------------------------------------------------------
<S> <C> <C>
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 566,749
outstanding shares of beneficial interest $ 5,854
Accumulated net realized loss on investments (12,593)
Net unrealized appreciation on investments 305
-----------
Total Net Assets (100.0%) $ 672,574
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 10.16
-----------
-----------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 10.16
-----------
-----------
Maximum Offering Price Per Share -- Investor Class
($10.16 DIVIDED BY 96.25%) $ 10.56
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 10.17
-----------
-----------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
90
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
SHORT-TERM BOND FUND
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (36.0%)
U.S. Treasury Bond
6.125%, 05/15/98 $ 2,000 $ 2,005
U.S. Treasury Notes
5.875%, 08/15/98 1,750 1,747
4.750%, 09/30/98 1,500 1,476
4.750%, 10/31/98 9,000 8,843
5.500%, 02/28/99 8,750 8,659
5.875%, 11/15/99 3,000 2,971
7.500%, 11/15/01 3,750 3,892
U.S. Treasury STRIPS
0.000%, 08/15/03 5,750 3,851
-----------
Total U.S. Treasury Obligations
(Cost $33,597) 33,444
-----------
CORPORATE OBLIGATIONS (43.1%)
FINANCE (22.7%)
American General
6.250%, 03/15/03 1,100 1,060
Associates of North America, MTN
5.980%, 12/19/00 1,250 1,220
7.080%, 04/15/03 1,500 1,502
Bankers Trust New York
6.625%, 07/30/99 2,250 2,250
Chrysler Financial
6.440%, 06/23/99 1,000 1,000
Dean Witter Discover, MTN
6.000%, 02/08/01 1,000 966
First Chicago NBD
6.500%, 11/01/01 2,250 2,214
FNMA, MTN
5.760%, 02/26/01 2,100 2,034
Ford Motor Credit
6.250%, 11/08/00 1,500 1,476
General Motors Acceptance
7.125%, 05/01/01 1,750 1,763
Household Finance
9.625%, 07/15/00 1,250 1,349
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
International Lease Finance, MTN
6.050%, 02/01/00 $ 2,250 $ 2,216
Norwest Financial
7.200%, 04/01/04 2,000 2,020
-----------
Total Finance 21,070
-----------
INDUSTRIAL (13.7%)
Dayton Hudson
6.800%, 10/01/01 2,250 2,230
Federal Express
6.250%, 04/15/98 750 752
Philip Morris (D)
9.000%, 05/15/98 1,500 1,540
Philip Morris
7.500%, 01/15/02 1,250 1,264
RJR Nabisco
8.300%, 04/15/99 1,000 1,031
Sears Roebuck Acceptance, MTN
6.820%, 10/17/02 500 496
6.540%, 02/20/03 1,200 1,170
Sherwin-Williams
6.250%, 02/01/00 1,000 991
Tenneco
10.075%, 02/01/01 3,000 3,296
-----------
Total Industrial 12,770
-----------
UTILITIES (6.7%)
General Electric Capital, Callable & Putable 4/14/98
@ 100 (C)(D)
6.650%, 04/14/08 2,000 2,006
Indiana & Michigan Power, MTN
6.400%, 03/01/00 2,250 2,230
NYNEX Credit, MTN
6.900%, 06/15/99 2,000 2,015
-----------
Total Utilities 6,251
-----------
Total Corporate Obligations
(Cost $40,297) 40,091
-----------
</TABLE>
91
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (4.9%)
FHLMC
6.500%, 04/01/98 $ 892 $ 884
8.000%, 01/01/00 894 910
5.375%, 04/13/00 1,000 989
FNMA
8.500%, 11/01/01 1,758 1,801
-----------
Total U.S. Agency Mortgage-Backed Obligations
(Cost $4,534) 4,584
-----------
ASSET-BACKED SECURITIES (9.4%)
Chase Manhattan Auto Grantor
Trust, Ser 1996-B, Cl A
6.610%, 09/15/02 1,947 1,955
Metris Master Trust,
Ser 1997-1, Cl A
6.870%, 11/20/05 2,750 2,767
Olympic Automobile Receivables
Trust, Ser 1996-D, Cl A3
5.950%, 06/15/01 2,500 2,477
Union Pacific Equipment Trust, Ser 96-A
7.060%, 05/15/03 1,500 1,506
-----------
Total Asset-Backed Securities
(Cost $8,697) 8,705
-----------
CASH EQUIVALENTS (2.8%)
SEI Daily Income Trust Prime
Obligation Portfolio 2,583 2,583
-----------
Total Cash Equivalents
(Cost $2,583) 2,583
-----------
Total Investments (96.2%)
(Cost $89,708) 89,407
-----------
Other Assets and Liabilities, Net (3.8%) 3,549
-----------
<CAPTION>
--------------------------------------------------------------------------------
VALUE
(000)
--------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 9,063,741
outstanding shares of beneficial interest $ 90,146
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 220,117
outstanding shares of beneficial interest 2,202
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 108,300
outstanding shares of beneficial interest 1,087
Undistributed net investment income 141
Accumulated net realized loss on investments (319)
Net unrealized depreciation on investments (301)
-----------
Total Net Assets (100.0%) $ 92,956
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 9.90
-----------
-----------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 9.91
-----------
-----------
Maximum Offering Price Per Share -- Investor Class
($9.91 DIVIDED BY 98.00%) $ 10.11
-----------
-----------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 9.91
-----------
-----------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
92
<PAGE>
SHORT-TERM U.S. TREASURY SECURITIES FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (97.3%)
U.S. Treasury Bonds
6.125%, 05/15/98 $2,250 $ 2,255
6.000%, 08/15/99 2,500 2,487
U.S. Treasury Notes
5.125%, 06/30/98 2,250 2,233
5.875%, 08/15/98 3,400 3,394
5.500%, 11/15/98 1,600 1,588
8.875%, 02/15/99 4,200 4,382
6.375%, 05/15/99 1,900 1,905
6.875%, 07/31/99 4,250 4,303
5.875%, 11/15/99 2,000 1,980
5.875%, 02/15/00 1,000 988
6.875%, 03/31/00 750 760
-------
Total U.S. Treasury Obligations
(Cost $26,305) 26,275
-------
CASH EQUIVALENT (1.6%)
SEI Daily Income Trust
Treasury II Portfolio 437 437
-------
Total Cash Equivalent
(Cost $437) 437
-------
Total Investments (98.9%)
(Cost $26,742) 26,712
-------
OTHER ASSETS AND LIABILITIES, NET (1.1%) 288
-------
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 2,225,584
outstanding shares of beneficial interest $22,198
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 396,977
outstanding shares of beneficial interest 3,986
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 110,713
outstanding shares of beneficial interest 1,103
Accumulated net realized loss on investments (257)
Net unrealized depreciation on investments (30)
-------
Total Net Assets (100.0%) $27,000
-------
-------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 9.88
-------
-------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 9.88
-------
-------
Maximum Offering Price Per Share -- Investor Class
($9.88 DIVIDED BY 99.00%) $ 9.98
-------
-------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 9.85
-------
-------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
93
<PAGE>
- --------------------------------------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (33.7%)
U.S. Treasury Notes
8.875%, 02/15/99 $10,300 $ 10,747
9.125%, 05/15/99 11,200 11,789
8.000%, 08/15/99 6,000 6,210
7.500%, 10/31/99 8,800 9,030
8.500%, 11/15/00 5,000 5,317
--------
Total U.S. Treasury Obligations
(Cost $43,159) 43,093
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS (64.0%)
FHLMC
6.000%, 07/01/00 4,568 4,415
8.000%, 06/01/02 1,149 1,178
7.000%, 10/01/02 4,532 4,543
8.000%, 12/01/02 2,855 2,886
7.000%, 03/01/04 14,946 14,947
FHLMC REMIC, Ser 1910-Ac
6.500%, 10/15/15 10,000 9,946
FHLMC REMIC, Ser 1637-E
5.750%, 02/15/19 2,699 2,645
FHLMC REMIC, Ser 1614-H
6.000%, 06/15/20 4,550 4,411
FNMA
7.500%, 07/01/03 8,811 8,924
7.000%, 03/01/04 14,834 14,830
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
8.500%, 04/01/17 $ 1,106 $ 1,157
FNMA REMIC, Ser G96-1PC
7.000%, 08/17/12 4,921 4,954
FNMA REMIC, Ser 1992-134G
6.000%, 11/25/18 5,586 5,460
GNMA
9.000%, 11/15/17 1,412 1,513
--------
Total U.S. Government Agency Obligations
(Cost $81,888) 81,809
--------
REPURCHASE AGREEMENT (1.9%)
J.P. Morgan
5.50%, dated 05/30/97, matures 06/02/97, repurchase
price $2,376,897 (collateralized by various FNMA
obligations, total par value $3,182,000,
7.500%-8.115%, 05/25/23-05/01/27; total market
value $2,425,338) 2,376 2,376
--------
Total Repurchase Agreement
(Cost $2,376) 2,376
--------
Total Investments (99.6%)
(Cost $127,423) 127,278
--------
OTHER ASSETS AND LIABILITIES, NET (0.4%) 460
--------
</TABLE>
94
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
(000)
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 12,371,227
outstanding shares of beneficial interest $124,063
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 242,520
outstanding shares of beneficial interest 2,441
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 140,719
outstanding shares of beneficial interest 1,424
Distributions in excess of net investment income (2)
Accumulated net realized loss on investments (43)
Net unrealized depreciation on investments (145)
--------
Total Net Assets (100.0%) $127,738
--------
--------
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
(000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 10.02
--------
--------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 10.00
--------
--------
Maximum Offering Price Per Share -- Investor Class
($10.00 DIVIDED BY 97.50%) $ 10.26
--------
--------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 10.02
--------
--------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
95
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
U.S. GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (28.0%)
U.S. Treasury Bonds
7.250%, 05/15/16 $1,000 $ 1,029
6.875%, 08/15/25 1,000 988
6.750%, 08/15/26 550 535
6.500%, 11/15/26 565 533
U.S. Treasury Notes
7.750%, 11/30/99 200 207
8.500%, 11/15/00 1,000 1,063
8.000%, 05/15/01 200 210
7.500%, 11/15/01 200 208
7.500%, 05/15/02 750 781
7.875%, 11/15/04 275 295
7.500%, 02/15/05 500 525
6.500%, 10/15/06 50 49
7.625%, 02/15/25 400 431
-------
Total U.S. Treasury Obligations
(Cost $6,994) 6,854
-------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (66.1%)
FHLMC
6.000%, 02/01/01 112 108
7.000%, 01/01/09 127 126
7.000%, 04/01/09 611 608
7.000%, 08/01/10 888 883
7.000%, 05/01/12 990 984
FNMA
7.500%, 06/01/11 947 958
7.000%, 09/17/11 1,430 1,421
7.000%, 10/25/16 951 926
7.500%, 04/01/27 987 983
FNMA REMIC, Ser 1997-6, Cl H
7.000%, 08/18/08 1,058 1,037
FNMA REMIC, Ser G93-40, Cl VC
6.500%, 08/25/10 261 248
FNMA REMIC, Ser 1997-34, Cl VC
7.500%, 05/01/12 1,000 1,009
FNMA REMIC, Ser 1996-9, Cl H
6.500%, 11/25/13 1,337 1,265
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
FNMA REMIC, Ser 993-156, Cl B
6.500%, 04/25/18 $ 100 $ 95
FNMA REMIC, Ser 1990-143, Cl J
8.750%, 12/25/20 140 146
GNMA
7.500%, 10/20/09 72 73
8.250%, 01/15/12 99 102
10.000%, 06/15/19 4 5
7.000%, 11/15/22 466 453
8.000%, 02/15/23 37 38
8.500%, 03/15/23 81 84
7.500%, 04/15/23 132 132
7.500%, 09/15/23 875 872
7.000%, 01/15/24 161 157
7.500%, 04/15/24 861 857
7.000%, 06/15/24 902 877
8.000%, 08/15/24 83 85
8.000%, 09/15/24 27 28
8.000%, 10/15/24 35 36
8.000%, 11/15/24 37 39
8.500%, 12/15/24 73 77
8.500%, 02/15/25 36 37
7.000%, 12/15/25 489 476
GNMA REMIC, Ser 1995-6A, Cl E
7.500%, 05/20/23 1,000 990
-------
Total U.S. Agency Mortgage-Backed Obligations (Cost
$16,289) 16,215
-------
CASH EQUIVALENTS (5.8%)
SEI Daily Income Trust
Government II Portfolio (C) 229 229
SEI Daily Income Trust
Treasury II Portfolio (C) 1,188 1,188
-------
Total Cash Equivalents
(Cost $1,417) 1,417
-------
Total Investments (99.9%)
(Cost $24,700) 24,486
-------
</TABLE>
96
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS AND LIABILITIES, NET (0.1%) $ 29
-------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 1,943,402
outstanding shares of beneficial interest 19,658
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 223,920
outstanding shares of beneficial interest 2,266
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based on 279,601
outstanding shares of beneficial interest 2,866
Accumulated net realized loss on investments (61)
Net unrealized depreciation on investments (214)
-------
Total Net Assets (100.0%) $24,515
-------
-------
<CAPTION>
- ------------------------------------------------------------------------------
VALUE
(000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 10.02
-------
-------
Net Asset Value and Redemption Price Per Share --
Investor Shares $ 10.02
-------
-------
Maximum Offering Price Per Share -- Investor Class
($10.02 DIVIDED BY 96.25%) $ 10.41
-------
-------
Net Asset Value, Offering and Redemption Price Per
Share -- Flex Shares (1) $ 10.02
-------
-------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
97
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
PRIME QUALITY MONEY MARKET FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER (45.9%)
ABN-Amro Finance
5.350%, 06/05/97 $ 1,500 $ 1,499
Banc One Funding
5.600%, 08/04/97 10,211 10,109
Bank of Montreal
5.520%, 07/01/97 20,000 19,908
Bankers Trust
5.500%, 11/17/97 1,000 974
BAT Capital
5.530%, 06/24/97 5,000 4,982
5.700%, 07/14/97 10,450 10,379
5.580%, 07/15/97 20,127 19,990
Cargill Financial
5.550%, 06/16/97 20,000 19,954
Caterpillar Financial Services
5.600%, 09/11/97 16,000 15,746
Central Illinois Public Services
5.500%, 06/05/97 5,700 5,697
Commerzbank
5.350%, 06/10/97 9,135 9,123
Deutsche Bank Finance
5.350%, 06/06/97 30,000 29,978
Dominion Semiconductor
5.650%, 06/04/97 18,497 18,488
5.550%, 06/23/97 5,000 4,983
5.550%, 06/24/97 15,000 14,947
Dresser Industries
5.550%, 06/30/97 20,500 20,408
Ford Motor Credit
5.650%, 07/03/97 1,800 1,791
Ford Motor Credit Puerto Rico
5.620%, 07/08/97 2,000 1,988
General Electric Capital
5.520%, 06/24/97 10,000 9,965
5.380%, 07/09/97 15,000 14,915
Golden Peanut
5.400%, 07/15/97 3,750 3,725
GTE Funding
5.510%, 06/09/97 16,000 15,980
Hertz
5.620%, 07/25/97 25,000 24,789
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
International Business Machines Credit
5.550%, 06/19/97 $35,000 $ 34,908
J.C. Penny Funding
5.350%, 06/09/97 21,000 20,975
Mobil Australia Finance
5.580%, 06/30/97 1,500 1,493
National Australia Funding
5.550%, 06/02/97 35,000 34,995
5.430%, 08/13/97 4,500 4,450
National City Credit
5.650%, 07/28/97 8,000 7,928
5.665%, 08/21/97 15,000 14,809
New England Power
5.520%, 06/06/97 3,500 3,497
Paccar Financial
5.350%, 06/04/97 1,500 1,499
Pactel Capital Resources
5.510%, 06/23/97 26,000 25,912
Panasonic
5.350%, 06/09/97 13,000 12,985
RTZ America
5.550%, 06/25/97 10,000 9,963
5.650%, 11/17/97 12,475 12,144
Sherwin Williams
5.620%, 07/21/97 4,000 3,969
5.640%, 08/04/97 8,325 8,242
5.640%, 08/05/97 4,800 4,751
5.640%, 08/11/97 7,500 7,417
5.680%, 08/22/97 3,000 2,961
Society Generale North America
5.500%, 09/10/97 5,000 4,923
Sony Capital
5.500%, 06/05/97 6,690 6,686
Southern New England Telcommunications
5.580%, 06/11/97 2,000 1,997
Transamerica Finance
5.520%, 06/04/97 9,700 9,696
5.540%, 06/19/97 4,955 4,941
</TABLE>
98
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER--CONTINUED
U.S. Borax
5.400%, 06/09/97 $ 3,700 $ 3,696
5.370%, 06/20/97 40,000 39,887
5.650%, 07/16/97 6,000 5,958
5.670%, 07/28/97 5,000 4,955
Virginia Electric & Power
5.650%, 07/16/97 8,000 7,943
Waste Management Technologies
5.580%, 06/24/97 25,000 24,911
5.650%, 06/27/97 5,000 4,980
5.720%, 08/12/97 14,700 14,532
----------
Total Commercial Paper
(Cost $628,321) 628,321
----------
CORPORATE OBLIGATIONS (15.5%)
FINANCE (10.0%)
American General Finance
7.700%, 11/15/97 5,000 5,034
8.250%, 01/15/98 1,250 1,269
American General, MTN
9.750%, 10/15/97 2,650 2,690
9.950%, 10/29/97 2,100 2,136
Associates of North America
5.875%, 08/15/97 750 750
6.625%, 11/15/97 16,755 16,811
8.125%, 01/15/98 1,000 1,014
Bank America, MTN
6.875%, 11/20/97 2,000 2,009
BAT Capital, MTN
6.470%, 09/15/97 10,000 10,022
Beneficial
9.125%, 02/15/98 1,875 1,914
Caterpillar Finance (C)
5.619%, 07/28/97 1,000 1,000
Corestates Capital (C)
5.610%, 09/02/97 30,000 30,000
Dean Witter Discover
6.000%, 03/01/98 19,865 19,873
First Chicago, MTN
11.150%, 10/31/97 5,000 5,102
Ford Motor Credit, MTN
6.450%, 02/05/98 5,000 5,018
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Household Finance, MTN (C)
5.460%, 08/04/97 $ 5,000 $ 5,000
International Lease Finance, MTN
7.500%, 01/15/98 3,000 3,030
5.750%, 02/02/98 5,000 4,997
5.740%, 02/03/98 5,000 4,997
International Lease Finance
5.840%, 06/09/97 5,000 5,000
5.625%, 03/01/98 4,800 4,791
NationsBank
6.625%, 01/15/98 1,000 1,004
Texaco Capital
8.650%, 01/30/98 2,000 2,035
Toyota Motor Credit, MTN
7.750%, 12/19/97 1,500 1,514
----------
Total Finance 137,010
----------
INDUSTRIAL (2.8%)
Ford Capital
9.750%, 06/05/97 2,150 2,151
9.375%, 01/01/98 6,351 6,476
Philip Morris
8.750%, 06/15/97 2,000 2,002
9.250%, 12/01/97 15,180 15,414
6.375%, 01/15/98 1,000 1,003
Rockwell International
7.625%, 02/17/98 1,000 1,010
Smithkline Beecham, MTN
6.200%, 01/20/98 5,250 5,261
Walt Disney
8.000%, 12/19/97 3,595 3,634
Waste Management Technologies
8.125%, 02/01/98 2,000 2,029
----------
Total Industrial 38,980
----------
UTILITIES (2.7%)
Hydro-Quebec, MTN
7.120%, 12/19/97 2,500 2,517
Northern State Power
5.875%, 10/01/97 12,000 12,004
Pacific Gas & Electric, MTN
6.900%, 06/23/97 4,500 4,503
Pacific
5.880%, 10/15/97 5,000 4,997
</TABLE>
99
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES--CONTINUED
Pacificorp, MTN
8.850%, 06/20/97 $10,000 $ 10,014
Southern California Edison
5.875%, 02/01/98 2,500 2,499
----------
Total Utilities 36,534
----------
Total Corporate Obligations
(Cost $212,524) 212,524
----------
BANK NOTES (7.6%)
Boatmans National Bank (C)
5.690%, 06/17/97 25,000 25,000
FCC National Bank (C)
5.640%, 05/08/98 15,000 14,993
FCC National Bank
5.880%, 11/05/97 25,000 25,003
Fifth Third Bank
5.430%, 06/12/97 10,000 10,000
Morgan Guaranty Trust
5.950%, 06/06/97 19,300 19,301
PNC Bank (C)
5.628%, 06/06/97 10,000 10,000
----------
Total Bank Notes
(Cost $104,297) 104,297
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (6.6%)
FNMA (C)
5.350%, 09/29/97 25,000 24,996
FNMA, MTN (C)
5.360%, 11/14/97 40,000 39,991
FNMA, MTN Ser B (C)
5.250%, 09/03/97 20,000 19,997
SLMA
Callable 08/18/97 @100
5.370%, 02/08/99 5,000 4,987
----------
Total U.S. Government Agency Obligations
(Cost $89,971) 89,971
----------
ASSET-BACKED SECURITIES (5.7%)
Americredit Auto Receivables Trust, Ser 1997-A, Cl A1
5.515%, 04/06/98 20,452 20,453
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Americredit Auto Receivables Trust, Ser 1996-D, Cl A1
5.425%, 12/12/97 $11,936 $ 11,939
Americredit Auto Receivables Trust, Ser 1997-B, Cl A
5.790%, 06/12/98 30,000 30,000
Chase Manhattan Auto Owner Trust, Ser 1997-A, Cl A1
5.545%, 04/10/98 6,789 6,789
Ford Credit Auto Owner Trust, Ser 1996-B, Cl A1
5.514%, 10/15/97 1,351 1,352
Navistar Financial Owner Trust, Ser 1996-B, Cl A1
5.490%, 11/20/97 910 911
Olympic Automobile Recievable Trust, Ser 1996-D
5.430%, 12/15/97 121 122
WFS Financial Owner Trust, Ser 1996-D, Cl A1
5.500%, 01/16/98 6,287 6,287
----------
Total Asset-Backed Securities
(Cost $77,853) 77,853
----------
CERTIFICATES OF DEPOSIT (13.1%)
Bank of America, Toronto
5.730%, 07/31/97 38,000 38,000
Bankers Trust New York (C)
5.630%, 10/16/97 25,000 24,995
Bankers Trust, Toronto
5.690%, 08/21/97 21,000 21,000
CIBC
5.970%, 03/19/98 5,000 4,999
Societe Generale
5.690%, 08/22/97 40,000 40,000
Swiss Bank
5.530%, 06/30/97 30,000 30,000
Swiss Bank (C)
6.149%, 06/19/97 10,000 10,000
Swiss Bank
5.490%, 07/09/97 10,000 10,000
----------
Total Certificates Of Deposit
(Cost $178,994) 178,994
----------
</TABLE>
100
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (1.5%)
U.S. Treasury Notes
7.250%, 02/15/98 $20,000 $ 20,200
----------
Total U.S. Treasury Obligations
(Cost $20,200) 20,200
----------
REPURCHASE AGREEMENTS (6.6%)
Deutsche Bank
5.55%, dated 05/30/97, matures 06/02/97, repurchase
price $10,007,654 (collateralized by FHMLC
obligation, par value $10,337,964, 6.092%,
10/01/32: market value $10,203,089) 10,003 10,003
Salomon Brothers
5.55%, dated 05/30/97, matures 06/02/97, repurchase
price $10,007,654 (collateralized by various FHLMC
obligations, total par value $17,813,437,
5.500%-9.000, 08/01/00-06/01/26; and various FNMA
obligations, total par value $18,383,048,
6.000%-9.000%, 12/01/01-05/01/27: total market
value $10,246,600) 10,003 10,003
Swiss Bank
5.55%, dated 05/30/97, matures 06/02/97, repurchase
price $13,337,430 (collateralized by FNMA
obligation, par value $17,012,000, 6.071%,
04/01/34: market value $13,664,762) 13,331 13,331
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Union Bank of Switzerland
5.55%, dated 05/30/97, matures 06/02/97, repurchase
price $59,196,682 (collateralized by various FHLMC
obligations, total par value $61,959,824,
0.000%-8.500%, 12/01/07-12/01/26; and FNMA
obligation, par value $3,000,000, 6.400% 02/25/03:
total market value $60,374,115) $59,169 $ 59,169
----------
Total Repurchase Agreements
(Cost $92,506) 92,506
----------
Total Investments (102.5%)
(Cost $1,404,666) 1,404,666
----------
OTHER ASSETS AND LIABILITIES, NET (-2.5%) (34,567)
----------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on
1,086,903,240 outstanding shares of beneficial
interest 1,086,903
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 283,601,522
outstanding shares of beneficial interest 283,602
Accumulated net realized loss on investments (406)
----------
Total Net Assets (100.0%) $1,370,099
----------
----------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 1.00
----------
----------
Net Asset Value, Offering Price and Redemption Price
Per Share -- Investor Shares $ 1.00
----------
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
101
<PAGE>
- --------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (25.9%)
U.S. Treasury Notes
5.750%, 10/31/97 $30,000 $ 30,025
7.375%, 11/15/97 55,000 55,405
5.000%, 01/31/98 10,000 9,950
7.250%, 02/15/98 10,000 10,100
--------
Total U.S. Government Agency Obligations (Cost
$105,480) 105,480
--------
REPURCHASE AGREEMENTS (73.2%)
Barclays
5.51%, dated 05/30/97, matures 06/02/97, repurchase
price $20,009,183 (collateralized by FHLMC
obligation, par value $8,960,000, 5.890%, 03/26/98;
FNMA obligation, par value $4,315,000, 6.200%,
06/06/00; SLMA obligation, par value $7,000,000,
5.880%, 02/06/01: total market value $20,401,553) 20,000 20,000
Deutsche Bank
5.51%, dated 05/30/97, matures 06/02/97, repurchase
price $20,040,319 (collateralized by various U.S.
Treasury obligations, total par value $19,827,000,
5.750%-8.125%, 12/31/98- 05/15/21: total market
value $20,432,188) 20,031 20,031
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Merrill Lynch
5.51%, dated 05/30/97, matures 06/02/97, repurchase
price $98,954,749 (collateralized by various GNMA
obligations, total par value $328,491,658,
7.000%-11.000%, 02/15/02-11/15/23: total market
value $100,889,610) $98,909 $ 98,909
Morgan Stanley
5.51%, dated 05/30/97, matures 06/02/97, repurchase
price $99,259,385 (collateralized by various GNMA
obligations, total par value $709,897,000,
0.698%-8.000%, 01/01/00-06/15/26: total market
value $104,959,999) 99,214 99,214
Salomon Brothers
5.51%, dated 05/30/97, matures 06/02/97, repurchase
price $20,093,747 (collateralized by various U.S.
Government Notes, total par value $20,034,000,
6.875%-8.875%, 10/15/97-03/31/00: total market
value $20,489,252) 20,085 20,085
Swiss Bank
5.51%, dated 05/30/97, matures 06/02/97, repurchase
price $20,012,200 (collateralized by various U.S.
Treasury obligations, total par value $19,625,000,
5.875%-7.250%, 06/30/00-08/15/22: total market
value $20,426,087) 20,003 20,003
</TABLE>
102
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS--CONTINUED
Union Bank of Switzerland
5.51%, dated 05/30/97, matures 06/02/97, repurchase
price $20,015,030 (collateralized by various FHLMC
obligations, total par value $20,185,000,
5.980%-7.554%, 02/26/04-07/31/06: total market
value $20,410,150) $20,006 $ 20,006
--------
Total Repurchase Agreements (Cost $298,248) 298,248
--------
Total Investments (99.1%) (Cost $403,728) 403,728
--------
OTHER ASSETS AND LIABILITIES, NET (0.9%) 3,800
--------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 344,391,123
outstanding shares of beneficial interest 344,391
<CAPTION>
- -------------------------------------------------------------------------------
VALUE
(000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 63,197,343
outstanding shares of beneficial interest $ 63,197
Accumulated net realized loss on investments (60)
--------
Total Net Assets (100.0%) $407,528
--------
--------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 1.00
--------
--------
Net Asset Value, Offering Price and Redemption Price
Per Share -- Investor Shares $ 1.00
--------
--------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
103
<PAGE>
- --------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (98.5%)
ALABAMA (1.1%)
McIntosh, Industrial Development Board, Ciba-Geigy
Project, Ser A, RB, VRDN (C)(D)(E)
3.850%, 06/04/97 $ 3,500 $ 3,500
Special Care Facilities, Montgomery Hospital Revenue,
RB, VRDN (FGIC) (C)(D)
3.900%, 06/04/97 1,400 1,400
--------
Total Alabama 4,900
--------
ALASKA (0.2%)
Anchorage, GO, Ser A, (MBIA)
5.000%, 02/01/98 1,045 1,054
--------
ARIZONA (1.7%)
Maricopa County, Pollution Control Authority, Ser A,
RB, VRDN (C)(D)(E)
3.850%, 06/04/97 4,000 4,000
Pima County, Industrial Development Authority, Tuscon
Electric Project, Ser A, RB, VRDN (C)(D)(E)
3.900%, 06/04/97 2,600 2,600
Scottsdale, GO
7.500%, 07/01/97 840 842
--------
Total Arizona 7,442
--------
ARKANSAS (0.2%)
State, Industrial Development Financial Authority,
Ser A, RB, VRDN, AMT (C)(D)(E)
4.000%, 06/04/97 1,000 1,000
--------
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
CALIFORNIA (1.7%)
Contra Costa County, Multi-Family Mortgage, Delta
Square Project, Ser A, RB, VRDN (C)(D)(E)
3.850%, 06/05/97 $ 4,200 $ 4,200
Higher Education Loan Authority, Ser A, VRDN,
callable 06/01/98 @ 100 (C)(D)(E)
3.950%, 06/01/01 1,900 1,900
State, Higher Education Loan Authority, Student Loan,
Ser 95E-5, RB, VRDN, AMT (C)(D)(E)
3.950%, 06/04/97 1,200 1,200
--------
Total California 7,300
--------
COLORADO (1.9%)
North Glen, Castle Garden Retirement Center, VRDN
(C)(D)(E)
3.850%, 06/05/97 1,200 1,200
State, TRAN, Ser A, RB
4.500%, 06/27/97 7,000 7,003
--------
Total Colorado 8,203
--------
DELAWARE (0.4%)
State Educational Development Authority, VRDN
(C)(D)(E)
4.225%, 06/05/97 1,875 1,875
--------
FLORIDA (10.3%)
Citrus Park, RB, VRDN (C)(D)(E)
3.900%, 06/04/97 1,500 1,500
Dade County, Water & Sewer System, Ser 94, RB, VRDN
(FGIC) (C)(E)
3.850%, 06/04/97 8,000 8,000
</TABLE>
104
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
FLORIDA--CONTINUED
Jacksonville, TECP
3.400%, 06/09/97 $ 1,000 $ 1,000
3.500%, 06/26/97 10,000 10,000
Jacksonville, Pollution Control Revenue, TECP
3.500%, 06/12/97 5,000 5,000
Local Government, TECP
3.450%, 06/16/97 4,000 4,000
3.550%, 06/19/97 5,500 5,500
Pinellas County, TECP
3.750%, 07/01/97 3,600 3,600
State Board of Education, Capital Outlay, GO
6.500%, 06/01/97 4,575 4,575
Sunshine State Government, Finance Commission
Revenue, TECP
3.500%, 06/12/97 1,400 1,400
--------
Total Florida 44,575
--------
GEORGIA (5.0%)
Barrow County School District, Ser 97, GO
4.000%, 02/01/98 1,000 1,000
Burke County, Development Authority Pollution
Control, RB (AMBAC)
3.600%, 12/01/97 1,500 1,500
Burke County, Oglethorpe Power, Ser A, VRDN
(FGIC)(C)(D)
3.850%, 06/04/97 4,400 4,400
Fulton County, Development Authority, American Red
Cross Project, RB, VRDN (C)(D)(E)
3.950%, 06/05/97 1,500 1,500
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
GEORGIA--CONTINUED
Gordon County, Development Authority, Sara Lee
Project, RB, VRDN (C)(D)
3.950%, 06/05/97 $ 1,400 $ 1,400
Lafayette, Industrial Development Authority,
Blue-Bird Project, Ser 1991, VRDN (C)(D)(E)
3.950%, 06/05/97 1,000 1,000
Marietta Housing Finance Authority, Franklin Walk
Apartments Project, VRDN (C)
3.975%, 06/05/97 1,600 1,600
Monroe County, Industrial Development Authority,
Forsyth Inns Project, RB, VRDN (C)(D)(E)
3.950%, 06/04/97 2,525 2,525
Municipal Electric Authority, VRDN (FGIC) (C)(D)
4.100%, 06/05/97 3,000 3,000
Private College Facilities Authority, Emory
University, RB, VRDN Optional Put 12/01/97 @ 100,
(C)(D)(E)
3.700%, 12/01/04 3,465 3,465
--------
Total Georgia 21,390
--------
IDAHO (1.6%)
Nez Pierce County, Pollution Control Board, Potlatch
Corp. Project, RB, VRDN (C)(D)(E)
3.900%, 06/05/97 3,000 3,000
Idaho State, TAN, GO
4.500%, 06/30/97 4,000 4,002
--------
Total Idaho 7,002
--------
</TABLE>
105
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
ILLINOIS (4.7%)
Bloomington, Airport Authority, VRDN (C)(D)(E)
3.950%, 06/04/97 $ 1,500 $ 1,500
Chicago, Tender Notes, GO (E)
3.650%, 02/05/98 2,000 2,000
DuPage County, First Preservation District, GO,
Pre-Refunded 11/01/97 @ 102 (F)
8.100%, 11/01/06 1,200 1,245
Educational Facilities, Chicago Children's Museum,
RB, VRDN (C)(D)(E)
3.900%, 06/04/97 1,600 1,600
Health Facilities Authority, Advocate Healthcare
Network, Ser B, RB, VRDN (C)(D)
3.950%, 06/04/97 3,000 3,000
Illinois Health Facility Authority, RB, VRDN (C)(D)
4.000%, 06/05/97 3,000 3,000
Savanna, Industrial Development Authority, Metform
Project, Ser B, RB, VRDN (C)(D)(E)
4.050%, 06/04/97 1,400 1,400
Savanna, Industrial Development Authority, Ser A, RB,
VRDN (C)(D)(E)
4.050%, 06/04/97 500 500
State, Health Facilities Authority, Streeterville
Project, RB, VRDN (C)(D)(E)
3.900%, 06/04/97 2,000 2,000
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
State, Health Facilities Authority, University of
Chicago Hospital Project, Ser C, VRDN (MBIA) (C)(D)
3.850%, 06/04/97 $ 4,000 $ 4,000
--------
Total Illinois 20,245
--------
INDIANA (5.6%)
Allen County, Industrial Economic Development, Mattel
Power Wheels Project, RB, VRDN, AMT (C)(D)(E)
4.200%, 06/04/97 1,500 1,500
Fort Wayne, Industrial Economic Development
Authority, ND Tech Project, RB, VRDN, AMT (C)(D)(E)
4.050%, 06/04/97 1,000 1,000
Hammond Industrial Local Public, Adv. Fdg Project,
Ser A-2, GO
4.200%, 01/08/98 6,000 6,017
Health Facility Authority, Clarian Health Partners,
Ser B, RB, VRDN, (C)(D)(E)
3.900%, 06/04/97 2,000 2,000
Indianapolis, Industrial Economic Development
Authority, Allied Signal Project, RB, VRDN
(C)(D)(E)
4.050%, 06/04/97 3,500 3,500
Indianapolis, Industrial Multi-Family Housing
Authority, Crossing Partners Project, RB, VRDN, AMT
(C)(D)(E)
4.150%, 06/04/97 8,700 8,700
</TABLE>
106
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
INDIANA--CONTINUED
Rockport County, Pollution Control Authority, Aep
Generating Project, Ser B, RB, VRDN (AMBAC) (C)(D)
4.150%, 06/02/97 $ 1,600 $ 1,600
--------
Total Indiana 24,317
--------
IOWA (0.6%)
West Des Moines, Commercial Development Authority,
Greyhound Lines Project, VRDN (C)(D)(E)
3.800%, 06/04/97 2,500 2,500
--------
KENTUCKY (0.9%)
Jefferson County, Industrial Building
Fisher-Klosterman Project, RB, VRDN (C)(D)(E)
4.050%, 06/05/97 2,500 2,500
State, Economic Development Financial Authority
Hospital Facilities-Baptist Healthcare, RB, VRDN
(C)(D)(E)
3.850%, 06/05/97 1,400 1,400
--------
Total Kentucky 3,900
--------
LOUISIANA (2.4%)
Lake Charles, Harbor & Terminal District Authority,
Reynolds Metals Project, VRDN (C)(D)(E)
3.900%, 06/04/97 3,000 3,000
Plaqeumines, Port Facilities, International Marine
Terminal Project, Ser B, RB, Optional Put 03/15/98
@ 100 (D)(E)
3.750%, 03/15/06 1,000 1,000
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Louisiana Port Authority, Occidental Petroleum
Project, RB, VRDN (C)(D)(E)
3.800%, 06/04/97 $ 4,500 $ 4,500
State, Offshore Terminal Authority Deepwater Port,
Loop Inc - First Stage Project, Ser A, RB, VRDN,
(C)(E)
3.850%, 06/04/97 2,000 2,000
--------
Total Louisiana 10,500
--------
MAINE (1.0%)
State, TAN, GO
4.500%, 06/27/97 4,500 4,502
--------
MARYLAND (2.7%)
Baltimore County, Allied Signal Project, RB, VRDN
(C)(D)(E)
4.000%, 06/04/97 1,000 1,000
Baltimore, Industrial Development Authority, Days Inn
of America Project, RB Callable
12/01/97 @ 100 (F)
12.625%, 12/01/04 2,000 2,087
Montgomery County, Housing Opportunities Multi-Family
Commission, Ser A, RB
3.700%, 11/13/97 3,650 3,650
State, Health & Higher Education Authority, Pooled
Loan Program, Ser B, VRDN (C)(D)(E)
3.850%, 06/04/97 5,000 5,000
--------
Total Maryland 11,737
--------
</TABLE>
107
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
MICHIGAN (3.4%)
Michigan City, Industrial Economic Development,
Performance Packaging, RB, VRDN (C)(D)(E)
4.150%, 06/04/97 $ 1,000 $ 1,000
Midland County, Economic Development, Dow Chemical
Project, Ser B, RB, VRDN, (C)(D)
4.000%, 06/02/97 5,575 5,575
Oakland County, Economic Development, VRDN (C)(D)(E)
4.100%, 06/04/97 1,000 1,000
State, Housing Development Authority, WoodLand
Meadows, RB, VRDN, AMT (C)(D)(E)(F)
4.050%, 06/04/97 1,000 1,000
State, Housing Development Authority, Harbortown,
VRDN (C)(D)(E)
3.975%, 06/05/97 3,000 3,000
State, Strategic Industrial Development Authority,
Norcor Manufacturing Project, RB, VRDN (C)(D)(E)
4.000%, 06/03/97 3,000 3,000
--------
Total Michigan 14,575
--------
MISSISSIPPI (0.8%)
Jackson County, Chevron USA Project, Ser 93, RB, VRDN
(C)(D)
4.050%, 06/02/97 3,500 3,500
--------
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
MISSOURI (0.7%)
Environmental Improvement and Energy Resource,
Utilicorp United Project, RB, VRDN (C)(D)(E)
4.050%, 06/04/97 $ 700 $ 700
State, Industrial Development Authority, Bachman
Machine Project, Ser A, RB, VRDN, AMT (C)(D)(E)
4.200%, 06/04/97 90 90
State, Industrial Development Authority, Plastic
Enterprises Project, Ser A, RB, VRDN, AMT
(C)(D)(E)(F)
4.200%, 06/04/97 385 385
State, Industrial Development Authority, Precision
Stainless Project, Ser I, RB, VRDN, AMT (C)(D)(E)
4.200%, 06/04/97 70 70
State, Custody Receipt, Third Street Building
Project, Ser A, GO, VRDN (C)(D)(E)
4.200%, 06/04/97 2,000 2,000
--------
Total Missouri 3,245
--------
NEVADA (6.3%)
Clark County, Airport Improvement Authority, Ser A,
VRDN, (MBIA) (C)(D)
3.850%, 06/04/97 10,000 10,000
Clark County, Airport Improvement, Sub Lien, Ser A-1,
RB, VRDN (C)(D)(E)
3.850%, 06/04/97 4,300 4,300
</TABLE>
108
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
NEVADA--CONTINUED
Clark County, Nevada Power Project, Ser A, VRDN, AMT
(C)(D)(E)
4.150%, 06/04/97 $ 5,000 $ 5,000
Clark County, School District, VRDN (C)(D)(E)
3.960%, 06/05/97 8,000 8,000
--------
Total Nevada 27,300
--------
NEW HAMPSHIRE (5.5%)
State, Business Finance Authority, TECP
3.650%, 07/29/97 7,000 7,000
State, Business Finance Authority, Pollution Control,
Ser D, VRDN, AMT (C)
4.000%, 06/04/97 6,000 6,000
State, Business Finance Authority, TECP (E)
3.400%, 06/11/97 5,000 5,000
State, Housing Finance Authority, Multi-Family,
Fairways Project, Ser 1, RB, VRDN, AMT (C)(D)(E)
4.000%, 06/04/97 5,000 5,000
State, Pollution Control Authority, CT Power and
Light, Ser A, RB, VRDN (C)(D)(E)
3.900%, 06/04/97 800 800
--------
Total New Hampshire 23,800
--------
NEW MEXICO (2.2%)
Hurley, New Mexico, Pollution Control Authority, RB,
VRDN (C)(D)(E)
4.150%, 06/02/97 2,200 2,200
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
NEW MEXICO--CONTINUED
State, Educational Assistance Foundation, Student
Loan Program, VRDN (AMBAC) (C)(D)
4.100%, 06/05/97 $ 3,490 $ 3,490
State, Mortgage Financial Authority, Ser B-CR-123,
Optional Put 07/01/97 @ 100
3.400%, 07/01/17 3,995 3,995
--------
Total New Mexico 9,685
--------
NEW YORK (1.8%)
Urban Development Corporation, Senior Lien, VRDN
(C)(D)
3.960%, 06/05/97 7,600 7,600
--------
NORTH CAROLINA (2.1%)
Educational Facilities, Guilford College, VRDN
(C)(D)(E)
4.000%, 06/04/97 2,300 2,300
Mecklenburg County, Industrial Facilities & Pollution
Control, Sterigenics International Project, RB,
VRDN, AMT (C)(D)(E)
4.250%, 06/04/97 2,000 2,000
State Municipal Power Authority, Finance Authority,
TECP (E)
3.400%, 06/10/97 5,000 5,000
--------
Total North Carolina 9,300
--------
NORTH DAKOTA (0.4%)
Mercer County, Solid Waste Disposal Authority, United
Power Project, RB, VRDN, AMT (C)(D)(E)
3.550%, 06/02/97 1,900 1,900
--------
OHIO (5.1%)
Columbus, Sewer Revenue (C)(D)
3.800%, 06/05/97 9,600 9,600
</TABLE>
109
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
OHIO--CONTINUED
State, Air Quality Development Authority, JMG Limited
Partnership, Ser A, RB, VRDN, AMT (C)(D)(E)
3.900%, 06/04/97 $ 3,000 $ 3,000
State, Higher Education Authority, Lake Erie Project,
RB, VRDN (C)(D)(E)
3.950%, 06/05/97 5,100 5,100
State, Pollution Control Authority, Duquesne Project,
RB, VRDN, AMT (C)(D)(E)
3.950%, 06/04/97 3,000 3,000
Trumbull County, St. Joseph Riverside Hospital
Project, RB, Pre-Refunded
11/01/97 @ 102 (F)
7.750%, 11/01/13 1,500 1,555
--------
Total Ohio 22,255
--------
PENNSYLVANIA (3.8%)
Beaver County, Industrial Development Authority,
Duquesne Light Company Project, Ser B, VRDN
(C)(D)(E)
3.800%, 06/04/97 1,000 1,000
Philadelphia School District, TRAN
4.500%, 06/30/97 5,000 5,002
Philadelphia, TRAN
4.500%, 06/30/97 4,000 4,002
State, Ser A, VRDN Pre-Refunded 11/01/99 @ 101.5,
(C)(F)
3.960%, 06/05/97 6,500 6,500
--------
Total Pennsylvania 16,504
--------
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
RHODE ISLAND (0.9%)
State, TAN
4.500%, 06/30/97 $ 4,000 $ 4,002
--------
SOUTH CAROLINA (1.2%)
York County, Pollution Control Revenue, Ser N-4,
VRDN, Optional Put on
9/15/97 @ 100 (C)(D)(E)
3.550%, 09/15/14 5,000 5,000
--------
TENNESSEE (2.5%)
Covington, Industrial Development Board, Charms
Project, RB, VRDN, AMT (C)(D)(E)
4.050%, 06/04/97 3,000 3,000
Hamilton County, Industrial Development Board,
Tennessee Aquarium Project, VRDN (C)(D)(E)
3.950%, 06/05/97 3,000 3,000
Memphis-Shelby County, Industrial Development Board,
Ponderosa Fibres American Project, RB, VRDN, AMT
(C)(D)(E)
4.100%, 06/05/97 1,600 1,600
Nashville & Davidson County, Industrial Development
Authority, Multi-Family Mortgage, Chimneytop II
Project, RB, VRDN (C)(D)(E)
3.950%, 06/02/97 1,325 1,325
Nashville & Davidson County, Vanderbilt University,
Ser 85A, VRDN, Optional Put 1/15/98, (C)(D)(E)
3.650%, 01/15/15 2,000 2,002
--------
Total Tennessee 10,927
--------
</TABLE>
110
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
TEXAS (9.2%)
Brazos River, TECP (E)
3.450%, 06/09/97 $ 2,700 $ 2,700
Brownsville, Utility System, TECP
3.450%, 06/12/97 4,000 4,000
Georgetown, Higher Education Financing Authority,
Southwestern University Project, Ser 84, RB, VRDN
(C)(D)(E)
3.950%, 06/04/97 2,000 2,000
Harris County, Health Facilities Authority, Memorial
Hospital Project, Ser B, RB, VRDN (C)(D)(E)
3.850%, 06/04/97 1,500 1,500
Harris County, Housing Finance Corporation, Ser 1985,
VRDN (C)(D)(E)
4.225%, 06/05/97 900 900
Harris County, Industrial Development Authority,
Lubrizol Project, RB, VRDN (C)(D)
3.850%, 06/04/97 1,600 1,600
Harris County, Toll Roads, Ser H, RB, VRDN (C)(D)(E)
3.850%, 06/04/97 5,500 5,500
Lone Star, Airport Improvement, Ser A2, RB, VRDN
(C)(D)
4.000%, 06/02/97 1,700 1,700
South Higher Education Authority, RB, VRDN, AMT
(C)(D)(E)
3.950%, 06/04/97 5,000 5,000
State, Public Finance Authority, TECP
3.650%, 08/11/97 5,000 5,000
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
State, TAN
4.750%, 08/29/97 $ 10,000 $ 10,019
--------
Total Texas 39,919
--------
UTAH (1.5%)
Carbon County, Pollution Control Authority,
Pacificorp Project, RB, VRDN (AMBAC) (C)(D)
4.150%, 06/02/97 1,600 1,600
Intermountain Power Agency, Ser E, RB, Optional Put
09/15/97 @ 100 (E)
3.500%, 07/01/14 1,000 1,000
Intermountain Power Agency, Optional Put 06/16/97 @
100, RB, VRDN (C)(D)(E)
3.930%, 06/17/97 4,000 4,000
--------
Total Utah 6,600
--------
VERMONT (0.2%)
State, Ser B, GO,
4.600%, 08/01/97 1,000 1,001
--------
TAX-EXEMPT MONEY MARKET FUND
VIRGINIA (3.6%)
Bedford County, Industrial Development Authority,
VRDN (C)(D)(E)
4.000%, 06/05/97 2,500 2,500
Chesterfield County, Industrial Development
Authority, Allied Signal Project, RB, VRDN
(C)(D)(E)
4.050%, 06/04/97 3,000 3,000
Commonwealth, Ser 1994, VRDN (C)(D)
4.060%, 06/05/97 4,000 4,000
</TABLE>
111
<PAGE>
STATEMENT OF NET ASSETS------
-----------------------------------------------
---------------------STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
VIRGINIA--CONTINUED
Front Royal & Warren County, Industrial Development
Authority, Pen Tab Industries Project, RB, VRDN,
AMT (C)(D)(E)
4.000%, 06/05/97 $ 3,000 $ 3,000
Peninsula Port Authority, Dominion Term Project, Ser
1987C, VRDN (C)(D)(E)
3.950%, 06/02/97 3,300 3,300
--------
Total Virginia 15,800
--------
WASHINGTON (2.6%)
Pierce County, Washington Economic Development,
Weyerhaeuser Real Estate Project, RB, VRDN (C)(D)
3.850%, 06/04/97 3,000 3,000
Port of Seattle, VRDN (C)(D)(E)
3.900%, 06/04/97 1,600 1,600
State Public Power Supply System, Nuclear Project #1,
1993-1A3, RB, VRDN (C)(D)(E)
3.850%, 06/04/97 3,500 3,500
State Student Loan Finance Association, Ser B, RB,
VRDN, AMT (C)(D)(E)
3.950%, 06/05/97 3,000 3,000
--------
Total Washington 11,100
--------
WEST VIRGINIA (0.9%)
Marshall County, Pollution Control Authority, Allied
Signal Project, RB, VRDN (C)(D)(E)
4.050%, 06/04/97 2,000 2,000
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Marshall County, PPG Industries Project, RB, VRDN
(C)(D)(E)
4.100%, 06/05/97 $ 2,000 $ 2,000
--------
Total West Virginia 4,000
--------
WISCONSIN (0.7%)
Milwaukee, Ser BY, GO
7.250%, 06/15/97 1,000 1,001
Milwaukee, School Order Notes, Ser B
4.250%, 08/21/97 1,000 1,002
Racine, Wisconsin Promissory Notes, Ser 96 B, GO
3.700%, 12/15/97 1,165 1,165
--------
Total Wisconsin 3,168
--------
WYOMING (1.1%)
Sweetwater, Ser A, RB, VRDN (C)(D)(E)
3.900%, 06/04/97 4,600 4,600
--------
Total Municipal Bonds
(Cost $428,223) 428,223
--------
CASH EQUIVALENT (1.3%)
AIM Management Institutional Tax-Free Portfolio 5,853 5,853
--------
Total Cash Equivalent
(Cost $5,853) 5,853
--------
Total Investments (99.8%) (Cost $434,076) 434,076
--------
OTHER ASSETS AND LIABILITIES (0.2%)
Total Other Assets and Liabilities, Net 943
--------
</TABLE>
112
<PAGE>
- --------------------------------------------------
------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based on 333,003,932
outstanding shares of beneficial interest $333,004
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based on 102,018,739
outstanding shares of beneficial interest 102,019
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Accumulated net realized loss on investments $ (4)
--------
Total Net Assets (100.0%) $435,019
--------
--------
Net Asset Value, Offering and Redemption Price Per
Share -- Trust Shares $ 1.00
--------
--------
Net Asset Value, Offering Price and Redemption Price
Per Share -- Investor Shares $ 1.00
--------
--------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 110.
113
<PAGE>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
KEY TO ABBREVIATIONS USED IN
THE STATEMENT OF NET ASSETS
<TABLE>
<S> <C>
ADR American Depository Receipt
AMBAC Security insured by the American Municipal Bond
Assurance Company
AMT Alternative Minimum Tax
ARM Adjustable Rate Mortgage
Cl Class
COP Certificate of Participation
CV Convertible Security
ETM Escrowed to Maturity
F Foreign Registry Shares
FGIC Security insured by the Financial Guaranty Insurance
Corporation
FHA Federal Housing Authority
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Security insured by Financial Security Assurance
GDR Global Depository Receipt
GDS Global Depository Shares
GNMA Government National Mortgage Association
GO General Obligation
LYON Liquid Yield Option Note
MBIA Security insured by the Municipal Bond Investors
Assurance
MTN Medium Term Note
RB Revenue Bond
REIT Real Estate Investment Trust
REMIC Real Estate Mortgage Investment Conduit
Ser Series
SLMA Student Loan Marketing Association
STRIPS Separately Traded Registered Interest and Principal
Security
TAN Tax Anticipation Note
TECP Tax Exempt Commercial Paper
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
* Non-income producing securities
(A) Zero Coupon Bond
(B) Private Placement Security
(C) Variable rate security. The rate reported on the
Statement of Net Assets is the rate in effect on May
31, 1997.
(D) Put and demand features exist requiring the issuer to
repurchase the instrument prior to maturity.
(E) Securities are held in connection with a letter of
credit issued by a major bank.
(F) Collateralized by U.S. Government Securities
(G) In local currency
</TABLE>
114
<PAGE>
(This page has been left blank intentionally.)
115
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD ENDED MAY 31, 1997
<TABLE>
<CAPTION>
MID-CAP SMALL CAP CAPITAL
VALUE INCOME EQUITY EQUITY GROWTH
STOCK FUND FUND FUND FUND
------------ --------- ---------- ---------
06/01/96- 06/01/96- 01/31/97*- 06/01/96-
05/31/97 05/31/97 05/31/97 05/31/97
(000) (000) (000) (000)
<S> <C> <C> <C> <C>
------------ --------- ---------- ---------
Income:
Interest Income... $ 5,035 $ 1,386 $ 92 $ 6,139
Dividend Income... 44,675 2,627 765 18,021
Less: Foreign
Taxes
Withheld........ -- -- -- --
------------ --------- ---------- ---------
Total
Investment
Income....... 49,710 4,013 857 24,160
------------ --------- ---------- ---------
Expenses:
Investment
Advisory Fees... 12,026 3,328 322 14,003
Less: Investment
Advisory Fees
Waived.......... -- (318) (48) (1,226)
Less: Contribution
from Advisor.... -- -- -- --
Administrator
Fees............ 1,009 194 18 818
Transfer Agent
Fees -- Trust
Shares.......... 16 15 6 16
Transfer Agent
Fees -- Investor
Shares.......... 103 31 -- 166
Transfer Agent
Fees -- Flex
Shares.......... 53 24 -- 37
Transfer Agent Out
of Pocket
Fees............ 114 22 1 98
Printing
Expenses........ 102 20 2 85
Custody Fees...... 73 14 1 62
Professional
Fees............ 77 15 2 63
Trustee Fees...... 22 4 -- 19
Registration
Fees............ 138 27 22 58
Distribution Fees
-- Investor
Shares.......... 470 82 -- 1,345
Less: Distribution
Fees Waived --
Investor
Shares.......... (32) (26) -- (236)
Distribution Fees
-- Flex
Shares.......... 444 74 -- 213
Less: Distribution
Fees Waived --
Flex Shares..... (11) (20) -- (12)
Insurance and
Other Fees...... 46 14 -- 40
Amortization of
Deferred
Organization
Costs........... 11 -- 10 8
------------ --------- ---------- ---------
Total
Expenses..... 14,661 3,500 336 15,557
------------ --------- ---------- ---------
Net
Investment
Income
(Loss)...... 35,049 513 521 8,603
------------ --------- ---------- ---------
Net Realized and Unrealized Gain (Loss) on Investments:
Net Realized Gain
(Loss) on
Securities
Sold............ 243,189 33,978 1,757 221,554
Net Realized Loss
on Foreign
Currency
Transactions.... -- -- -- --
Net Change in
Unrealized
Appreciation
(Depreciation)
on Foreign
Currency and
Translation of
Other Assets and
Liabilities in
Foreign
Currency........ -- -- -- --
Net Change in
Unrealized
Appreciation
(Depreciation)
on
Investments..... 33,953 4,912 7,644 43,851
------------ --------- ---------- ---------
Total Net
Realized and
Unrealized
Gain on
Investments... 277,142 38,890 9,401 265,405
------------ --------- ---------- ---------
Net Increase in Net
Assets from
Operations........ $312,191 $ 39,403 $9,922 $ 274,008
------------ --------- ---------- ---------
------------ --------- ---------- ---------
</TABLE>
* Commencement of Operations
Amounts designated as "--" are either $0 or round to $0.
116
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING INTERNATIONAL INVESTMENT GRADE FLORIDA TENNESSEE
BALANCED MARKETS EQUITY INDEX INTERNATIONAL SUNBELT TAX-EXEMPT BOND TAX-EXEMPT TAX-EXEMPT
FUND EQUITY FUND FUND EQUITY FUND EQUITY FUND FUND BOND FUND BOND FUND
-------- ----------- ------------- ------------- ----------- ---------------- ---------- ----------
06/01/96- 01/31/97*- 06/01/96- 06/01/96- 06/01/96- 06/01/96- 06/01/96- 06/01/96-
05/31/97 05/31/97 05/31/97 05/31/97 05/31/97 05/31/97 05/31/97 05/31/97
(000) (000) (000) (000) (000) (000) (000) (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-------- ----------- ------ ------------- ----------- ------- ---------- -----
Income:
Interest Income... $ 3,654 $ 49 $ 13 $ 922 $ 18 $ 8,107 $2,318 $282
Dividend Income... 1,113 272 1,382 6,838 2,081 -- -- --
Less: Foreign
Taxes
Withheld........ -- (14) (108) (645) -- -- -- --
-------- ----------- ------ ------------- ----------- ------- ---------- -----
Total
Investment
Income....... 4,767 307 1,287 7,115 2,099 8,107 2,318 282
-------- ----------- ------ ------------- ----------- ------- ---------- -----
Expenses:
Investment
Advisory Fees... 1,177 137 658 4,494 4,842 1,272 293 35
Less: Investment
Advisory Fees
Waived.......... (151) (53) (80) (157) (442) (189) (73) (35)
Less: Contribution
from Advisor.... -- -- -- -- -- -- -- (10)
Administrator
Fees............ 83 7 48 240 283 115 31 4
Transfer Agent
Fees -- Trust
Shares.......... 16 5 18 12 16 16 16 16
Transfer Agent
Fees -- Investor
Shares.......... 17 -- 21 14 44 34 13 12
Transfer Agent
Fees -- Flex
Shares.......... 17 -- 15 17 20 15 14 13
Transfer Agent Out
of Pocket
Fees............ 9 1 9 22 33 15 3 --
Printing
Expenses........ 8 6 7 21 30 13 3 --
Custody Fees...... 6 34 70 484 21 9 2 1
Professional
Fees............ 6 1 6 15 22 9 2 --
Trustee Fees...... 2 -- 2 5 7 3 1 --
Registration
Fees............ 21 11 5 111 31 12 6 1
Distribution Fees
-- Investor
Shares.......... 15 -- 22 21 119 148 6 3
Less: Distribution
Fees Waived --
Investor
Shares.......... (13) -- (14) (10) (39) (47) (6) --
Distribution Fees
-- Flex
Shares.......... 43 -- 10 33 45 51 27 23
Less: Distribution
Fees Waived --
Flex Shares..... (14) -- (10) (15) (18) (15) (21) (8)
Insurance and
Other Fees...... 4 4 15 18 13 7 2 --
Amortization of
Deferred
Organization
Costs........... -- 10 3 2 -- 8 -- --
-------- ----------- ------ ------------- ----------- ------- ---------- -----
Total
Expenses..... 1,246 163 805 5,327 5,027 1,476 319 55
-------- ----------- ------ ------------- ----------- ------- ---------- -----
Net
Investment
Income
(Loss)...... 3,521 144 482 1,788 (2,928) 6,631 1,999 227
-------- ----------- ------ ------------- ----------- ------- ---------- -----
Net Realized and Unrealized Gain (Loss) on Investments:
Net Realized Gain
(Loss) on
Securities
Sold............ 11,411 80 4,148 31,885 24,062 2,924 (209) (11)
Net Realized Loss
on Foreign
Currency
Transactions.... -- (18) (50) (949) -- -- -- --
Net Change in
Unrealized
Appreciation
(Depreciation)
on Foreign
Currency and
Translation of
Other Assets and
Liabilities in
Foreign
Currency........ -- -- (21) 16 -- -- -- --
Net Change in
Unrealized
Appreciation
(Depreciation)
on
Investments..... 5,223 2,108 (466) 51,213 (18,818) 2,169 1,157 153
-------- ----------- ------ ------------- ----------- ------- ---------- -----
Total Net
Realized and
Unrealized
Gain on
Investments... 16,634 2,170 3,611 82,165 5,244 5,093 948 142
-------- ----------- ------ ------------- ----------- ------- ---------- -----
Net Increase in Net
Assets from
Operations........ $ 20,155 $2,314 $4,093 $83,953 $ 2,316 $11,724 $2,947 $369
-------- ----------- ------ ------------- ----------- ------- ---------- -----
-------- ----------- ------ ------------- ----------- ------- ---------- -----
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
117
<PAGE>
STATEMENT OF OPERATIONS (concluded)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD ENDED MAY 31, 1997
<TABLE>
<CAPTION>
GEORGIA INVESTMENT
TAX-EXEMPT GRADE BOND SHORT-TERM
BOND FUND FUND BOND FUND
---------- ---------- ----------
06/01/96- 06/01/96- 06/01/96-
05/31/97 05/31/97 05/31/97
(000) (000) (000)
<S> <C> <C> <C>
---------- ---------- ----------
Interest Income............... $1,875 $43,028 $5,793
---------- ---------- ----------
Expenses:
Investment Advisory Fees.... 246 4,793 624
Less: Investment Advisory
Fees Waived............... (64) (645) (138)
Administrator Fees.......... 25 435 65
Less: Administrator Fees
Waived.................... -- -- --
Transfer Agent Fees -- Trust
Shares.................... 16 16 16
Transfer Agent Fees --
Investor Shares........... 13 46 13
Transfer Agent Fees -- Flex
Shares.................... 14 19 13
Transfer Agent Out of Pocket
Fees...................... 3 54 8
Printing Expenses........... 2 49 7
Custody Fees................ 2 34 5
Professional Fees........... 2 34 5
Trustee Fees................ 1 11 2
Registration Fees........... 5 64 13
Distribution Fees --
Investor Shares........... 6 153 5
Less: Distribution Fees
Waived -- Investor
Shares.................... (6) (59) (5)
Distribution Fees -- Flex
Shares.................... 46 54 10
Less: Distribution Fees
Waived -- Flex Shares..... (26) (24) (10)
Insurance and Other Fees.... 1 22 3
Amortization of Deferred
Organization Costs........ -- 8 5
---------- ---------- ----------
Total Expenses.......... 286 5,064 641
---------- ---------- ----------
Net Investment
Income................ 1,589 37,964 5,152
---------- ---------- ----------
Net Realized and Unrealized Gain (Loss) on Investments:
Net Realized Gain (Loss) on
Securities Sold........... 7 (5,113) (321)
Net Change in Unrealized
Appreciation on
Investments............... 882 10,558 1,027
---------- ---------- ----------
Total Net Realized and
Unrealized Gain (Loss)
on Investments........ 889 5,445 706
---------- ---------- ----------
Net Increase in Net Assets
from Operations............. $2,478 $43,409 $5,858
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
118
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM PRIME TAX-EXEMPT
U.S. TREASURY LIMITED-TERM QUALITY U.S. GOVERNMENT MONEY
SECURITIES FEDERAL MORTGAGE U.S. GOVERNMENT MONEY MARKET SECURITIES MONEY MARKET
FUND SECURITIES FUND SECURITIES FUND FUND MARKET FUND FUND
------------- ---------------- --------------- ------------ ---------------- ----------
06/01/96- 06/01/96- 06/01/96- 06/01/96- 06/01/96- 06/01/96-
05/31/97 05/31/97 05/31/97 05/31/97 05/31/97 05/31/97
(000) (000) (000) (000) (000) (000)
<S> <C> <C> <C> <C> <C> <C>
------ ------ ------ ------------ ------- ----------
Interest Income............... $1,410 $6,871 $1,411 $82,489 $20,206 $15,230
------ ------ ------ ------------ ------- ----------
Expenses:
Investment Advisory Fees.... 156 691 150 9,767 2,455 2,361
Less: Investment Advisory
Fees Waived............... (73) (151) (59) (2,181) (519) (674)
Administrator Fees.......... 16 71 14 1,009 254 289
Less: Administrator Fees
Waived.................... -- -- -- (348) (41) --
Transfer Agent Fees -- Trust
Shares.................... 16 16 16 16 16 16
Transfer Agent Fees --
Investor Shares........... 14 13 13 35 23 18
Transfer Agent Fees -- Flex
Shares.................... 14 14 15 -- -- --
Transfer Agent Out of Pocket
Fees...................... 2 6 1 107 34 36
Printing Expenses........... 2 6 1 95 26 29
Custody Fees................ 1 4 1 69 21 22
Professional Fees........... 1 5 1 80 21 23
Trustee Fees................ -- 1 -- 21 7 7
Registration Fees........... 17 30 19 162 27 38
Distribution Fees --
Investor Shares........... 7 6 10 551 106 149
Less: Distribution Fees
Waived -- Investor
Shares.................... (7) (6) (9) (208) (40) (59)
Distribution Fees -- Flex
Shares.................... 21 16 30 -- -- --
Less: Distribution Fees
Waived -- Flex Shares..... (20) (16) (15) -- -- --
Insurance and Other Fees.... 1 3 1 25 8 9
Amortization of Deferred
Organization Costs........ 4 2 2 8 8 8
------ ------ ------ ------------ ------- ----------
Total Expenses.......... 172 711 191 9,208 2,406 2,272
------ ------ ------ ------------ ------- ----------
Net Investment
Income................ 1,238 6,160 1,220 73,281 17,800 12,958
------ ------ ------ ------------ ------- ----------
Net Realized and Unrealized Gain (Loss) on Investments:
Net Realized Gain (Loss) on
Securities Sold........... (25) 1 (17) (121) (51) 10
Net Change in Unrealized
Appreciation on
Investments............... 88 303 214 -- -- --
------ ------ ------ ------------ ------- ----------
Total Net Realized and
Unrealized Gain (Loss)
on Investments........ 62 304 197 (121) (51) 10
------ ------ ------ ------------ ------- ----------
Net Increase in Net Assets
from Operations............. $1,301 $6,464 $1,417 $73,160 $17,749 $12,968
------ ------ ------ ------------ ------- ----------
------ ------ ------ ------------ ------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
119
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE YEAR ENDED MAY 31, 1997
<TABLE>
<CAPTION>
SMALL CAP
VALUE INCOME STOCK FUND MID-CAP EQUITY FUND EQUITY FUND
-------------------------- -------------------------- ------------
06/01/96- 06/01/95- 06/01/96- 06/01/95- 01/31/97*-
05/31/97 05/31/96 05/31/97 05/31/96 05/31/97
(000) (000) (000) (000) (000)
<S> <C> <C> <C> <C> <C>
------------ ------------ ------------ ------------ ------------
Operations:
Net Investment Income
(Loss)..................... $ 35,049 $ 33,101 $ 513 $ 1,365 $ 521
Net Realized Gain on
Investments................ 243,189 196,134 33,978 29,513 1,757
Net Realized Loss on Foreign
Currency Transactions...... -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Foreign Currency and
Translation of Other Assets
and Liabilities in Foreign
Currency................... -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments............. 33,953 60,796 4,912 12,518 7,644
------------ ------------ ------------ ------------ ------------
Increase in Net Assets
from Operations......... 312,191 290,031 39,403 43,396 9,922
------------ ------------ ------------ ------------ ------------
Distributions to Shareholders:
Net Investment Income:
Trust Shares............... (30,805) (29,124) (962) (1,285) (205)
Investor Shares............ (2,820) (2,618) (17) (30) --
Flex Shares................ (606) (206) -- (1) --
Capital Gains:
Trust Shares............... (166,191) (92,363) (24,244) (13,072) --
Investor Shares............ (18,030) (9,853) (1,770) (922) --
Flex Shares................ (5,570) (1,106) (676) (167) --
------------ ------------ ------------ ------------ ------------
Total Distributions..... (224,022) (135,270) (27,669) (15,477) (205)
------------ ------------ ------------ ------------ ------------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares
Issued................... 380,339 371,542 113,386 133,402 126,046
Reinvestment of Cash
Distributions............ 179,808 111,671 22,790 13,361 137
Cost of Shares
Repurchased.............. (392,524) (369,739) (113,291) (44,487) (4,851)
------------ ------------ ------------ ------------ ------------
Increase (Decrease) in Net
Assets From Trust Share
Transactions............... 167,623 113,474 22,885 102,276 121,332
------------ ------------ ------------ ------------ ------------
Investor Shares:
Proceeds from Shares
Issued................... 31,242 31,177 5,664 10,027 --
Reinvestment of Cash
Distributions............ 20,626 12,291 1,783 948 --
Cost of Shares
Repurchased.............. (24,774) (19,420) (5,934) (2,010) --
------------ ------------ ------------ ------------ ------------
Increase (Decrease) in Net
Assets From Investor Share
Transactions............... 27,094 24,048 1,513 8,965 --
------------ ------------ ------------ ------------ ------------
Flex Shares:
Proceeds from Shares
Issued................... 43,363 24,893 5,680 5,125 --
Reinvestment of Cash
Distributions............ 6,080 1,301 666 163 --
Cost of Shares
Repurchased.............. (6,096) (1,416) (1,648) (450) --
------------ ------------ ------------ ------------ ------------
Increase (Decrease) in Net
Assets From Flex Share
Transactions............... 43,347 24,778 4,698 4,838 --
------------ ------------ ------------ ------------ ------------
Increase (Decrease) in Net
Assets From Share
Transactions............. 238,064 162,300 29,096 116,079 121,332
------------ ------------ ------------ ------------ ------------
Total Increase
(Decrease) in Net
Assets.................. 326,233 317,061 40,830 143,998 131,049
------------ ------------ ------------ ------------ ------------
Net Assets:
Beginning of Period.......... 1,401,294 1,084,233 276,905 132,907 --
------------ ------------ ------------ ------------ ------------
End of Period................ $1,727,527 $1,401,294 $317,735 $276,905 $131,049
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued.............. 29,343 29,898 9,011 10,952 12,290
Shares Issued in Lieu of
Cash Distributions....... 14,654 9,282 1,853 1,144 13
Shares Redeemed............ (30,076) (30,154) (9,008) (3,620) (466)
------------ ------------ ------------ ------------ ------------
Net Trust Share
Transactions............ 13,921 9,026 1,856 8,476 11,837
------------ ------------ ------------ ------------ ------------
Investor Shares:
Shares Issued.............. 2,411 2,522 455 824 --
Shares Issued in Lieu of
Cash Distributions....... 1,683 1,023 145 82 --
Shares Redeemed............ (1,906) (1,569) (472) (165) --
------------ ------------ ------------ ------------ ------------
Net Investor Share
Transactions............ 2,188 1,976 128 741 --
------------ ------------ ------------ ------------ ------------
Flex Shares:
Shares Issued.............. 3,360 2,014 459 419 --
Shares Issued in Lieu of
Cash Distributions....... 500 108 55 14 --
Shares Redeemed............ (470) (113) (134) (37) --
------------ ------------ ------------ ------------ ------------
Net Flex Share
Transactions............ 3,390 2,009 380 396 --
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
*Commencement of operations.
Amounts designated as "--" are either $0 or round to $0.
120
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
EMERGING EQUITY
CAPITAL GROWTH FUND BALANCED FUND MARKETS EQUITY FUND INDEX FUND
----------------------- ------------------------ ------------------- --------------------------
06/01/96- 06/01/95- 06/01/96- 06/01/95- 01/31/97*- 06/01/96- 06/01/95-
05/31/97 05/31/96 05/31/97 05/31/96 05/31/97 05/31/97 05/31/96
(000) (000) (000) (000) (000) (000) (000)
<S> <C> <C> <C> <C> <C> <C> <C>
---------- ------------ ------------- --------- ---------- ------------ ------------
Operations:
Net Investment Income
(Loss)..................... $ 8,603 $ 9,278 $ 3,521 $ 3,088 $ 144 $ 482 $ 800
Net Realized Gain on
Investments................ 221,554 224,050 11,411 11,091 80 4,148 1,134
Net Realized Loss on Foreign
Currency Transactions...... -- -- -- -- (18) (50) --
Net Change in Unrealized
Appreciation (Depreciation)
on Foreign Currency and
Translation of Other Assets
and Liabilities in Foreign
Currency................... -- -- -- -- -- (21) (7)
Net Change in Unrealized
Appreciation (Depreciation)
on Investments............. 43,851 63,301 5,223 1,891 2,108 (466) 6,362
---------- ------------ ------------- --------- ---------- ------------ ------------
Increase in Net Assets
from Operations......... 274,008 296,629 20,155 16,070 2,314 4,093 8,289
---------- ------------ ------------- --------- ---------- ------------ ------------
Distributions to Shareholders:
Net Investment Income:
Trust Shares............... (7,993) (9,644) (3,051) (2,933) -- (614) (1,048)
Investor Shares............ (338) (570) (139) (115) -- (35) (59)
Flex Shares................ -- (5) (77) (31) -- -- (7)
Capital Gains:
Trust Shares............... (180,731) (41,659) (9,775) (904) -- (1,696) (743)
Investor Shares............ (35,976) (7,343) (505) (44) -- (154) (43)
Flex Shares................ (3,858) (227) (388) (18) -- (27) (6)
---------- ------------ ------------- --------- ---------- ------------ ------------
Total Distributions..... (228,896) (59,448) (13,935) (4,045) -- (2,526) (1,906)
---------- ------------ ------------- --------- ---------- ------------ ------------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares
Issued................... 295,281 187,108 75,303 54,735 42,043 21,944 62,965
Reinvestment of Cash
Distributions............ 178,092 48,431 12,606 3,784 -- 1,958 1,417
Cost of Shares
Repurchased.............. (406,707) (439,271) (54,011) (47,301) (4,862) (62,693) (68,891)
---------- ------------ ------------- --------- ---------- ------------ ------------
Increase (Decrease) in Net
Assets From Trust Share
Transactions............... 66,666 (203,732) 33,898 11,218 37,181 (38,791) (4,509)
---------- ------------ ------------- --------- ---------- ------------ ------------
Investor Shares:
Proceeds from Shares
Issued................... 22,778 21,971 1,430 1,315 -- 2,579 3,017
Reinvestment of Cash
Distributions............ 36,046 7,818 633 155 -- 189 101
Cost of Shares
Repurchased.............. (38,034) (34,867) (1,149) (844) -- (2,981) (1,782)
---------- ------------ ------------- --------- ---------- ------------ ------------
Increase (Decrease) in Net
Assets From Investor Share
Transactions............... 20,790 (5,078) 914 626 -- (213) 1,336
---------- ------------ ------------- --------- ---------- ------------ ------------
Flex Shares:
Proceeds from Shares
Issued................... 23,389 10,505 3,065 3,359 -- 334 992
Reinvestment of Cash
Distributions............ 3,813 230 462 49 -- 27 13
Cost of Shares
Repurchased.............. (2,774) (641) (787) (428) -- (410) (127)
---------- ------------ ------------- --------- ---------- ------------ ------------
Increase (Decrease) in Net
Assets From Flex Share
Transactions............... 24,428 10,094 2,740 2,980 -- (49) 878
---------- ------------ ------------- --------- ---------- ------------ ------------
Increase (Decrease) in Net
Assets From Share
Transactions............. 111,884 (198,716) 37,552 14,824 37,181 (39,053) (2,295)
---------- ------------ ------------- --------- ---------- ------------ ------------
Total Increase
(Decrease) in Net
Assets.................. 156,996 38,465 43,772 26,849 39,495 (37,486) 4,088
---------- ------------ ------------- --------- ---------- ------------ ------------
Net Assets:
Beginning of Period.......... 1,183,545 1,145,080 119,665 92,816 -- 97,494 93,406
---------- ------------ ------------- --------- ---------- ------------ ------------
End of Period................ $1,340,541 $1,183,545 $163,437 $119,665 $ 39,495 $ 60,008 $97,494
---------- ------------ ------------- --------- ---------- ------------ ------------
---------- ------------ ------------- --------- ---------- ------------ ------------
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued.............. 20,391 13,624 6,572 4,974 4,128 2,030 5,971
Shares Issued in Lieu of
Cash Distributions....... 13,369 3,617 1,122 346 -- 184 134
Shares Redeemed............ (27,687) (32,204) (4,686) (4,335) (468) (5,800) (6,536)
---------- ------------ ------------- --------- ---------- ------------ ------------
Net Trust Share
Transactions............ 6,073 (14,963) 3,008 985 3,660 (3,586) (431)
---------- ------------ ------------- --------- ---------- ------------ ------------
Investor Shares:
Shares Issued.............. 1,573 1,605 122 119 -- 241 286
Shares Issued in Lieu of
Cash Distributions....... 2,717 585 56 14 -- 18 10
Shares Redeemed............ (2,607) (2,576) (99) (76) -- (277) (170)
---------- ------------ ------------- --------- ---------- ------------ ------------
Net Investor Share
Transactions............ 1,683 (386) 79 57 -- (18) 126
---------- ------------ ------------- --------- ---------- ------------ ------------
Flex Shares:
Shares Issued.............. 1,620 768 265 305 -- 31 95
Shares Issued in Lieu of
Cash Distributions....... 289 17 41 5 -- 3 1
Shares Redeemed............ (191) (46) (68) (38) -- (38) (12)
---------- ------------ ------------- --------- ---------- ------------ ------------
Net Flex Share
Transactions............ 1,718 739 238 272 -- (4) 84
---------- ------------ ------------- --------- ---------- ------------ ------------
---------- ------------ ------------- --------- ---------- ------------ ------------
<CAPTION>
INTERNATIONAL
EQUITY FUND SUNBELT EQUITY FUND
---------------------- ----------------------
06/01/96- 12/01/95*- 06/01/96- 06/01/95-
05/31/97 05/31/96 05/31/97 05/31/96
(000) (000) (000) (000)
<S> <C> <C> <C> <C>
--------- ------------ --------- ------------
Operations:
Net Investment Income
(Loss)..................... $ 1,788 $ 986 $ (2,928) $ (1,275)
Net Realized Gain on
Investments................ 31,885 4,059 24,062 39,898
Net Realized Loss on Foreign
Currency Transactions...... (949) (265) -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Foreign Currency and
Translation of Other Assets
and Liabilities in Foreign
Currency................... 16 (10) -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments............. 51,213 13,617 (18,818) 84,777
--------- ------------ --------- ------------
Increase in Net Assets
from Operations......... 83,953 18,387 2,316 123,400
--------- ------------ --------- ------------
Distributions to Shareholders:
Net Investment Income:
Trust Shares............... (638) -- -- --
Investor Shares............ -- -- -- --
Flex Shares................ -- -- -- --
Capital Gains:
Trust Shares............... (9,573) -- (29,932) (5,188)
Investor Shares............ (182) -- (2,119) (426)
Flex Shares................ (75) -- (360) (20)
--------- ------------ --------- ------------
Total Distributions..... (10,468) -- (32,411) (5,634)
--------- ------------ --------- ------------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares
Issued................... 382,588 212,805 208,763 132,237
Reinvestment of Cash
Distributions............ 9,386 -- 27,551 4,956
Cost of Shares
Repurchased.............. (187,406) (17,640) (239,412) (92,700)
--------- ------------ --------- ------------
Increase (Decrease) in Net
Assets From Trust Share
Transactions............... 204,568 195,165 (3,098) 44,493
--------- ------------ --------- ------------
Investor Shares:
Proceeds from Shares
Issued................... 7,794 3,467 6,043 5,187
Reinvestment of Cash
Distributions............ 181 -- 2,111 426
Cost of Shares
Repurchased.............. (2,060) (220) (7,103) (7,209)
--------- ------------ --------- ------------
Increase (Decrease) in Net
Assets From Investor Share
Transactions............... 5,915 3,247 1,051 (1,596)
--------- ------------ --------- ------------
Flex Shares:
Proceeds from Shares
Issued................... 7,049 911 3,978 2,489
Reinvestment of Cash
Distributions............ 74 -- 354 20
Cost of Shares
Repurchased.............. (424) (3) (1,172) (123)
--------- ------------ --------- ------------
Increase (Decrease) in Net
Assets From Flex Share
Transactions............... 6,699 908 3,160 2,386
--------- ------------ --------- ------------
Increase (Decrease) in Net
Assets From Share
Transactions............. 217,182 199,320 1,113 45,283
--------- ------------ --------- ------------
Total Increase
(Decrease) in Net
Assets.................. 290,667 217,707 (28,982) 163,049
--------- ------------ --------- ------------
Net Assets:
Beginning of Period.......... 217,707 -- 444,137 281,088
--------- ------------ --------- ------------
End of Period................ $ 508,374 $217,707 $ 415,155 $444,137
--------- ------------ --------- ------------
--------- ------------ --------- ------------
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued.............. 31,059 20,338 16,289 10,848
Shares Issued in Lieu of
Cash Distributions....... 785 -- 2,176 437
Shares Redeemed............ (14,649) (1,635) (18,979) (7,882)
--------- ------------ --------- ------------
Net Trust Share
Transactions............ 17,195 18,703 (514) 3,403
--------- ------------ --------- ------------
Investor Shares:
Shares Issued.............. 634 324 473 428
Shares Issued in Lieu of
Cash Distributions....... 15 -- 169 38
Shares Redeemed............ (166) (21) (569) (614)
--------- ------------ --------- ------------
Net Investor Share
Transactions............ 483 303 73 (148)
--------- ------------ --------- ------------
Flex Shares:
Shares Issued.............. 566 84 310 202
Shares Issued in Lieu of
Cash Distributions....... 6 -- 29 2
Shares Redeemed............ (34) -- (95) (10)
--------- ------------ --------- ------------
Net Flex Share
Transactions............ 538 84 244 194
--------- ------------ --------- ------------
--------- ------------ --------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
121
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE YEAR ENDED MAY 31, 1997
<TABLE>
<CAPTION>
INVESTMENT GRADE TAX- FLORIDA TAX-EXEMPT TENNESSEE TAX-EXEMPT
EXEMPT BOND FUND BOND FUND BOND FUND
------------------------ --------------------- ---------------------
06/01/96- 06/01/95- 06/01/96- 06/01/95- 06/01/96- 06/01/95-
05/31/97 05/31/96 05/31/97 05/31/96 05/31/97 05/31/96
(000) (000) (000) (000) (000) (000)
<S> <C> <C> <C> <C> <C> <C>
--------- ------------ --------- --------- --------- ---------
Operations:
Net Investment Income................ $ 6,631 $ 5,851 $ 1,999 $ 1,235 $ 227 $ 185
Net Realized Gain (Loss) on
Investments........................ 2,924 5,634 (209) 220 (11) 13
Net Change in Unrealized Appreciation
(Depreciation) on Investments...... 2,169 (3,672) 1,157 (723) 153 (96)
--------- ------------ --------- --------- --------- ---------
Increase in Net Assets from
Operations...................... 11,724 7,813 2,947 732 369 102
--------- ------------ --------- --------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Trust Shares....................... (5,248) (4,292) (1,748) (996) (74) (80)
Investor Shares.................... (1,226) (1,492) (154) (171) (65) (54)
Flex Shares........................ (159) (120) (101) (65) (88) (51)
Capital Gains:
Trust Shares....................... (2,384) (3,335) (126) (111) -- --
Investor Shares.................... (623) (1,295) (11) (21) -- --
Flex Shares........................ (92) (137) (9) (10) -- --
--------- ------------ --------- --------- --------- ---------
Total Distributions............. (9,732) (10,671) (2,149) (1,374) (227) (185)
--------- ------------ --------- --------- --------- ---------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued........ 45,948 87,347 27,976 30,124 1,241 414
Reinvestment of Cash
Distributions.................... 3,196 4,062 314 228 33 36
Cost of Shares Repurchased......... (36,027) (42,946) (9,265) (9,139) (1,174) (264)
--------- ------------ --------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Trust Share Transactions...... 13,117 48,463 19,025 21,213 100 186
--------- ------------ --------- --------- --------- ---------
Investor Shares:
Proceeds from Shares Issued........ 2,163 4,535 923 1,865 450 668
Reinvestment of Cash
Distributions.................... 1,619 2,347 128 127 51 35
Cost of Shares Repurchased......... (9,763) (10,550) (1,919) (1,235) (459) (333)
--------- ------------ --------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Investor Share Transactions... (5,981) (3,668) (868) 757 42 370
--------- ------------ --------- --------- --------- ---------
Flex Shares:
Proceeds from Shares Issued........ 1,973 6,823 1,182 2,844 836 2,235
Reinvestment of Cash
Distributions.................... 222 222 80 50 53 36
Cost of Shares Repurchased......... (3,111) (1,413) (1,011) (153) (456) (215)
--------- ------------ --------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Flex Share Transactions....... (916) 5,632 251 2,741 433 2,056
--------- ------------ --------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Share Transactions.......... 6,220 50,427 18,408 24,711 575 2,612
--------- ------------ --------- --------- --------- ---------
Total Increase (Decrease) in Net
Assets.......................... 8,212 47,569 19,206 24,069 717 2,529
--------- ------------ --------- --------- --------- ---------
Net Assets:
Beginning of Period.................. 167,470 119,901 37,507 13,438 5,363 2,834
--------- ------------ --------- --------- --------- ---------
End of Period........................ $175,682 $167,470 $56,713 $37,507 $6,080 $5,363
--------- ------------ --------- --------- --------- ---------
--------- ------------ --------- --------- --------- ---------
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued...................... 4,112 7,736 2,728 2,945 130 43
Shares Issued in Lieu of Cash
Distributions.................... 286 362 31 22 3 4
Shares Redeemed.................... (3,216) (3,816) (907) (902) (122) (28)
--------- ------------ --------- --------- --------- ---------
Net Trust Share Transactions.... 1,182 4,282 1,852 2,065 11 19
--------- ------------ --------- --------- --------- ---------
Investor Shares:
Shares Issued...................... 193 401 89 182 47 70
Shares Issued in Lieu of Cash
Distributions.................... 144 208 13 12 5 4
Shares Redeemed.................... (869) (934) (188) (120) (48) (35)
--------- ------------ --------- --------- --------- ---------
Net Investor Share
Transactions.................... (532) (325) (86) 74 4 39
--------- ------------ --------- --------- --------- ---------
Flex Shares:
Shares Issued...................... 176 603 115 277 88 233
Shares Issued in Lieu of Cash
Distributions.................... 20 20 8 5 6 4
Shares Redeemed.................... (277) (125) (99) (15) (48) (23)
--------- ------------ --------- --------- --------- ---------
Net Flex Share Transactions..... (81) 498 24 267 46 214
--------- ------------ --------- --------- --------- ---------
--------- ------------ --------- --------- --------- ---------
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
122
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GEORGIA SHORT-TERM U.S.
TAX-EXEMPT INVESTMENT GRADE TREASURY SECURITIES
BOND FUND BOND FUND SHORT-TERM BOND FUND FUND
-------------------- -------------------- -------------------- --------------------
06/01/96- 06/01/95- 06/01/96- 06/01/95- 06/01/96- 06/01/95- 06/01/96- 06/01/95-
05/31/97 05/31/96 05/31/97 05/31/96 05/31/97 05/31/96 05/31/97 05/31/96
(000) (000) (000) (000) (000) (000) (000) (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------- --------- --------- --------- --------- --------- --------- ---------
Operations:
Net Investment Income................ $ 1,589 $ 971 $ 37,964 $ 35,694 $ 5,152 $ 4,224 $ 1,238 $ 915
Net Realized Gain (Loss) on
Investments........................ 7 330 (5,113) 19,716 (321) 1,358 (25) 95
Net Change in Unrealized Appreciation
(Depreciation) on Investments...... 882 (789) 10,558 (32,383) 1,027 (2,395) 88 (294)
--------- --------- --------- --------- --------- --------- --------- ---------
Increase in Net Assets from
Operations...................... 2,478 512 43,409 23,027 5,858 3,187 1,301 716
--------- --------- --------- --------- --------- --------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Trust Shares....................... (1,285) (747) (35,713) (33,703) (4,983) (4,065) (934) (551)
Investor Shares.................... (139) (139) (1,950) (1,908) (120) (133) (205) (308)
Flex Shares........................ (165) (88) (270) (114) (51) (26) (99) (56)
Capital Gains:
Trust Shares....................... (153) (26) -- -- (311) (124) -- --
Investor Shares.................... (17) (6) -- -- (7) (4) -- --
Flex Shares........................ (26) (4) -- -- (4) (1) -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Distributions............. (1,785) (1,010) (37,933) (35,725) (5,476) (4,353) (1,238) (915)
--------- --------- --------- --------- --------- --------- --------- ---------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued........ 29,571 17,893 218,768 203,235 43,385 60,843 17,856 5,744
Reinvestment of Cash
Distributions.................... 761 215 27,532 26,403 3,426 2,588 465 334
Cost of Shares Repurchased......... (14,098) (7,944) (217,253) (161,583) (48,636) (32,113) (6,510) (5,409)
--------- --------- --------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Trust Share Transactions...... 16,234 10,164 29,047 68,055 (1,825) 31,318 11,811 669
--------- --------- --------- --------- --------- --------- --------- ---------
Investor Shares:
Proceeds from Shares Issued........ 573 661 5,838 8,832 602 642 745 966
Reinvestment of Cash
Distributions.................... 137 109 1,770 1,510 111 90 204 278
Cost of Shares Repurchased......... (677) (596) (10,944) (7,248) (1,240) (606) (1,238) (4,147)
--------- --------- --------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Investor Share Transactions... 33 174 (3,336) 3,094 (527) 126 (289) (2,903)
--------- --------- --------- --------- --------- --------- --------- ---------
Flex Shares:
Proceeds from Shares Issued........ 1,697 4,355 3,077 5,179 523 1,014 825 2,603
Reinvestment of Cash
Distributions.................... 172 75 237 88 50 22 85 39
Cost of Shares Repurchased......... (1,499) (150) (2,217) (508) (469) (53) (2,259) (188)
--------- --------- --------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Flex Share Transactions....... 370 4,280 1,097 4,759 104 983 (1,349) 2,454
--------- --------- --------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Share Transactions.......... 16,637 14,618 26,808 75,908 (2,248) 32,427 10,173 220
--------- --------- --------- --------- --------- --------- --------- ---------
Total Increase (Decrease) in Net
Assets.......................... 17,330 14,120 32,284 63,210 (1,866) 31,261 10,236 21
--------- --------- --------- --------- --------- --------- --------- ---------
Net Assets:
Beginning of Period.................. 30,575 16,455 640,290 577,080 94,822 63,561 16,764 16,743
--------- --------- --------- --------- --------- --------- --------- ---------
End of Period........................ $47,905 $30,575 $672,574 $640,290 $92,956 $94,822 $27,000 $16,764
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued...................... 3,062 1,832 21,475 19,682 4,380 6,066 1,806 579
Shares Issued in Lieu of Cash
Distributions.................... 78 22 2,709 2,550 345 258 47 34
Shares Redeemed.................... (1,457) (823) (21,378) (15,629) (4,902) (3,190) (659) (547)
--------- --------- --------- --------- --------- --------- --------- ---------
Net Trust Share Transactions.... 1,683 1,031 2,806 6,603 (177) 3,134 1,194 66
--------- --------- --------- --------- --------- --------- --------- ---------
Investor Shares:
Shares Issued...................... 59 68 575 856 61 64 75 97
Shares Issued in Lieu of Cash
Distributions.................... 14 11 174 146 11 9 21 28
Shares Redeemed.................... (70) (61) (1,076) (701) (125) (60) (125) (418)
--------- --------- --------- --------- --------- --------- --------- ---------
Net Investor Share
Transactions.................... 3 18 (327) 301 (53) 13 (29) (293)
--------- --------- --------- --------- --------- --------- --------- ---------
Flex Shares:
Shares Issued...................... 175 448 303 499 52 101 84 262
Shares Issued in Lieu of Cash
Distributions.................... 18 8 23 8 5 2 9 4
Shares Redeemed.................... (154) (15) (218) (49) (47) (5) (228) (19)
--------- --------- --------- --------- --------- --------- --------- ---------
Net Flex Share Transactions..... 39 441 108 458 10 98 (135) 247
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
MORTGAGE SECURITIES U.S. GOVERNMENT
FUND SECURITIES FUND
-------------------- --------------------
06/01/96- 06/01/95- 06/01/96- 06/01/95-
05/31/97 05/31/96 05/31/97 05/31/96
(000) (000) (000) (000)
<S> <C> <C> <C> <C>
--------- --------- --------- ---------
Operations:
Net Investment Income................ $ 6,160 $ 3,181 $ 1,220 $ 602
Net Realized Gain (Loss) on
Investments........................ 1 389 (17) (24)
Net Change in Unrealized Appreciation
(Depreciation) on Investments...... 303 (1,359) 214 (557)
--------- --------- --------- ---------
Increase in Net Assets from
Operations...................... 6,464 2,211 1,417 21
--------- --------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Trust Shares....................... (5,933) (3,012) (916) (453)
Investor Shares.................... (146) (68) (147) (68)
Flex Shares........................ (81) (37) (157) (81)
Capital Gains:
Trust Shares....................... (159) -- -- (18)
Investor Shares.................... (4) -- -- (3)
Flex Shares........................ (3) -- -- (5)
--------- --------- --------- ---------
Total Distributions............. (6,326) (3,117) (1,220) (628)
--------- --------- --------- ---------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued........ 75,207 46,841 19,904 9,824
Reinvestment of Cash
Distributions.................... 4,139 1,846 297 144
Cost of Shares Repurchased......... (28,939) (16,287) (11,131) (2,556)
--------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Trust Share Transactions...... 50,407 32,400 9,070 7,412
--------- --------- --------- ---------
Investor Shares:
Proceeds from Shares Issued........ 1,381 2,404 1,272 2,290
Reinvestment of Cash
Distributions.................... 141 51 140 50
Cost of Shares Repurchased......... (1,615) (533) (1,599) (456)
--------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Investor Share Transactions... (93) 1,922 (187) 1,884
--------- --------- --------- ---------
Flex Shares:
Proceeds from Shares Issued........ 500 1,538 764 3,019
Reinvestment of Cash
Distributions.................... 72 27 130 59
Cost of Shares Repurchased......... (517) (196) (958) (148)
--------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Flex Share Transactions....... 55 1,369 (64) 2,930
--------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Share Transactions.......... 50,369 35,691 8,819 12,226
--------- --------- --------- ---------
Total Increase (Decrease) in Net
Assets.......................... 50,507 34,785 9,016 11,619
--------- --------- --------- ---------
Net Assets:
Beginning of Period.................. 77,231 42,446 15,499 3,880
--------- --------- --------- ---------
End of Period........................ $127,738 $77,231 $24,515 $15,499
--------- --------- --------- ---------
--------- --------- --------- ---------
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued...................... 7,497 4,639 1,986 952
Shares Issued in Lieu of Cash
Distributions.................... 413 182 30 14
Shares Redeemed.................... (2,886) (1,610) (1,110) (249)
--------- --------- --------- ---------
Net Trust Share Transactions.... 5,024 3,211 906 717
--------- --------- --------- ---------
Investor Shares:
Shares Issued...................... 138 238 127 225
Shares Issued in Lieu of Cash
Distributions.................... 14 5 14 5
Shares Redeemed.................... (161) (53) (159) (45)
--------- --------- --------- ---------
Net Investor Share
Transactions.................... (9) 190 (18) 185
--------- --------- --------- ---------
Flex Shares:
Shares Issued...................... 50 152 77 294
Shares Issued in Lieu of Cash
Distributions.................... 7 2 13 6
Shares Redeemed.................... (51) (19) (95) (15)
--------- --------- --------- ---------
Net Flex Share Transactions..... 6 135 (5) 285
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
123
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (concluded)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE YEAR ENDED MAY 31, 1997
<TABLE>
<CAPTION>
U.S. GOVERNMENT
PRIME QUALITY MONEY SECURITIES MONEY MARKET TAX-EXEMPT MONEY
MARKET FUND FUND MARKET FUND
------------------------ ----------------------- ---------------------
06/01/96- 06/01/95- 06/01/96- 06/01/95- 06/01/96- 06/01/95-
05/31/97 05/31/96 05/31/97 05/31/96 05/31/97 05/31/96
(000) (000) (000) (000) (000) (000)
<S> <C> <C> <C> <C> <C> <C>
---------- ------------ --------- ----------- --------- ---------
Operations:
Net Investment Income................. $ 73,281 $ 54,132 $ 17,800 $ 20,311 $ 12,958 $ 12,217
Net Realized Gain (Loss) on
Investments......................... (121) (82) (51) 90 10 9
---------- ------------ --------- ----------- --------- ---------
Increase in Net Assets from
Operations....................... 73,160 54,050 17,749 20,401 12,968 12,226
---------- ------------ --------- ----------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Trust Shares........................ (60,224) (44,689) (14,924) (17,516) (10,054) (9,342)
Investor Shares..................... (13,057) (9,442) (2,876) (2,795) (2,904) (2,872)
Capital Gains:
Trust Shares........................ -- -- -- -- -- --
Investor Shares..................... -- -- -- -- -- --
---------- ------------ --------- ----------- --------- ---------
Total Distributions............... (73,281) (54,131) (17,800) (20,311) (12,958) (12,214)
---------- ------------ --------- ----------- --------- ---------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued......... 2,786,281 2,131,623 705,839 1,156,411 980,872 719,678
Reinvestment of Cash
Distributions...................... 2,069 1,223 274 60 -- 3
Cost of Shares Redeemed............. (2,752,496) (1,881,171) (687,215) (1,265,169) (921,487) (661,491)
---------- ------------ --------- ----------- --------- ---------
Increase (Decrease) in Net Assets From
Trust Share Transactions............ 35,854 251,675 18,898 (108,698) 59,385 58,190
---------- ------------ --------- ----------- --------- ---------
Investor Shares:
Proceeds from Shares Issued......... 928,946 1,012,310 182,325 231,451 305,724 322,435
Reinvestment of Cash
Distributions...................... 10,375 8,255 2,379 2,414 2,569 2,480
Cost of Shares Redeemed............. (871,451) (962,468) (180,124) (221,906) (301,505) (317,341)
---------- ------------ --------- ----------- --------- ---------
Increase in Net Assets From Investor
Share Transactions.................. 67,870 58,097 4,580 11,959 6,788 7,574
---------- ------------ --------- ----------- --------- ---------
Increase in Net Assets From Share
Transactions....................... 103,724 309,772 23,478 (96,739) 66,173 65,764
---------- ------------ --------- ----------- --------- ---------
Total Increase (Decrease) in Net
Assets........................... 103,603 309,691 23,427 (96,649) 66,183 65,776
---------- ------------ --------- ----------- --------- ---------
Net Assets:
Beginning of Period................... 1,266,496 956,805 384,101 480,750 368,836 303,060
---------- ------------ --------- ----------- --------- ---------
End of Period......................... $1,370,099 $1,266,496 $407,528 $ 384,101 $435,019 $368,836
---------- ------------ --------- ----------- --------- ---------
---------- ------------ --------- ----------- --------- ---------
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued....................... 2,786,281 2,131,623 705,839 1,156,411 980,872 719,678
Shares Issued in Lieu of Cash
Distributions...................... 2,069 1,223 274 60 -- 3
Shares Redeemed..................... (2,752,496) (1,881,171) (687,215) (1,265,169) (921,487) (661,491)
---------- ------------ --------- ----------- --------- ---------
Net Trust Share Transactions...... 35,854 251,675 18,898 (108,698) 59,385 58,190
---------- ------------ --------- ----------- --------- ---------
Investor Shares:
Shares Issued....................... 928,946 1,012,310 182,325 231,451 305,724 322,435
Shares Issued in Lieu of Cash
Distributions...................... 10,375 8,255 2,379 2,414 2,569 2,480
Shares Redeemed..................... (871,451) (962,468) (180,124) (221,906) (301,505) (317,341)
---------- ------------ --------- ----------- --------- ---------
Net Investor Share Transactions... 67,870 58,097 4,580 11,959 6,788 7,574
---------- ------------ --------- ----------- --------- ---------
---------- ------------ --------- ----------- --------- ---------
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
124
<PAGE>
(This page has been left blank intentionally.)
125
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1997
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET NET REALIZED AND DISTRIBUTIONS
INVESTMENT UNREALIZED GAINS FROM
NET ASSET VALUE INCOME (LOSSES) DISTRIBUTIONS FROM REALIZED CAPITAL
BEGINNING OF PERIOD (LOSS) ON INVESTMENTS NET INVESTMENT INCOME GAINS
------------------- ---------- ---------------- ---------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
VALUE INCOME STOCK FUND
Trust Shares
1997 $13.15 $ 0.30 $ 2.32 $(0.30) $(1.76)
1996 11.59 0.35 2.71 (0.34) (1.16)
1995 10.54 0.32 1.56 (0.32) (0.51)
1994 10.23 0.29 0.70 (0.32) (0.36)
1993(1) 10.00 0.11 0.16 (0.04) --
Investor Shares
1997 $13.13 $ 0.25 $ 2.32 $(0.26) $(1.76)
1996 11.58 0.30 2.71 (0.30) (1.16)
1995 10.52 0.28 1.56 (0.27) (0.51)
1994 10.23 0.26 0.67 (0.27) (0.37)
1993(2) 9.73 0.09 0.44 (0.03) --
Flex Shares
1997 $13.08 $ 0.18 $ 2.29 $(0.18) $(1.76)
1996(3) 11.59 0.26 2.65 (0.26) (1.16)
MID-CAP EQUITY FUND (B)
Trust Shares
1997 $12.76 $ 0.03 $ 1.69 $(0.05) $(1.22)
1996 11.00 0.08 2.63 (0.08) (0.87)
1995 9.85 0.08 1.15 (0.08) --
1994(4) 10.00 0.02 (0.16) (0.01) --
Investor Shares
1997 $12.74 $(0.03) $ 1.69 $(0.01) $(1.22)
1996 10.99 0.03 2.62 (0.03) (0.87)
1995 9.84 0.03 1.15 (0.03) --
1994(5) 10.00 0.01 (0.17) -- --
Flex Shares
1997 $12.69 $(0.07) $ 1.64 $ -- $(1.22)
1996(6) 11.13 -- 2.45 (0.02) (0.87)
SMALL CAP EQUITY FUND
Trust Shares
1997(7) $10.00 $ 0.05 $ 1.04 $(0.02) $ --
CAPITAL GROWTH FUND
Trust Shares
1997 $14.90 $ 0.12 $ 3.13 $(0.12) $(2.94)
1996 12.18 0.12 3.32 (0.13) (0.59)
1995 11.99 0.16 0.57 (0.14) (0.40)
1994 11.95 0.16 0.31 (0.17) (0.26)
1993(8) 10.36 0.12 1.57 (0.10) --
Investor Shares
1997 $14.89 $ 0.03 $ 3.10 $(0.02) $(2.94)
1996 12.17 0.03 3.32 (0.04) (0.59)
1995 11.98 0.09 0.57 (0.07) (0.40)
1994 11.93 0.09 0.31 (0.09) (0.26)
1993(9) 10.00 0.06 1.93 (0.06) --
Flex Shares
1997 $14.84 $(0.01) $ 3.07 $ -- $(2.94)
1996(3) 12.20 0.02 3.26 (0.05) (0.59)
</TABLE>
* Annualized.
** Average commission rate paid per share for security purchases and
sales during the period. Presentation of the rate is only required for
fiscal years beginning after September 1, 1995.
+ Returns are for the period indicated and have not been annualized.
(1) Commenced operations on February 12, 1993.
(2) Commenced operations on February 17, 1993.
(3) Commenced operations on June 1, 1995.
(4) Commenced operations on February 2, 1994.
(5) Commenced operations on February 1, 1994.
(6) Commenced operations on June 5, 1995.
(7) Commenced operations on January 31, 1997
(8) Commenced operations on July 1, 1992.
(9) Commenced operations on June 9, 1992.
(A) Total return figures do not reflect applicable sales loads.
(B) During the fiscal year ended May 31, 1996, the Aggressive Growth Fund
changed its name to the Mid-Cap Equity Fund.
126
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
NET INVESTMENT
RATIO OF INCOME (LOSS)
RATIO OF EXPENSES TO TO
NET AVERAGE NET AVERAGE NET
INVESTMENT ASSETS ASSETS
RATIO OF INCOME (EXCLUDING (EXCLUDING
NET ASSET TOTAL NET ASSETS EXPENSES TO (LOSS) TO WAIVERS WAIVERS PORTFOLIO
VALUE END RETURN END OF AVERAGE NET AVERAGE NET AND AND TURNOVER
OF PERIOD (A) PERIOD (000) ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
--------- --------- ------------ ----------- ----------- --------------- --------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VALUE INCOME STOCK FUND
Trust Shares
$13.71 22.18% $1,488,062 0.91% 2.40% 0.91% 2.40% 105.03%
13.15 27.91% 1,244,399 0.92% 2.86% 0.92% 2.86% 133.99%
11.59 19.06% 991,977 0.95% 3.16% 0.95% 3.16% 125.71%
10.54 9.95% 573,082 0.88% 3.21% 0.97% 3.12% 149.28%
10.23 9.05%* 137,761 0.80%* 4.32%* 0.96%* 4.16%* 34.71%
Investor Shares
$13.68 21.69% $ 165,999 1.30% 2.01% 1.31% 2.00% 105.03%
13.13 27.39% 130,597 1.30% 2.47% 1.37% 2.40% 133.99%
11.58 18.71% 92,256 1.30% 2.80% 1.41% 2.69% 125.71%
10.52 9.27% 60,589 1.25% 2.80% 1.44% 2.61% 149.28%
10.23 19.42%* 24,779 1.15%* 4.51%* 1.63%* 4.04%* 34.71%
Flex Shares
$13.61 20.91% $ 73,466 2.00% 1.33% 2.03% 1.30% 105.03%
13.08 26.52%* 26,298 2.00%* 1.72%* 2.15%* 1.57%* 133.99%
MID-CAP EQUITY FUND (B)
Trust Shares
$13.21 14.23% $ 287,370 1.15% 0.23% 1.26% 0.12% 151.68%
12.76 25.54% 253,905 1.15% 0.70% 1.29% 0.56% 115.62%
11.00 12.56% 125,562 1.15% 0.88% 1.32% 0.71% 65.63%
9.85 (1.39%)+ 57,036 1.15%* 1.20%* 1.68%* 0.67%* 7.99%
Investor Shares
$13.17 13.76% $ 20,245 1.60% (0.21%) 1.85% (0.46%) 151.68%
12.74 24.93% 17,971 1.60% 0.25% 1.96% (0.11%) 115.62%
10.99 11.96% 7,345 1.60% 0.43% 2.27% (0.24%) 65.63%
9.84 (1.60%)+ 3,004 1.60%* 0.74%* 4.60%* (2.26%)* 7.99%
Flex Shares
$13.04 13.06% $ 10,120 2.20% (0.85%) 2.58% (1.23%) 151.68%
12.69 23.00%* 5,029 2.20%* (0.37%)* 3.04%* (1.21%)* 115.62%
SMALL CAP EQUITY FUND
Trust Shares
$11.07 10.97%+ $ 131,049 1.20%* 1.86%* 1.37%* 1.69%* 27.46%
CAPITAL GROWTH FUND
Trust Shares
$15.09 24.66% $1,085,128 1.15% 0.83% 1.25% 0.73% 141.32%
14.90 28.97% 981,498 1.15% 0.90% 1.27% 0.78% 156.46%
12.18 6.63% 984,205 1.15% 1.38% 1.28% 1.25% 127.79%
11.99 3.87% 891,870 1.15% 1.25% 1.29% 1.11% 123.87%
11.95 17.90%* 507,692 1.15%* 1.43%* 1.28%* 1.30%* 95.02%
Investor Shares
$15.06 23.74% $ 218,660 1.80% 0.19% 2.02% (0.03%) 141.32%
14.89 28.18% 191,078 1.80% 0.24% 2.08% (0.04%) 156.46%
12.17 5.93% 160,875 1.80% 0.73% 2.10% 0.43% 127.79%
11.98 3.26% 170,795 1.80% 0.64% 2.11% 0.33% 123.87%
11.93 20.49%* 131,858 1.80%* 0.81%* 2.06%* 0.55%* 95.02%
Flex Shares
$14.96 23.24% $ 36,753 2.27% (0.29%) 2.43% (0.45%) 141.32%
14.84 27.48%* 10,969 2.27%* (0.29%)* 2.68%* (0.70%)* 156.46%
<CAPTION>
AVERAGE
COMMISSION
RATE**
----------
<S> <C>
VALUE INCOME STOCK FUND
Trust Shares
$0.0609
n/a
n/a
n/a
n/a
Investor Shares
$0.0609
n/a
n/a
n/a
n/a
Flex Shares
$0.0609
n/a
MID-CAP EQUITY FUND (B)
Trust Shares
$0.0587
n/a
n/a
n/a
Investor Shares
$0.0587
n/a
n/a
n/a
Flex Shares
$0.0587
n/a
SMALL CAP EQUITY FUND
Trust Shares
$0.0523
CAPITAL GROWTH FUND
Trust Shares
$0.0620
n/a
n/a
n/a
n/a
Investor Shares
$0.0620
n/a
n/a
n/a
n/a
Flex Shares
$0.0620
n/a
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
127
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1997
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET NET REALIZED AND DISTRIBUTIONS
INVESTMENT UNREALIZED GAINS FROM
NET ASSET VALUE INCOME (LOSSES) DISTRIBUTIONS FROM REALIZED
BEGINNING OF PERIOD (LOSS) ON INVESTMENTS NET INVESTMENT INCOME CAPITAL GAINS
------------------- ---------- ---------------- ---------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCED FUND
Trust Shares
1997 $11.55 $ 0.33 $ 1.47 $(0.32) $(1.09)
1996 10.26 0.33 1.41 (0.34) (0.11)
1995 9.76 0.33 0.49 (0.32) --
1994(1) 10.00 0.11 (0.29) (0.06) --
Investor Shares
1997 $11.60 $ 0.29 $ 1.48 $(0.29) $(1.09)
1996 10.30 0.30 1.41 (0.30) (0.11)
1995 9.79 0.28 0.51 (0.28) --
1994(2) 10.00 0.03 (0.24) -- --
Flex Shares
1997 $11.53 $ 0.22 $ 1.45 $(0.21) $(1.09)
1996(3) 10.36 0.24 1.29 (0.25) (0.11)
EMERGING MARKETS EQUITY FUND
Trust Shares
1997(4) $10.00 $ 0.04 $ 0.75 $ -- $ --
INTERNATIONAL EQUITY INDEX FUND
Trust Shares
1997 $10.96 $ 0.10 $ 0.69 $(0.11) $(0.30)
1996 10.24 0.10 0.84 (0.13) (0.09)
1995(5) 10.00 0.08 0.19 (0.02) (0.01)
Investor Shares
1997 $10.88 $ 0.03 $ 0.72 $(0.07) $(0.30)
1996 10.20 0.05 0.85 (0.13) (0.09)
1995(5) 10.00 0.05 0.17 (0.01) (0.01)
Flex Shares
1997 $10.87 $(0.05) $ 0.72 $ -- $(0.30)
1996(6) 10.24 -- 0.82 (0.10) (0.09)
INTERNATIONAL EQUITY FUND
Trust Shares
1997 $11.40 $ 0.03 $ 2.57 $(0.02) $(0.35)
1996(7) 10.00 0.05 1.35 -- --
Investor Shares
1997 $11.38 $(0.01) $ 2.56 $ -- $(0.35)
1996(8) 10.44 0.04 0.90 -- --
Flex Shares
1997 $11.37 $(0.04) $ 2.49 $ -- $(0.35)
1996(8) 10.44 0.02 0.91 -- --
SUNBELT EQUITY FUND
Trust Shares
1997 $14.11 $(0.09) $ 0.25 $ -- $(0.99)
1996 10.03 (0.04) 4.32 -- (0.20)
1995 9.70 (0.01) 0.38 -- (0.04)
1994(1) 10.00 -- (0.30) -- --
Investor Shares
1997 $13.95 $(0.14) $ 0.24 $ -- $(0.99)
1996 9.96 (0.11) 4.30 -- (0.20)
1995 9.69 (0.05) 0.36 -- (0.04)
1994(2) 10.00 (0.02) (0.29) -- --
Flex Shares
1997 $13.97 $(0.14) $ 0.16 $ -- $(0.99)
1996(9) 10.20 (0.07) 4.04 -- (0.20)
</TABLE>
* Annualized.
** Average commission rate paid per share for security purchases and
sales during the period. Presentation of the rate is only required for
fiscal years beginning after September 1, 1995.
+ Returns are for the period indicated and have not been annualized.
(1) Commenced operations on January 3, 1994.
(2) Commenced operations on January 4, 1994.
(3) Commenced operations on June 14, 1995.
(4) Commenced operations on January 31, 1997.
(5) Commenced operations on June 6, 1994.
(6) Commenced operations on June 8, 1995.
(7) Commenced operations on December 1, 1995.
(8) Commenced operations on January 2, 1996.
(9) Commenced operations on June 5, 1995.
(A) Total return figures do not reflect applicable sales loads.
128
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
NET INVESTMENT
RATIO OF INCOME (LOSS)
RATIO OF EXPENSES TO TO
NET AVERAGE NET AVERAGE NET
INVESTMENT ASSETS ASSETS
RATIO OF INCOME (EXCLUDING (EXCLUDING
NET ASSET NET ASSETS EXPENSES TO (LOSS) TO WAIVERS WAIVERS
VALUE END TOTAL END OF AVERAGE NET AVERAGE NET AND AND
OF PERIOD RETURN (A) PERIOD (000) ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS)
--------- ---------- ------------ ----------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCED FUND
Trust Shares
$11.94 16.66% $151,358 0.95% 2.89% 1.08% 2.76%
11.55 17.26% 111,638 0.95% 3.00% 1.09% 2.86%
10.26 8.72% 89,051 0.95% 3.44% 1.11% 3.28%
9.76 (1.78%)+ 90,579 0.95%* 2.76%* 1.25%* 2.46%*
Investor Shares
$11.99 16.27% $ 6,012 1.25% 2.58% 1.64% 2.19%
11.60 16.88% 4,896 1.25% 2.70% 1.89% 2.06%
10.30 8.29% 3,765 1.25% 3.17% 1.80% 2.62%
9.79 (2.10%)+ 2,311 1.25%* 2.46%* 4.91%* (1.20%)*
Flex Shares
$11.90 15.40% $ 6,067 2.01% 1.84% 2.45% 1.40%
11.53 15.58%* 3,131 2.00%* 1.85%* 2.97%* 0.88%*
EMERGING MARKETS EQUITY FUND
Trust Shares
$10.79 7.90%+ $ 39,495 1.55%* 1.37%* 2.04%* 0.88%*
INTERNATIONAL EQUITY INDEX FUND
Trust Shares
$11.34 7.48% $ 53,516 1.05% 0.71% 1.15% 0.61%
10.96 9.29% 90,980 1.05% 0.84% 1.19% 0.70%
10.24 2.69%+ 89,446 1.05%* 1.13%* 1.31%* 0.87%*
Investor Shares
$11.26 7.12% $ 5,592 1.45% 0.28% 1.88% (0.15%)
10.88 8.90% 5,597 1.45% 0.48% 2.06% (0.13%)
10.20 2.18%+ 3,960 1.45%* 0.67%* 2.44%* (0.32%)*
Flex Shares
$11.24 6.41% $ 900 2.10% (0.39%) 3.69% (1.98%)
10.87 8.32%+ 917 2.10%* (0.24%)* 4.14%* (2.28%)*
INTERNATIONAL EQUITY FUND
Trust Shares
$13.63 23.29% $489,325 1.46% 0.51% 1.51% 0.46%
11.40 14.00%+ 213,306 1.46%* 1.36%* 1.65%* 1.17%*
Investor Shares
$13.58 22.85% $ 10,674 1.81% 0.18% 2.05% (0.06%)
11.38 9.00%+ 3,448 1.81%* 1.73%* 3.14%* 0.40%*
Flex Shares
$13.47 21.98% $ 8,375 2.51% (0.27%) 3.03% (0.79%)
11.37 8.91%+ 953 2.51%* 1.08%* 5.86%* (2.27%)*
SUNBELT EQUITY FUND
Trust Shares
$13.28 1.48% $381,371 1.15% (0.65%) 1.26% (0.76%)
14.11 43.19% 412,430 1.15% (0.34%) 1.28% (0.47%)
10.03 3.81% 258,908 1.15% (0.12%) 1.30% (0.27%)
9.70 (2.99%)+ 128,280 1.15%* (0.19%)* 1.58%* (0.62%)*
Investor Shares
$13.06 1.05% $ 28,095 1.60% (1.10%) 1.84% (1.34%)
13.95 42.58% 29,002 1.60% (0.79%) 1.93% (1.12%)
9.96 3.20% 22,180 1.60% (0.57%) 1.98% (0.95%)
9.69 (3.10%)+ 16,077 1.60%* (0.63%)* 2.04%* (1.07%)*
Flex Shares
$13.00 0.46% $ 5,689 2.20% (1.72%) 2.69% (2.21%)
13.97 39.86%* 2,705 2.20%* (1.43%)* 3.62%* (2.85%)*
<CAPTION>
PORTFOLIO AVERAGE
TURNOVER COMMISSION
RATE RATE**
--------- ----------
<S> <C> <C>
BALANCED FUND
Trust Shares
196.73% $0.0608
154.63% n/a
156.61% n/a
105.65% n/a
Investor Shares
196.73% $0.0608
154.63% n/a
156.61% n/a
105.65% n/a
Flex Shares
196.73% $0.0608
154.63% n/a
EMERGING MARKETS EQUITY FUND
Trust Shares
23.88% $0.0019
INTERNATIONAL EQUITY INDEX FUND
Trust Shares
1.82% $0.0244
30.46% n/a
10.37% n/a
Investor Shares
1.82% $0.0244
30.46% n/a
10.37% n/a
Flex Shares
1.82% $0.0244
30.46% n/a
INTERNATIONAL EQUITY FUND
Trust Shares
139.37% $0.0313
113.34% n/a
Investor Shares
139.37% $0.0313
113.34% n/a
Flex Shares
139.37% $0.0313
113.34% n/a
SUNBELT EQUITY FUND
Trust Shares
72.17% $0.0674
106.27% n/a
80.03% n/a
21.42% n/a
Investor Shares
72.17% $0.0674
106.27% n/a
80.03% n/a
21.42% n/a
Flex Shares
72.17% $0.0674
106.27% n/a
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
129
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1997
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM
BEGINNING OF INVESTMENT (LOSSES) DISTRIBUTIONS FROM REALIZED
PERIOD INCOME ON INVESTMENTS NET INVESTMENT INCOME CAPITAL GAINS
------------ ---------- ---------------- ---------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE TAX-EXEMPT BOND FUND
Trust Shares
1997 $11.10 $ 0.44 $ 0.33 $(0.44) $(0.21)
1996 11.28 0.45 0.19 (0.45) (0.37)
1995 10.68 0.46 0.60 (0.46) --
1994(1) 11.37 0.22 (0.34) (0.22) (0.35)
Investor Shares
1997 $11.12 $ 0.40 $ 0.33 $(0.40) $(0.21)
1996 11.30 0.41 0.19 (0.41) (0.37)
1995 10.69 0.42 0.61 (0.42) --
1994 10.79 0.33 0.25 (0.33) (0.35)
1993(2) 10.00 0.35 0.82 (0.35) (0.03)
Flex Shares
1997 $11.11 $ 0.35 $ 0.33 $(0.35) $(0.21)
1996(3) 11.30 0.37 0.18 (0.37) (0.37)
FLORIDA TAX-EXEMPT BOND FUND
Trust Shares
1997 $10.06 $ 0.46 $ 0.25 $(0.46) $(0.03)
1996 10.18 0.46 (0.07) (0.46) (0.05)
1995 9.75 0.44 0.43 (0.44) --
1994(4) 10.00 0.13 (0.25) (0.13) --
Investor Shares
1997 $10.07 $ 0.44 $ 0.25 $(0.44) $(0.03)
1996 10.18 0.44 (0.06) (0.44) (0.05)
1995 9.75 0.42 0.43 (0.42) --
1994(5) 10.00 0.13 (0.25) (0.13) --
Flex Shares
1997 $10.08 $ 0.39 $ 0.25 $(0.39) $(0.03)
1996(3) 10.19 0.39 (0.06) (0.39) (0.05)
TENNESSEE TAX-EXEMPT BOND FUND
Trust Shares
1997 $ 9.40 $ 0.43 $ 0.23 $(0.43) $ --
1996 9.50 0.43 (0.11) (0.42) --
1995 9.22 0.44 0.28 (0.44) --
1994(6) 10.00 0.12 (0.77) (0.13) --
Investor Shares
1997 $ 9.42 $ 0.41 $ 0.23 $(0.41) $ --
1996 9.53 0.41 (0.10) (0.42) --
1995 9.23 0.44 0.29 (0.43) --
1994(7) 10.00 0.13 (0.77) (0.13) --
Flex Shares
1997 $ 9.41 $ 0.37 $ 0.23 $(0.37) $ --
1996(8) 9.59 0.37 (0.18) (0.37) --
GEORGIA TAX-EXEMPT BOND FUND
Trust Shares
1997 $ 9.56 $ 0.42 $ 0.22 $(0.42) $(0.05)
1996 9.63 0.43 (0.05) (0.43) (0.02)
1995 9.42 0.42 0.21 (0.42) --
1994(5) 10.00 0.14 (0.58) (0.14) --
Investor Shares
1997 $ 9.58 $ 0.40 $ 0.21 $(0.40) $(0.05)
1996 9.65 0.41 (0.05) (0.41) (0.02)
1995 9.44 0.40 0.21 (0.40) --
1994(7) 10.00 0.13 (0.56) (0.13) --
Flex Shares
1997 $ 9.56 $ 0.35 $ 0.22 $(0.35) $(0.05)
1996(9) 9.72 0.36 (0.14) (0.36) (0.02)
</TABLE>
* Annualized.
+ Returns are for the period indicated and have not been annualized.
(1) Commenced operations on October 21, 1993.
(2) Commenced operations on June 9, 1992.
(3) Commenced operations on June 1, 1995.
(4) Commenced operations on January 25, 1994.
(5) Commenced operations on January 18, 1994.
(6) Commenced operations on January 27, 1994.
(7) Commenced operations on January 19, 1994.
(8) Commenced operations on June 5, 1995.
(9) Commenced operations on June 6, 1995.
(A) Total return figures do not reflect applicable sales loads.
130
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
EXPENSES TO
RATIO OF AVERAGE NET
NET ASSETS
RATIO OF INVESTMENT (EXCLUDING
NET ASSET NET ASSETS EXPENSES TO INCOME TO WAIVERS
VALUE END TOTAL END OF AVERAGE NET AVERAGE NET AND
OF PERIOD RETURN (A) PERIOD (000) ASSETS ASSETS REIMBURSEMENTS)
--------- ---------- ------------ ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE TAX-EXEMPT BOND FUND
Trust Shares
$11.22 7.13% $139,144 0.75% 3.96% 0.86%
11.10 5.82% 124,507 0.75% 4.01% 0.89%
11.28 10.21% 78,208 0.75% 4.34% 0.91%
10.68 (1.10%)+ 44,595 0.75%* 3.46%* 0.95%*
Investor Shares
$11.24 6.69% $ 31,857 1.15% 3.56% 1.38%
11.12 5.40% 37,427 1.15% 3.61% 1.42%
11.30 9.91% 41,693 1.15% 3.88% 1.43%
10.69 5.37% 46,182 1.14% 2.96% 1.51%
10.79 11.88%* 15,844 1.12%* 3.61%* 1.83%*
Flex Shares
$11.23 6.19% $ 4,681 1.63% 3.08% 2.15%
11.11 4.91%* 5,536 1.63%* 3.12%* 2.25%*
FLORIDA TAX-EXEMPT BOND FUND
Trust Shares
$10.28 7.22% $ 50,487 0.65% 4.48% 0.80%
10.06 3.87% 30,790 0.65% 4.49% 0.88%
10.18 9.26% 10,118 0.65% 4.63% 1.13%
9.75 (1.19%)+ 3,192 0.65%* 3.86%* 1.12%*
Investor Shares
$10.29 7.00% $ 3,226 0.85% 4.28% 1.31%
10.07 3.76% 4,025 0.85% 4.28% 1.36%
10.18 9.04% 3,320 0.85% 4.36% 1.50%
9.75 (1.22%)+ 2,280 0.85%* 3.67%* 3.20%*
Flex Shares
$10.30 6.48% $ 3,000 1.35% 3.78% 2.28%
10.08 3.27%* 2,692 1.35%* 3.79%* 2.54%*
TENNESSEE TAX-EXEMPT BOND FUND
Trust Shares
$ 9.63 7.16% $ 1,973 0.65% 4.51% 1.72%
9.40 3.43% 1,823 0.65% 4.49% 1.68%
9.50 8.17% 1,664 0.65% 4.90% 2.65%
9.22 (6.52%)+ 594 0.65%* 4.24%* 1.43%*
Investor Shares
$ 9.65 6.93% $ 1,602 0.85% 4.31% 1.76%
9.42 3.28% 1,523 0.85% 4.29% 2.08%
9.53 8.24% 1,170 0.85% 4.70% 2.10%
9.23 (6.39%)+ 1,127 0.85%* 3.74%* 6.60%*
Flex Shares
$ 9.64 6.42% $ 2,505 1.35% 3.81% 2.34%
9.41 1.98%* 2,017 1.34%* 3.80%* 2.74%*
GEORGIA TAX-EXEMPT BOND FUND
Trust Shares
$ 9.73 6.79% $ 39,732 0.65% 4.31% 0.81%
9.56 3.89% 22,950 0.65% 4.36% 0.89%
9.63 6.94% 13,187 0.65% 4.56% 0.98%
9.42 (4.43%)+ 4,338 0.65%* 4.12%* 1.06%*
Investor Shares
$ 9.74 6.47% $ 3,511 0.85% 4.10% 1.33%
9.58 3.69% 3,418 0.85% 4.17% 1.41%
9.65 6.70% 3,268 0.85% 4.31% 1.43%
9.44 (4.29%)+ 3,300 0.85%* 3.93%* 2.36%*
Flex Shares
$ 9.73 6.06% $ 4,662 1.35% 3.60% 2.07%
9.56 2.25%* 4,207 1.35%* 3.66%* 2.35%*
<CAPTION>
RATIO OF
NET INVESTMENT
INCOME (LOSS)
TO
AVERAGE NET
ASSETS
(EXCLUDING
WAIVERS PORTFOLIO
AND TURNOVER
REIMBURSEMENTS) RATE
--------------- --------
<S> <C> <C>
INVESTMENT GRADE TAX-EXEMPT BOND
Trust Shares
3.85% 489.02%
3.87% 513.90%
4.18% 591.91%
3.26%* 432.46%
Investor Shares
3.33% 489.02%
3.34% 513.90%
3.60% 591.91%
2.59% 432.46%
2.90%* 344.87%
Flex Shares
2.56% 489.02%
2.50%* 513.90%
FLORIDA TAX-EXEMPT BOND FUND
Trust Shares
4.33% 134.62%
4.26% 62.68%
4.15% 105.01%
3.39%* 53.24%
Investor Shares
3.82% 134.62%
3.77% 62.68%
3.71% 105.01%
1.32%* 53.24%
Flex Shares
2.85% 134.62%
2.60%* 62.68%
TENNESSEE TAX-EXEMPT BOND FUND
Trust Shares
3.44% 16.09%
3.46% 41.00%
2.90% 27.73%
3.46%* 13.05%
Investor Shares
3.40% 16.09%
3.06% 41.00%
3.45% 27.73%
(2.01%)* 13.05%
Flex Shares
2.82% 16.09%
2.40%* 41.00%
GEORGIA TAX-EXEMPT BOND FUND
Trust Shares
4.15% 14.81%
4.12% 60.02%
4.23% 24.50%
3.71%* 25.90%
Investor Shares
3.62% 14.81%
3.61% 60.02%
3.73% 24.50%
2.42%* 25.90%
Flex Shares
2.88% 14.81%
2.66%* 60.02%
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
131
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1997
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET REALIZED
AND
UNREALIZED DISTRIBUTIONS
NET ASSET GAINS FROM DISTRIBUTIONS
VALUE NET (LOSSES) NET FROM
BEGINNING INVESTMENT ON INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS
--------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE BOND FUND
Trust Shares
1997 $10.07 $ 0.60 $ 0.09 $(0.60) $ --
1996 10.26 0.60 (0.19) (0.60) --
1995 9.89 0.61 0.37 (0.61) --
1994 10.45 0.50 (0.36) (0.50) (0.20)
1993(1) 10.09 0.45 0.36 (0.45) --
Investor Shares
1997 $10.06 $ 0.56 $ 0.10 $(0.56) $ --
1996 10.26 0.56 (0.20) (0.56) --
1995 9.89 0.57 0.38 (0.58) --
1994 10.44 0.46 (0.35) (0.46) (0.20)
1993(2) 10.00 0.44 0.44 (0.44) --
Flex Shares
1997 $10.07 $ 0.51 $ 0.10 $(0.51) $ --
1996(3) 10.33 0.52 (0.26) (0.52) --
SHORT-TERM BOND FUND
Trust Shares
1997 $ 9.86 $ 0.53 $ 0.07 $(0.53) $(0.03)
1996 9.98 0.54 (0.10) (0.54) (0.02)
1995 9.79 0.53 0.19 (0.53) --
1994 10.01 0.42 (0.21) (0.42) (0.01)
1993(4) 10.00 0.08 0.01 (0.08) --
Investor Shares
1997 $ 9.88 $ 0.51 $ 0.06 $(0.51) $(0.03)
1996 10.01 0.52 (0.10) (0.53) (0.02)
1995 9.81 0.51 0.19 (0.50) --
1994 10.03 0.40 (0.21) (0.40) (0.01)
1993(5) 10.06 0.06 (0.03) (0.06) --
Flex Shares
1997 $ 9.88 $ 0.48 $ 0.06 $(0.48) $(0.03)
1996(6) 10.02 0.47 (0.12) (0.47) (0.02)
SHORT-TERM U.S. TREASURY SECURITIES FUND
Trust Shares
1997 $ 9.84 $ 0.51 $ 0.04 $(0.51) $ --
1996 9.93 0.55 (0.09) (0.55) --
1995 9.82 0.47 0.11 (0.47) --
1994 9.98 0.33 (0.11) (0.33) (0.05)
1993(4) 10.00 0.07 (0.02) (0.07) --
Investor Shares
1997 $ 9.84 $ 0.50 $ 0.04 $(0.50) $ --
1996 9.94 0.54 (0.10) (0.54) --
1995 9.83 0.46 0.11 (0.46) --
1994 9.99 0.32 (0.12) (0.31) (0.05)
1993(7) 10.01 0.06 (0.02) (0.06) --
Flex Shares
1997 $ 9.82 $ 0.47 $ 0.03 $(0.47) $ --
1996(8) 9.96 0.48 (0.14) (0.48) --
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
Trust Shares
1997 $ 9.99 $ 0.58 $ 0.04 $(0.58) $(0.01)
1996 10.11 0.62 (0.14) (0.60) --
1995(9) 10.00 0.58 0.13 (0.60) --
Investor Shares
1997 $ 9.97 $ 0.56 $ 0.04 $(0.56) $(0.01)
1996 10.11 0.60 (0.14) (0.60) --
1995(10) 9.98 0.58 0.13 (0.58) --
Flex Shares
1997 $ 9.99 $ 0.52 $ 0.04 $(0.52) $(0.01)
1996(3) 10.14 0.55 (0.15) (0.55) --
</TABLE>
* Annualized.
+ Returns are for the period indicated and have not been annualized.
(1) Commenced operations on July 16, 1992.
(2) Commenced operations on June 11, 1992.
(3) Commenced operations on June 7, 1995.
(4) Commenced operations on March 15, 1993.
(5) Commenced operations on March 22, 1993.
(6) Commenced operations on June 20, 1995.
(7) Commenced operations on March 18, 1993.
(8) Commenced operations on June 22, 1995.
(9) Commenced operations on June 7, 1994.
(10) Commenced operations on July 17, 1994.
132
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
EXPENSES TO
RATIO OF AVERAGE NET
NET ASSETS
RATIO OF INVESTMENT (EXCLUDING
NET ASSET NET ASSETS EXPENSES TO INCOME TO WAIVERS
VALUE END TOTAL END OF AVERAGE NET AVERAGE NET AND
OF PERIOD RETURN (A) PERIOD (000) ASSETS ASSETS REIMBURSEMENTS)
--------- ---------- ------------ ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE BOND FUND
Trust Shares
$10.16 6.99% $633,646 0.75% 5.89% 0.85%
10.07 4.02% 599,514 0.75% 5.81% 0.87%
10.26 10.39% 543,308 0.75% 6.22% 0.88%
9.89 1.17% 460,538 0.75% 4.77% 0.88%
10.45 9.34%* 336,132 0.74%* 5.14%* 0.87%*
Investor Shares
$10.16 6.66% $ 33,165 1.15% 5.48% 1.41%
10.06 3.50% 36,155 1.15% 5.40% 1.44%
10.26 10.04% 33,772 1.15% 5.79% 1.49%
9.89 0.86% 35,775 1.14% 4.39% 1.41%
10.44 9.21%* 24,375 1.14%* 4.75%* 1.46%*
Flex Shares
$10.17 6.16% $ 5,763 1.64% 5.00% 2.20%
10.07 2.50%* 4,621 1.64%* 4.84%* 2.49%*
SHORT-TERM BOND FUND
Trust Shares
$ 9.90 6.30% $ 89,701 0.65% 5.37% 0.78%
9.86 4.45% 91,156 0.65% 5.39% 0.81%
9.98 7.60% 60,952 0.65% 5.49% 0.85%
9.79 2.02% 34,772 0.65% 4.15% 0.85%
10.01 4.45%* 25,334 0.64%* 3.88%* 1.11%*
Investor Shares
$ 9.91 5.97% $ 2,182 0.85% 5.16% 1.58%
9.88 4.23% 2,700 0.85% 5.20% 1.72%
10.01 7.44% 2,609 0.85% 5.24% 1.56%
9.81 1.81% 2,381 0.85% 3.94% 2.52%
10.03 1.65%* 716 0.85%* 3.85%* 7.22%*
Flex Shares
$ 9.91 5.62% $ 1,073 1.20% 4.82% 3.02%
9.88 3.73%* 966 1.20%* 4.77%* 4.06%*
SHORT-TERM U.S. TREASURY SECURITIES FUND
Trust Shares
$ 9.88 5.76% $ 21,988 0.65% 5.23% 0.92%
9.84 4.73% 10,149 0.65% 5.56% 1.00%
9.93 6.11% 9,599 0.65% 4.91% 1.08%
9.82 2.17% 12,723 0.65% 3.23% 0.81%
9.98 2.22%* 30,336 0.63%* 3.34%* 1.04%*
Investor Shares
$ 9.88 5.59% $ 3,921 0.80% 5.05% 1.35%
9.84 4.52% 4,192 0.80% 5.43% 1.32%
9.94 6.03% 7,144 0.80% 4.74% 1.33%
9.83 2.01% 4,841 0.78% 3.11% 1.41%
9.99 1.84%* 2,423 0.80%* 3.16%* 3.42%*
Flex Shares
$ 9.85 5.19% $ 1,091 1.05% 4.75% 2.51%
9.82 3.72%* 2,423 1.05%* 5.03%* 2.97%*
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
Trust Shares
$10.02 6.43% $123,903 0.65% 5.81% 0.78%
9.99 4.84% 73,370 0.65% 6.04% 0.84%
10.11 7.50%+ 41,823 0.65%* 6.43%* 0.93%*
Investor Shares
$10.00 6.17% $ 2,426 0.90% 5.55% 1.48%
9.97 4.59% 2,512 0.90% 5.75% 2.25%
10.11 7.45%+ 623 0.90%* 6.27%* 7.74%*
Flex Shares
$10.02 5.80% $ 1,409 1.25% 5.20% 2.66%
9.99 4.10%* 1,349 1.25%* 5.38%* 3.59%*
<CAPTION>
RATIO OF
NET INVESTMENT
INCOME (LOSS)
TO
AVERAGE NET
ASSETS
(EXCLUDING
WAIVERS PORTFOLIO
AND TURNOVER
REIMBURSEMENTS) RATE
--------------- ---------
<S> <C> <C>
INVESTMENT GRADE BOND FUND
Trust Shares
5.79% 297.82%
5.69% 184.33%
6.09% 237.66%
4.64% 259.19%
5.01%* 299.32%
Investor Shares
5.22% 297.82%
5.11% 184.33%
5.45% 237.66%
4.12% 259.19%
4.43%* 299.32%
Flex Shares
4.44% 297.82%
3.99%* 184.33%
SHORT-TERM BOND FUND
Trust Shares
5.24% 117.83%
5.23% 162.62%
5.29% 200.49%
3.95% 74.85%
3.41%* 63.89%
Investor Shares
4.43% 117.83%
4.33% 162.62%
4.53% 200.49%
2.27% 74.85%
(2.52%)* 63.89%
Flex Shares
3.00% 117.83%
1.91%* 162.62%
SHORT-TERM U.S. TREASURY SECURITIES FUND
Trust Shares
4.96% 92.89%
5.21% 94.00%
4.48% 87.98%
3.07% 116.57%
2.93%* 36.44%
Investor Shares
4.50% 92.89%
4.91% 94.00%
4.21% 87.98%
2.48% 116.57%
0.54%* 36.44%
Flex Shares
3.29% 92.89%
3.11%* 94.00%
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
Trust Shares
5.68% 133.45%
5.85% 83.01%
6.15%* 67.63%
Investor Shares
4.97% 133.45%
4.40% 83.01%
(0.57%)* 67.63%
Flex Shares
3.79% 133.45%
3.04%* 83.01%
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
133
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1997
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM FROM
BEGINNING OF INVESTMENT (LOSSES) NET INVESTMENT REALIZED
PERIOD INCOME ON INVESTMENTS INCOME CAPITAL GAINS
------------ ---------- ---------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES FUND
Trust Shares
1997 $ 9.91 $ 0.62 $ 0.11 $(0.62) $ --
1996 10.27 0.62 (0.33) (0.62) (0.03)
1995(1) 9.98 0.53 0.29 (0.53) --
Investor Shares
1997 $ 9.90 $ 0.58 $ 0.12 $(0.58) $ --
1996 10.26 0.59 (0.33) (0.59) (0.03)
1995(2) 10.00 0.56 0.26 (0.56) --
Flex Shares
1997 $ 9.91 $ 0.53 $ 0.11 $(0.53) $ --
1996(3) 10.31 0.52 (0.37) (0.52) (0.03)
PRIME QUALITY MONEY MARKET FUND
Trust Shares
1997 $ 1.00 $ 0.05 $ -- $(0.05) $ --
1996 1.00 0.05 -- (0.05) --
1995 1.00 0.05 -- (0.05) --
1994 1.00 0.03 -- (0.03) --
1993(4) 1.00 0.03 -- (0.03) --
Investor Shares
1997 $ 1.00 $ 0.05 $ -- $(0.05) $ --
1996 1.00 0.05 -- (0.05) --
1995 1.00 0.05 -- (0.05) --
1994 1.00 0.03 -- (0.03) --
1993(4) 1.00 0.03 -- (0.03) --
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
Trust Shares
1997 $ 1.00 $ 0.05 $ -- $(0.05) $ --
1996 1.00 0.05 -- (0.05) --
1995 1.00 0.05 -- (0.05) --
1994 1.00 0.03 -- (0.03) --
1993(4) 1.00 0.03 -- (0.03) --
Investor Shares
1997 $ 1.00 $ 0.05 $ -- $(0.05) $ --
1996 1.00 0.05 -- (0.05) --
1995 1.00 0.04 -- (0.04) --
1994 1.00 0.03 -- (0.03) --
1993(4) 1.00 0.03 -- (0.03) --
TAX-EXEMPT MONEY MARKET FUND
Trust Shares
1997 $ 1.00 $ 0.03 $ -- $(0.03) $ --
1996 1.00 0.03 -- (0.03) --
1995 1.00 0.03 -- (0.03) --
1994 1.00 0.02 -- (0.02) --
1993(4) 1.00 0.02 -- (0.02) --
Investor Shares
1997 $ 1.00 $ 0.03 $ -- $(0.03) $ --
1996 1.00 0.03 -- (0.03) --
1995 1.00 0.03 -- (0.03) --
1994 1.00 0.02 -- (0.02) --
1993(4) 1.00 0.02 -- (0.02) --
</TABLE>
* Annualized.
+ Returns are for the period indicated and have not been annualized.
(A) Total return figures do not reflect applicable sales loads.
(1) Commenced operations on July 31, 1994.
(2) Commenced operations on June 9, 1994.
(3) Commenced operations on June 7, 1995.
(4) Commenced operations on June 8, 1992.
134
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
EXPENSES TO
RATIO OF AVERAGE NET
RATIO OF NET ASSETS
EXPENSES INVESTMENT (EXCLUDING
NET ASSET NET ASSETS TO INCOME TO WAIVERS
VALUE END TOTAL END OF AVERAGE AVERAGE AND
OF PERIOD RETURN (A) PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS)
--------- ---------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES FUND
Trust Shares
$10.02 7.54% $ 19,471 0.75% 6.19% 1.02%
9.91 2.77% 10,277 0.75% 6.05% 1.25%
10.27 8.64%+ 3,291 0.75%* 6.67%* 3.33%*
Investor Shares
$10.02 7.21% $ 2,243 1.15% 5.76% 1.79%
9.90 2.47% 2,396 1.15% 5.68% 2.50%
10.26 8.61%+ 589 1.15%* 6.08%* 6.84%*
Flex Shares
$10.02 6.57% $ 2,801 1.66% 5.26% 2.42%
9.91 1.42%* 2,826 1.66%* 5.18%* 2.86%*
PRIME QUALITY MONEY MARKET FUND
Trust Shares
$ 1.00 5.01% $1,086,555 0.58% 4.90% 0.76%
1.00 5.25% 1,050,800 0.58% 5.11% 0.78%
1.00 4.79% 799,189 0.58% 4.77% 0.79%
1.00 2.88% 583,399 0.58% 2.86% 0.79%
1.00 2.92%* 410,991 0.58%* 2.85%* 0.78%*
Investor Shares
$ 1.00 4.84% $ 283,544 0.75% 4.74% 0.97%
1.00 5.08% 215,696 0.75% 4.94% 1.00%
1.00 4.62% 157,616 0.75% 4.55% 1.01%
1.00 2.71% 129,415 0.75% 2.67% 0.99%
1.00 2.75%* 61,578 0.75%* 2.68%* 1.02%*
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
Trust Shares
$ 1.00 4.83% $ 344,350 0.61% 4.73% 0.76%
1.00 5.14% 325,493 0.61% 5.02% 0.78%
1.00 4.67% 434,111 0.61% 4.64% 0.80%
1.00 2.77% 309,228 0.61% 2.69% 0.77%
1.00 2.79%* 453,567 0.61%* 2.71%* 0.78%*
Investor Shares
$ 1.00 4.69% $ 63,178 0.75% 4.59% 0.96%
1.00 4.99% 58,608 0.75% 4.88% 0.99%
1.00 4.51% 46,639 0.75% 4.51% 1.02%
1.00 2.63% 32,395 0.75% 2.54% 0.97%
1.00 2.65%* 16,688 0.75%* 2.57%* 1.11%*
TAX-EXEMPT MONEY MARKET FUND
Trust Shares
$ 1.00 3.09% $ 333,006 0.50% 3.04% 0.66%
1.00 3.28% 273,613 0.50% 3.23% 0.68%
1.00 3.10% 215,413 0.45% 3.12% 0.70%
1.00 2.08% 143,982 0.42% 2.05% 0.71%
1.00 2.12%* 78,416 0.41%* 2.07%* 0.70%*
Investor Shares
$ 1.00 2.97% $ 102,013 0.62% 2.92% 0.83%
1.00 3.16% 95,223 0.62% 3.10% 0.85%
1.00 3.00% 87,647 0.55% 3.00% 0.87%
1.00 1.96% 61,675 0.54% 1.93% 0.88%
1.00 2.00%* 35,209 0.53%* 1.95%* 0.95%*
<CAPTION>
RATIO OF
NET INVESTMENT
INCOME (LOSS)
TO
AVERAGE NET
ASSETS
(EXCLUDING
WAIVERS PORTFOLIO
AND TURNOVER
REIMBURSEMENTS) RATE
--------------- --------
<S> <C> <C>
U.S. GOVERNMENT SECURITIES FUND
Trust Shares
5.92% 21.15%
5.55% 83.38%
4.09%* 30.39%
Investor Shares
5.12% 21.15%
4.33% 83.38%
0.39%* 30.39%
Flex Shares
4.50% 21.15%
3.98%* 83.38%
PRIME QUALITY MONEY MARKET FUND
Trust Shares
4.72% --
4.91% --
4.56% --
2.65% --
2.65%* --
Investor Shares
4.52% --
4.69% --
4.29% --
2.43% --
2.41%* --
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
Trust Shares
4.58% --
4.85% --
4.45% --
2.53% --
2.54%* --
Investor Shares
4.38% --
4.64% --
4.24% --
2.32% --
2.21%* --
TAX-EXEMPT MONEY MARKET FUND
Trust Shares
2.88% --
3.05% --
2.87% --
1.76% --
1.78%* --
Investor Shares
2.71% --
2.87% --
2.68% --
1.59% --
1.53%* --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
135
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
1. Organization:
The STI Classic Funds (the "Trust") was organized as a Massachusetts Business
Trust under a Declaration of Trust dated January 15, 1992. The Trust is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company with twenty-three portfolios: the Value Income
Stock Fund, the Mid-Cap Equity Fund, the Small Cap Equity Fund, the Capital
Growth Fund, the Balanced Fund, the Emerging Markets Equity Fund, the
International Equity Index Fund, the International Equity Fund, the Sunbelt
Equity Fund, the Investment Grade Tax-Exempt Bond Fund, the Florida Tax-Exempt
Bond Fund, the Tennessee Tax-Exempt Bond Fund, the Georgia Tax-Exempt Bond Fund,
the Investment Grade Bond Fund, the Short-Term Bond Fund, the Short-Term U.S.
Treasury Securities Fund, the Limited-Term Federal Mortgage Securities Fund, and
the U.S. Government Securities Fund, (collectively the "Non-Dollar Funds"), the
Prime Quality Money Market Fund, the U.S. Government Securities Money Market
Fund, the Tax-Exempt Money Market Fund, the Classic Institutional Cash
Management Money Market Fund and the Classic Institutional U.S. Treasury
Securities Money Market Fund, (collectively the "Money Market Funds"). The
assets of each portfolio are segregated, and a shareholder's interest is limited
to the Fund in which shares are held. Each Fund's prospectus provides a
description of the Fund's investment objectives, policies and strategies.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the
Trust.
SECURITY VALUATION--Investment securities held by the Money Market Funds are
stated at amortized cost, which approximates market value.
Investment securities held by the Non-Dollar Funds that are listed on a
securities exchange for which market quotations are available are valued at
the last quoted sales price each business day. If there is no such reported
sale, these securities and unlisted securities for which market quotations
are readily available are valued at the most recently quoted bid price.
Foreign securities in the Emerging Markets Equity Fund, the International
Equity Fund and the International Equity Index Fund are valued based upon
quotations from the primary market in which they are traded. Debt
obligations with sixty days or less remaining until maturity may be valued
at their amortized cost.
FEDERAL INCOME TAXES--It is each Fund's intention to qualify as a regulated
investment company for Federal income tax purposes and distribute all of its
taxable income and net capital gains. Accordingly, no provisions for Federal
income taxes are required.
SECURITY TRANSACTIONS AND INVESTMENT INCOME--Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date and interest income is
recognized on an accrual basis. Costs used in determining net realized gains
and losses on the sales of investment securities are those of the specific
securities sold adjusted for the accretion and amortization of purchase
discounts and premiums during the respective holding period. Purchase
discounts and premiums on securities held by the Money Market Funds are
accreted and amortized ratably to maturity and are included in interest
income. Purchase discounts and premiums on securities held by the Non-Dollar
Funds are accreted and amortized to maturity using the scientific interest
method, which approximates the effective interest method.
REPURCHASE AGREEMENTS--Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market value
of the collateral, including accrued interest thereon, is sufficient in the
event of default of the counterparty. If the counterparty defaults and the
value of the collateral declines or if the counterparty enters into an
insolvency proceeding, realization of the collateral by the Funds may be
delayed or limited.
NET ASSET VALUE PER SHARE--The net asset value per share of each Fund is
calculated each business day, by dividing the total value of each Fund's
assets, less liabilities, by the number of shares outstanding. The maximum
offering price per share for Investor shares of the Investment Grade Bond,
the Investment Grade Tax-Exempt Bond, the Capital Growth, the Value Income
Stock, the Sunbelt
136
<PAGE>
- --------------------------------------------------------------------------------
Equity, the Mid-Cap Equity, the Balanced, the Florida Tax-Exempt Bond, the
Georgia Tax-Exempt Bond, the Tennessee Tax-Exempt Bond, the U.S. Government
Securities, the International Equity, and the International Equity Index
Funds is equal to the net asset value per share plus a sales load of 3.75%.
The maximum offering price per share for Investor shares of the Short-Term
U.S. Treasury Securities Fund is equal to the net asset value per share plus
a sales load of 1.00%. The maximum offering price per share for Investor
shares of the Short-Term Bond Fund is equal to the net asset value per share
plus a sales load of 2.00%. The maximum offering price per share for
Investor shares of the Limited-Term Federal Mortgage Securities Fund is
equal to the net asset value per share plus a sales load of 2.50%
Flex Shares of the Funds may be purchased at their net asset value. Shares
redeemed within the first year after purchase will be subject to a
contingent deferred sales charge ("CDSC") equal to 2.00% of the net asset
value of the shares at the time of redemption. The CDSC will not apply to
shares redeemed after such time.
FOREIGN CURRENCY TRANSLATION--The books and records of the Emerging Markets
Equity, the International Equity and the International Equity Index Funds
are maintained in U.S. dollars on the following basis:
(I) market value of investment securities, assets and liabilities at
the current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses
at the relevant rates of exchange prevailing on the respective
dates of such transactions.
The Emerging Markets Equity, the International Equity and the International
Equity Index Funds do not isolate that portion of gains and losses on
investments in equity securities that is due to changes in the foreign
exchange rates from that which is due to changes in market prices of equity
securities.
The Emerging Markets Equity, the International Equity and the International
Equity Index Funds report certain foreign currency related transactions as
components of realized and unrealized gains and losses for financial
reporting purposes, whereas such components are treated as ordinary income
for Federal income tax purposes.
OTHER--Expenses that are directly related to a specific Fund are charged to
that Fund. Class specific expenses are borne by that class. Other operating
expenses of the Trust are pro-rated to the Funds on the basis of relative
net assets. Fund expenses are pro-rated to the respective classes on the
basis of relative net assets.
Distributions from net investment income of each of the Money Market Funds
and the Investment Grade Bond, the Investment Grade Tax-Exempt Bond, the
Short-Term U.S. Treasury Securities, the Short-Term Bond, the Florida
Tax-Exempt Bond, the Georgia Tax-Exempt Bond, the Tennessee Tax-Exempt Bond,
the U.S. Government Securities and the Limited-Term Federal Mortgage
Securities Funds are declared each business day and paid to shareholders on
a monthly basis. Distributions from net investment income are declared and
paid each calendar quarter by the Capital Growth, the Value Income Stock,
the Sunbelt Equity, the Mid-Cap Equity, the Small Cap Equity and the
Balanced Funds. Distributions from net investment income are declared and
paid annually by the Emerging Markets Equity, the International Equity and
the International Equity Index Funds. Any net realized capital gains on
sales of securities are distributed to shareholders at least annually.
RECLASSIFICATION OF COMPONENTS OF NET ASSETS--The timing and
characterization of certain income and capital gains distributions are
determined annually in accordance with federal tax regulations which may
differ from generally accepted accounting principles. As a result, net
investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions during such period. These book/tax differences may be
temporary or permanent in nature. To the extent these differences are
permanent, they are charged or credited to paid-in-capital or accumulated
net realized gain, as appropriate, in the period that the differences arise.
Accordingly, the following permanent differences, primarily attributable to
a net operating loss in the Sunbelt Equity Fund and the
137
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
classification of short-term capital gains and ordinary income for tax
purposes related to the other funds, have been reclassified to/from the
following accounts:
<TABLE>
<CAPTION>
UNDISTRIBUTED
ACCUMULATED NET INVESTMENT
PAID-IN-CAPITAL REALIZED GAIN INCOME
(000) (000) (000)
--------------- ------------- --------------
<S> <C> <C> <C>
Mid-Cap Equity Fund..................... $-- $(207) $ 207
International Equity Index Fund......... -- (204) 204
International Equity Fund............... -- 83 (83)
Sunbelt Equity Fund..................... (2,967) -- 2,967
Short-Term Bond Fund.................... -- (54) 54
</TABLE>
These reclassifications have no effect on net assets or net asset values per
share.
USE OF ESTIMATES--The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements, and reported amounts of revenues and expenses
during the reporting period. Actual amounts could differ from these
estimates.
3. Organization Costs and Transactions with Affiliates:
The Trust incurred organization costs of approximately $808,836 including
approximately $395,594 relating to state registration fees. These costs have
been deferred in the accounts of the Funds and are being amortized on a straight
line basis over a period of sixty months commencing with operations with the
exception of state registration fees, which are being amortized over a period of
twelve months. The costs include legal fees of approximately $60,383 for
organizational work performed by a law firm of which two officers of the Trust
are partners. On March 18, 1992, the Trust sold initial shares of beneficial
interest to SEI Fund Resources (the "Administrator"). In the event any of the
initial shares of the Trust are redeemed by any holder thereof during the period
that the Trust is amortizing its organizational costs, the redemption proceeds
payable to the holder thereof will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption.
Certain officers of the Trust are also officers of the Administrator and/or SEI
Investments Distribution Co. (the "Distributor"). Such officers are paid no fees
by the Trust for serving as officers of the Trust.
4. Administration, Transfer Agency Servicing and
Distribution Agreements:
The Trust and the Administrator are parties to an Administration Agreement dated
May 29, 1995, under which the Administrator provides administrative services for
an annual fee (expressed as a percentage of the combined average daily net
assets of the Trust and STI Classic Variable Annuity Trust) of: .10% up to $1
billion, .07% on the next $4 billion, .05% on the next $3 billion, .045% on the
next $2 billion and .04% for over $10 billion.
The Trust and Federated Services Company are parties to a Transfer Agency
servicing agreement dated May 14, 1994 under which Federated Services Company
provides transfer agency services to the Trust.
The Trust and the Distributor are parties to a Distribution Agreement dated May
29, 1995 regarding the Flex Shares and a Distribution Agreement dated November
21, 1995 with respect to the Trust and Investor shares. The Distributor will
receive no fees for its distribution services under this agreement for the Trust
Shares of any Fund. With respect to the Investor Shares and Flex Shares, the
Distributor receives amounts, pursuant to a Distribution Plan and (in the case
of Flex Shares) a Distribution and Service Plan, as outlined in the table in
footnote 5 under the column titled "Distribution Fee".
5. Investment Advisory and Custodian Agreements:
The Trust and STI Capital Management, N.A., ("STI Capital Management, N.A."),
Trusco Capital Management ("Trusco"), the SunTrust Bank, Atlanta and SunTrust
Bank, Chattanooga have entered into advisory agreements dated May 29, 1992, June
15, 1993, December 20, 1993 and December 20, 1993 respectively.
138
<PAGE>
- --------------------------------------------------------------------------------
Under terms of the respective agreements, the Funds are charged the following
annual fees based upon average daily net assets:
<TABLE>
<CAPTION>
MAXIMUM
INVESTOR MAXIMUM
MAXIMUM TRUST SHARE INVESTOR FLEX SHARE FLEX
ANNUAL SHARE DISTRI- SHARE DISTRI- SHARE
ADVISORY MAXIMUM BUTION MAXIMUM BUTION AND MAXIMUM
FEE EXPENSE FEE EXPENSE SERVICE FEE EXPENSE
-------- ------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
TRUSCO:
International Equity Index Fund*.................. .90% 1.05% .38% 1.45% 1.00% 2.10%
Sunbelt Equity Fund............................... 1.15% 1.15% .43% 1.60% 1.00% 2.20%
Short-Term Bond Fund.............................. .65% .65% .23% .85% 1.00% 1.20%
Short-Term U.S. Treasury Securities Fund.......... .65% .65% .18% .80% 1.00% 1.05%
U.S. Government Securities Fund................... .74% .75% .38% 1.15% 1.00% 1.66%
Prime Quality Money Market Fund................... .65% .58% .20% .75% -- --
U.S. Government Securities Money Market Fund...... .65% .61% .17% .75% -- --
Tax-Exempt Money Market Fund...................... .55% .60% .15% .72% -- --
STI CAPITAL MANAGEMENT, N.A.:
Value Income Stock Fund........................... .80% .95% .33% 1.30% 1.00% 2.00%
Mid-Cap Equity Fund............................... 1.15% 1.15% .43% 1.60% 1.00% 2.20%
Capital Growth Fund............................... 1.15% 1.15% .68% 1.80% 1.00% 2.27%
Balanced Fund..................................... .95% .95% .28% 1.25% 1.00% 2.01%
Small Cap Equity Fund............................. 1.15% 1.20% -- -- -- --
Investment Grade Tax-Exempt Bond Fund............. .74% .75% .43% 1.15% 1.00% 1.63%
Florida Tax-Exempt Bond Fund...................... .65% .65% .18% .85% 1.00% 1.35%
Investment Grade Bond Fund........................ .74% .75% .43% 1.15% 1.00% 1.64%
Limited-Term Federal Mortgage Securities Fund..... .65% .65% .23% .90% 1.00% 1.25%
International Equity Fund......................... 1.25% 1.46% .33% 1.81% 1.00% 2.51%
Emerging Markets Equity Fund...................... 1.30% 1.55% -- -- -- --
<CAPTION>
MAXIMUM
INVESTOR MAXIMUM
MAXIMUM TRUST SHARE INVESTOR FLEX SHARE FLEX
ANNUAL SHARE DISTRI- SHARE DISTRI- SHARE
ADVISORY MAXIMUM BUTION MAXIMUM BUTION AND MAXIMUM
FEE EXPENSE FEE EXPENSE SERVICE FEE EXPENSE
-------- ------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
SUNTRUST BANK, ATLANTA:
Georgia Tax-Exempt Bond Fund...................... .65% .65% .18% .85% 1.00% 1.35%
SUNTRUST BANK, CHATTANOOGA:
Tennessee Tax-Exempt Bond Fund.................... .65% .65% .18% .85% 1.00% 1.35%
</TABLE>
- --------------------
* Trusco and SunBank serve as joint advisors to the International Equity Index
Fund.
The Investment Advisors, the Administrator and the Distributor have voluntarily
agreed to waive all or a portion of their fees (and to reimburse Funds'
expenses) in order to limit operating expenses to an amount as outlined in the
table above. Fee waivers and expense reimbursements are voluntary and may be
terminated at any time.
SunTrust Bank, Atlanta, formerly Trust Company Bank, acts as custodian for all
the Funds except the Emerging Markets Equity, the International Equity and the
International Equity Index Funds who utilize the Bank of New York as custodian.
Fees of the Custodians are paid on the basis of the net assets of the Funds. The
Custodians play no role in determining the investment policies of the Trust or
which securities are to be purchased or sold in the Funds.
139
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
6. Investment Transactions:
The cost of purchases and the proceeds from sales of securities, excluding
short-term investments and U.S. Government Securities, for the period ended May
31, 1997, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
---------- ----------
<S> <C> <C>
Value Income Stock Fund................................. $1,510,065 $1,479,214
Mid-Cap Equity Fund..................................... 418,847 401,422
Small Cap Equity Fund................................... 138,246 20,448
Capital Growth Fund..................................... 1,613,504 1,785,362
Balanced Fund........................................... 162,679 134,261
Emerging Markets Equity Fund............................ 39,912 6,023
International Equity Index Fund......................... 1,316 43,227
International Equity Fund............................... 683,881 480,728
Sunbelt Equity Fund..................................... 297,705 337,710
Investment Grade Tax-Exempt Bond Fund................... 737,733 729,258
Florida Tax-Exempt Bond Fund............................ 69,939 56,743
Tennessee Tax-Exempt Bond Fund.......................... 858 814
Georgia Tax-Exempt Bond Fund............................ 18,954 5,152
Investment Grade Bond Fund.............................. 833,857 550,764
Short-Term Bond Fund.................................... 57,688 42,957
Short-Term U.S. Treasury Securities Fund................ -- --
Limited-Term Federal Mortgage Securities Fund........... -- --
U.S. Government Securities Fund......................... -- --
</TABLE>
The cost of purchases and proceeds from sales of U.S. Government Securities
were:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
---------- ----------
<S> <C> <C>
Value Income Stock Fund.............................. $ -- $ --
Mid-Cap Equity Fund.................................. -- --
Small Cap Equity Fund................................ -- --
Capital Growth Fund.................................. -- --
Balanced Fund........................................ 79,476 93,071
Emerging Markets Equity Fund......................... -- --
International Equity Index Fund...................... -- --
International Equity Fund............................ -- --
Sunbelt Equity Fund.................................. -- --
Investment Grade Tax-Exempt Bond Fund................ -- --
Florida Tax-Exempt Bond Fund......................... -- --
Tennessee Tax-Exempt Bond Fund....................... -- --
Georgia Tax-Exempt Bond Fund......................... -- --
Investment Grade Bond Fund........................... $1,016,624 $1,283,246
Short-Term Bond Fund................................. 49,756 70,593
Short-Term U.S. Treasury Securities Fund............. 32,074 21,455
Limited-Term Federal Mortgage Securities Fund........ 187,177 136,508
U.S. Government Securities Fund...................... 12,660 4,083
</TABLE>
At May 31, 1997, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes were not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Funds
at May 31, 1997, were as follows:
<TABLE>
<CAPTION>
VALUE
INCOME MID-CAP SMALL-CAP
STOCK EQUITY EQUITY
FUND FUND FUND
(000) (000) (000)
--------- ----------- -----------
<S> <C> <C> <C>
Aggregate gross unrealized appreciation............ $ 181,099 $ 36,213 $ 8,808
Aggregate gross unrealized depreciation............ (26,682) (10,378) (1,164)
--------- ----------- -----------
Net unrealized appreciation........................ $ 154,417 $ 25,835 $ 7,644
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
EMERGING
CAPITAL MARKETS
GROWTH BALANCED EQUITY
FUND FUND FUND
(000) (000) (000)
--------- ----------- -----------
<S> <C> <C> <C>
Aggregate gross unrealized appreciation............ $ 201,727 $ 13,349 $ 3,401
Aggregate gross unrealized depreciation............ (20,916) (1,442) (1,293)
--------- ----------- -----------
Net unrealized appreciation........................ $ 180,811 $ 11,907 $ 2,108
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY INTERNATIONAL SUNBELT
INDEX EQUITY EQUITY
FUND FUND FUND
(000) (000) (000)
------------- ------------- ---------
<S> <C> <C> <C>
Aggregate gross unrealized appreciation...... $ 12,670 $ 69,379 $ 94,010
Aggregate gross unrealized depreciation...... (4,169) (4,549) (12,447)
------------- ------------- ---------
Net unrealized appreciation.................. $ 8,501 $ 64,830 $ 81,563
------------- ------------- ---------
------------- ------------- ---------
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT
GRADE FLORIDA TENNESSEE
TAX-EXEMPT TAX-EXEMPT BOND TAX-EXEMPT BOND
BOND FUND FUND FUND
(000) (000) (000)
------------- --------------- ---------------
<S> <C> <C> <C>
Aggregate gross unrealized appreciation..... $ 1,557 $ 843 $ 132
Aggregate gross unrealized depreciation..... (84) (43) (12)
------ ----- -----
Net unrealized appreciation................. $ 1,473 $ 800 $ 120
------ ----- -----
------ ----- -----
</TABLE>
140
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GEORGIA INVESTMENT SHORT-
TAX-EXEMPT GRADE BOND TERM BOND
FUND FUND FUND
(000) (000) (000)
------------- ----------- -------------
<S> <C> <C> <C>
Aggregate gross unrealized appreciation....... $ 425 $ 3,182 $ 172
Aggregate gross unrealized depreciation....... (123) (2,877) (473)
----- ----------- -----
Net unrealized appreciation/(depreciation).... $ 302 $ 305 $ (301)
----- ----------- -----
----- ----------- -----
</TABLE>
<TABLE>
<CAPTION>
SHORT- LIMITED-
TERM TERM
U.S. FEDERAL U.S.
TREASURY MORTGAGE GOVERNMENT
SECURITIES SECURITIES SECURITIES
FUND FUND FUND
(000) (000) (000)
------------- ----------- -------------
<S> <C> <C> <C>
Aggregate gross unrealized appreciation......... $ 23 $ 268 $ 85
Aggregate gross unrealized depreciation......... (53) (413) (299)
--- ----- -----
Net unrealized appreciation/(depreciation)...... $ (30) $ (145) $ (214)
--- ----- -----
--- ----- -----
</TABLE>
Subsequent to October 31, 1996, the Funds recognized net capital losses for tax
purposes that have been deferred to 1997 and can be used to offset future
capital gains at May 31, 1997. The Funds also had capital loss carryforwards at
May 31, 1997 as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS POST
CARRYOVER EXPIRES EXPIRES EXPIRES EXPIRES 10/31
5/31/97 2002 2003 2004 2005 DEFERRAL
FUND (000) (000) (000) (000) (000) (000)
- ------------------------------ ------------ ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Florida Tax-Exempt Bond
Fund......................... $ 127 $-- $ -- $-- $ 127 $ 83
Tennessee Tax Exempt
Bond Fund.................... 12 -- -- -- 12 --
Investment Grade
Bond Fund.................... 10,613 -- 6,388 -- 4,225 --
Short-Term Bond Fund.......... 137 -- -- -- 137 120
Short-Term U.S. Treasury
Securities Fund.............. 232 -- 203 29 -- 26
Limited-Term Federal Mortgage
Securities Fund.............. -- -- -- -- -- 28
U.S. Government Securities
Fund......................... 31 -- -- -- 31 20
Prime Quality Money Market
Fund......................... 379 3 173 -- 203 --
U.S. Government Securities
Money Market Fund............ 62 -- 11 -- 51 --
Tax-Exempt Money Market
Fund......................... 4 -- -- 4 -- --
</TABLE>
For tax purposes, the losses in the Funds can be carried forward for a maximum
of eight years to offset any net realized capital gains.
7. Concentration of Credit Risk:
The Prime Quality Money Market Fund invests primarily in high quality money
market instruments rated in the highest short-term rating category by Standard &
Poor's Ratings Group ("S&P") or Moody's Investors Services, Inc. ("Moody's") or,
if not rated, are determined by the Advisor to be of comparable quality. The
U.S. Government Securities Money Market Fund invests exclusively in U.S.
Treasury obligations, U.S. Government subsidiary corporation securities which
are backed by the full faith and credit of the U.S. Government and repurchase
agreements with approved dealers collateralized by U.S. Treasury securities and
U.S. Government subsidiary corporation securities. The Tax-Exempt Money Market
Fund invests in high quality, U.S. dollar denominated municipal securities rated
in one of the two highest short-term rating categories or, if not rated, are
determined by the Advisor to be of comparable quality. The Investment Grade Bond
Fund, the Short-Term Bond Fund and the Balanced Fund invest primarily in
investment grade obligations rated at least BBB or better by S&P or Baa or
better by Moody's or, if not rated, are determined by the Advisor to be of
comparable quality. The Investment Grade Tax-Exempt Fund invests primarily in
investment grade municipal securities. Municipal securities must be rated BBB or
better by S&P or Baa or better by Moody's in the case of bonds; SP-1, SP-2 or
MIG-1, MIG-2 in the case of notes; A-1, A-2 or P-1, P-2 in the case of
commercial paper; and VMIG-1, VMIG-2 in the case of variable rate demand
obligations. The Short-Term U.S. Treasury Securities Fund invests exclusively in
obligations issued by the U.S. Treasury with a maximum remaining maturity of 3
years or less. The Florida Tax-Exempt Bond Fund, the Georgia Tax-Exempt Bond
Fund, and the Tennessee Tax-Exempt Bond Fund invest primarily in municipal bonds
concentrated in each of their respective states. Municipal securities must be
rated BBB or better by S&P or Baa or better by Moody's in the case of bonds;
A-1, A-2 or P-1, P-2 in the case of tax-exempt commercial paper; and VMIG-1,
VMIG-2 in
141
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
the case of variable rate demand obligations. The U.S. Government Securities
Fund invests primarily in obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, including mortgage backed
securities. The Limited-Term Federal Mortgage Securities Fund invests in
mortgage related securities issued or guaranteed by U.S. Government agencies. Up
to 35% of the U.S. Government Securities Fund and the Limited-Term Federal
Mortgage Securities Fund may be invested in corporate, or government bonds that
carry a rating of BBB or better by S&P or Baa or better by Moody's. The ability
of the issuers of the securities held by the Funds to meet their obligations may
be affected by economic developments in a specific industry, state or region, or
by changing business conditions.
8. Consent of Sole Shareholder:
On December 30, 1996, the sole shareholder of the Emerging Markets Equity Fund
and Small Cap Equity Fund (the "Funds") approved the following: SEI Fund
Resources as administrator of the Funds, STI Capital Management, N.A. as
investment advisor to the assets of the Funds, SEI Investments Distribution Co.
as distributor of the shares of the Funds, the Distribution and Service Plan for
Flex Shares, the Distribution Plan for Investor Shares, and Arthur Andersen LLP
as independent public accountants of the Funds.
142
<PAGE>
STI CLASSIC FUNDS
INVESTMENT ADVISOR:
TRUSCO CAPITAL MANAGEMENT, INC.
This Statement of Additional Information is not a prospectus. It is intended
to provide additional information regarding the activities and operations of
the Trust and should be read in conjunction with the Trust's Classic
Institutional Cash Management and Classic Institutional U.S. Treasury
Securities Money Market Fund prospectus dated October 1, 1997. The
prospectus may be obtained through the Distributor, SEI Investments
Distribution Co., Oaks, Pennsylvania 19456.
TABLE OF CONTENTS
PAGE
THE TRUST...............................................................B-
DESCRIPTION OF PERMITTED INVESTMENTS....................................B-
INVESTMENT LIMITATIONS..................................................B-
INVESTMENT ADVISOR......................................................B-
THE ADMINISTRATOR.......................................................B-
THE DISTRIBUTOR.........................................................B-
TRUSTEES AND OFFICERS OF THE TRUST......................................B-
COMPUTATION OF YIELD....................................................B-
ADVERTISING.............................................................B-
PURCHASE AND REDEMPTION OF SHARES.......................................B-
DETERMINATION OF NET ASSET VALUE........................................B-
TAXES...................................................................B-
FUND TRANSACTIONS.......................................................B-
DESCRIPTION OF SHARES...................................................B-
SHAREHOLDER LIABILITY...................................................B-
LIMITATION OF TRUSTEES' LIABILITY.......................................B-
5% AND 25% SHAREHOLDERS.................................................B-
EXPERTS.................................................................B-
FINANCIAL STATEMENTS....................................................F-
October 1, 1997
<PAGE>
THE TRUST
STI Classic Funds (the "Trust") is a diversified, open-end management
investment company established under Massachusetts law as a Massachusetts
business trust under a Declaration of Trust dated January 15, 1992. The
Declaration of Trust permits the Trust to offer separate series ("Funds") of
units of beneficial interest ("shares") and different classes of shares of
each Fund. This Statement of Additional Information relates to the Trust's
Classic Institutional Cash Management Money Market Fund and Classic
Institutional U.S. Treasury Securities Money Market Fund (collectively, the
"Funds"), each of which currently offers one class of shares.
DESCRIPTION OF PERMITTED INVESTMENTS
FOREIGN SECURITIES
The Institutional Cash Management Money Market Fund may invest in U.S. dollar
denominated obligations or securities of foreign issuers. Possible
investments include equity securities of foreign entities, obligations of
foreign branches of U.S. banks and of foreign banks, including, without
limitation, European Certificates of Deposit, European Time Deposits,
European Bankers' Acceptances, Canadian Time Deposits and Yankee Certificates
of Deposit, and investments in Canadian Commercial Paper, Europaper and
foreign securities. These instruments may subject the Fund to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest or other income, possible seizure, nationalization, or
expropriation of foreign deposits, the possible establishment of exchange
controls or taxation at the source, greater fluctuations in value due to
changes in exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and
interest on such obligations. Such investments may also entail higher
custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting
treatment and engage in business practices different from those respecting
domestic issuers of similar securities or obligations. Foreign branches of
U.S. banks and foreign banks may be subject to less stringent reserve
requirements than those applicable to domestic branches of U.S. banks.
INVESTMENT COMPANY SHARES
Investment companies typically incur fees that are separate from those fees
incurred directly by the Funds. A Fund's purchase of such investment company
securities results in the layering of expenses, such that Shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.
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MUNICIPAL SECURITIES
The Funds may invest in municipal securities. The two principal
classifications of municipal securities are "general obligation" and
"revenue" issues. General obligation issues are issues involving the credit
of an issuer possessing taxing power and are payable from the issuer's
general unrestricted revenues, although the characteristics and method of
enforcement of general obligation issues may vary according to the law
applicable to the particular issue. Revenue issues are payable only from the
revenues derived from a particular facility or class of facilities or other
specific revenue source. A Fund may also invest in "moral obligation"
issues, which are normally issued by special purpose authorities. Moral
obligation issues are not backed by the full faith and credit of the state
and are generally backed by the agreement of the issuing authority to request
appropriations from the state legislative body. Municipal securities include
debt obligations issued by governmental entities to obtain funds for various
public purposes, such as the construction of a wide range of public
facilities, the refunding of outstanding obligations, the payment of general
operating expenses, and the extension of loans to other public institutions
and facilities. Certain private activity bonds that are issued by or on
behalf of public authorities to finance various privately-owned or operated
facilities are included within the term "Municipal Securities." Private
activity bonds are industrial development bonds are generally revenue bonds,
the credit and quality of which are directly related to the credit of the
private user of the facilities.
Municipal securities may also include general obligation notes, tax
anticipation notes, bond anticipation notes, revenue anticipation notes,
project notes, certificates of indebtedness, demand notes, tax-exempt
commercial paper, construction loan notes and other forms of short-term,
tax-exempt loans. Such instruments are issued with a short-term maturity in
anticipation of the receipt of fax funds, the proceeds of bond placements or
other revenues. Project notes are issued by a state or local housing agency
and are sold by the Department of Housing and Urban Development. While the
issuing agency has the primary obligation with respect to its project notes,
they are also secured by the full faith and credit of the United States
through agreements with the issuing authority which provide that, if
required, the federal government will end the issuer an amount equal to the
principal of and interest on the project notes.
The quality of municipal securities, both within a particular classification
and between classifications, will vary, and the yields on municipal
securities depend upon a variety of factors, including general money market
conditions, the financial condition of the issuer (or other entity whose
financial resources are supporting the securities), general conditions of the
municipal bond market, the size of a particular offering, the maturity of the
obligation and the rating(s) of the issue. In this regard, it should be
emphasized that the ratings of any NRSRO are general and are not absolute
standards of quality. Municipal securities with the same maturity, interest
rate and rating(s) may have different yields, while municipal securities of
the same maturity and interest rate with different rating(s) may have the
same yield.
An issuer's obligations under its municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
B-3
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payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for
the payment of interest on and principal of its municipal securities may be
materially adversely affected by litigation or other conditions.
MUNICIPAL NOTE RATINGS: Moody's highest rating for state and municipal and
other short-term notes is MIG-1 and VMIG-1. Short-term municipal securities
rated MIG-1 or VMIG-1 are of the best quality. They have strong protection
from established cash flows of funds for their servicing or from established
and broad-based access to the market for refinancing or both. Short-term
municipal securities rated MIG-2 and VMIG-2 are of high quality. Margins of
protection are ample although not so large as in the preceding group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a
long-term debt rating. The following criteria will be used in making that
assessment.
- Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
- Source of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).
Note rate symbols are as follows:
SP-1. Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
SUPRANATIONAL AGENCY OBLIGATIONS
The Institutional Cash Management Money Market Fund may purchase obligations
of supranational agencies. Currently the Fund intends to invest only in
obligations issued or guaranteed by the Asian Development Bank,
Inter-American Development Bank, International Bank for Reconstruction and
Development (World Bank), African Development Bank, European Coal and Steel
Community, European Economic Community, European Investment Bank and the
Nordic Investment Bank.
OTHER INVESTMENTS
The Trust is not prohibited from investing in obligations of banks which are
clients of SEI Investments Company ("SEI Investments"), the parent company of
the Administrator and the Distributor. The purchase of shares of the Trust
by such banks or by their customers will not be a consideration in
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determining which bank obligations the Trust will purchase. However, the
Trust will not purchase obligations issued by the Advisor.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements. Repurchase agreements are
agreements by which a person (E.G., a Fund) obtains a security and
simultaneously commits to return the security to the seller (a primary
securities dealer as recognized by the Federal Reserve Bank of New York or a
national member bank as defined in Section 3(d)(1) of the Federal Deposit
Insurance Act, as amended) at an agreed-upon price (including principal and
interest) on an agreed-upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed upon market rate of interest which is unrelated
to the coupon rate or maturity of the underlying security. A repurchase
agreement involves the obligation of the seller to pay the agreed upon price,
which obligation is, in effect, secured by the value of the underlying
security.
Repurchase agreements are considered to be loans by a Fund for purposes of
its investment limitations. The repurchase agreements entered into by a Fund
will provide that the underlying security at all times shall have a value at
least equal to 102% of the resale price stated in the agreement (the Advisor
monitors compliance with this requirement). Under all repurchase agreements
entered into by a Fund, the Custodian or its agent must take possession of
the underlying collateral. However, if the seller defaults, a Fund could
realize a loss on the sale of the underlying security to the extent that the
proceeds of the sale including accrued interest are less than the resale
price provided in the agreement including interest. In addition, even though
the Bankruptcy Code provides protection for most repurchase agreements, if
the seller should be involved in bankruptcy or insolvency proceedings, a Fund
may incur delay and costs in selling the underlying security or may suffer a
loss of principal and interest if a Fund is treated as an unsecured creditor
and required to return the underlying security to the seller's estate.
RESTRICTED SECURITIES
Restricted securities are securities that may not be sold to the public
without registration under the Securities Act of 1933 (the "1933 Act") absent
an exemption from registration. PERMITTED INVESTMENTS FOR THE FUNDS INCLUDE
RESTRICTED SECURITIES, AND EACH FUND MAY INVEST UP TO 10% OF ITS NET ASSETS
IN illiquid securities, subject to each Fund's investment limitations on the
purchase of illiquid securities. Restricted securities, including securities
eligible for re-sale under 1933 Act Rule 144A, that are determined to be
liquid are not subject to this limitation. This determination is to be made
by the Fund's Advisor pursuant to guidelines adopted by the Board of
Trustees. Under these guidelines, the Advisor will consider the frequency
of trades and quotes for the security, the number of dealers in, and
potential purchasers for, the securities, dealer undertakings to make a
market in the security, and the nature of the security and of the marketplace
trades. In purchasing such Restricted Securities, the Advisor intends to
purchase securities that are exempt from registration under Rule 144A under
the 1933 Act.
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SECURITIES LENDING
The Funds may lend securities pursuant to agreements which require that the
loans be continuously secured by collateral at all times equal to 100% of the
market value of the loaned securities which consists of cash, securities of
the U.S. Government or its agencies, or any combination of cash and such
securities. Such loans will not be made if, as a result, the aggregate amount
of all outstanding securities loans for a Fund exceed one-third of the value
of the Fund's total assets taken at fair market value. A Fund will continue
to receive interest on the securities lent while simultaneously earning
interest on the investment of the cash collateral in U.S. Government
securities. However, a Fund will normally pay lending fees to such
broker-dealers and related expenses from the interest earned on invested
collateral. There may be risks of delay in receiving additional collateral
or 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 are made only to borrowers deemed by the Advisor to be of good standing
and when, in the judgment of the Advisor, the consideration which can be
earned currently from such securities loans justifies the attendant risk.
Any loan may be terminated by either party upon reasonable notice to the
other party. The Funds may use the Distributor or a broker-dealer affiliate
of the Advisor as a broker in these transactions.
STANDBY COMMITMENTS AND PUTS
The Institutional Cash Management Money Market Fund may purchase securities
at a price which would result in a yield-to-maturity lower than that
generally offered by the seller at the time of purchase when it can
simultaneously acquire the right to sell the securities back to the seller,
the issuer, or a third party (the "writer") at an agreed-upon price at any
time during a stated period or on a certain date. Such a right is generally
denoted as a "standby commitment" or a "put." The purpose of engaging in
transactions involving puts is to maintain flexibility and liquidity to
permit the Fund to meet redemptions and remain as fully invested as possible
in municipal securities. The Fund reserves the right to engage in put
transactions. The right to put the securities depends on the writer's
ability to pay for the securities at the time the put is exercised. The
Institutional Cash Management Money Market Fund would limit its put
transactions to institutions which the Advisor believes present minimal
credit risks, and the Advisor would use its best efforts to initially
determine and continue to monitor the financial strength of the sellers of
the options by evaluating their financial statements and such other
information as is available in the marketplace. It may, however be difficult
to monitor the financial strength of the writers because adequate current
financial information may not be available. In the event that any writer is
unable to honor a put for financial reasons, the Fund would be a general
creditor (I.E., on a parity with all other unsecured creditors) of the
writer. Furthermore, particular provisions of the contract between the Fund
and the writer may excuse the writer from repurchasing the securities; for
example, a change in the published rating of the underlying securities or any
similar event that has an adverse effect on the issuer's credit or a
provision in the contract that the put will not be exercised except in
certain special cases, for example, to maintain portfolio liquidity. The
Fund could, however, at any time sell the underlying portfolio security in
the open market or wait until the portfolio security matures, at which time
it should realize the full par value of the security.
B-6
<PAGE>
The securities purchased subject to a put may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the Fund.
Sale of the securities to third parties or lapse of time with the put
unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, the Fund could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Fund, the Fund could, of course, sell the portfolio
security. The maturity of the underlying security will generally be
different from that of the put. There will be no limit to the percentage of
portfolio securities that the Fund may purchase subject to a standby
commitment or put, but the amount paid directly or indirectly for all standby
commitments or puts which are not integral parts of the security as
originally issued held in the Fund will not exceed 1/2 of 1% of the value of
its total assets of such Fund calculated immediately after any such put is
acquired.
STRIPS
Each Fund may invest in Separately Traded Interest and Principal Securities
("STRIPS"), which are component parts of U.S. Treasury Securities traded
through the Federal Book-Entry System. The Advisor will only purchase STRIPS
that it determines are liquid or, if illiquid, do not violate each Fund's
investment policy concerning investments in illiquid securities. Consistent
with Rule 2a-7 under the Investment Company Act of 1940, as amended, (the
"1940 Act"), the Advisor will only purchase STRIPS for the Funds that have a
remaining maturity of 397 days or less; therefore, the Funds currently may
only purchase interest component parts of U.S. Treasury Securities. While
there is no limitation on the percentage of a Fund's assets that may be
comprised of STRIPS, the Advisor will monitor the level of such holdings to
avoid the risk of impairing Shareholders' redemption rights and of deviations
in the value of shares of the Funds.
U.S. GOVERNMENT AGENCY SECURITIES
Certain investments of the Institutional Cash Management Money Market Fund
may include U.S. Government Agency Securities. Agencies of the United States
Government which issue obligations consist of, among others, the Export
Import Bank of the United States, Farmers Home Administration, Federal Farm
Credit Bank, Federal Housing Administration, Government National Mortgage
Association ("GNMA"), Maritime Administration, Small Business Administration,
and The Tennessee Valley Authority. Obligations of instrumentalities of the
United States Government include securities issued by, among others, Federal
Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, Federal Land Banks, Fannie Mae, and the United States Postal
Service as well as government trust certificates. Some of these securities
are supported by the full faith and credit of the United States Treasury
(E.G., GNMA securities), others are supported by the right of the issuer to
borrow from the Treasury and still others are supported only by the credit of
the instrumentality (E.G., Fannie Mae securities). Guarantees of principal
by agencies or instrumentalities of the U.S. Government may be a guarantee of
payment at the maturity of the obligation so that in the event of a default
prior to maturity there might not be a market and thus no means of realizing
the value of the obligation prior to maturity.
B-7
<PAGE>
VARIABLE RATE MASTER DEMAND NOTES
The Institutional Cash Management Money Market Fund may invest in variable
rate master demand notes which may or may not be backed by bank letters of
credit. These notes permit the investment of fluctuating amounts at varying
market rates of interest pursuant to direct arrangements between the Fund, as
lender, and the borrower. Such notes provide that the interest rate on the
amount outstanding varies on a daily, weekly or monthly basis depending upon
a stated short-term interest rate index. Both the lender and the borrower
have the right to reduce the amount of outstanding indebtedness at any time.
There is no secondary market for the notes and it is not generally
contemplated that such instruments will be traded. The quality of the note
or the underlying credit must, in the opinion of the Advisor, be equivalent
to the ratings applicable to permitted investments for the Fund. The Advisor
will monitor on an ongoing basis the earning power, cash flow and liquidity
ratios of the issuers of such instruments and will similarly monitor the
ability of an issuer of a demand instrument to pay principal and interest on
demand.
INVESTMENT LIMITATIONS
The following are fundamental policies of each Fund and cannot be changed
with respect to a Fund without the consent of the holders of a majority of a
Fund's outstanding shares.
The term "a majority of the outstanding shares" of a Fund means the vote of
the lesser of (i) 67% or more of the shares of such Fund present at a
meeting, if the holders of more than 50% of the outstanding shares of such
Fund are present or represented by proxy or (ii) more than 50% of the
outstanding shares of such Fund.
A Fund may not:
1. Acquire more than 10% of the voting securities of any one issuer.
2. Invest in companies for the purpose of exercising control.
3. Borrow money except for temporary or emergency purposes and then
only in an amount not exceeding one-third of the value of total assets.
Any borrowing will be done from a bank and, to the extent that such
borrowing exceeds 5% of the value of the Fund's assets, asset coverage
of at least 300% is required. In the event that such asset coverage
shall at any time fall below 300%, the Fund shall, within three days
thereafter or such longer period as the Securities and Exchange
Commission may prescribe by rules and regulations, reduce the amount of
its borrowings to such an extent that the asset coverage of such
borrowings shall be at least 300%. This borrowing provision is
included solely to facilitate the orderly sale of portfolio securities
to accommodate heavy redemption requests if they should occur and is
not for investment purposes. All borrowings in excess of 5% of the
value of a Fund's total assets will be repaid before making additional
investments and any interest paid on such borrowings will reduce income.
B-8
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4. Make loans, except that (a) a Fund may purchase or hold debt
instruments in accordance with its investment objective and policies;
(b) a Fund may enter into repurchase agreements, and (c) a Fund may
engage in securities lending as described in the Prospectus and in this
Statement of Additional Information.
5. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (3) above in aggregate amounts not to exceed
10% of the Fund's total assets, taken at current value at the time of
the incurrence of such loan, except as permitted with respect to
securities lending.
6. Purchase or sell real estate, real estate limited partnership
interests, commodities or commodities contracts and interests in a pool
of securities that are secured by interests in real estate. However,
subject to their permitted investment spectrum, any Fund may invest in
companies which invest in real estate commodities or commodities
contracts.
7. Make short sales of securities, maintain a short position or
purchase securities on margin, except that the Trust may obtain
short-term credits as necessary for the clearance of security
transactions.
8. Act as an underwriter of securities of other issuers except as it
may be deemed an underwriter in selling a security.
9. Purchase securities of other investment companies except for money
market funds and CMOs and REMICs deemed to be investment companies and
then only as permitted by the 1940 Act and the rules and regulations
thereunder. Under these rules and regulations, a Fund is prohibited
from acquiring the securities of other investment companies if, as a
result of such acquisition, the Fund owns more than 3% of the total
voting stock of the company; securities issued by any one investment
company represent more than 5% of the total assets of a Fund; or
securities (other than treasury stock) issued by all investment
companies represent more than 10% of the total assets of the Fund.
10. Issue senior securities (as defined in the 1940 Act) except in
connection with permitted borrowings as described above or as permitted
by rule, regulation or order of the SEC.
NON-FUNDAMENTAL POLICIES
No Fund may purchase or hold illiquid securities, I.E., securities that
cannot be disposed of for their approximate carrying value in seven days or
less (which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 10% of its net assets
would be invested in illiquid securities.
The foregoing percentages, except with respect to holding illiquid
securities, will apply at the time of the purchase of a security and shall
not be considered violated unless an excess occurs or exists immediately
after and as a result of a purchase of such security.
B-9
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INVESTMENT ADVISOR
The Trust and Trusco Capital Management, Inc. (the "Advisor") have entered
into an advisory agreement (the "Advisory Agreement"). The Advisory
Agreement provides that the Advisor shall not be protected against any
liability to the Trust or its Shareholders by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard of its obligations or duties thereunder.
The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of a Fund (including amounts payable to the Advisor but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by certain states, the Advisor and/or the
Administrator will bear the amount of such excess. The Advisor will not be
required to bear expenses of the Trust to an extent which would result in a
Fund's inability to qualify as a regulated investment company under
provisions of the Internal Revenue Code.
The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to each
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Funds, by a majority of the outstanding shares of the Funds,
on not less than 30 days' nor more than 60 days' written notice to the
Advisor, or by the Advisor on 90 days' written notice to the Trust.
For the fiscal year ended May 31, 1997, the Funds paid the following advisory
fees:
Fees Paid Fees Waived
Fund 1997 1997
- ---- --------- -----------
Classic Institutional Cash Management Money $0 $100,270
Market Fund
Classic Institutional U.S. Treasury Securities $0 $ 18,255
Money Market Fund
THE ADMINISTRATOR
The Trust and SEI Fund Resources (the "Administrator"), are parties to an
Administration Agreement (the "Administration Agreement") dated May 29, 1992.
The Administration Agreement provides that the Administrator shall not be
liable for any error of judgment or mistake of law or for any loss suffered
by the Trust in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Administrator in the
performance of its duties or from reckless disregard by it of its duties and
obligations thereunder.
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<PAGE>
The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the Administrator.
SEI and its subsidiaries and affiliates, including the Administrator, are
leading providers of funds evaluation services, trust accounting systems, and
brokerage and information services to financial institutions, institutional
investors and money managers. The Administrator and its affiliates also serve
as administrator to the following other mutual funds: The Achievement Funds
Trust; The Advisors' Inner Circle Fund; The Arbor Fund; ARK Funds; Bishop
Street Funds; CoreFunds, Inc.; CrestFunds, Inc.; CUFUND; FMB Funds, Inc.;
First American Funds, Inc.; First American Investment Funds, Inc.; Inventor
Funds, Inc; Marquis Funds-Registered Trademark-; Monitor Funds; Morgan
Grenfell Investment Trust; The PBHG Funds, Inc.; The PBHG Insurance Series
Fund, Inc.; The Pillar Funds; Rembrandt Funds-Registered Trademark-; 1784
Funds-Registered Trademark-; SEI Asset Allocation Trust; SEI Daily Income
Trust; SEI Index Funds; SEI Institutional Investments Trust; SEI
Institutional Managed Trust; SEI International Trust; SEI Liquid Asset Trust;
SEI Tax Exempt Trust; Stepstone Funds; and Turner Funds.
For the fiscal year ended May 31, 1997, the Funds paid the following
administration fees:
Fees Paid Fees Waived
Fund 1997 1997
- ---- --------- -----------
Classic Institutional Cash Management Money $32,389 $0
Market Fund
Classic Institutional U.S. Treasury Securities $ 6,047 $0
Money Market Fund
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned
subsidiary of SEI Investments, and the Trust have entered into a distribution
agreement (the "Distribution Agreement") dated May 29, 1992. The Distributor
will receive no compensation for distribution of Shares.
The Distribution Agreement is renewable annually and may be terminated by the
Distributor, the Qualified Trustees (as defined in the Distribution
Agreement), or by a majority vote of the outstanding securities of the Trust
upon not more than 60 days' written notice by either party.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees and executive officers of the Trust, their respective dates of birth
and principal occupations for the last five years are set forth below. The
principal business address for each officer listed below is Oaks,
Pennsylvania 19456.
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DANIEL S. GOODRUM (7/11/26) - Trustee - Chairman & CEO, SunBank/South
Florida, N.A., 1985-1991; Chairman Audit Committee and Director, Holy Cross
Hospital; Executive Committee Member and Director, Honda Classic Foundation;
Director, Broward Community College Foundation.
WILTON LOONEY (4/18/19) - Trustee - President of Genuine Parts Company,
1961-1964; Chairman of the Board, 1964-1990; Honorary Chairman of the Board,
1990 to present. Director, Rollins, Inc.; Director, RPC Energy Services, Inc.
CHAMPNEY A. MCNAIR (10/30/24) - Trustee - Director and Chairman of Investment
Committee and member of Executive Committee, Cotton States Life and Health
Insurance Company; Director and Chairman of Investment Committee and member
of Executive Committee, Cotton States Mutual Insurance Company; Chairman,
Trust Company of Georgia Advisory Council.
F. WENDELL GOOCH (12/3/32) - Trustee - Retired. President, Orange County
Publishing Co., Inc., 1981 - 1997, Publisher of the Paoli News and the Paoli
Republican and Editor of the Paoli Republican, 1981 - 1997, President, H & W
Distribution, Inc., 1984 - 1997. Current Trustee on the Board of Trustees
for the SEI Family of Funds and The Capitol Mutual Funds. Executive Vice
President, Trust Department, Harris Trust and Savings Bank and Chairman of
the Board of Directors of The Harris Trust Company of Arizona before January
1981.
T. GORDY GERMANY (11/28/25) -Trustee - Retired President, Chairman, and CEO
of Crawford & Company; held these positions, 1973-1987. Member of the Board
of Directors, 1970-1990, joined company in 1948; spent entire career at
Crawford, currently serves on Boards of Norrell Corporation and Mercy Health
Services, the latter being the holding company of St. Joseph's Hospitals.
DR. BERNARD F. SLIGER (9/30/24) - Trustee - Currently on sabbatical leave
from Florida State University (1991-92); now serves as visiting professor at
the University of New Orleans. President of Florida State University,
1976-91; previous four years EVP and Chief Academic Officer. During
educational career, taught at Florida State, Michigan State, Louisiana State
and Southern University. Spent 19 years as faculty member and administrator
at Louisiana State University and served as Head of Economics Department,
member and Chairman of the Graduate Council, Dean of Academic Affairs and
Vice Chancellor. Member of Board of Directors of Federal Reserve Bank of
Atlanta, 1983-1988.
JESSE HALL (9/26/29) - Trustee* - Executive Vice President, SunTrust Banks,
Inc., 1985-1994; Director of Crawford & Company since 1979; Member, Atlanta
Estate Planning Council, 1988-1993.
DAVID G. LEE (4/16/52) - President, Chief Executive Officer - Senior Vice
President of the Administrator and Distributor since 1993. Vice President of
the Administrator and Distributor (1991-1993). President, GW Sierra Trust
Funds before 1991.
CAROL ROONEY (5/8/64) - Controller, Chief Financial Officer - A Director of
SEI Fund Resources since 1992.
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RICHARD W. GRANT (10/25/45) - Secretary - 2000 One Logan Square,
Philadelphia, Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law
firm). Counsel to the Trust, Administrator and Distributor.
SANDRA K. ORLOW (10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor since
1983.
KEVIN P. ROBINS (4/15/61) - Vice President, Assistant Secretary - Senior Vice
President & General Counsel of SEI Investments, the Administrator and the
Distributor since 1994. Vice President of SEI, the Administrator and the
Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm)
prior to 1992.
KATHRYN L. STANTON (11/19/58) - Vice President, Assistant Secretary - Vice
President, Assistant Secretary of SEI Investments, the Administrator and
Distributor since 1994. Associate, Morgan, Lewis & Bockius LLP (law firm),
1989-1994.
TODD CIPPERMAN (2/14/66) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor
since 1995. Associate, Dewey Ballantine (law firm), 1994-1995. Associate,
Winston & Strawn (law firm), 1991-1994.
BARBARA NUGENT (6/18/56) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of SEI Investments, the Distributor and
Administrator, Associate, Drinker Biddle & Reath (law firm), 1994-1996.
Assistant Vice President/Administration, Delaware Service Company, Inc.,
1981-1994.
MARC H. CAHN (6/19/57) - Vice President, Assistant Secretary - Vice President
and Assistant Secretary of SEI Investments, the Distributor and
Administrator, Associate General Counsel, Barclays Bank PLC., 1995-1996.
Counsel for First Fidelity Bancorporation prior to 1995.
JOHN H. GRADY, JR. (6/1/61) - Assistant Secretary - 1800 M Street, N.W.,
Washington, DC 20036. Partner, Morgan, Lewis & Bockius LLP (law firm) since
1995. Associate, Morgan, Lewis & Bockius LLP, 1993-1995. Associate, Ropes &
Gray (law firm), 1988-1993.
- ----------------
* Jesse S. Hall may be deemed to be an "interested person" of the Trust as
defined in the Investment Company Act of 1940.
The Trustees and officers of the Trust own, in the aggregate, less than 1% of
the outstanding shares of the Trust.
For the fiscal year end May 31, 1997, the Trust paid the following amounts to
Trustees and Officers of the Trust:
B-13
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Aggregate Pension or Total Compensation from
Compensation Retirement Registrant and Fund
From Registrant Benefits Accrued Estimated Annual Complex Paid to
Name of Person, for Fiscal Year as Part of Fund Benefits Upon Directors for Fiscal Year
Position Ended 1997 Expenses Retirement Ended 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel S. Goodrum, $15,625 N/A N/A $15,625 for service on
Trustee two boards
- ---------------------------------------------------------------------------------------------------------
Wilton Looney, $16,750 N/A N/A $16,750 for service on
Trustee two boards
- ---------------------------------------------------------------------------------------------------------
Champney A. McNair, $15,625 N/A N/A $15,625 for service on
Trustee two boards
- ---------------------------------------------------------------------------------------------------------
F. Wendell Gooch, $15,625 N/A N/A $15,625 for service on
Trustee two boards
- ---------------------------------------------------------------------------------------------------------
T. Gordy Germany, $15,625 N/A N/A $15,625 for service on
Trustee two boards
- ---------------------------------------------------------------------------------------------------------
Dr. Bernard F. Sliger, $15,625 N/A N/A $15,625 for service on
Trustee two boards
- ---------------------------------------------------------------------------------------------------------
Jesse S. Hall, Trustee $15,625 N/A N/A $15,625 for service on
two boards
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE INFORMATION
From time to time a Fund may advertise its performance. Performance figures
are based on historical earnings and are not intended to indicate future
performance.
PERFORMANCE COMPARISONS
Each Fund may periodically compare its performance to other mutual funds
tracked by mutual fund rating services, to broad groups of comparable mutual
funds, or to unmanaged indices. These comparisons may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.
COMPUTATION OF YIELD
The current yield of the Funds will be calculated daily based upon the seven
days ending on the date of calculation ("base period"). The yield is
computed by determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing shareholder account having a balance of
one share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing such net change
by the value of the account at the beginning of the same period to obtain the
base period return and multiplying the result by (365/7). Realized and
unrealized gains and losses are not included in the calculation of the yield.
The effective compound
B-14
<PAGE>
yield of the Funds is determined by computing the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing the difference by the value of the account at the beginning of the
base period to obtain the base period return, and then compounding the base
period return by adding 1, raising the sum to a power equal to 365 divided by
7, and subtracting 1 from the result, according to the following formula:
Effective Yield = [Base Period Return + 1) 365/7] - 1. The current and the
effective yields reflect the reinvestment of net income earned daily on
portfolio assets.
- -------------------------------------------------------------------------------
Fund 7-Day Yield 7-Day Effective Yield
- -------------------------------------------------------------------------------
Classic Institutional Cash 5.59% 5.73%
Management Money Market Fund
- -------------------------------------------------------------------------------
Classic Institutional U.S. 5.36% 5.49%
Treasury Securities Fund
- -------------------------------------------------------------------------------
The yield of these Funds fluctuates, and the annualization of a week's
dividend is not a representation by the Trust as to what an investment in the
Fund will actually yield in the future. Actual yields will depend on such
variables as asset quality, average asset maturity, the type of instruments
the Fund invests in, changes in interest rates on money market instruments,
changes in the expenses of the Fund and other factors.
Yields are one basis upon which investors may compare the Funds with other
money market funds; however, yields of other money market funds and other
investment vehicles may not be comparable because of the factors set forth
above and differences in the methods used in valuing portfolio instruments.
CALCULATION OF TOTAL RETURN
From time to time, the Trust may include the names of clients of the Advisor
in advertisements and/or sales literature for the Trust. The SEI Funds
Evaluation database tracks the total return of numerous tax-exempt pension
accounts. The range of returns in these accounts determines the percentile
rankings. SunTrust Bank's investment advisory affiliate, Trusco Capital
Management, has been in the top 1% of the SEI Funds Evaluation database for
equity managers over the past ten years. SEI Investment's database includes
research data on over 1,000 investment managers responsible for over $450
billion in assets.
Based on the foregoing, the average annual total returns for the Funds from
inception through May 31, 1997 were as follows:
B-15
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
FUND AVERAGE ANNUAL TOTAL RETURN
---------------------------
SINCE INCEPTION
- -----------------------------------------------------------------------------------
<S> <C>
Classic Institutional Cash Management Money Market 5.47%
Fund*
- -----------------------------------------------------------------------------------
Classic Institutional U.S. Treasury Securities Money 5.36%
Market Fund*
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
* Commenced operations December 12, 1996
ADVERTISING
From time to time, the Trust may include the names of clients of the Advisor
in advertisements and/or sales literature for the Trust.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions of shares of the Funds may be made on any day the
New York Stock Exchange ("NYSE") is open for business. Currently, the NYSE
is closed on the days following holidays are observed: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
It is currently the Trust's policy to pay for all redemptions in cash. The
Trust retains the right, however, to alter this policy to provide for
redemptions in whole or in part by a distribution in-kind of readily
marketable securities held by the Funds in lieu of cash. Shareholders may
incur brokerage charges on the sale of any such securities so received in
payment of redemptions. A Shareholder will at all times be entitled to
aggregate cash redemptions from all Funds of the Trust during any 90-day
period of up to the lesser of $250,000 or 1% of the Trust's net assets.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading
on the NYSE is restricted, or during the existence of an emergency (as
determined by the Securities and Exchange Commission by rule or regulation)
as a result of disposal or valuation of a Fund's securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission has by order permitted. The Trust also reserves the right to
suspend sales of shares of a Fund for any period during which the NYSE, an
Advisor, the Administrator and/or the Custodian are not open for business.
Investors will receive written notification at least thirty days prior to any
change in a Fund's investment objective.
Certain state securities laws may require those financial institutions
providing certain distribution services to the Trust to register as dealers
pursuant to state law.
B-16
<PAGE>
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Funds is calculated daily by the
Administrator by adding the value of securities and other assets, subtracting
liabilities and dividing by the number of outstanding shares. Securities
will be valued by the amortized cost method which involves valuing a security
at its cost on the date of purchase and thereafter (absent unusual
circumstances) assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuations in general market rates
of interest on the value of the instrument. While this method provides
certainty in valuation, it may result in periods during which a security's
value, as determined by this method, is higher or lower than the price a Fund
would receive if it sold the instrument. During periods of declining
interest rates, the daily yield of a Fund may tend to be higher than a like
computation made by a company with identical investments utilizing a method
of valuation based upon market prices and estimates of market prices for all
of its portfolio securities. Thus, if the use of amortized cost by a Fund
resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in a Fund would be able to obtain a somewhat higher
yield than would result from investment in a company utilizing solely market
values, and existing investors in a Fund would experience a lower yield. The
converse would apply in a period of rising interest rates.
A Fund's use of amortized cost and the maintenance of a Fund's net asset
value at $1.00 are permitted by regulations promulgated by Rule 2a-7 under
the 1940 Act, provided that certain conditions are met. The regulations
also require the Trustees to establish procedures which are reasonably
designed to stabilize the net asset value per share at $1.00 for the Funds.
Such procedures include the determination of the extent of deviation, if any,
of the Funds current net asset value per share calculated using available
market quotations from the Funds amortized cost price per share at such
intervals as the Trustees deem appropriate and reasonable in light of market
conditions and periodic reviews of the amount of the deviation and the
methods used to calculate such deviation. In the event that such deviation
exceeds 1/2 of 1%, the Trustees are required to consider promptly what action,
if any, should be initiated, and, if the Trustees believe that the extent of
any deviation may result in material dilution or other unfair results to
Shareholders, the Trustees are required to take such corrective action as
they deem appropriate to eliminate or reduce such dilution or unfair results
to the extent reasonably practicable. Such actions may include the sale of
portfolio instruments prior to maturity to realize capital gains or losses or
to shorten average portfolio maturity; withholding dividends; redeeming
shares in kind; or establishing a net asset value per share by using
available market quotations. In addition, if the Funds incur a significant
loss or liability, the Trustees have the authority to reduce pro rata the
number of shares of the Funds in each Shareholder's account and to offset
each Shareholder's pro rata portion of such loss or liability from the
Shareholder's accrued but unpaid dividends or from future dividends while
each other Fund must annually distribute at least 90% of its investment
company taxable income.
TAXES
The following is a summary of certain Federal income tax considerations
generally affecting the Funds and their shareholders that are not described
in the Funds' prospectus. No attempt is made to
B-17
<PAGE>
present a detailed explanation of the Federal tax treatment of the Funds or
their Shareholders, and the discussion here and in the Funds' prospectus is
not intended as a substitute for careful tax planning.
This discussion of Federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional
Information. New legislation, as well as administrative changes or court
decisions, may change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated herein.
FEDERAL INCOME TAX
In order to qualify for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended ("Code"), each Fund must
distribute annually to its Shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment
company taxable income (generally, net investment income plus net short-term
capital gain) ("Distribution Requirement") and also must meet several
additional requirements. Among these requirements are the following: (i) at
least 90% of a Fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans, and gains
from the sale or other disposition of stock or securities, or certain other
income; (ii) a Fund must derive less than 30% of its gross income each
taxable year from the sale or other disposition of stocks or securities held
for less than three months; (iii) at the close of each quarter of a Fund's
taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RIC's and other securities, with such other securities limited, in
respect of any one issuer, to an amount that does not exceed 5% of the value
of a Fund's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iv) at the close of each
quarter of a Fund's taxable year, not more than 25% of the value of its
assets may be invested in securities (other than U.S. Government securities
or the securities of other RIC's) of any one issuer, or of two or more
issuers engaged in same or similar businesses if the Fund owns at least 20%
of the voting power of such issuers. Requirement (ii) no longer applies for
tax years beginning after August 5, 1997.
Notwithstanding the Distribution Requirement described above, which only
requires a Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital
gains (the excess of net long-term capital gains over net short-term capital
loss), a Fund will be subject to a nondeductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year 98% of its ordinary
income for that year and 98% of its capital gain net income for the one-year
period ending on October 31 of that calendar year, plus certain other
amounts. Each Fund intends to make sufficient distributions prior to the end
of each calendar year to avoid liability for the federal excise tax
applicable to regulated investment companies.
B-18
<PAGE>
If, at the close of each quarter of its taxable year, at least 50% of the
value of a Fund's total assets consists of obligations the interest on which
is excludable from gross income, a Fund may pay "exempt-interest dividends,"
as defined in Section 852(b)(5) of the Code, to its Shareholders.
Any gain or loss recognized on a sale or redemption of Shares of a Fund by a
Shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than
eighteen months, mid-term if the shares have been held for over one year but
not for over eighteen months, and short-term if for a year or less. If
shares held for six months or less are sold or redeemed for a loss, two
special rules apply: First, if shares on which a net capital gain
distribution has been received are subsequently sold or redeemed, and such
shares have been held for six months or less, any loss recognized will be
treated as long-term capital loss to the extent of the long-term capital gain
distributions. Second, any loss recognized by a Shareholder upon the sale or
redemption of shares of a tax-exempt fund held for six months or less will be
disallowed to the extent of any exempt-interest dividends received by the
Shareholder with respect to such shares.
The Funds will make annual reports to Shareholders of the Federal income tax
status of all distributions.
FUND TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Advisor is responsible for placing the
orders to execute transactions for a Fund. In placing orders, it is the
policy of the Trust to seek to obtain the best net results taking into
account such factors as price (including the applicable dealer spread), the
size, type and difficulty of the transaction involved, the firm's general
execution and operational facilities, and the firm's risk in positioning the
securities involved. While the Advisor generally seeks reasonably
competitive spreads or commissions, the Trust will not necessarily be paying
the lowest spread or commission available.
The money market securities in which the Funds invest are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the
Advisor will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Money market securities are generally traded on a
net basis and do not normally involve either brokerage commissions or
transfer taxes. The cost of executing portfolio securities transactions of
the Trust will primarily consist of dealer spreads and underwriting
commissions.
TRADING PRACTICES AND BROKERAGE
The Trust selects brokers or dealers to execute transactions for the purchase
or sale of portfolio securities on the basis of its judgment of their
professional capability to provide the service. The primary
B-19
<PAGE>
consideration is to have brokers or dealers provide transactions at best
price and execution for the Trust. Best price and execution includes many
factors, including the price paid or received for a security, the commission
charged, the promptness and reliability of execution, the confidentiality
and placement accorded the order and other factors affecting the overall
benefit obtained by the account on the transaction. The Trust's
determination of what are reasonably competitive rates is based upon the
professional knowledge of its trading department as to rates paid and charged
for similar transactions throughout the securities industry. In some
instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis
where the Trust either buys securities directly from the dealer or sells them
to the dealer. In these instances, there is no direct commission charged but
there is a spread (the difference between the buy and sell price) which is
the equivalent of a commission.
The Trust may allocate out of all commission business generated by all of the
funds and accounts under management by an Advisor, brokerage business to
brokers or dealers who provide brokerage and research services. These
research services include advice, either directly or through publications or
writings, as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing of analyses and reports
concerning issuers, securities or industries; providing information on
economic factors and trends, assisting in determining portfolio strategy,
providing computer software used in security analyses, and providing
portfolio performance evaluation and technical market analyses. Such
services are used by an Advisor in connection with its investment
decision-making process with respect to one or more funds and accounts
managed by it, and may not be used exclusively with respect to the fund or
account generating the brokerage.
As provided in the Securities Exchange Act of 1934 (the "1934 Act") higher
commissions may be paid to broker-dealers who provide brokerage and research
services than to broker-dealers who do not provide such services if such
higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. Although transactions are directed
to broker-dealers who provide such brokerage and research services, the Trust
believes that the commissions paid to such broker-dealers are not, in
general, higher than commissions that would be paid to broker-dealers not
providing such services and that such commissions are reasonable in relation
to the value of the brokerage and research services provided. In addition,
portfolio transactions which generate commissions or their equivalent are
directed to broker-dealers who provide daily portfolio pricing services to
the Trust. Subject to best price and execution, commissions used for pricing
may or may not be generated by the funds receiving the pricing service.
An Advisor may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment,
joint execution is in the best interest of each participant and will result
in best price and execution. Transactions involving commingled orders are
allocated in a manner deemed equitable to each account or fund. It is
believed that the ability of the accounts to participate in volume
transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or Fund may obtain, it is the opinion of each Advisor and the
B-20
<PAGE>
Trust's Board of Trustees that the advantages of combined orders outweigh the
possible disadvantages of separate transactions.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Funds, at
the request of the Distributor, give consideration to sales of shares of the
Trust as a factor in the selection of brokers and dealers to execute Trust
portfolio transactions.
It is expected that the Trust may execute brokerage or other agency
transactions through the Distributor or an affiliate of an Advisor, both of
which are registered broker-dealers, for a commission in conformity with the
1940 Act, the 1934 Act and rules promulgated by the SEC. Under these
provisions, the Distributor or an affiliate of an Advisor is permitted to
receive and retain compensation for effecting portfolio transactions for the
Trust on an exchange if a written contract is in effect between the
Distributor and the Trust expressly permitting the Distributor or an
affiliate of an Advisor to receive and retain such compensation. These rules
further require that commissions paid to the Distributor by the Trust for
exchange transactions not exceed "usual and customary" brokerage commissions.
The rules define "usual and customary" commissions to include amounts which
are "reasonable and fair compared to the commission, fee or other
renumeration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold
on a securities exchange during a comparable period of time." In addition,
the Trust may direct commission business to one or more designated
broker-dealers in connection with such broker/dealer's provision of services
to the Trust or payment of certain Trust expenses (e.g., custody, pricing and
professional fees). The Trustees, including those who are not "interested
persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor, and will review these
procedures periodically.
For the fiscal year ended May 31, 1997, the Funds paid the following
brokerage commissions with respect to portfolio transactions:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Total $ Total $ Total $ Total $ % of Total % of Total Total
Amount of Amount of Amount of Amount of Brokerage Brokered Brokerage
Brokered Brokered Brokerage Brokerage Commissions Transactions Commissions
Transactions Transactions Commissions Commissions Paid to Effected Paid to SFS in
for FYE Through Paid in FYE Paid to Affiliated Through Connection
5/31/97 Affiliates for 5/31/97 Affiliates in Brokers in Affiliated with
FYE 5/31/97 FYE 5/31/97 FYE 5/31/97 Brokers in Repurchase
FYE 5/31/97 Agreement
Transactions
for FYE
5/31/97
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Classic Institutional $3,981,691,204 $1,109,513,576 $ 13,324 $ 13,324 100% 28% $13,324
Cash Management
Money Market Fund
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-21
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Total $ Total $ Total $ Total $ % of Total % of Total Total
Amount of Amount of Amount of Amount of Brokerage Brokered Brokerage
Brokered Brokered Brokerage Brokerage Commissions Transactions Commissions
Transactions Transactions Commissions Commissions Paid to Effected Paid to SFS in
for FYE Through Paid in FYE Paid to Affiliated Through Connection
5/31/97 Affiliates for 5/31/97 Affiliates in Brokers in Affiliated with
FYE 5/31/97 FYE 5/31/97 FYE 5/31/97 Brokers in Repurchase
FYE 5/31/97 Agreement
Transactions
for FYE
5/31/97
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Classic Institutional $ 701,083,896 $ 339,610,033 $ 4,235 $ 4,235 100% 48% $ 4,235
U.S. Treasury
Securities Money
Market Fund
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares and classes of shares of the Funds each of which represents an equal
proportionate interest in that Fund with each other share. Shares are
entitled upon liquidation to a PRO RATA share in the net assets of the Funds.
Shareholders have no preemptive rights. The Declaration of Trust provides
that the Trustees of the Trust may create additional series of shares or
classes of series. All consideration received by the Trust for shares of any
additional series and all assets in which such consideration is invested
would belong to that series and would be subject to the liabilities related
thereto. Share certificates representing shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust
could, under certain circumstances, be held personally liable as partners for
the obligations of the trust. Even if, however, the Trust were held to be a
partnership, the possibility of the Shareholders' incurring financial loss
for that reason appears remote because the Trust's Declaration of Trust
contains an express disclaimer of Shareholder liability for obligations of
the Trust and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by or on behalf
of the Trust or the Trustees, and because the Declaration of Trust provides
for indemnification out of the Trust property for any Shareholder held
personally liable for the obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisors, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in
B-22
<PAGE>
connection with actual or threatened litigation in which they may be involved
because of their offices with the Trust unless it is determined in the manner
provided in the Declaration of Trust that they have not acted in good faith
in the reasonable belief that their actions were in the best interests of the
Trust. However, nothing in the Declaration of Trust shall protect or
indemnify a Trustee against any liability for his willful misfeasance, bad
faith, gross negligence or reckless disregard of his duties.
5% AND 25% SHAREHOLDERS
As of September 29, 1997, the following persons were the only persons who
were record owners (or to the knowledge of the Trust, beneficial owners) of
5% and 25% or more of the shares of the Funds. Persons who owned of record
or beneficially more than 25% of a Fund's outstanding shares may be deemed to
control the Fund within the meaning of the Act. The Trust believes that most
of the shares of the Trust Class of the Funds were held for the record
owner's fiduciary, agency or custodial customers.
SunTrust Capital Markets ACH 192,561,104.3300 99.48%
Attn: Anita Woods Center 3910
303 Peachtree Street, 24th Floor
Atlanta, GA 30308-3201
SunTrust Capital Markets ACH 101,508,926.6000 99.02%
Attn: Anita Woods Center 3910
303 Peachtree Street, 24th Floor
Atlanta, GA 30308-3201
EXPERTS
The financial statements as of May 31, 1997 have been audited by Arthur
Andersen LLP, Independent Public Accountants, as indicated in their report
dated July 11, 1997 with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in giving said report.
B-23
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
STI Classic Funds:
We have audited the accompanying statements of net assets of the Classic
Institutional Cash Management Money Market Fund and the statements of assets and
liabilities, including the schedule of investments of the Classic Institutional
U.S. Treasury Securities Money Market Fund of STI Classic Funds (the "Trust") as
of May 31, 1997, and the related statements of operations, changes in net
assets, and financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1997, by correspondence with the custodian and the application of
alternative auditing procedures with respect to unsettled securities
transactions. 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
Classic Institutional Cash Management Money Market Fund and Classic
Institutional U.S. Treasury Securities Money Market Fund of STI Classic Funds as
of May 31, 1997, the results of their operations, changes in their net assets,
and financial highlights for the periods presented, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
July 11, 1997
146
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER (70.0%)
A1 Credit
5.640%, 06/02/97 $13,000 $ 12,998
American Express
5.500%, 08/28/97 500 493
Banc One Funding
5.620%, 07/21/97 4,000 3,969
5.680%, 08/14/97 3,811 3,767
Bank of America Toronto, Yankee
5.730%, 07/31/97 5,500 5,500
Bank of Montreal
5.520%, 07/01/97 10,000 9,954
Bank of New York
5.500%, 06/02/97 3,350 3,350
Bankers Trust
5.500%, 11/17/97 200 195
BAT Capital
5.530%, 06/24/97 10,000 9,965
Bell Atlantic Network Funding
5.600%, 06/12/97 1,000 998
Campbell Soup
5.550%, 07/07/97 2,550 2,536
Cargill Global Funding
5.550%, 06/16/97 5,000 4,988
5.820%, 11/25/97 500 486
Caterpillar Financial Services
5.600%, 09/11/97 4,915 4,837
Dean Witter Discover
5.640%, 08/01/97 6,000 5,943
Dominion Semiconductor
5.650%, 06/03/97 5,000 4,998
5.570%, 06/11/97 5,000 4,992
Dresser Industries
5.550%, 06/30/97 10,000 9,955
Ford Motor Credit
5.520%, 06/24/97 835 832
5.600%, 06/27/97 1,000 996
5.640%, 07/21/97 5,000 4,961
Gannett
5.520%, 06/17/97 4,775 4,763
General Electric Capital
5.400%, 06/02/97 500 500
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
5.700%, 06/30/97 $ 1,000 $ 995
5.630%, 09/25/97 1,000 982
Golden Peanut
5.400%, 07/15/97 250 248
GTE Funding
5.510%, 06/05/97 3,500 3,498
5.510%, 06/06/97 5,350 5,346
5.530%, 06/17/97 3,000 2,993
Hertz
5.620%, 07/25/97 8,500 8,428
IBM Credit
5.550%, 06/09/97 7,717 7,708
5.550%, 06/19/97 5,000 4,987
John Hancock Capital
5.600%, 06/26/97 9,375 9,339
Marsh & Mclennan
5.700%, 09/05/97 2,393 2,357
Metlife Funding
5.530%, 07/11/97 2,203 2,189
Monongahela Power
5.700%, 06/02/97 6,320 6,319
National Australia Funding
5.550%, 06/02/97 12,000 11,998
5.430%, 08/13/97 250 247
National City Credit
5.650%, 07/28/97 2,000 1,982
5.665%, 08/21/97 5,000 4,936
New England Power
5.550%, 06/04/97 2,300 2,299
5.520%, 06/06/97 5,550 5,546
5.540%, 06/12/97 2,123 2,119
Pactel Capital Resources
5.510%, 06/23/97 7,000 6,976
Philip Morris
5.700%, 06/02/97 8,000 7,999
5.550%, 06/06/97 1,505 1,504
5.550%, 06/09/97 1,275 1,273
5.550%, 06/18/97 1,240 1,237
Potomac Electric Power
5.600%, 06/06/97 9,360 9,353
Progress Capital
5.520%, 06/09/97 8,798 8,787
</TABLE>
147
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER--CONTINUED
5.550%, 06/20/97 $ 1,271 $ 1,267
Royal Bank Canada
5.580%, 07/15/97 3,010 2,989
RTZ America
5.370%, 06/16/97 250 249
5.550%, 06/25/97 250 249
5.570%, 07/08/97 800 795
Sherwin Williams
5.550%, 06/18/97 5,000 4,987
Societe Generale North America
5.500%, 09/10/97 200 197
Sony Capital
5.650%, 06/02/97 4,400 4,399
South Carolina Fuel
5.510%, 06/20/97 4,435 4,422
Southern New England
Telcommunications
5.580%, 06/11/97 1,157 1,155
Transamerica Finance
5.650%, 06/02/97 7,500 7,499
5.520%, 06/12/97 5,000 4,992
5.530%, 06/13/97 700 699
U.S. Borax
5.370%, 06/16/97 250 249
5.600%, 07/01/97 2,000 1,991
5.650%, 07/16/97 1,600 1,589
Union Bank Of Switzerland Finance
5.750%, 06/02/97 1,000 1,000
Virgina Electric & Power
5.650%, 07/16/97 2,000 1,986
Waste Management Technologies
5.580%, 06/24/97 3,000 2,989
5.650%, 06/27/97 2,770 2,759
Xerox Credit
5.520%, 06/12/97 1,985 1,982
5.510%, 06/24/97 5,100 5,082
-----------
Total Commercial Paper
(Cost $277,147) 277,147
-----------
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (0.3%)
Compton Community,
Redevelopment Agency,
Series 1995B, RB (FSA)
6.150%, 08/01/97 $ 1,000 $ 1,000
-----------
Total Municipal Bonds
(Cost $1,000) 1,000
-----------
CORPORATE OBLIGATIONS (5.2%)
Associates Corporation of
North America
6.750%, 06/13/97 3,000 3,001
8.625%, 06/15/97 500 500
Beneficial MTN
6.850%, 11/19/97 1,500 1,506
6.860%, 11/19/97 2,200 2,209
BP America
8.875%, 12/01/97 200 203
Dow Capital
5.750%, 09/15/97 500 500
FCC National Bank (A)
5.640%, 05/08/98 3,000 2,999
Federal National Mortgage
Association MTN
6.520%, 09/08/97 500 501
6.520%, 09/15/97 900 901
First Chicago MTN
11.150%, 10/31/97 1,700 1,735
Household Finance
7.750%, 06/15/97 2,250 2,251
6.250%, 10/15/97 1,000 1,001
Morgan Guaranty Trust
5.950%, 06/06/97 200 200
Teco Energy MTN
9.250%, 06/16/97 3,000 3,004
-----------
Total Corporate Obligations
(Cost $20,511) 20,511
-----------
CERTIFICATES OF DEPOSIT (4.8%)
Bankers Trust Toronto
5.690%, 08/21/97 4,000 4,000
Societe Generale Yankee
5.690%, 08/22/97 5,000 5,000
</TABLE>
148
<PAGE>
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
CERTIFICATES OF DEPOSIT--CONTINUED
Swiss Bank, Yankee
5.530%, 06/30/97 $10,000 $ 10,000
-----------
Total Certificates Of Deposit
(Cost $19,000) 19,000
-----------
ASSET-BACKED SECURITIES (1.0%)
Americredit Auto Receivables
Trust, 1997-B, Cl A
5.790%, 06/12/98 4,000 4,000
-----------
Total Asset-Backed Securities
(Cost $4,000) 4,000
-----------
REPURCHASE AGREEMENTS (21.3%)
Deutsche Bank
5.56%, dated 05/30/97, matures 06/02/97, repurchase
price $76,220,749 (collateralized by various FHLMC
obligations, total par value $94,382,160,
0.000%-6.630%, 05/15/08-09/01/26; FNMA obligation,
par value $21,264,738, 0.000%, 01/01/26: total
market value $77,708,900) 76,185 76,185
Salomon Brothers 5.56%, dated 05/30/97, matures
06/02/97, repurchase price $8,072,554
(collateralized by various FHLMC obligations, total
par value $9,465,582, 6.014%-8.500%,
07/01/02-11/01/26; various FNMA obligations, total
par value $20,886,794, 5.500%-9.000%,
04/01/98-05/01/26: total market value $8,294,005) 8,069 8,069
-----------
<CAPTION>
--------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
Total Repurchase Agreements
(Cost $84,254) $ 84,254
-----------
Total Investments (102.6%)
(Cost $405,912) 405,912
-----------
OTHER ASSETS AND LIABILITIES, NET (-2.6%) (10,239)
-----------
NET ASSETS:
Fund shares of the Institutional Shares (unlimited
authorization -- no par value) based on 395,673,180
outstanding shares of beneficial interest 395,673
-----------
Total Net Assets (100.0%) $ 395,673
-----------
-----------
Net Asset Value, Offering and
Redemption Price Per Share --
Institutional Shares $ 1.00
-----------
-----------
</TABLE>
CL -- CLASS
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- SECURITY INSURED BY FINANCIAL SECURITY ASSURANCE
MTN -- MEDIUM TERM NOTE
RB -- REVENUE BOND
(A) -- VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MAY 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
149
<PAGE>
- --------------------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
TREASURY NOTE (4.9%)
U.S. Treasury Note
5.750%, 10/31/97 $1,000 $ 1,000
Total Treasury Note
(Cost $1,000) 1,000
-------
REPURCHASE AGREEMENTS (71.1%)
Deutsche Bank
5.50%, dated 05/30/97, matures 06/02/97, repurchase
price $1,031,851 (collateralized by U.S. Treasury
Bill, par value $948,000, 0.000%, 07/31/97; U.S.
Treasury Note, par value $111,000, 5.125%,
12/31/98: total maket value $1,052,006) 1,031 1,031
Merrill Lynch
5.50%, dated 05/30/97, matures 06/02/97, repurchase
price $1,000,995 (collateralized by U.S. Government
STRIPS, total par value $1,995,661, 0.000%,
05/15/02-11/15/14: total market value $1,021,320) 1,001 1,001
Barclays
5.50%, dated 05/30/97, matures 06/02/97, repurchase
price $4,677,964 (collateralized by U.S. Treasury
Bill, par value $4,955,000, 0.000%, 02/05/98:
market value $4,770,173) 4,676 4,676
Morgan Stanley
5.50%, dated 05/30/97, matures 06/02/97, repurchase
price $1,000,458 (collateralized by U.S. Treasury
Note, par value $990,000, 7.25%, 05/15/04: market
value $1,021,442) 1,000 1,000
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Salomon Brothers
5.50%, dated 05/30/97, matures 06/02/97, repurchase
price $1,000,458 (collateralized by various U.S.
Treasury Notes, total par value $1,005,000,
6.125%-8.875%, 11/15/97-07/31/00: total market
value $1,022,745) $1,000 $ 1,000
Swiss Bank
5.50%, dated 05/30/97, matures 06/02/97, repurchase
price $4,678,206 (collateralized by U.S. Treasury
Bond, par value $4,565,000, 7.250%, 08/15/22; U.S.
Treasury Note, par value $25,000, 5.875%, 06/30/00:
total market value $4,777,310) 4,676 4,676
Union Bank of Switzerland
5.50%, dated 05/30/97, matures 06/02/97, repurchase
price $1,000,458 (collateralized by U.S. Treasury
Note, par value 1,030,000, 5.875%, 11/15/99: market
value $1,021,198) 1,000 1,000
-------
Total Repurchase Agreements
(Cost $14,384) 14,384
-------
Total Investments (76.0% of Net Assets)
(Cost $15,384) $15,384
-------
-------
</TABLE>
STRIPS -- SEPARATELY TRADED REGISTERED INTEREST
AND PRINCIPAL SECURITY
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
151
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (000)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD ENDED MAY 31, 1997
<TABLE>
<CAPTION>
CLASSIC INSTITUTIONAL
U.S. TREASURY
SECURITIES
MONEY MARKET
FUND
---------------------
<S> <C>
Assets:
Investments at market value (Cost $15,384).......................... $15,384
Receivables for investment securities sold.......................... 4,951
Other assets........................................................ 120
-------
Total Assets........................................................ 20,455
-------
Liabilities:
Accrued expenses.................................................... 26
Distribution payable................................................ 101
Other liabilities................................................... 90
-------
Total Liabilities................................................... 217
-------
Net Assets:
Fund Shares of the Institutional Shares (unlimited authorization --
no par value)
based on 20,238,609 outstanding shares of beneficial interest..... 20,239
Accumulated net realized loss on investments........................ (1)
-------
Total Net Assets.................................................... $20,238
-------
-------
Net Asset Value, Offering Price and Redemption Price Per Share --
Institutional Shares................................................. $ 1.00
-------
-------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
152
<PAGE>
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD ENDED MAY 31, 1997
<TABLE>
<CAPTION>
CLASSIC CLASSIC
INSTITUTIONAL INSTITUTIONAL
CASH MANAGEMENT U.S. TREASURY
MONEY MARKET SECURITIES MONEY
FUND MARKET FUND
--------------- ----------------
12/12/96*- 12/12/96*-
05/31/97 05/31/97
--------------- ----------------
<S> <C> <C>
Income:
Interest Income..................................................... $2,784 $491
Expenses:
Investment Advisory Fees............................................ 100 18
Investment Advisory Fees Waived..................................... (100) (18)
Contribution from Advisor........................................... (131) (20)
Administrator Fees.................................................. 33 6
Registration Fees................................................... 108 3
Transfer Agent Fees................................................. 8 8
Printing Fees....................................................... 3 3
Amortization of Deferred Organizational Costs....................... 8 8
------ ---
Total Expenses.................................................... 29 8
------ ---
Net Investment Income................................................. 2,755 483
------ ---
Net Realized Loss on Securities Sold.................................. -- (1)
------ ---
Increase in Net Assets Resulting from Operations...................... $2,755 $482
------ ---
------ ---
</TABLE>
* Commencement of Operations
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
153
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD ENDED MAY 31, 1997
<TABLE>
<CAPTION>
CLASSIC CLASSIC
INSTITUTIONAL INSTITUTIONAL
CASH MANAGEMENT U.S. TREASURY
MONEY MARKET SECURITIES MONEY
FUND MARKET FUND
--------------- ----------------
12/12/96*- 12/12/96*-
05/31/97 05/31/97
--------------- ----------------
<S> <C> <C>
Operations:
Net Investment Income............................................... $ 2,755 $ 483
Net Realized Loss on Securities Sold................................ -- (1)
--------------- ----------------
Increase in Net Assets Resulting from Operations.................. 2,755 482
--------------- ----------------
Distributions to Shareholders:
Net Investment Income............................................... (2,755) (483)
Capital Gains....................................................... -- --
--------------- ----------------
Total Distributions................................................. (2,755) (483)
--------------- ----------------
Capital Share Transactions (1):
Proceeds from Shares Issued......................................... 578,520 143,133
Reinvestments of Cash Distributions................................. -- --
Cost of Shares Redeemed............................................. (182,847) (122,894)
--------------- ----------------
Increase in Net Assets from Share Transactions.................... 395,673 20,239
--------------- ----------------
Total Increase in Net Assets.................................... 395,673 20,238
--------------- ----------------
Net Assets:
Beginning of Period................................................. -- --
--------------- ----------------
End of Period....................................................... $ 395,673 $ 20,238
--------------- ----------------
--------------- ----------------
(1) Shares Issued and Redeemed:
Shares Issued..................................................... 578,520 143,133
Shares Issued in Lieu of Cash Distributions....................... -- --
Shares Redeemed................................................... (182,847) (122,894)
--------------- ----------------
Net Share Transactions.......................................... 395,673 20,239
--------------- ----------------
--------------- ----------------
</TABLE>
* Commencement of Operations.
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
154
<PAGE>
(This page has been left blank intentionally.)
155
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1997
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET REALIZED AND
NET UNREALIZED GAINS
NET ASSET VALUE INVESTMENT OR (LOSSES) DISTRIBUTIONS FROM
BEGINNING OF PERIOD INCOME ON INVESTMENTS NET INVESTMENT INCOME
------------------- ------------- ----------------- ---------------------
<S> <C> <C> <C> <C> <C>
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
Institutional
Shares
1997* $ 1.00 $ 0.02 $ -- $ (0.02)
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
Institutional
Shares
1997* $ 1.00 $ 0.02 $ -- $ (0.02)
<CAPTION>
DISTRIBUTIONS FROM
REALIZED CAPITAL GAINS
-----------------------
<S> <C>
CLASSIC INSTITUTION
Institutional
Shares
$ --
CLASSIC INSTITUTION
Institutional
Shares
$ --
</TABLE>
* Commenced operations on December 12, 1996. Total return is for the period
indicated and has not been annualized. All ratios for the period have been
annualized.
156
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET INVESTMENT
NET ASSETS RATIO OF EXPENSES TO INCOME TO
NET ASSET END OF RATIO OF NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS
VALUE END TOTAL PERIOD EXPENSES TO INCOME TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS
OF PERIOD RETURN (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS)
- ----------- ----------- ----------- ------------------- ------------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.00 2.51% $ 395,673 0.06% 5.49% 0.52% 5.03%
$ 1.00 2.46% $ 20,238 0.09% 5.27% 0.51% 4.85%
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
157
<PAGE>
STI CLASSIC FUNDS
PART C: OTHER INFORMATION
POST-EFFECTIVE AMENDMENT NO. 22
Item 24. Financial Statements and Exhibits:
Financial Statements
(a) Part A - Financial Highlights
Part B - Audited Financial Statements as of May 31, 1997:
Statement of Net Assets
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Public Accountants
(b) Additional Exhibits
(1) Declaration of Trust--as originally filed with Registrant's
Registration Statement on Form N-1A filed February 12, 1992 and
incorporated by reference to Post-Effective Amendment No. 15
filed July 31, 1996.
(2) By-Laws--as originally filed with Registrant's Pre-Effective
Amendment No. 1 filed April 23, 1992 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(3) Not applicable.
(4) Not applicable.
(5)(c) Revised Investment Advisory Agreement with Trusco Capital
Management--as originally filed with Registrant's Post-Effective
Amendment No. 5 filed August 2, 1993 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(5)(d) Investment Advisory Agreement with American National Bank and
Trust Company--as originally filed with Registrant's
Post-Effective Amendment No. 6 filed October 22, 1993 and
incorporated by reference to Post-Effective Amendment No. 15
filed July 31, 1996.
(5)(e) Investment Advisory Agreement with Trust Company Bank--as
originally filed with Registrant's Post-Effective Amendment No. 6
filed October 22, 1993 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.
(6) Distribution Agreement incorporated by reference to
Post-Effective Amendment No. 16 filed September 10, 1996.
(7 ) Not applicable.
(8)(a) Custodian Agreement with Trust Company Bank dated February 1,
1994--as originally filed with Registrant's Post-Effective
Amendment No. 13 filed September 28, 1995 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(8)(b) Custodian Agreement with the Bank of California incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
C-1
<PAGE>
(8)(c) Transfer Agent Agreement with Federated Services Company dated
May 14, 1994--as originally filed with Post-Effective Amendment
No. 9 filed September 22, 1994 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.
(8)(d) Fourth Amendment to Custodian Agreement by and Between Sti Trust
& Investment Operations, Inc. And the Bank of New York, Dated May
6, 1997, incorporated herein by reference to Post-Effective
Amendment No. 21 filed September 30, 1997.
(9)(a) Administration Agreement with SEI Financial Management
Corporation dated May 29, 1995 as originally filed with
Post-Effective Amendment No. 12 filed August 17, 1995 and
incorporated by reference to Post-Effective Amendment No. 15
filed July 31, 1996.
(9)(b) Consent to Assignment and Assumption of the Administration
Agreement Between Sti Classic Funds and Sei Financial Mangement
Corporation incorporated by reference to Post-Effective
Amendment No. 21 filed September 30, 1997.
(10) Opinion and Consent of Counsel (Incorporated by reference to
Pre-Effective Amendment No. 2 filed May 22, 1992).
(11) Consent of Independent Public Accountants.*
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan - Investor Class incorporated by reference to
Post-Effective Amendment No. 16 filed September 10, 1996.
(15)(a) Distribution and Service Agreement relating to Flex Shares dated
May 29, 1995--as originally filed with Post-Effective Amendment
No. 12 filed August 17, 1995 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.
(16) Performance Quotation Computation (Incorporated by reference to
Post-Effective Amendment No. 9 filed September 22, 1994).
(17) Not applicable.
(18) Rule 18f-3 Plan incorporated by reference to Post-Effective
Amendment No. 16 filed September 10, 1996.
(24) Powers of Attorney, incorporated herein by reference to
Post-Effective Amendment No. 21 filed September 30, 1997.
(27) Financial Data Schedules.
*Filed Herewith.
Item 25. Persons Controlled by or under Common Control with Registrant:
See the Prospectuses and Statement of Additional Information regarding the
Trust's control relationships. The Administrator is a subsidiary of SEI
Investments which also controls the distributor of the Registrant, SEI
Investments Distribution Co., and other corporations engaged in providing
various financial and record keeping services, primarily to bank trust
departments, pension plan sponsors, and investment managers.
Item 26. Number of Holders of Securities:
As of September 3, 1997:
C-2
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
<S> <C>
Units of beneficial interest, without par value
Balanced Fund
Trust Shares.......................................................... 8
Investor Shares....................................................... 332
Flex Shares........................................................... 474
Capital Growth Fund
Trust Shares.......................................................... 10
Investor Shares.......................................................9,510
Flex Shares...........................................................3,768
Classic Institutional Cash Management Money Market Fund................... 8
Classic Institutional U.S. Treasury Securities Money Market Fund.......... 7
Emerging Markets Equity Fund.............................................. 7
Florida Tax-Exempt Bond Fund
Trust Shares.......................................................... 6
Investor Shares....................................................... 81
Flex Shares........................................................... 107
Georgia Tax-Exempt Bond Fund
Trust Shares.......................................................... 6
Investor Shares....................................................... 65
Flex Shares........................................................... 119
International Equity Index Fund
Trust Shares.......................................................... 5
Investor Shares....................................................... 553
Flex Shares........................................................... 156
International Equity Fund
Trust Shares.......................................................... 7
Investor Shares....................................................... 514
Flex Shares...........................................................1,523
Investment Grade Bond Fund
Trust Shares.......................................................... 6
Investor Shares.......................................................1,597
Flex Shares........................................................... 517
Investment Grade Tax-Exempt Bond Fund
Trust Shares.......................................................... 5
Investor Shares....................................................... 878
Flex Shares........................................................... 196
Limited-Term Federal Mortgage Securities Fund
Trust Shares.......................................................... 6
Investor Shares....................................................... 49
C-3
<PAGE>
<S> <C>
Flex Shares........................................................... 101
Mid-Cap Equity Fund
Trust Shares.......................................................... 6
Investor Shares.......................................................1,156
Flex Shares...........................................................1,027
Prime Quality Money Market Fund
Trust Shares.......................................................... 32
Investor Shares.......................................................1,316
Short-Term Bond Fund
Trust Shares.......................................................... 7
Investor Shares....................................................... 89
Flex Shares........................................................... 65
Short-Term U.S. Treasury Securities Fund
Trust Shares.......................................................... 7
Investor Shares....................................................... 93
Flex Shares........................................................... 86
Small Cap Equity Fund
Trust Shares.......................................................... 7
Flex Shares........................................................... 733
Sunbelt Equity Fund
Trust Shares.......................................................... 7
Investor Shares.......................................................2,028
Flex Shares........................................................... 615
Tax-Exempt Money Market Fund
Trust Shares.......................................................... 5
Investor Shares....................................................... 270
Tennessee Tax-Exempt Bond Fund
Trust Shares.......................................................... 6
Investor Shares....................................................... 30
Flex Shares........................................................... 55
U.S. Government Securities Fund
Trust Shares.......................................................... 6
Investor Shares....................................................... 38
Flex Shares........................................................... 146
U.S. Government Securities Money Market Fund
Trust Shares.......................................................... 5
Investor Shares....................................................... 579
Value Income Stock Fund
Trust Shares.......................................................... 10
Investor Shares.......................................................5,909
Flex Shares...........................................................5,975
</TABLE>
Item 27. Indemnification:
C-4
<PAGE>
Article VIII of the Agreement of Declaration of Trust filed as Exhibit 1
to the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or
otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and, therefore, is unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by trustees, directors, officers
or controlling persons of the Registrant in connection with the successful
defense of any act, suit or proceeding) is asserted by such trustees,
directors, officers or controlling persons in connection with the shares
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issues.
Item 28. Business and Other Connections of Investment Advisors:
Other business, profession, vocation, or employment of a substantial
nature in which each director or principal officer of each Advisor is or has
been, at any time during the last two fiscal years, engaged for his own
account or in the capacity of director, officer, employee, partner or trustee
are as follows:
NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------
STI CAPITAL MANAGEMENT, N.A.
E. Jenner Wood III -- --
Director
Hunting F. Deutsch -- --
Director
Anthony R. Gray -- --
Chairman & Chief Investment
Officer
James R. Wood -- --
President
Daniel Jaworski -- --
Senior Vice President
Elliott A. Perny -- --
Executive Vice President
& Chief Portfolio Manager
C-5
<PAGE>
NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------
Stuart F. Van Arsdale -- --
Senior Vice President
Jonathan D. Rich -- --
Director
Robert Buhrmann -- --
Senior Vice President
Larry M. Cole -- --
Senior Vice President
L. Earl Denney -- --
Executive Vice President
Thomas A. Edgar -- --
Senior Vice President
Daniel G. Shannon -- --
Senior Vice President
Ronald Schwartz -- --
Senior Vice President
Ryan R. Burrow Catalina Lighting Director/25% owner
Senior Vice President
Mills A. Riddick -- --
Senior Vice President
Christopher A. Jones -- --
Senior Vice President
David E. West -- --
Vice President
The list required by this Item 28 of officers and directors of Trusco Capital
Management, Inc., together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two years, is incorporated by
reference to
C-6
<PAGE>
Schedules A and D of Form ADV, filed by Trusco Capital Management, Inc.
pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-23163).
C-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SUNTRUST BANK CHATTANOOGA, N.A.
Paul K. Brock, Jr. Brock Candy Company Vice President - Special
Director Projects
J. Harold Chandler Provident Life & Accident President & CEO
Director Insurance Co.
William H. Chapin See Rock City, Inc. President
Director
John W. Clay, Jr. Third National Corporation Chairman & Director
CEO
Andrew G. Cope The Johnston Company Managing Partner
Director
Robert P. Corker, Jr. -- --
Director
John B. Crimmins, Jr. -- --
Director
J.H. Davenport, III Howard Holdings, Inc. President
Director
Edwin B. Duckett, Jr. -- --
Director
R. Alton Duke, Jr. -- --
Director
Daniel K. Frierson Dixie Yarns, Inc. Chairman & CEO
Director
Zan Guerry Chattem, Inc. Chairman & CEO
Director
James L.E. Hill The Tennessee Aquarium President
Director
C-7
<PAGE>
<CAPTION>
<S> <C> <C>
Summerfield K. Johnston, Jr. Coca Cola Enterprises, Inc. Vice Chairman & CEO
Director
Robert C. Jones Southern Products Chairman
Director Company, Inc.
James D. Kennedy, Jr. Cherokee Warehouses, Inc. Chairman
Director
T. A. Lupton, Jr. Stone Fort Land Company President
Director
Hugh O. Maclellen, Jr. Provident Life & Accident Chairman - Executive
Director Insurance Co. Committee
Jack C. McKee McKee Baking Company Executive Vice
Director President
Charles G. Mills Olan Mills Incorporated Chairman - Executive
Director Committee
J. Woodley Murphy E.I. DuPont de Nemours Plant Manager
Director & Co.
L. Harlen Painter Bell & Associates Attorney-at-Law
Director
Scott L. Probasco, Jr. American National Bank & Chairman - Executive
Director Trust Co. Committee
Robert J. Sudderth, Jr. American National Bank & Chairman & CEO
Director Trust Co.
Winston W. Walker -- --
Director
SUNTRUST BANK, ATLANTA
Gaylord O. Coan Gold Kist, Inc. President & CEO
Director Hindsight Corp. Director
A.D. Correll Georgia-Pacific Corporation President & CEO
Director
C-8
<PAGE>
<CAPTION>
<S> <C> <C>
R.W. Courts, II Atlantic Realty Company President
Director
Ronald S. Crowding -- --
A.W. Dahlberg The Southern Company President
Director
William W. Gaston Gaston & Gaston General Partner
Director Gaston Development Co., Inc. President
Charles B. Ginden -- --
Director
Roberto C. Goizueta The Coca-Cola Company Chairman of the Board
Director
Edward P. Gould Trust Company of Georgia Chairman of the Board
Director
T. Marshall Hahn, Jr. Georgia-Pacific Honorary Chairman
Director Corporation
Jesse Hill, Jr. Atlanta Life Insurance President
Director Company
L. Phillip Humann SunTrust Banks, Inc. President & Treasurer
Director Services Resources
Corporation
William B. Johnson The Ritz Carlton Hotel Chairman of the Board
Director Company
Hicks J. Lanier Oxford Industries, Inc. Chairman of the Board
Director & President
Pinehill Development Co. 30% owner
Joseph L. Lanier, Jr. Dan River, Inc. Chairman of the Board
Director Braelan Group Chairman
Robert R. Long Trust Company Bank President
Director
C-9
<PAGE>
<CAPTION>
<S> <C> <C>
Arthur L. Montgomery -- --
Director
H.G. Patillo Patillo Construction Chairman of the Board
Director Company
Larry L. Prince Genuine Parts Company Chairman of the Board
Director
R. Randall Rollins Rollins, Inc. Chairman of the Board
Director Lor, Inc. Director
Maran, Inc. Director
Gutterworld, Inc. Director
Dabora, Inc. Director & Secretary
Simpson, Nance & Graham Director
Auto Parts Wholesale, Inc. Director
Global Expanded Metal, Inc. Director
Rollins Holding Co. Director
Rol, Ltd. Partner
Rollins Investment Fund Partner
Energy Partners Partner
Petro Partnership Partner
The Piedmont Investment
Group Director
WRG, Ltd. Partner
Rollins, Inc. Chairman
RPC Energy Services, Inc. Chairman
The Mul Company Partner
Bugvac, Inc. Director
Omnitron Int'l, Inc. Director
MRG, Ltd. Partner
Robert W. Scherer -- --
Director
Charles R. Shufeldt -- --
Executive Vice President
Donald Wayne Thurmond -- --
Senior Vice President
James B. Williams SunTrust Banks, Inc. Chairman of the Board
Director
C-10
<PAGE>
<CAPTION>
<S> <C> <C>
Gerald T. Adams -- --
Senior Vice President
James R. Albach -- --
Group Vice President
Virginia D. Anderson -- --
Assistant Vice President
Christina Bird -- --
First Vice President
Edward Burgess -- --
Vice President
Gay Cash -- --
Vice President
Krista Lee Cosgrove -- --
Trust Officer
Mark Elam -- --
Vice President
Joseph B. Foley, Jr. -- --
First Vice President
Thomas R. Frisbie -- --
Group Vice President
Molly Guenther -- --
Assistant Vice President
Benjamin S. Harris -- --
Vice President
Jethro H. Irby, III -- --
First Vice President
V. Jere Koser -- --
Group Vice President
C-11
<PAGE>
Richard A. Makepeace -- --
Assistant Vice President
Sally S. McKinley -- --
Assistant Vice President
James B. Murphy, III -- --
Vice President
James E. Russell -- --
Vice President
Mark Stancil -- --
Assistant Vice President
David E. Thompson -- --
Vice President
Charles C. Watson -- --
Group Vice President
</TABLE>
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.
Registrant's distributor, SEI Investments Distribution Co. ("SEI
Investments"), acts as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
C-12
<PAGE>
Boston 1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds-Registered Trademark- August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds Feburary 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
Expedition Funds June 9, 1997
SEI Investments provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments. These services
include portfolio evaluation, performance measurement and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is Oaks, Pennsylvania 19456.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & President-Investment
Advisory Group --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President, President-Investment Services Division --
Dennis J. McGonigle Executive Vice President --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
David G. Lee Senior Vice President --
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Hartland J. McKeown Senior Vice President --
C-13
<PAGE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
<S> <C> <C>
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Vice President & Assistant
Secretary Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant Secretary Vice President & Assistant
Secretary
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President & Assistant
Secretary
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Kathy Heilig Vice President & Treasurer --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Joanne Nelson Vice President --
Barbara A. Nugent Vice President & Assistant Secretary Vice President & Assistant
Secretary
Sandra K. Orlow Vice President & Assistant Secretary Vice President & Assistant
Secretary
Cynthia M. Parrish Vice President & Assistant Secretary --
Donald Pepin Vice President & Managing Director --
Kim Rainey Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President & Assistant
Secretary
Wayne M. Withrow Vice President & Managing Director --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1(d), the required books and records are maintained at the
offices of Registrant's Custodians:
Trust Company Bank
Park Place
P.O. Box 105504
Atlanta, Georgia 30348
C-14
<PAGE>
Bank of New York
One Wall Street
New York, New York
(International Equity Index Fund, International Equity Fund, Emerging
Markets Equity Fund)
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D);
(4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Administrator:
SEI Fund Resources
One Freedom Valley Road
Oaks, Pennsylvania 19456
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Advisors:
STI Capital Management, N.A.
P.O. Box 3808
Orlando, Florida 32802
Trusco Capital Management
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
SunTrust Bank, Chattanooga
736 Market Street
Chattanooga, Tennessee 37402
SunTrust Bank, Atlanta
25 Park Place
Atlanta, Georgia 30303
Item 31. Management Services: None.
Item 32. Undertakings:
Registrant hereby undertakes that whenever Shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform
the Board of Trustees of their desire to communicate with Shareholders of the
Trust, the Trustees will inform such Shareholders as to the approximate
number of Shareholders of record and the approximate costs of mailing or
afford said Shareholders access to a list of Shareholders.
Registrant undertakes to call a meeting of Shareholders for the purpose
of voting upon the question of removal of a Trustee(s) when requested in
writing to do so by the holders of at least 10% of
C-15
<PAGE>
Registrant's outstanding shares and in connection with such meetings to
comply with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to Shareholder communications.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
Shareholders, upon request and without a charge.
Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be audited, within 4-6 months
from the later of the commencement of operations of the Contrarian Equity
Fund and Tax Free Income Fund of the Registrant or the effective date of
Post-Effective Amendment No. 19 to the Registrant's 1933 Act Registration
Statement.
C-16
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust for STI Classic Funds is
on file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this Registration Statement has been executed on
behalf of the Trust by an officer of the Trust as an officer and by its
Trustees as trustees and not individually and the obligations of or arising
out of this Registration Statement are not binding upon any of the Trustees,
officers, or Shareholders individually but are binding only upon the assets
and property of the Trust.
C-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 (the
"Securities Act") and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for effectiveness
of under the Securities Act and has duly caused this Post-Effective Amendment
No. 22 to Registration Statement No. 33-45671 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Oaks, Commonwealth
of Pennsylvania on the 15 day of October, 1997.
By: /s/ DAVID G. LEE
-------------------------------------
David G. Lee, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacity on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
* Trustee October 15, 1997
- -----------------------------------
F. Wendell Gooch
* Trustee October 15, 1997
- -----------------------------------
Daniel S. Goodrum
* Trustee October 15, 1997
- -----------------------------------
Jesse S. Hall
* Trustee October 15, 1997
- -----------------------------------
Wilton Looney
* Trustee October 15, 1997
- -----------------------------------
Champney A. McNair
* Trustee October 15, 1997
- -----------------------------------
T. Gordy Germany
* Trustee October 15, 1997
- -----------------------------------
Bernard F. Sliger
/s/ CAROL ROONEY Controller, Treasurer & October 15, 1997
- ----------------------------------- Chief Financial Officer
Carol Rooney
* President & Chief October 15, 1997
- ----------------------------------- Executive Officer
David G. Lee
* By: /s/ DAVID G. LEE
-----------------------------------
David G. Lee, As Power of Attorney
</TABLE>
<PAGE>
EXHIBIT INDEX
NUMBER EXHIBIT
EX-99.B1 Declaration of Trust as originally filed with Registrant's
Registration Statement on Form N-1A filed February 12,
1992 and incorporated by reference to Post-Effective
Amendment No. 15
EX-99.B2 By-Laws as originally filed with Registrant's Pre-Effective
Amendment No. 1 filed April 23, 1992 and incorporated by
reference to Post-Effective Amendment No. 15 filed July
31, 1996.
EX-99.B3 Not applicable.
EX-99.B4 Not applicable.
EX-99.B5C Revised Investment Advisory Agreement with Trusco Capital
Management as filed with Registrant's Post-Effective
Amendment No. 5 filed August 2, 1993 and incorporated by
reference to Post-Effective Amendment No. 15 filed July
31, 1996.
EX-99.B5D Investment Advisory Agreement with American National Bank
and Trust Company as filed with Registrant's
Post-Effective Amendment No. 6 filed October 22, 1993 and
incorporated by reference to Post-Effective Amendment No.
15 filed July 31, 1996.
EX-99.B5E Investment Advisory Agreement with Trust Company Bank as
originally filed with Registrant's Post-Effective
Amendment No. 6 filed October 22, 1993 and incorporated by
reference to Post-Effective Amendment No. 15 filed July
31, 1996.
EX-99.B6 Distribution Agreement incorporated by reference to
Post-Effective Amendment No. 16 filed October 10, 1996.
EX-99.B7 Not applicable.
EX-99.B8A Custodian Agreement with Trust Company Bank dated February
1, 1994 as originally filed with Registrant's
Post-Effective Amendment No. 13 filed October 28, 1995 and
incorporated by reference to Post-Effective Amendment No.
15 filed July 31, 1996.
EX-99.B8B Custodian Agreement with Bank of California incorporated
by reference to Post-Effective Amendment No. 15 filed July
31, 1996.
EX-99.B8D Fourth Amendment to Custodian Agreement by and between STI
Trust & Investment Operations, Inc. And The Bank of New
York, dated May 6, 1997, incorporated by reference to
Post-effective Amendment No. 21 filed September 30, 1997.
EX-99.B8C Transfer Agent Agreement with Federated Services Company
dated May 14, 1994 as originally filed with Post-Effective
Amendment No. 9 filed October 22, 1994 and incorporated by
reference to Post-Effective Amendment No. 15 filed July
31, 1996.
EX-99.B9A Administration Agreement with SEI Financial Management
Corporation dated May 29, 1995 as originally filed with
Post-Effective Amendment No. 12 filed August 17, 1995 and
incorporated by reference to Post-Effective Amendment No.
15 filed July 31, 1996.
EX-99.B9B Consent to Assignment and Assumption of the Administration
Agreement between STI Classic Funds and SEI Financial
Management Corporation, incorporated by reference to
Post-effective Amendment No. 21 filed September 30, 1997.
EX-99.B10 Opinion and Consent of Counsel (incorporated by reference
to Pre-Effective Amendment No. 2 filed May 22, 1992)
<PAGE>
EX-99.B11 Consent of Independent Public Accountants*
EX-99.B12 Not applicable.
EX-99.B13 Not applicable.
EX-99.B14 Not applicable.
EX-99.B15 Distribution Plan--Investor Class incorporated by
reference to Post-Effective Amendment No. 16 filed
October 10, 1996.
EX-99.B15A Distribution and Service Agreement relating to Flex
Shares dated May 29, 1995 as originally filed with
Post-Effective Amendment No. 12 filed August 17, 1995
and incorporated by reference to Post-Effective Amendment
No. 15 filed July 31, 1996.
EX-99.B16 Performance Quotation Computation (incorporated by
reference to Post-Effective Amendment No. 9 filed
September 22, 1994).
EX-99.B18 Rule 18f-3 Plan incorporated by reference to
Post-Effective Amendment No. 16 filed September 10, 1996.
EX-99.B24 Powers of attorney, incorporated by reference to
Post-Effective Amendment No. 21 filed September 30, 1997.
EX-27.1A Financial Data Schedule-Prime Quality Money Market
Fund--Trust Shares*
EX-27.1B Financial Data Schedule-Prime Quality Money Market
Fund--Investor Shares*
EX-27.2A Financial Data Schedule-U.S. Government Securities Money
Market Fund--Trust Shares*
EX-27.2B Financial Data Schedule-U.S. Government Securities Money
Market Fund--Investor Shares*
EX-27.3A Financial Data Schedule-Tax-Exempt Money Market
Fund--Trust Shares*
EX-27.3B Financial Data Schedule-Tax-Exempt Money Market
Fund--Investor Shares*
EX-27.4A Financial Data Schedule-Investment Grade Bond Fund--Trust
Shares*
EX-27.4B Financial Data Schedule-Investment Grade Bond
Fund--Investor Shares*
EX-27.4C Financial Data Schedule-Investment Grade Bond Fund--Flex
Shares*
EX-27.5A Financial Data Schedule-Investment Grade Tax-Exempt Bond
Fund--Trust Shares*
EX-27.5B Financial Data Schedule-Investment Grade Tax-Exempt Bond
Fund--Investor Shares*
EX-27.5C Financial Data Schedule-Investment Grade Tax-Exempt Bond
Fund--Flex Shares*
EX-27.6A Financial Data Schedule-Capital Growth Fund--Trust Shares*
EX-27.6B Financial Data Schedule-Capital Growth Fund--Investor
Shares*
EX-27.6C Financial Data Schedule-Capital Growth Fund--Flex Shares*
EX-27.7A Financial Data Schedule-Value Income Stock Fund--Trust
Shares*
C-21
<PAGE>
EX-27.7B Financial Data Schedule-Value Income Stock Fund--Investor
Shares*
EX-27.7C Financial Data Schedule-Value Income Stock Fund--Flex
Shares*
EX-27.8A Financial Data Schedule-Short-Term Treasury Securities
Fund--Trust Shares*
EX-27.8B Financial Data Schedule-Short-Term Treasury Securities
Fund--Investor Shares*
EX-27.8C Financial Data Schedule-Short-Term Treasury Securities
Fund--Flex Shares*
EX-27.9A Financial Data Schedule-Short-Term Bond Fund--Trust Shares*
EX-27.9B Financial Data Schedule-Short-Term Bond Fund--Investor
Shares*
EX-27.9C Financial Data Schedule-Short-Term Bond Fund--Flex Shares*
EX-27.10A Financial Data Schedule-Sunbelt Equity Fund--Trust Shares*
EX-27.10B Financial Data Schedule-Sunbelt Equity Fund--Investor
Shares*
EX-27.10C Financial Data Schedule-Sunbelt Equity Fund--Flex Shares*
EX-27.11A Financial Data Schedule-Mid-Cap Equity Fund--Trust Shares*
EX-27.11B Financial Data Schedule-Mid-Cap Equity Fund--Investor
Shares*
EX-27.11C Financial Data Schedule-Mid-Cap Equity Fund--Flex Shares*
EX-27.12A Financial Data Schedule-Balanced Fund--Trust Shares*
EX-27.12B Financial Data Schedule-Balanced Fund--Investor Shares*
EX-27.12C Financial Data Schedule-Balanced Fund--Flex Shares*
EX-27.14A Financial Data Schedule-Florida Tax-Exempt Bond
Fund--Trust Shares*
EX-27.14B Financial Data Schedule-Florida Tax-Exempt Bond
Fund--Investor Shares*
EX-27.14C Financial Data Schedule-Florida Tax-Exempt Bond
Fund--Flex Shares*
EX-27.15A Financial Data Schedule-Georgia Tax-Exempt Bond
Fund--Trust Shares*
EX-27.15B Financial Data Schedule-Georgia Tax-Exempt Bond
Fund--Investor Shares*
EX-27.15C Financial Data Schedule-Georgia Tax-Exempt Bond
Fund--Flex Shares*
EX-27.16A Financial Data Schedule-Tennessee Tax-Exempt Bond
Fund--Trust Shares*
EX-27.16B Financial Data Schedule-Tennessee Tax-Exempt Bond
Fund--Investor Shares*
EX-27.16C Financial Data Schedule-Tennessee Tax-Exempt Bond
Fund--Flex Shares*
EX-27.17A Financial Data Schedule-U.S. Government Securities
Fund--Trust Shares*
EX-27.17B Financial Data Schedule-U.S. Government Securities
Fund--Investor Shares*
EX-27.17C Financial Data Schedule-U.S. Government Securities
Fund--Flex Shares*
EX-27.18A Financial Data Schedule-Limited-Term Federal Mortgage
Securities Fund--Trust Shares*
C-22
<PAGE>
EX-27.18B Financial Data Schedule-Limited-Term Federal Mortgage
Securities Fund--Investor Shares*
EX-27.18C Financial Data Schedule-Limited-Term Federal Mortgage
Securities Fund--Flex Shares*
EX-27.19A Financial Data Schedule-International Equity Index
Fund--Trust Shares*
EX-27.19B Financial Data Schedule-International Equity Index
Fund--Investor Shares*
EX-27.19C Financial Data Schedule-International Equity Index
Fund--Flex Shares*
EX-27.20A Financial Data Schedule-International Equity Fund--Trust
Shares*
EX-27.20B Financial Data Schedule-International Equity
Fund--Investor Shares*
EX-27.20C Financial Data Schedule-International Equity Fund--Flex
Shares*
EX-27.21 Financial Data Schedule-Classic Institutional Cash
Management Money Market Fund*
EX-27.22 Financial Data Schedule-Classic Institutional U.S.
Treasury Money Market Fund*
EX-27.23 Financial Data Schedule-Small Cap Equity Fund*
EX-27.24 Financial Data Schedule-Emerging Markets Equity Fund*
*FILED HEREWITH.
C-23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000883939
<NAME> STI CLASSIC
<SERIES>
<NUMBER> 011
<NAME> PRIME QUALITY MONEY MARKET
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 1404666
<INVESTMENTS-AT-VALUE> 1404666
<RECEIVABLES> 8195
<ASSETS-OTHER> 304
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1413165
<PAYABLE-FOR-SECURITIES> 34908
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8158
<TOTAL-LIABILITIES> 43066
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1086903
<SHARES-COMMON-STOCK> 1086903
<SHARES-COMMON-PRIOR> 1051049
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (406)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1370099
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 82489
<OTHER-INCOME> 0
<EXPENSES-NET> (9208)
<NET-INVESTMENT-INCOME> 73281
<REALIZED-GAINS-CURRENT> (121)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 73160
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (60224)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2786281
<NUMBER-OF-SHARES-REDEEMED> (2752496)
<SHARES-REINVESTED> 2069
<NET-CHANGE-IN-ASSETS> 103603
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (285)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9767
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11945
<AVERAGE-NET-ASSETS> 1504033
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
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<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Registration Statement of our report dated July 11, 1997, on the May 31, 1997
financial statements of STI Classic Funds, included in Post-Effective
Amendment No. 22 to the Registration Statement on Form N1-A, and to all
references to our Firm included in or made part of this Registration
Statement File No. 33-45671.
/s/ Arthur Andersen LLP
Philadelphia, PA
October 15, 1997
