<PAGE>
STI CLASSIC FUNDS
TO THE FUNDS:
FOR PARTICIPANTS OF SUNTRUST BANKS
SPONSORED RETIREMENT PLANS
PROSPECTUS
OCTOBER 1, 1999
BALANCED FUND
CAPITAL APPRECIATION FUND (FORMERLY CAPITAL GROWTH FUND)
CORE EQUITY FUND
E-COMMERCE OPPORTUNITY FUND
GROWTH AND INCOME FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
INVESTMENT GRADE BOND FUND
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
MID-CAP EQUITY FUND
SHORT-TERM BOND FUND
SHORT-TERM U.S. TREASURY SECURITIES FUND
SMALL CAP EQUITY FUND
SMALL CAP GROWTH STOCK FUND
TAX SENSITIVE GROWTH STOCK FUND
U.S. GOVERNMENT SECURITIES FUND
VALUE INCOME STOCK FUND
PRIME QUALITY MONEY MARKET FUND
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
LIFE VISION BALANCED PORTFOLIO
LIFE VISION GROWTH AND INCOME PORTFOLIO
LIFE VISION MAXIMUM GROWTH PORTFOLIO
INVESTMENT ADVISERS
TO THE FUNDS:
STI CAPITAL MANAGEMENT, N.A.
TRUSCO CAPITAL MANAGEMENT, INC.
THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
HOW TO READ THIS PROSPECTUS
The STI Classic Funds is a mutual fund family that offers shares in separate
investment portfolios (Funds). The Funds have individual investment goals and
strategies. This prospectus gives you important information about the Trust
Shares of the Equity Funds that you should know before investing. Please read
this prospectus and keep it for future reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN WHICH IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
<TABLE>
<CAPTION>
PAGE
<S> <C>
BALANCED FUND................................................2
CAPITAL APPRECIATION FUND....................................4
CORE EQUITY FUND.............................................6
E-COMMERCE OPPORTUNITY FUND..................................8
GROWTH AND INCOME FUND......................................10
INTERNATIONAL EQUITY FUND...................................12
INTERNATIONAL EQUITY INDEX FUND.............................14
INVESTMENT GRADE BOND FUND..................................16
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND...............18
MID-CAP EQUITY FUND.........................................20
SHORT-TERM BOND FUND........................................22
SHORT-TERM U.S. TREASURY SECURITIES FUND....................24
SMALL CAP EQUITY FUND.......................................26
SMALL CAP GROWTH STOCK FUND.................................28
TAX SENSITIVE GROWTH STOCK FUND.............................30
U.S. GOVERNMENT SECURITIES FUND.............................32
VALUE INCOME STOCK FUND.....................................34
PRIME QUALITY MONEY MARKET FUND.............................36
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND................38
U.S. TREASURY MONEY MARKET FUND.............................40
LIFE VISION BALANCED PORTFOLIO..............................44
LIFE VISION GROWTH AND INCOME PORTFOLIO.....................46
LIFE VISION MAXIMUM GROWTH PORTFOLIO........................48
<PAGE>
MORE INFORMATION ABOUT RISK.................................50
EACH FUND'S OTHER INVESTMENTS...............................51
THE INVESTMENT ADVISERS AND
PORTFOLIO MANAGERS..........................................51
PURCHASING AND SELLING FUND SHARES..........................54
DIVIDENDS AND DISTRIBUTIONS.................................56
TAXES.......................................................57
FINANCIAL HIGHLIGHTS........................................58
HOW TO OBTAIN MORE INFORMATION ABOUT THE
STI CLASSIC FUNDS.......................................66
</TABLE>
[INSERT ICONS HERE]
<PAGE>
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help a
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. An investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In fact, no matter how good
a job an investment manager does, you could lose money on your investment in the
Fund, just as you could with other investments. A Fund share is not a bank
deposit and it is not insured or guaranteed by the FDIC or any government
agency.
The value of your investment in a Fund (other than a money market fund) is based
on the market value of the securities the Fund holds. These prices change daily
due to economic and other events that affect particular companies and other
issuers. These price movements, sometimes called volatility, may be greater or
lesser depending on the types of securities a Fund owns and the markets in which
they trade. The effect on a Fund of a change in the value of a single security
will depend on how widely the Fund diversifies its holdings.
<PAGE>
BALANCED FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation and current income
INVESTMENT FOCUS
PRIMARY U.S. common stocks
SECONDARY Bonds
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with a
history of earnings growth and bonds with
minimal risk
INVESTOR PROFILE Investors who want income from their
investment, as well as an increase in its
value
INVESTMENT STRATEGY
The Balanced Fund invests in common and preferred stocks, convertible
securities, U.S. government obligations and investment grade corporate bonds.
In selecting stocks for the Fund, the Adviser attempts to identify high-quality
companies with a history of earnings growth. In selecting bonds, the Adviser
tries to minimize risk while attempting to outperform selected market indices.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1995 25.51%
1996 12.13%
1997 21.14%
1998 19.55%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
12.57% -5.70%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 5.39%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE LEHMAN GOVERNMENT/CORPORATE BOND INDEX
AND THE S&P 500 INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR SINCE INCEPTION
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Balanced Fund 19.55% 14.30%*
Lehman Government/Corporate Bond Index 9.47% 7.11%**
S&P 500 Index 28.60% 23.66%**
</TABLE>
* SINCE 1/3/94
** SINCE 1/31/94
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers Government/Corporate Bond Index
is a widely-recognized, market value-weighted (higher market value bonds have
more influence than lower market value bonds) index of U.S. Treasury securities,
U.S. government agency obligations, corporate debt backed by the U.S.
government, fixed-rate nonconvertible corporate debt securities, Yankee bonds,
and nonconvertible debt securities issued by or guaranteed by foreign
governments and agencies. All securities in the Index are rated investment grade
(BBB) or higher, with maturities of at least 1 year. The S&P 500 Index is a
widely-recognized, market value-weighted (higher market value stocks have more
influence than lower market value stocks) index of 500 stocks designed to mimic
the overall equity market's industry weightings.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.95%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.06%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$108 $337 $585 $1,294
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.86% AND 0.97%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
CAPITAL APPRECIATION FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with above
average growth potential
INVESTOR PROFILE Investors who want the value of their
investment to grow, but do not need to
receive income on their investment
INVESTMENT STRATEGY
The Capital Appreciation Fund invests primarily in U.S. common stocks and other
equity securities that the Adviser believes are undervalued by the stock market.
In selecting investments for the Fund, the Adviser chooses companies that it
believes have above average growth potential. The Adviser rotates the Fund's
investment among various market sectors based on the Adviser's research of
business cycles. The Adviser's strategy focuses on large cap stocks with a
strong growth history. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and
additional capital gains tax liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1993 9.89%
1994 -7.41%
1995 31.15%
1996 20.31%
1997 31.13%
1998 28.06%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
22.93% -11.16%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 10.45%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998, TO THOSE OF THE S&P 500 INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund 28.06% 19.66% 18.64%*
S&P 500 Index 28.60% 24.05% 20.82%**
</TABLE>
* SINCE 7/1/92
** SINCE 7/31/92
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of 500 stocks designed to mimic the overall equity market's
industry weightings.
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- ------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.26%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$128 $400 $692 $1,523
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.06% AND 1.17%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
CORE EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital growth
INVESTMENT FOCUS Common stocks of mid-to large-cap companies
SHARE PRICE VOLATILITY Moderate to high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with superior
earnings trends
INVESTOR PROFILE Investors seeking long-term growth of
capital without regard to income who are
willing to accept more volatility for the
possibility of higher returns
INVESTMENT STRATEGY
The Core Equity Fund invests primarily in common stocks of U.S. companies with
market capitalizations of more than $1 billion. In selecting stocks for the
Fund, the Adviser attempts to capture superior growth prospects based on
earnings potential, profitability and other measures. These measures include
growth characteristics such as whether a company makes significant investments
in research and product development or whether a company is participating in
rapidly expanding industries. Due to its investment strategy, the Fund may buy
and sell securities frequently. This may result in higher transaction costs and
additional capital gains tax liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
stock markets have moved in cycles, and the value of the Fund's common stocks
may fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of stocks issued by such companies may suffer a decline
in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
In addition, the Fund is subject to the risk that its principal market segment,
mid- to large-capitalization growth stocks, may underperform other equity market
segments or the equity markets as a whole.
PERFORMANCE INFORMATION
As of September 30, 1999, the Core Equity Fund had not commenced operations, and
did not have a performance history.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- ------------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.10%
Other Expenses* 0.20%
-----
Total Annual Fund Operating Expenses 1.30%
</TABLE>
* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$132 $412
</TABLE>
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
estimated expenses in the table above are shown as a percentage of the Fund's
net assets. These expenses are deducted from Fund assets. The table shows the
highest estimated expenses that could be currently charged to the Fund. Actual
expenses are expected to be lower because the Adviser is voluntarily waiving a
portion of its fees. ESTIMATED ACTUAL INVESTMENT ADVISORY FEES AND TOTAL
OPERATING EXPENSES ARE 1.00% AND 1.20%, RESPECTIVELY. The Adviser could
discontinue this voluntary waiver at any time. For more information about these
fees, see "Investment Advisers."
<PAGE>
E-COMMERCE OPPORTUNITY FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital growth
INVESTMENT FOCUS Common stocks of companies participating in
multiple electronic commerce market segments
SHARE PRICE VOLATILITY Very high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies utilizing
electronic commerce opportunities to
achieve above average growth
INVESTOR PROFILE Aggressive investors with long-term
investment goals who are willing to accept
significant volatility for the possibility
of higher returns
INVESTMENT STRATEGY
The E-Commerce Opportunity Fund invests primarily in common stocks of U.S.
companies that are expected to benefit substantially from electronic commerce
and achieve above average growth. The Fund defines electronic commerce, or
e-commerce, as conducting business through the use of computers, the Internet,
telecommunication lines and other electronic means of information transfer. The
Fund's holdings are generally diversified across three market segments. The
first segment is comprised of recently established corporations that are
implementing pioneering electronic commerce strategies. The second segment
consists of technology companies that provide the infrastructure to support
electronic commerce. The third segment includes conventional corporations
that are leveraging electronic commerce opportunities to improve their
competitive advantage. In selecting investments for the Fund, the Adviser
focuses on a "bottom-up" analysis that evaluates the competitive advantages
and market sustainability of individual companies. The Fund invests
primarily in companies with market capitalizations over $1 billion, but may
invest a portion of its assets in smaller companies. Due to its investment
strategy, the Fund may buy and sell securities frequently. This may result in
higher transaction costs and additional capital gains tax liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
stock markets have moved in cycles, and the value of the Fund's common stocks
may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of stocks issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The smaller capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more
established companies. In particular, these small companies may have limited
product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small cap stocks may be more
volatile than those of larger companies. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
<PAGE>
Due to the focus of the Fund, many holdings share similar risk factors. Many
companies in the portfolio have limited operating histories, function in rapidly
changing business environments and trade at valuations which are significantly
higher than average. As a result, the Fund's NAV may be more volatile than
other, broadly diversified equity funds.
PERFORMANCE INFORMATION
As of September 30, 1999, the E-Commerce Opportunity Fund had not commenced
operations, and did not have a performance history.
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.10%
Other Expenses* 0.20%
-----
Total Annual Fund Operating Expenses 1.30%
</TABLE>
* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$132 $412
</TABLE>
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
estimated expenses in the table above are shown as a percentage of the Fund's
net assets. These expenses are deducted from Fund assets. The table shows the
highest estimated expenses that could be currently charged to the Fund. Actual
expenses are expected to be lower because the Adviser is voluntarily waiving a
portion of its fees. ESTIMATED ACTUAL INVESTMENT ADVISORY FEES AND TOTAL
OPERATING EXPENSES ARE 1.00% AND 1.20%, RESPECTIVELY. The Adviser could
discontinue this voluntary waiver at any time. For more information about these
fees, see "Investment Advisers."
<PAGE>
GROWTH AND INCOME FUND
FUND SUMMARY
INVESTMENT GOALS
PRIMARY Long-term capital appreciation
SECONDARY Current income
INVESTMENT FOCUS Equity securities
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify securities of
companies with market capitalizations of
at least $1 billion with attractive
valuation and/or above average momentum
relative either to their sectors or
the market as a whole
INVESTOR PROFILE Investors who are looking for capital
appreciation potential and income with
less volatility than the equity markets
as a whole
INVESTMENT STRATEGY
The Growth and Income Fund invests primarily in equity securities, including
common stock and listed American Depository Receipts (ADR's), of domestic and
foreign companies with market capitalizations of at least $1 billion. However,
the average market capitalization can vary throughout a full market cycle and
will be flexible to allow the Adviser to capture market opportunities. The
Adviser uses a quantitative screening process to identify companies with an
attractive fundamental profile. The portfolio management team selects stocks of
companies with strong financial quality and above average earnings momentum
to secure the best relative values in each economic sector.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1993 10.20%
1994 -0.81%
1995 29.38%
1996 19.06%
1997 27.69%
1998 18.20%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.38% -10.36%
(6/30/97) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 12.76%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE S&P 500 INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth and Income Fund 18.20% 18.19% 17.26%*
S&P 500 Index 28.60% 24.05% 21.60%**
</TABLE>
* SINCE 9/25/92
** SINCE 9/30/92
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of 500 stocks designed to mimic the overall equity market's
industry weightings.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TRUST SHARES
- ---------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.90%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.01%
</TABLE>
* EXPENSE INFORMATION IN THE TABLE HAS BEEN RESTATED TO REFLECT CURRENT
FEES.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$103 $322 $558 $1,236
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. For more information about
these fees, see "Investment Advisers."
<PAGE>
INTERNATIONAL EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Foreign common stocks
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued companies
with good fundamentals
INVESTOR PROFILE Investors who want an increase in the value
of their investment without regard to
income, are willing to accept the increased
risks of international investing for the
possibility of higher returns, and want
exposure to a diversified portfolio of
international stocks
INVESTMENT STRATEGY
The International Equity Fund invests primarily in common stocks and other
equity securities of foreign companies. In selecting investments for the Fund,
the Adviser diversifies the Fund's investments among at least three foreign
countries. The Fund invests primarily in developed countries, but may invest in
countries with emerging markets. The Adviser's "bottom-up" approach to stock
selection focuses on individual stocks and fundamental characteristics of
companies. The Adviser's goal is to find companies with top management, quality
products and sound financial positions, that are trading at a discount. Due to
its investment strategy, the Fund may buy and sell securities frequently. This
may result in higher transaction costs and additional capital gains tax
liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, foreign common
stocks, may underperform other equity market segments or the equity markets as a
whole.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily
<PAGE>
affect the U.S. economy or similar issuers located in the United States. In
addition, investments in foreign countries are generally denominated in a
foreign currency. As a result, changes in the value of those currencies compared
to the U.S. dollar may affect (positively or negatively) the value of a Fund's
investments. These currency movements may happen separately from and in response
to events that do not otherwise affect the value of the security in the issuer's
home country.
Emerging market countries are countries that the World Bank or the United
Nations considers to be emerging or developing. Emerging markets may be more
likely to experience political turmoil or rapid changes in market or economic
conditions than more developed countries. In addition, the financial stability
of issuers (including governments) in emerging market countries may be more
precarious than in other countries. As a result, there will tend to be an
increased risk of price volatility associated with the Fund's investments in
emerging market countries, which may be magnified by currency fluctuations
relative to the U.S. dollar.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to December 1995, when the Fund began operating, represent the
performance of the Adviser's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Adviser's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1996 22.08%
1997 13.35%
1998 11.22%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
16.88% -18.28%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 2.91%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, AND FAR EAST (MSCI EAFE) INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
International Equity Fund 11.22% 21.28%*
MSCI EAFE Index 20.00% 10.87%*
</TABLE>
* SINCE 1/31/95
<PAGE>
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment adviser and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The MSCI EAFE Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of over 900 securities listed on the stock exchanges
in Europe, Australasia and the Far East.
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- -----------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.25%
Other Expenses 0.28%
-----
Total Annual Fund Operating Expenses 1.53%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$156 $483 $834 $1,824
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.20% AND 1.48%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
INTERNATIONAL EQUITY INDEX FUND
FUND SUMMARY
INVESTMENT GOAL Investment results that correspond to the
performance of the MSCI EAFE-GDP Index
INVESTMENT FOCUS Foreign common stocks in MSCI EAFE-GDP Index
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Statistical analysis to track the Index
INVESTOR PROFILE Aggressive investors who want exposure to
foreign markets and are willing to accept
the increased risks of foreign investing
for the possibility of higher returns
INVESTMENT STRATEGY
The International Equity Index Fund invests primarily in common stocks of
foreign companies. In selecting investments for the Fund, the Adviser chooses
companies included in the MSCI EAFE-GDP Index, an index of equity securities
of companies located in Europe, Australasia and the Far East. While the Fund
is structured to have overall investment characteristics similar to those of
the Index, it selects a sample of stocks within the Index using a statistical
process. So, the Fund will not hold all stocks included in the Index.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the stock
markets have moved in cycles, and the value of the Fund's common stocks may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of stocks issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, foreign common
stocks, may underperform other equity market segments or the equity markets as
a whole.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
<PAGE>
In addition to the above mentioned risks, the Adviser may not be able to match
the performance of the Fund's benchmark.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1995 10.73%
1996 6.04%
1997 8.99%
1998 30.02%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
21.26% -12.98%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 6.23%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA AND FAR EAST-GROSS DOMESTIC PRODUCT (MSCI EAFE-GDP) WEIGHTED
INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
International Equity Index Fund 30.02% 11.15%*
MSCI EAFE-GDP Weighted Index 25.12% 9.42%**
</TABLE>
* SINCE 6/6/94
** SINCE 6/30/94
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment adviser and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The MSCI EAFE-GDP Weighted
Index is a widely-recognized, capitalization-weighted (companies with larger
market capitalizations have more influence than those with smaller market
capitalizations) index of over 900 securities listed on the stock exchanges
in Europe, Australasia and the Far East. The index is weighted by the gross
domestic product of the various countries in the index.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you
buy and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.90%
Other Expenses 0.28%
-----
Total Annual Fund Operating Expenses 1.18%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$120 $375 $649 $1,432
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.79% AND 1.07%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
INVESTMENT GRADE BOND FUND
FUND SUMMARY
INVESTMENT GOAL High total return through current income
and capital appreciation, while preserving
the principal amount invested
INVESTMENT FOCUS Investment grade U.S. government and
corporate debt securities
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify relatively inexpensive
securities in a selected market index
INVESTOR PROFILE Investors who want to receive income from
their investment, as well as an increase
in the value of the investment
INVESTMENT STRATEGY
The Investment Grade Bond Fund invests primarily in investment grade corporate
debt securities, U.S. Treasury obligations and mortgage-backed securities. In
selecting investments for the Fund, the Adviser tries to minimize risk while
attempting to outperform selected market indices. Currently, the Adviser's
selected index is the Lehman Brothers Government/Corporate Bond Index, a
widely-recognized, unmanaged index of investment grade government and corporate
debt securities. The Adviser seeks to invest more in portions of the Index that
seem relatively inexpensive, and less in those that seem expensive. The Adviser
allocates the Fund's investments among various market sectors based on the
Adviser's analysis of historical data, yield information and credit ratings. The
Adviser anticipates that the Fund's average weighted maturity will range from 4
to 10 years. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and
additional capital gains tax liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. They are sensitive to changes in
interest rates, but may respond to these changes differently from other fixed
income securities due to the possibility of prepayment
<PAGE>
of the underlying mortgage loans. As a result, it may not be possible to
determine in advance the actual maturity date or average life of a
mortgage-backed security. Rising interest rates tend to discourage refinancings,
with the result that the average life and volatility of the security will
increase, exacerbating its decrease in market price. When interest rates fall,
however, mortgage-backed securities may not gain as much in market value because
of the expectation of additional mortgage prepayments that must be reinvested at
lower interest rates. Prepayment risk may make it difficult to calculate the
average maturity of the portfolio of mortgage-backed securities and, therefore,
to assess the volatility risk of that portfolio.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1993 10.84%
1994 -3.32%
1995 17.80%
1996 2.34%
1997 9.08%
1998 9.19%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
6.11% -2.67%
(6/30/95) (3/31/94)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.
THE FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS -1.83%.
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Grade Bond Fund 9.19% 6.78% 7.30%*
Lehman Brothers Government/Corporate Bond Index 9.47% 7.30% 7.77%**
</TABLE>
* SINCE 7/16/92
** SINCE 7/31/92
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers Government/Corporate Bond Index
is a widely-recognized, market value-weighted (higher market value bonds have
more influence than lower market value bonds) index of U.S. Treasury securities,
U.S. government agency obligations, corporate debt backed by the U.S.
government, fixed-rate nonconvertible corporate debt securities, Yankee bonds,
and nonconvertible debt securities issued by or guaranteed by foreign
governments and agencies. All securities in the Index are rated investment grade
(BBB) or higher, with maturities of at least 1 year.
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- -----------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.74%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.85%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$87 $271 $471 $1,049
</TABLE>
<PAGE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.66% AND 0.77%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
FUND SUMMARY
INVESTMENT GOAL High current income, while preserving
capital
INVESTMENT FOCUS Mortgage-backed securities
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify securities that are
less prone to prepayment risk
INVESTOR PROFILE Conservative investors who want to receive
income from their investment
INVESTMENT STRATEGY
The Limited-Term Federal Mortgage Securities Fund invests primarily in U.S.
government agency mortgage-backed securities, such as Fannie Mae, GNMA and
collateralized mortgage obligations. These securities typically have an
effective maturity from 1 to 5 years. In selecting investments for the Fund, the
Adviser tries to identify securities that the Adviser expects to perform well in
rising and falling markets. The Adviser also attempts to reduce the risk that
the underlying mortgages are prepaid by focusing on securities that the Adviser
believes are less prone to this risk. For example, Fannie Mae or GNMA securities
that were issued years ago may be less prone to prepayment risk because there
have been many opportunities for prepayment, but few have occurred. Due to its
investment strategy, the Fund may buy and sell securities frequently. This may
result in higher transaction costs and additional capital gains tax liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that its market segment, mortgage-backed
securities, may underperform other fixed income market segments or the fixed
income markets as a whole.
Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. They are sensitive to changes in
interest rates, but may respond to these changes differently from other fixed
income securities due to the possibility of prepayment of the underlying
mortgage loans. As a result, it may not be possible to determine in advance the
<PAGE>
actual maturity date or average life of a mortgage-backed security. Rising
interest rates tend to discourage refinancings, with the result that the average
life and volatility of the security will increase, exacerbating its decrease in
market price. When interest rates fall, however, mortgage-backed securities may
not gain as much in market value because of the expectation of additional
mortgage prepayments that must be reinvested at lower interest rates. Prepayment
risk may make it difficult to calculate the average maturity of the portfolio of
mortgage-backed securities and, therefore, to assess the volatility risk of that
portfolio.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1995 12.14%
1996 4.53%
1997 6.74%
1998 6.90%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
4.05% -0.32%
(3/31/95) (3/31/97)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.
THE FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 0.32%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE MERRILL LYNCH 1-5 YEAR U.S. TREASURY
INDEX AND THE MERRILL LYNCH 1-5 YEAR U.S. GOVERNMENTS, INTERMEDIATE-TERM INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Limited-Term Federal Mortgage Securities Fund 6.90% 6.64%*
Merrill Lynch 1-5 Year U.S. Treasury Index 7.74% 7.24%**
Merrill Lynch 1-5 Year U.S. Governments, Intermediate-Term Index 7.67% 7.24%**
</TABLE>
* SINCE 6/6/94
* SINCE 6/30/94
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Merrill Lynch 1-5 Year U.S. Treasury Index
is a widely-recognized, capitalization-weighted
<PAGE>
index of U.S. Treasury securities with maturities 1 year or greater and no
more than 5 years. The Merrill Lynch 1-5 Year U.S. Governments,
Intermediate-Term Index is a widely-recognized, capitalization weighted index
including all U.S. Treasuries, and agency securities with maturities of 1
year or greater but less than 5 years from maturity.
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you
buy and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- --------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.65%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 0.77%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$79 $246 $428 $954
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.55% AND 0.67%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
MID-CAP EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS U.S. mid-cap common stocks
SHARE PRICE VOLATILITY Moderate to high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with above
average growth potential at an attractive
price
INVESTOR PROFILE Investors who want the value of their
investment to grow and who are willing to
accept more volatility for the possibility
of higher returns
INVESTMENT STRATEGY
The Mid-Cap Equity Fund invests primarily in a diversified portfolio of common
stocks and other equity securities of U.S. companies. In selecting investments
for the Fund, the Adviser primarily chooses companies that have small- to
mid-sized market capitalizations (i.e., companies with market capitalizations of
$500 million to $10 billion and companies in the S&P MidCap 400 Index) and that
have above average growth potential at attractive prices. The Adviser evaluates
companies based on their industry sectors and the market in general. The Fund
maintains holdings in the industries that appear to perform best during a given
business cycle. The Adviser analyzes companies that are in favored industries
based on their fundamental characteristics, such as growth rates and earnings.
The Adviser does not consider current income in selecting investments for the
Fund.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's
securities may fluctuate drastically from day-to-day. Individual companies
may report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies
may suffer a decline in response. These factors contribute to price
volatility, which is the principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, mid-cap common
stocks, may underperform other equity market segments or the equity markets as a
whole.
The small- to mid-sized capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these small companies may have limited product lines,
markets and financial resources, and may
<PAGE>
depend upon a relatively small management group. Therefore, small cap and
mid-cap stocks may be more volatile than those of larger companies. These
securities may be traded over-the-counter or listed on an exchange and may
or may not pay dividends.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1995 31.22%
1996 15.42%
1997 21.23%
1998 6.48%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
24.73% -19.96
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.
THE FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 6.51%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE S&P MIDCAP 400 INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR SINCE INCEPTION
- ----------------------------------------------------------------------
<S> <C> <C>
Mid-Cap Equity Fund 6.48% 14.25%*
S&P MidCap 400 Index 19.12% 19.34%**
</TABLE>
* SINCE 2/24/94
** SINCE 2/28/94
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P MidCap 400 Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of 400 domestic
mid-cap stocks chosen for market size, liquidity, and industry group
representation.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TRUST SHARES
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses 0.13%
-----
Total Annual Fund Operating Expenses 1.28%
</TABLE>
* EXPENSE INFORMATION IN THE TABLE HAS BEEN RESTATED TO REFLECT CURRENT FEES.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$130 $406 $702 $1,545
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.04% AND 1.17%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
SHORT-TERM BOND FUND
FUND SUMMARY
INVESTMENT GOAL High current income, while preserving
capital
INVESTMENT FOCUS Investment grade U.S. government and
corporate debt securities
SHARE PRICE VOLATILITY Low
PRINCIPAL INVESTMENT STRATEGY Attempts to identify securities that offer
a comparably better return than similar
securities for a given level of credit risk
INVESTOR PROFILE Income oriented investors who are willing
to accept increased risk for the
possibility of returns greater than money
market investing
INVESTMENT STRATEGY
The Short-Term Bond Fund invests primarily in a diversified portfolio of short-
to medium-term investment grade U.S. Treasury, corporate debt, mortgage-backed
and asset-backed securities. The Fund expects that it will normally maintain an
average weighted maturity of approximately 3 years. In selecting investments for
the Fund, the Adviser attempts to identify securities that offer a comparably
better investment return for a given level of credit risk. For example,
short-term bonds generally have better returns than money market instruments,
with a fairly modest increase in credit risk and/or volatility. The Adviser
manages the Fund from a total return perspective. That is, the Adviser makes
day-to-day investment decisions for the Fund with a view towards maximizing
returns. The Adviser analyzes yields, market sectors and credit risk in an
effort to identify attractive investments with the best risk/reward trade-off.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
Mortgage-backed and asset-backed securities are fixed income securities
representing an interest in a pool of underlying mortgage loans or underlying
assets such as truck and auto loans, leases and credit card receivables. They
are sensitive to changes in interest rates, but may respond to these changes
differently from other fixed income securities due to the possibility of
prepayment
<PAGE>
of the underlying mortgage loan, receivables or other assets underlying these
securities. As a result, it may not be possible to determine in advance the
actual maturity date or average life of a mortgage-backed or asset-backed
security. Rising interest rates tend to discourage refinancings, with the result
that the average life and volatility of the security will increase, exacerbating
its decrease in the market place. When interest rates fall, however,
mortgage-backed and asset-backed securities may not gain as much in market value
because of the expectation of additional mortgage prepayment or prepayment of
the underlying asset that must be reinvested at lower interest rates. Prepayment
risk may make it difficult to calculate the average maturity of the portfolio of
mortgage-backed or asset-backed securities and, therefore, to assess the
volatility risk of that portfolio.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.
<TABLE>
<S> <C>
1994 -0.07%
1995 11.77%
1996 3.90%
1997 6.78%
1998 6.84%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
3.76% -0.58%
(6/30/95) (3/31/94)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.
THE FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS -0.20%.
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE SALOMON ONE YEAR TREASURY BENCHMARK
ON-THE-RUN INDEX AND THE SALOMON 1-3 YEAR TREASURY/GOVERNMENT
SPONSORED/CORPORATE INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE
INCEPTION
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Bond Fund 6.84% 5.77% 5.68%*
Salomon One Year Treasury Benchmark On-the-Run Index 5.89% 5.66% 5.38%**
Salomon 1-3 Year Treasury/Government Sponsored/Corporate Index 6.95% 6.00% 5.79%**
</TABLE>
* SINCE 3/15/93
** SINCE 3/31/93
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Salomon One Year Treasury Benchmark On-the-Run
Index is a widely-recognized index of U.S. Treasury securities. The Salomon 1-3
Year Treasury/Government Sponsored/Corporate Index is a widely-recognized index
of U.S. Treasury securities, government agency obligations, and corporate debt
securities rated at least investment grade (BBB). The securities in the index
have maturities 1 year or greater and less than 3 years.
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- ---------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.65%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 0.77%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$79 $246 $428 $954
</TABLE>
<PAGE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.55% AND 0.67%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
SHORT-TERM U.S. TREASURY SECURITIES FUND
FUND SUMMARY
INVESTMENT GOAL High current income, while preserving
capital
INVESTMENT FOCUS Short-term U.S. Treasury securities
SHARE PRICE VOLATILITY Low
PRINCIPAL INVESTMENT STRATEGY Attempts to identify Treasury securities
with maturities that offer a comparably
better return potential and yield than
either shorter maturity or longer maturity
securities for a given level of interest
rate risk
INVESTOR PROFILE Income oriented investors who are willing
to accept increased risk for the possibility
of returns greater than money market
investing
INVESTMENT STRATEGY
The Short-Term U.S. Treasury Securities Fund invests exclusively in short-term
U.S. Treasury securities (those with remaining maturities of 3 years or less).
The Fund intends to maintain an average weighted maturity from 1 to 2 years. The
Fund offers investors the opportunity to capture the advantage of investing in
short-term bonds over money market instruments. Generally, short-term bonds
offer a comparably better return than money market instruments, with a modest
increase in interest rate risk. The Adviser manages the Fund from a total return
perspective. That is, the Adviser makes day-to-day investment decisions for the
Fund with a view toward maximizing returns and yield. The Adviser tries to
select those U.S. Treasury securities that offer the best risk/reward trade-off.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that its market segment, short-term U.S.
Treasury securities, may underperform other fixed income market segments or the
fixed income markets as a whole.
Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1994 1.41%
1995 8.58%
1996 4.52%
1997 5.86%
1998 6.24%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.61% -0.10%
(3/31/95) (3/31/94)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.
THE FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 0.91%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE SALOMON 1-3 YEAR TREASURY INDEX AND
THE SALOMON 6 MONTH TREASURY BILL INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term U.S. Treasury Securities Fund 6.24% 5.30% 5.06%*
Salomon 1-3 Year Treasury Index 6.98% 5.95% 5.73%**
Salomon 6 Month Treasury Bill Index 5.27% 5.24% 4.98%**
</TABLE>
* SINCE 3/15/93
** SINCE 3/31/93
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment adviser and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The Salomon 1-3 Year Treasury
Index is a widely-recognized index of U.S. Treasury securities with
maturities 1 year or greater and less than 3 years. The Salomon 6 Month
Treasury Bill Index is a widely-recognized index of the 6 month U.S. Treasury
bills.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- -------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.65%
Other Expenses 0.13%
-----
Total Annual Fund Operating Expenses 0.78%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$80 $249 $433 $966
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.54% AND 0.67%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
SMALL CAP EQUITY FUND
FUND SUMMARY
INVESTMENT GOALS
PRIMARY Capital appreciation
SECONDARY Current income
INVESTMENT FOCUS U.S. small cap common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued small cap
stocks
INVESTOR PROFILE Investors who primarily want the value of
their investment to grow, but want to
receive some income from their investment
INVESTMENT STRATEGY
The Small Cap Equity Fund invests primarily in common stocks of U.S. companies.
In selecting investments for the Fund, the Adviser chooses common stocks of
small sized companies (i.e., companies with market capitalizations under $1
billion) that it believes are undervalued in the market.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the stock
markets have moved in cycles, and the value of the Fund's common stocks may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of stocks issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, small
capitalization common stocks, may underperform other equity market segments or
the equity markets as a whole.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over-the-counter or listed on an exchange and may
or may not pay dividends.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to January 1997, when the Fund began operating, represent the
performance of the Adviser's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Adviser's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1995 30.99%
1996 34.25%
1997 32.59%
1998 -13.45%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
14.95% -21.99%
(6/30/97) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.
THE FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 3.88%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE FRANK RUSSELL 2000 SMALL STOCK INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR SINCE INCEPTION
- ------------------------------------------------------------------------
<S> <C> <C>
Small Cap Equity Fund -13.45% 17.77%*
Frank Russell 2000 Small Stock Index -2.55% 13.71%*
</TABLE>
* SINCE 8/31/94
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Frank Russell 2000 Small Stock Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of the 2,000 smallest U.S. companies out of the 3,000
largest companies.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 1.27%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$129 $403 $697 $1,534
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.10% AND 1.22%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
SMALL CAP GROWTH STOCK FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS U.S. small cap common stocks of growth
companies
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Identifies small cap companies with above
average growth potential
INVESTOR PROFILE Investors who want the value of their
investment to grow, but do not need current
income
INVESTMENT STRATEGY
The Small Cap Growth Stock Fund invests primarily in small U.S. companies with
market capitalizations between $50 million and $3 billion. The Adviser selects
companies that demonstrate above average earnings and sales growth potential.
The selected companies tend to have an established operating history and a
solid balance sheet.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
stock markets have moved in cycles, and the value of the Fund's common stocks
may fluctuate drastically from day-to-day. Individual companies may report
poor results or be negatively affected by industry and/or economic trends and
developments. The prices of stocks issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is
the principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, small
capitalization growth stocks, may underperform other equity market segments or
the equity markets as a whole.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over-the-counter or listed on an exchange and may
or may not pay dividends.
<PAGE>
PERFORMANCE INFORMATION
The Small Cap Growth Stock Fund commenced operations on October 8, 1998, and
therefore does not have a performance history for a full calendar year.
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses 0.34%
-----
Total Annual Fund Operating Expenses 1.49%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$152 $471 $813 $1,779
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.86% AND 1.20%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
TAX SENSITIVE GROWTH STOCK FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital growth with nominal
dividend income
INVESTMENT FOCUS U.S. common stocks of growth companies
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies that have
above-average growth potential and uses a
low portfolio turnover strategy to reduce
capital gains distributions
INVESTOR PROFILE Investors who want to increase the value of
their investment while minimizing taxable
capital gains distributions
INVESTMENT STRATEGY
The Tax Sensitive Growth Stock Fund invests primarily in a diversified
portfolio of common stocks of financially strong U.S. growth companies. Many
of these companies have a history of stable or rising dividend payout
policies.
The Adviser attempts to minimize the impact of capital gains taxes on investment
returns by using a low turnover rate (generally 50% or less) strategy, in
conjunction with other tax management strategies. These strategies may lead to
lower capital gains distributions and, therefore, lower capital gains taxes.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the stock
markets have moved in cycles, and the value of the Fund's common stocks may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of stocks issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, common stocks of
U.S. growth companies, may underperform other equity market segments or the
equity markets as a whole.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile
<PAGE>
than those of larger companies. These securities may be traded over-the-counter
or listed on an exchange and may or may not pay dividends.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to December 1998, when the Fund began operating, represent the
performance of the Adviser's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Adviser's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
<TABLE>
<S> <C>
1996 21.04%
1997 28.76%
1998 31.73%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
27.74% -9.96%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 17.56%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF S&P 500 INDEX AND THE LIPPER GROWTH AND
INCOME FUNDS INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR SINCE INCEPTION
- -------------------------------------------------------------------------------
<S> <C> <C>
Tax Sensitive Growth Stock Fund 31.73% 27.15%*
S&P 500 Index 28.60% 28.23%*
Lipper Growth and Income Funds Index 13.58% 20.25%*
</TABLE>
* SINCE 12/31/95
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of 500 stocks designed to mimic the overall equity market's
industry weightings. The Lipper Growth and Income Funds Index is a
widely-recognized composite of mutual funds that have growth-of-earnings
orientations and income requirements for level and/or rising dividends.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- -------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses 0.19%
-----
Total Annual Fund Operating Expenses 1.34%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$136 $425 $734 $1,613
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.01% AND 1.20%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
U.S. GOVERNMENT SECURITIES FUND
FUND SUMMARY
INVESTMENT GOAL High current income, while preserving
capital
INVESTMENT FOCUS Mortgage-backed securities and U.S. Treasury
obligations
SHARE PRICE VOLATILITY Low to moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income without adding
undue risk
INVESTOR PROFILE Conservative investors who want to receive
income from their investment
INVESTMENT STRATEGY
The U.S. Government Securities Fund invests primarily in U.S. government debt
securities, such as mortgage-backed securities and U.S. Treasury obligations. In
an attempt to provide a consistently high dividend without adding undue risk,
the Fund focuses its investments in mortgage-backed securities. The average
maturity of the Fund's portfolio will typically range from 7 to 14 years.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that its market segment, U.S. government
debt securities, may underperform other fixed income market segments or the
fixed income markets as a whole.
Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. They are sensitive to changes in
interest rates, but may respond to these changes differently from other fixed
income securities due to the possibility of prepayment of the underlying
mortgage loans. As a result, it may not be possible to determine in advance the
actual maturity date or average life of a mortgage-backed security. Rising
interest rates tend to discourage refinancings, with the result that the average
life and volatility of the security will increase, exacerbating its decrease in
market price. When interest rates fall, however, mortgage-backed securities may
not gain as much in market value because of the expectation of additional
mortgage prepayments that must be reinvested at lower interest rates. Prepayment
risk may make it difficult to calculate the average maturity of the portfolio of
mortgage-backed securities and, therefore, to assess the volatility risk of that
portfolio.
<PAGE>
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
<TABLE>
<S> <C>
1995 17.33%
1996 2.55%
1997 8.94%
1998 8.16%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.89% -2.24%
(6/30/95) (3/31/96)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS -1.47%.
THIS TABLE COMPARES THE FUND'S AVERAGE TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1998, TO THOSE OF THE MERRILL LYNCH GOVERNMENT/MORTGAGE INDEX.
PREVIOUSLY THE FUND'S RETURNS HAD BEEN COMPARED TO THE LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT BOND INDEX, BUT THE ADVISER BELIEVES THAT THE MERRILL
LYNCH GOVERNMENT/MORTGAGE INDEX, BECAUSE OF ITS GREATER EMPHASIS ON
MORTGAGE-BACKED SECURITIES, MORE ACCURATELY REFLECTS THE TYPE OF SECURITIES IN
WHICH THE FUND INVESTS.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR SINCE INCEPTION
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Securities Fund 8.16% 7.82%*
Merrill Lynch Government/Mortgage Index 8.91% 8.83%**
Lehman Brothers Intermediate Government Bond Index 8.47% 7.69%**
</TABLE>
* SINCE 8/1/94
** SINCE 8/31/94
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment adviser and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The previous index, the Lehman
Brothers Intermediate Government Bond Index, is a widely-recognized index of
U.S. Treasury securities and government agency securities with maturities
ranging from 1 to 10 years. The Merrill Lynch Government/Mortgage Index is a
synthetic index created by combining, at their respective market weights; (i)
the Merrill Lynch Government Master Index which is a widely-recognized index
comprised of U.S. Treasury securities and U.S. government agency securities
with a maturity of at least 1 year; and (ii) the Merrill Lynch Mortgage
Master Index which is a widely-recognized index comprised of mortgage-
<PAGE>
backed securities including 15 and 30 year single family mortgages in
addition to aggregated pooled mortgages.
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- -------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.74%
Other Expenses 0.14%
-----
Total Annual Fund Operating Expenses 0.88%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$90 $281 $488 $1,084
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.63% AND 0.77%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
VALUE INCOME STOCK FUND
FUND SUMMARY
INVESTMENT GOAL
PRIMARY Current income
SECONDARY Capital appreciation
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify high dividend-paying,
undervalued stocks
INVESTOR PROFILE Investors who are looking for current income
and capital appreciation with less
volatility than the average stock fund
INVESTMENT STRATEGY
The Value Income Stock Fund invests primarily in common stocks and other equity
securities of U.S. companies. In selecting investments for the Fund, the Adviser
primarily chooses companies that have a market capitalization of at least $500
million and that have a history of paying regular dividends. The Adviser focuses
on high dividend-paying stocks that trade below their historical value. The
Adviser's "bottom-up" approach to stock selection emphasizes individual stocks
over economic trends.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to February 1993, when the Fund began operating, represent the
performance of the Adviser's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Adviser's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THE BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
<TABLE>
<S> <C>
1990 -4.93%
1991 39.30%
1992 20.05%
1993 11.14%
1994 3.54%
1995 35.93%
1996 19.46%
1997 27.08%
1998 10.58%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
18.56% -14.86%
(3/31/91) (9/30/90)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 13.51%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998, TO THOSE OF THE S&P/BARRA VALUE INDEX AND THE LIPPER
EQUITY INCOME FUND INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Value Income Stock Fund 10.58% 18.76% 17.21%*
S&P/Barra Value Index 14.68% 19.88% 15.76%*
Lipper Equity Income Fund Index 11.78% 16.62% 13.53%*
</TABLE>
* SINCE 10/31/89
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P/BARRA Value Index is a widely-recognized
index of the stocks in the S&P 500 Index that have lower price to book ratios.
The Lipper Equity Income Fund Index is an equally weighted index of typically
the 30 largest funds that seek relatively high current income and growth of
income through investing 60% or more of their portfolios in equities.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.80%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 0.92%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$94 $293 $509 $1,131
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. For more information about
these fees, see "Investment Advisers."
<PAGE>
PRIME QUALITY MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL High current income, while preserving
capital and liquidity
INVESTMENT FOCUS Money market instruments
PRINCIPAL INVESTMENT STRATEGY Attempts to identify money market
instruments with the most attractive risk/
return trade-off
INVESTOR PROFILE Conservative investors who want to receive
current income
INVESTMENT STRATEGY
The Prime Quality Money Market Fund invests exclusively in high quality U.S.
money market instruments and foreign money market instruments denominated in
U.S. dollars. In selecting investments for the Fund, the Adviser tries to
increase income without adding undue risk. The Adviser analyzes maturity,
yields, market sectors and credit risk. Investments are made in money market
instruments with the most attractive risk/return trade-off. As a money market
fund, the Fund follows strict rules about credit risk, maturity and
diversification of its investments.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in the Fund.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
<TABLE>
<S> <C>
1993 2.77%
1994 3.77%
1995 5.47%
1996 4.99%
1997 5.15%
1998 5.10%
<PAGE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.37% 0.68%
(6/30/95) (6/30/93)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 2.24%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE IBC/FINANCIAL DATA FIRST TIER AVERAGE.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Prime Quality Money Market Fund 5.10% 4.89% 4.40%*
IBC/Financial Data First Tier Average 4.96% 4.79% 4.31%**
</TABLE>
* SINCE 6/8/92
** SINCE 6/30/92
To obtain more information about the Fund's yield, call 1-800-814-3397.
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The
IBC/Financial Data First Tier Average is a widely-recognized composite of money
market fund which invest in securities rated in the highest category by at
least two of the five recognized rating agencies.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- -------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.65%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 0.77%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$79 $246 $428 $954
</TABLE>
<PAGE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.48% AND 0.60%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL High current income, while preserving
capital and liquidity
INVESTMENT FOCUS U.S. Treasury and government agency
securities, and repurchase agreements
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income without adding
undue risk by analyzing yields
INVESTOR PROFILE Conservative investors who want to receive
current income
INVESTMENT STRATEGY
The U.S. Government Securities Money Market Fund invests exclusively in U.S.
Treasury bills, notes, bonds and components of these securities, government
agency securities that are backed by the full faith and credit of the U.S.
government and repurchase agreements involving these securities. In selecting
investments for the Fund, the Adviser tries to increase income without adding
undue risk by analyzing yields. The Adviser actively manages the maturity of
the Fund and its portfolio to maximize the Fund's yield based on current
market interest rates and the Adviser's outlook on the market. As a money
market fund, the Fund follows strict rules about credit risk, maturity and
diversification of its investments.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in the Fund.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
<TABLE>
<S> <C>
1993 2.67%
1994 3.64%
1995 5.39%
1996 4.81%
1997 4.99%
1998 4.88%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.36% 0.65%
(6/30/95) (6/30/93)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 2.08%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE IBC/FINANCIAL DATA U.S. TREASURY & REPO
AVERAGE.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Government Securities Money Market Fund 4.88% 4.74% 4.26%*
IBC/Financial Data U.S. Treasury & Repo Average 4.81% 4.66% 4.19%**
</TABLE>
* SINCE 6/8/92
** SINCE 6/30/92
To obtain more information about the Fund's yield, call 1-800-814-3397.
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The
IBC/Financial Data U.S. Treasury & Repo Average is a widely-recognized
composite of money market funds which invest in U.S. Treasury securities and
repurchase agreements backed by these securities.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
TRUST SHARES
- -------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.65%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.76%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$78 $243 $422 $942
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.52% AND 0.63%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
U.S. TREASURY MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL High current income, while maintaining
liquidity
INVESTMENT FOCUS Money market instruments issued and
guaranteed by the U.S. Treasury
PRINCIPAL INVESTMENT STRATEGY Investing in U.S. Treasury obligations and
repurchase agreements
INVESTOR PROFILE Conservative investors who want to receive
current income from their investment
INVESTMENT STRATEGY
The U.S. Treasury Money Market Fund invests solely in U.S. Treasury obligations
and repurchase agreements that are collateralized by obligations issued or
guaranteed by the U.S. Treasury. The Fund limits its investments so as to obtain
the highest investment quality rating by a nationally recognized statistical
rating organization (Standard and Poor's Corporation, AAA). The Fund will
maintain an average maturity of 90 days or less, and will only acquire
securities that have a remaining maturity of 397 days or less. As a money market
fund, the Fund follows strict rules about credit risk, maturity and
diversification of its investments.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in the Fund.
Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
<TABLE>
<S> <C>
1989 8.84%
1990 7.86%
1991 5.75%
1992 3.40%
1993 2.51%
1994 3.50%
1995 5.33%
1996 4.77%
1997 4.93%
1998 4.82%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.25% 0.61%
(6/30/89) (12/31/93)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 2.05%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE IBC/FINANCIAL DATA U.S. TREASURY & REPO
AVERAGE.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Money Market Fund 4.82% 4.67% 5.15% 5.38%*
IBC/Financial Data U.S. Treasury & Repo Average 4.81% 4.66%** N/A N/A
</TABLE>
* SINCE 2/18/87
** SINCE 12/31/93
To obtain more information about the Fund's yield, call 1-800-814-3397.
WHAT IS AN AVERAGE?
An average is a composite of mutual funds with similar investment goals. The
IBC/Financial Data U.S. Treasury & Repo Average is a widely-recognized
composite of money market funds which invest in U.S. Treasury securities and
repurchase agreements backed by these securities.
<PAGE>
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay if you buy
and hold Fund shares.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TRUST SHARES
- -------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.65%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 0.75%
</TABLE>
* EXPENSE INFORMATION IN THE TABLE HAS BEEN RESTATED TO REFLECT CURRENT FEES.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$77 $240 $417 $930
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.53% AND 0.63%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
RISK/RETURN INFORMATION COMMON TO THE PORTFOLIOS
Each Portfolio, and each underlying Fund in which it invests is a mutual fund. A
mutual fund pools shareholders' money and, using professional investment
managers, invests it in securities like stocks and bonds. Before you invest, you
should know a few things about investing in mutual funds.
The value of your investment in a Portfolio is based on the market prices of the
securities the underlying Fund holds. These prices change daily due to economic
and other events that affect particular companies and other issuers. These price
movements, sometimes called volatility, will vary depending on the types of
securities the underlying Fund owns and the markets where these securities
trade. The effect on a Portfolio of a change in the value of a single security
will depend on how widely the Portfolio and the underlying Funds diversify their
holdings.
Like other investments, you could lose money on your investment in a Portfolio.
Your investment in a Portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any government agency.
The Portfolios provide investors with the opportunity to purchase three distinct
asset allocations strategies implemented through investments in Trust Class
Shares of selected Funds. By investing in the Portfolios, investors have the
opportunity to diversify and allocate their assets among the broad range of
Funds in STI Classic Funds.
The assets of each Portfolio will be allocated among underlying Funds in
accordance with its investment objective, the Adviser's outlook for the economy,
the financial markets and the relative market valuations of the underlying
Funds. Each Portfolio has the ability to invest its assets allocated to a
particular asset class in one or more of the underlying Funds, which have
different investment objectives, policies and risk characteristics. Although the
Portfolios currently expect to invest in one or more of the underlying Funds,
the Adviser has the discretion to change the particular Funds used as underlying
investments for the Portfolios. If determined to be in the best interest of the
Portfolios, the Adviser reserves the right to substitute or include other
underlying Funds, including Funds that do not currently exist. A Portfolio's
goal may be changed without shareholder approval. Before investing, make sure
that the Portfolio's goal matches your own.
<PAGE>
LIFE VISION BALANCED PORTFOLIO
PORTFOLIO SUMMARY
INVESTMENT GOAL Capital appreciation and current income
INVESTMENT FOCUS Equity and bond funds
SHARE PRICE VOLATILITY Low
PRINCIPAL INVESTMENT STRATEGY Investing pursuant to an asset allocation
strategy in a combination of STI Classic
Equity and Bond Funds
INVESTOR PROFILE Investors who want income from their
investment, as well as an increase in its
value, and are willing to be subject to the
risks of equity securities
INVESTMENT STRATEGY
The Life Vision Balanced Portfolio principally invests in STI Classic Funds that
invest primarily in equity securities, but invest at least 35% of the
Portfolio's total assets in STI Classic Funds that invest primarily in fixed
income securities. The Portfolio's remaining assets may be invested in shares of
underlying STI Classic Funds that are money market funds, securities issued by
the U.S. Government, its agencies or instrumentalities, repurchase agreements
and short-term paper. In selecting a diversified portfolio of underlying STI
Classic Funds, the Adviser analyzes many factors, including the underlying STI
Classic Funds' investment objectives, total return, volatility and expenses.
The Portfolio currently plans to invest in shares of the following underlying
STI Classic Funds within the percentage ranges indicated:
<TABLE>
<CAPTION>
INVESTMENT RANGE
(PERCENTAGE OF THE
LIFE VISION BALANCED
ASSET CLASS PORTFOLIO'S ASSETS)
- -------------------------------------------------------------------------------
<S> <C>
Equity Funds 40-65%
Growth and Income Fund
Capital Appreciation Fund
Small Cap Equity Fund
Small Cap Stock Growth Fund
Bond Funds 35-60%
Short-Term Bond Fund
Investment Grade Bond Fund
U.S. Government Securities Fund
Money Market Funds 0-20%
Prime Quality Money Market Fund
</TABLE>
Other STI Classic Funds may be utilized in the future.
Due to its investment strategy, the Portfolio holds STI Classic Funds that buy
and sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THIS PORTFOLIO?
The value of an investment in the Portfolio is based primarily on the
performance of the underlying Funds and the allocation of the Portfolio's
assets among them. Since it purchases equity funds, the Portfolio is subject
to the risk that stock prices will fall over short or extended periods of
time. Historically, the equity markets have moved in cycles, and the value of
an underlying Fund's securities may fluctuate drastically from day-to-day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in
the Portfolio.
The prices of an underlying Fund's fixed income securities respond to
economic developments, particularly interest rate changes, as well as to
perceptions about the creditworthiness of individual issuers, including
governments. Generally, an underlying Fund's fixed income securities will
decrease in value if interest rates rise and vice versa, and the volatility
of lower rated securities is even greater than that of higher rated
securities. Also, longer-term securities are generally more volatile, so the
average maturity or duration of these securities affects risk.
The Portfolio is also subject to the risk that the Adviser's asset allocation
decisions will not anticipate market trends successfully. For example,
weighting common stocks too heavily during a stock market decline may result
in a failure to preserve capital. Conversely, investing too heavily in fixed
income securities during a period of stock market appreciation may result in
lower total return. The risks associated with investing in the Portfolio will
vary depending upon how the assets are allocated among the underlying STI
Classic Funds.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, the Portfolio's past
performance does not necessarily indicate how the Fund will perform in the
future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1993 9.26%
1994 -2.97%
1995 20.52%
1996 10.51%
1997 16.41%
1998 11.15%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
11.24% -7.99%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 5.21%.
<PAGE>
THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE FRANK RUSSELL 2000 SMALL STOCK INDEX,
THE LEHMAN BROTHERS AGGREGATE BOND INDEX, THE S&P 500 INDEX AND THE SALOMON 3
MONTH TREASURY BILL INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Life Vision Balanced Portfolio 11.15% 10.83% 10.56%*
Frank Russell 2000 Small Stock Index -2.55% 11.87% 13.01%*
Lehman Brothers Aggregate Bond Index 8.67% 7.27% 7.68%*
S&P 500 Index 28.60% 24.05% 21.60%*
Salomon 3 Month Treasury Bill Index 5.05% 5.10% 4.76%*
</TABLE>
* SINCE 12/31/92
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Frank Russell 2000 Small Stock Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of the 2,000 smallest U.S. companies out of the 3,000
smallest companies. The Lehman Brothers Aggregate Bond Index is a
widely-recognized, market value-weighted (higher market value bonds have more
influence than lower market value bonds) index of U.S. government obligations,
corporate debt securities, and AAA mortgage-backed securities. All securities in
the index are rated investment grade (BBB) or higher, with maturities of at
least 1 year. The S&P 500 Index is a widely-recognized, market value-weighted
(higher market value stocks have more influence than lower market value stocks)
index of 500 stocks designed to mimic the overall equity market's industry
weightings. The Salomon 3 Month Treasury Bill Index is a widely-recognized index
of U.S. Treasury bills.
PORTFOLIO FEES AND EXPENSES
This table describes the portfolio's fees and expenses that you may pay if you
buy and hold portfolio shares. The table does not reflect any of the operating
costs and investment advisory fees of the underlying STI Classic Funds. The
portfolio and its shareholders will indirectly bear a pro rata share of the
expenses of the underlying STI Classic Funds.
ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM PORTFOLIO ASSETS)*
<TABLE>
<CAPTION>
TRUST SHARES
- -------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.25%
Other Expenses 0.13%
-----
Total Annual Portfolio Operating Expenses 0.38%
</TABLE>
* EXPENSE INFORMATION IN THE TABLE HAS BEEN RESTATED TO REFLECT CURRENT FEES.
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and
Portfolio expenses remain the same. Although your actual costs and returns might
be different, your approximate costs of investing $10,000 in the Portfolio would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$143 $443 $766 $1,680
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.12% AND 0.25%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
LIFE VISION GROWTH AND INCOME PORTFOLIO
PORTFOLIO SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Equity and bond funds
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Investing pursuant to an asset allocation
strategy in a combination of STI Classic
Equity and, to a lesser extent, Bond Funds
INVESTOR PROFILE Investors who want their assets to grow, but
want to moderate the risks of equity
securities through investment of a portion
of their assets in bonds
INVESTMENT STRATEGY
The Life Vision Growth and Income Portfolio invests at least 80% of the
Portfolio's total assets in STI Classic Funds that invest primarily in either
equity securities or fixed income securities. The Portfolio's remaining assets
may be invested in shares of underlying STI Classic Money Market Funds,
securities issued by the U.S. Government, its agencies or instrumentalities,
repurchase agreements and short-term paper. In selecting a diversified portfolio
of underlying STI Classic Funds, the Adviser analyzes many factors, including
the underlying STI Classic Funds' investment objectives, total return,
volatility and expenses.
The Portfolio currently plans to invest in shares of the following underlying
STI Classic Funds within the percentage ranges indicated:
<TABLE>
<CAPTION>
INVESTMENT RANGE
(PERCENTAGE OF THE
LIFE VISION GROWTH
AND INCOME
ASSET CLASS PORTFOLIO'S ASSETS)
- -------------------------------------------------------------------------------
<S> <C>
Equity Funds 40-70%
Growth and Income Fund
Capital Appreciation Fund
Small Cap Equity Fund
Small Cap Stock Growth Fund
Bond Funds 30-60%
Short-Term Bond Fund
Investment Grade Bond Fund
U.S. Government Securities Fund
Money Market Funds 0-20%
Prime Quality Money Market Fund
</TABLE>
Other STI Classic Funds may be utilized in the future.
Due to its investment strategy, the Portfolio holds STI Classic Funds that buy
and sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THIS PORTFOLIO?
The value of an investment in the Portfolio is based primarily on the
performance of the underlying Funds and the allocation of the Portfolio's
assets among them. Since it purchases equity funds, the Portfolio is subject
to the risk that stock prices will fall over short or extended periods of
time. Historically, the equity markets have moved in cycles, and the value of
an underlying Fund's securities may fluctuate drastically from day-to-day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in
the Portfolio.
The prices of an underlying Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, an underlying Fund's fixed income securities will decrease in value
if interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also,
longer-term securities are generally more volatile, so the average maturity or
duration of these securities affects risk.
The Portfolio is also subject to the risk that the Adviser's asset allocation
decisions will not anticipate market trends successfully. For example, weighting
common stocks too heavily during a stock market decline may result in a failure
to preserve capital. Conversely, investing too heavily in fixed income
securities during a period of stock market appreciation may result in lower
total return. The risks associated with investing in the Portfolio will vary
depending upon how the assets are allocated among the underlying STI Classic
Funds.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, the Portfolio's past
performance does not necessarily indicate how the Portfolio will perform in the
future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1993 10.02%
1994 -3.52%
1995 22.68%
1996 12.16%
1997 18.08%
1998 11.16%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
13.65% -10.20%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 6.46%.
<PAGE>
THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE FRANK RUSSELL 2000 SMALL STOCK INDEX,
THE LEHMAN BROTHERS AGGREGATE BOND INDEX, THE S&P 500 INDEX AND THE SALOMON 3
MONTH TREASURY BILL INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Life Vision Balanced Portfolio 11.16% 11.75% 11.45%*
Frank Russell 2000 Small Stock Index -2.55% 11.87% 13.01%*
Lehman Brothers Aggregate Bond Index 8.67% 7.27% 7.68%*
S&P 500 Index 28.60% 24.05% 21.60%*
Salomon 3 Month Treasury Bill Index 5.05% 5.10% 4.76%*
</TABLE>
* SINCE 12/31/92
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Frank Russell 2000 Small Stock Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of the 2,000 smallest U.S. companies out of the 3,000
smallest companies. The Lehman Brothers Aggregate Bond Index is a
widely-recognized, market value-weighted (higher market value bonds have more
influence than lower market value bonds) index of U.S. government obligations,
corporate debt securities, and AAA mortgage-backed securities. All securities in
the index are rated investment grade (BBB) or higher, with maturities of at
least 1 year. The S&P 500 Index is a widely-recognized, market value-weighted
(higher market value stocks have more influence than lower market value stocks)
index of 500 stocks designed to mimic the overall equity market's industry
weightings. The Salomon 3 Month Treasury Bill Index is a widely-recognized index
of U.S. Treasury bills.
PORTFOLIO FEES AND EXPENSES
This table describes the portfolio's fees and expenses that you may pay if you
buy and hold portfolio shares. The table does not reflect any of the operating
costs and investment advisory fees of the underlying STI Classic Funds. The
portfolio and its shareholders will indirectly bear a pro rata share of the
expenses of the underlying STI Classic Funds.
<PAGE>
ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM PORTFOLIO ASSETS)*
<TABLE>
<CAPTION>
TRUST SHARES
- -------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.25%
Other Expenses 0.21%
-----
Total Annual Portfolio Operating Expenses 0.46%
</TABLE>
* EXPENSE INFORMATION IN THE TABLE HAS BEEN RESTATED TO REFLECT CURRENT FEES.
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and
Portfolio expenses remain the same. Although your actual costs and returns might
be different, your approximate costs of investing $10,000 in the Portfolio would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$156 $483 $834 $1,824
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.04% AND 0.25%,
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
LIFE VISION MAXIMUM GROWTH PORTFOLIO
FUND SUMMARY
INVESTMENT GOAL High capital appreciation
INVESTMENT FOCUS Equity and money market Funds
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Investing at least 80% of the Portfolio's
total assets in STI Classic Equity Funds
INVESTOR PROFILE Investors who want the value of their
investment to grow, but do not need to
receive income on their investment, and are
willing to be subject to the risks of
equity securities
INVESTMENT STRATEGY
The Portfolio invests at least 80% of the Portfolio's total assets in STI
Classic Funds that invest primarily in equity securities. The Portfolio's
remaining assets may be invested in STI Classic Money Market Funds, securities
issued by the U.S. Government, its agencies or instrumentalities, repurchase
agreements and short-term paper. In selecting a diversified portfolio of
underlying STI Classic Funds, the Adviser analyzes many factors, including the
underlying STI Classic Funds' investment objectives, total return, volatility
and expenses.
The Portfolio currently plans to invest in shares of the following underlying
STI Classic Funds within the percentage ranges indicated:
<TABLE>
<CAPTION>
INVESTMENT RANGE
(PERCENTAGE OF THE LIFE
VISION MAXIMUM GROWTH
ASSET CLASS PORTFOLIO'S ASSETS)
- -------------------------------------------------------------------------------
<S> <C>
Equity Funds 80-100%
Growth and Income Fund
Capital Appreciation Fund
Small Cap Equity Fund
Small Cap Stock Growth Fund
Money Market Funds 0-20%
Prime Quality Money Market Fund
</TABLE>
Other STI Classic Funds may be utilized in the future.
Due to its investment strategy, the Portfolio holds STI Classic Funds that buy
and sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
WHAT ARE THE RISKS OF INVESTING IN THIS PORTFOLIO?
The value of an investment in the Fund is based primarily on the performance
of the underlying Funds and the allocation of the Portfolio's assets among
them. Since it purchases equity securities, the Portfolio is subject to the
risk that stock prices will fall over short or extended periods of time.
<PAGE>
Historically, the equity markets have moved in cycles, and the value of an
underlying Fund's securities may fluctuate drastically from day-to-day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the
Portfolio.
The Portfolio is also subject to the risk that the Adviser's asset allocation
decisions will not anticipate market trends successfully. For example, weighting
common stocks too heavily during a stock market decline may result in a failure
to preserve capital. Conversely, investing too heavily in fixed income
securities during a period of stock market appreciation may result in lower
total return. The risks associated with investing in the Portfolio will vary
depending upon how the assets are allocated among the underlying STI Classic
Funds.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, the Portfolio's past
performance does not necessarily indicate how the Portfolio will perform in the
future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S TRUST SHARES
FROM YEAR TO YEAR.*
<TABLE>
<S> <C>
1993 12.14%
1994 -4.30%
1995 25.12%
1996 16.62%
1997 22.53%
1998 12.31%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
18.72% -15.23%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 9.55%.
THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE FRANK RUSSELL 2000 SMALL STOCK INDEX,
THE S&P 500 INDEX AND THE SALOMON 3 MONTH TREASURY BILL INDEX.
<TABLE>
<CAPTION>
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Life Vision Maximum Growth Portfolio 12.31% 13.96% 13.65%*
Frank Russell 2000 Small Stock Index -2.55% 11.87% 13.01%*
S&P 500 Index 28.60% 24.05% 21.60%*
Salomon 3 Month Treasury Bill Index 5.05% 5.10% 4.76%*
</TABLE>
* SINCE 12/31/92
<PAGE>
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Frank Russell 2000 Small Stock Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of the 2,000 smallest U.S. companies out of the 3,000
smallest companies. The S&P 500 Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of 500 stocks designed to mimic the overall equity market's
industry weightings. The Salomon 3 Month Treasury Bill Index is a
widely-recognized index of U.S. Treasury bills.
PORTFOLIO FEES AND EXPENSES
This table describes the portfolio's fees and expenses that you may pay if you
buy and hold portfolio shares. The table does not reflect any of the operating
costs and investment advisory fees of the underlying STI Classic Funds. The
portfolios and its shareholders will indirectly bear a pro rata share of the
expenses of the underlying STI Classic Funds.
ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM PORTFOLIO ASSETS)*
<TABLE>
<CAPTION>
TRUST SHARES
- -------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.25%
Other Expenses 0.23%
-----
Total Annual Portfolio Operating Expenses 0.48%
</TABLE>
* EXPENSE INFORMATION IN THE TABLE HAS BEEN RESTATED TO REFLECT CURRENT FEES.
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and
Portfolio expenses remain the same. Although your actual costs and returns might
be different, your approximate costs of investing $10,000 in the Portfolio would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$166 $514 $887 $1,933
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser is voluntarily waiving a portion of its fees. ACTUAL
INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 0.02% AND 0.25%,
<PAGE>
RESPECTIVELY. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Advisers."
<PAGE>
MORE INFORMATION ABOUT RISK
<TABLE>
<CAPTION>
<S> <C>
EQUITY RISK -- Equity securities include public and BALANCED FUND
privately issued equity securities, common and preferred CAPITAL APPRECIATION FUND
stocks, warrants, rights to subscribe to common stock CORE EQUITY FUND
and convertible securities, as well as instruments that E-COMMERCE OPPORTUNITY FUND
attempt to track the price movement of equity indices. GROWTH AND INCOME FUND
Investments in equity securities and equity derivatives in INTERNATIONAL EQUITY FUND
general are subject to market risks that may cause their INTERNATIONAL EQUITY INDEX FUND
prices to fluctuate over time. The value of securities MID-CAP EQUITY FUND
convertible into equity securities, such as warrants or SMALL CAP EQUITY FUND
convertible debt, is also affected by prevailing interest SMALL CAP GROWTH STOCK FUND
rates, the credit quality of the issuer and any call TAX SENSITIVE GROWTH FUND
provision. Fluctuations in the value of equity securities in VALUE INCOME STOCK FUND
which a mutual fund invests will cause a fund's net asset LIFE VISION BALANCED PORTFOLIO
value to fluctuate. An investment in a portfolio of equity LIFE VISION GROWTH AND INCOME PORTFOLIO
securities may be more suitable for long-term investors LIFE VISION MAXIMUM GROWTH PORTFOLIO
who can bear the risk of these share price fluctuations.
FIXED INCOME RISK -- The market value of fixed BALANCED FUND
income investments change in response to interest rate INVESTMENT GRADE BOND FUND
changes and other factors. During periods of falling LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
interest rates, the values of outstanding fixed income SHORT-TERM BOND FUND
securities generally rise. Moreover, while securities with SHORT-TERM U.S. TREASURY SECURITIES FUND
longer maturities tend to produce higher yields, the prices LIFE VISION BALANCED PORTFOLIO
of longer maturity securities are also subject to greater LIFE VISION GROWTH AND INCOME PORTFOLIO
market fluctuations as a result of changes in interest rates.
In addition to these fundamental risks, different types of
fixed income securities may be subject to the following
additional risks:
CREDIT RISK -- The possibility that an issuer will BALANCED FUND
be unable to make timely payments of either principal or interest. INVESTMENT GRADE BOND FUND
SHORT-TERM BOND FUND
<PAGE>
FOREIGN SECURITY RISKS -- Investments in securities of foreign GROWTH AND INCOME FUND
companies or governments can be more volatile than investments INTERNATIONAL EQUITY FUND
in U.S. companies or governments. Diplomatic, political, or INTERNATIONAL EQUITY INDEX FUND
economic developments, including nationalization or appropriation,
could affect investments in foreign countries. Foreign securities
markets generally have less trading volume and less liquidity
than U.S. markets. In addition, the value of securities
denominated in foreign currencies, and of dividends from such
securities, can change significantly when foreign currencies
strengthen or weaken relative to the U.S. dollar. Foreign companies
or governments generally are not subject to uniform accounting,
auditing, and financial reporting standards comparable to those
applicable to domestic U.S. companies or governments. Transaction
costs are generally higher than those in the U.S. and expenses for
custodial arrangements of foreign securities may be somewhat
greater than typical expenses for custodial arrangements of
similar U.S. securities. Some foreign governments levy
withholding taxes against dividend and interest income.
Although in some countries a portion of these taxes are
recoverable, the non-recovered portion will reduce the income
received from the securities comprising the portfolio.
TRACKING ERROR RISK -- Factors such as Fund INTERNATIONAL EQUITY INDEX FUND
expenses, imperfect correlation between the Fund's
investments and those of their benchmarks, rounding of
share prices, changes to the benchmark, regulatory
policies, and leverage, may affect their ability to achieve
perfect correlation. The magnitude of any tracking error
may be affected by a higher portfolio turnover rate.
Because an index is just a composite of the prices of the
securities it represents rather than an actual portfolio of
those securities, an index will have no expenses. As a
result, a Fund, which will have expenses such as taxes,
custody, management fees and other operational costs,
and brokerage, may not achieve its investment objective of
accurately correlating to an index.
<PAGE>
YEAR 2000 RISK-- The Funds depend on the smooth ALL FUNDS
functioning of computer systems in almost every aspect of
their business. Like other mutual funds, businesses and
individuals around the world, the Funds could be
adversely affected if the computer systems used by their
service providers do not properly process dates on and
after January 1, 2000, and distinguish between the year
2000 and the year 1900. The Funds have asked their
mission critical service providers whether they expect to
have their computer systems adjusted for the year 2000
transition, and have sought and received assurances from
such service providers that they are devoting significant
resources to prevent material adverse consequences to
the Funds. While such assurances have been received,
the Funds and their shareholders may experience losses
if these assurances prove to be incorrect or as a result
of year 2000 computer difficulties experienced by issuers
of portfolio securities or third parties, such as
custodians, banks, broker-dealers or others with which
the Funds do business.
Furthermore, many foreign countries are not as prepared as the
U.S. for the year 2000 transition. As a result, computer
difficulties in foreign markets and with foreign institutions
as a result of the year 2000 may add to the possibility of
losses to the Funds and their shareholders.
</TABLE>
<PAGE>
EACH FUND'S OTHER INVESTMENTS
The prospectus describes the Fund's primary strategies, and the Funds will
normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, each Fund also may invest in other securities, use other
strategies and engage in other investment practices. These investments and
strategies, as well as those described in this prospectus, are described in
detail in the Statement of Additional Information (SAI).
The investments and strategies described in this prospectus are those that the
Funds use under normal conditions. During unusual economic or market conditions,
or for temporary defensive or liquidity purposes, each Fund (except the Money
Market Funds) may invest up to 100% of its assets in cash, money market
instruments, repurchase agreements and short-term obligations that would not
ordinarily be consistent with a Fund's objectives. In addition, the Investment
Grade Bond and Short-Term Bond Funds each may shorten its average weighted
maturity to as little as 90 days. A Fund (other than a Money Market Fund) will
do so only if the Adviser believes that the risk of loss outweighs the
opportunity for capital gains or higher income. Of course, a Fund cannot
guarantee that it will achieve its investment goal.
INVESTMENT ADVISERS
The Investment Advisers make investment decisions for the Funds and continuously
review, supervise and administer each Fund's respective investment program. The
Board of Trustees supervises the Advisers and establishes policies that the
Advisers must follow in its management activities.
STI Capital Management, N.A. (STI), P. O. Box 3786, Orlando, Florida 32802,
serves as the Adviser to the Balanced Fund, Capital Appreciation Fund,
International Equity Fund, Investment Grade Bond Fund, Limited-Term Federal
Mortgage Securities Fund, Mid-Cap Equity Fund, Small Cap Equity Fund and Value
Income Stock Fund. As of July 1, 1999, STI had approximately $14.5 billion in
assets under management. For the fiscal period ended May 31, 1999, STI received
advisory fees of:
<TABLE>
<CAPTION>
<S> <C>
BALANCED FUND 0.86%
CAPITAL APPRECIATION FUND 1.06%
INTERNATIONAL EQUITY FUND 1.20%
INVESTMENT GRADE BOND FUND 0.66%
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND 0.55%
MID-CAP EQUITY FUND 1.04%
SMALL CAP EQUITY FUND 1.10%
VALUE INCOME STOCK FUND 0.80%
</TABLE>
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Core Equity Fund, E-Commerce
Opportunity Fund, Growth and Income Fund, International Equity Index, Short-Term
Bond Fund, Short-Term U.S. Treasury Securities Fund, Small Cap Growth Stock
Fund, Tax Sensitive Growth Stock Fund, U.S. Government Securities Fund, Prime
Quality Money Market Fund, U.S. Government Securities Money Market Fund, U.S.
Treasury Money Market Fund, Life Vision Balanced Portfolio, Life Vision Growth
and Income Portfolio and Life Vision Maximum Growth Portfolio. As of July 1,
1999, Trusco had approximately $30 billion in assets under management. For the
fiscal period ended May 31, 1999, Trusco received advisory fees of:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
INTERNATIONAL EQUITY INDEX FUND 0.79%
PRIME QUALITY MONEY MARKET FUND 0.48%
SHORT-TERM BOND FUND 0.55%
SHORT-TERM U.S. TREASURY SECURITIES FUND 0.54%
U.S. GOVERNMENT SECURITIES FUND 0.63%
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND 0.52%
</TABLE>
The Small Cap Growth Stock and Tax Sensitive Growth Stock Funds had not
completed a full fiscal year and the Core Equity and E-Commerce Opportunity
Funds had not commenced operations as of May 31, 1999.
Prior to May 24, 1999, Crestar Asset Management Company served as the Adviser to
the predecessors of the following Funds. For the fiscal period ended May 31,
1999, Crestar Asset Management Company and/or Trusco received advisory fees of:
<TABLE>
<CAPTION>
<S> <C>
GROWTH AND INCOME FUND 0.75%
U.S. TREASURY MONEY MARKET FUND 0.38%
LIFE VISION BALANCED PORTFOLIO 0.12%
LIFE VISION GROWTH AND INCOME PORTFOLIO 0.10%
LIFE VISION MAXIMUM GROWTH PORTFOLIO 0.09%
</TABLE>
The Advisers may use their affiliates as brokers for Fund transactions.
THE INVESTMENT TEAM
The Life Vision Balanced Portfolio, Life Vision Growth and Income Portfolio
and Life Vision Maximum Growth Portfolio are managed by a team of investment
professionals. No one person is primarily responsible for making investment
recommendations to the team.
PORTFOLIO MANAGERS
The Balanced Fund is co-managed by Mr. Anthony R. Gray, Mr. L. Earl Denney, CFA,
and Mr. Dave E. West, CFA. Mr. Gray manages the equity portion of the Fund. Mr.
Denney and Mr. West co-manage the fixed income portion of the Fund. Mr. Gray has
served as Chairman and Chief Investment Officer of STI since 1979. He has more
than 30 years of investment experience. Mr. West has served as a Managing
Director of STI and has worked there since 1985. He has more than 13 years of
investment experience. Mr. Denney is a Managing Director of STI and has worked
there since 1983. He has more than 20 years of investment experience.
Mr. Anthony Gray has served as Chairman and Chief Investment Officer of STI
since 1979. He has managed the Capital Appreciation Fund since it began
operating in June 1992. He has more than 30 years of investment experience.
Mr. Robert J. Rhodes, CFA, has been employed by Trusco since 1973, and
Director of Research since 1980. He has managed the Core Equity Fund since
its inception in October 1999. He has more than 26 years of investment
experience.
Mr. Alan S. Kelley has served as a portfolio manager of Trusco since 1999. He
has managed the E-Commerce Opportunity Fund since it began operating in October
1999. Prior to joining
<PAGE>
Trusco, Mr. Kelley served as a portfolio manager with SunTrust Bank, Atlanta
from 1995 to 1999. Prior to 1995, he was a portfolio manager of Urban Equities,
LLC. He has more than 5 years of investment experience.
Mr. Jeffrey E. Markunas, CFA, has served as lead portfolio manager of the Growth
and Income Fund since it began operating in September 1992. Since 1992, he has
served as Senior Vice President and Director of Equity Management for Crestar
Asset Management Company. Additionally, he was named Senior Vice President of
Trusco in January 1999. Mr. Markunas has more than 17 years of investment
experience.
Mr. Ned Dau has served as Managing Director of STI since 1997. He has managed
the International Equity Fund since May 1997. Prior to joining STI Capital
Management, N.A., Mr. Dau served as a senior international equity analyst for
American Express Financial Advisors from 1996 to 1997 and as an international
portfolio manager for the Principal Financial Group from 1992 to 1995. He has
more than 8 years of investment experience.
The International Equity Index Fund is managed by Mr. Chad Deakins and
co-managed by Mr. Robert J. Rhodes. Mr. Deakins has served as a portfolio
manager at Trusco since February 1999 and as a portfolio assistant since 1996.
He has managed the International Equity Index Fund since February 1999. Prior to
joining Trusco, Mr. Deakins worked at SunTrust Banks. He has more than 4 years
of investment experience. Mr. Rhodes has served as Senior Vice President of
Trusco since 1973. He has co-managed the International Equity Index Fund since
it began operating in June 1994. He has more than 26 years of investment
experience.
The Investment Grade Bond Fund is co-managed by Mr. L. Earl Denney, CFA and
Mr. Dave E. West, CFA. Mr. Denney is a Managing Director of STI and has
worked there since 1983. He has co-managed the Investment Grade Bond Fund
since it began operating in June 1992. He has more than 20 years of
investment experience. Mr. West has served as a Managing Director of STI and
has worked there since 1985. Mr. West also co-manages the Investment Grade
Bond Fund with Mr. Denney. He has more than 14 years of investment experience.
The Limited-Term Federal Mortgage Securities Fund is co-managed by Mr. Dave
E. West, CFA and Mr. L. Earl Denney, CFA. Mr. West has served as a Managing
Director of STI and has worked there since 1985. He has managed the
Limited-Term Federal Mortgage Securities Fund since it began operating in
June 1994. He has more than 14 years of investment experience. Mr. West also
co-manages the Investment Grade Bond Fund with Mr. Denney. Mr. Denney is a
Managing Director of STI and has worked there since 1983. He has co-managed
the Limited-Term Mortgage Securities Fund since it began operating in June
1994. He has more than 20 years of investment experience.
Mr. John Hamlin has served as Portfolio Manager of STI since March 1999. He
has managed the Mid-Cap Equity Fund since April 1999. Prior to joining STI,
Mr. Hamlin served as Portfolio Manager at Phoenix Investment Counsel, Inc.
from 1992 to 1999. He has more 10 years of investment experience.
Mr. David Yealy has served as Vice President of Trusco since 1993. He has
managed the Prime Quality Money Market Fund since its inception in June 1992,
the Short-Term U.S. Treasury Securities Fund since July 1996, and the U.S.
Government Securities Money Market Fund since its inception in June 1992. He has
more than 13 years of investment experience.
<PAGE>
Ms. Agnes Pampush, CFA, has served as Vice President of Trusco since 1988. She
has managed the Short-Term Bond Fund since February 1999. She has more than 16
years of investment experience.
Mr. Brett Barner, CFA, has served as a Managing Director of STI since 1994. He
has managed the Small Cap Equity Fund since it began operating in January 1997.
He has more than 15 years of investment experience.
Mr. Mark D. Garfinkel, CFA, has served as a Portfolio Manager of Trusco since
1994. He has managed the Small Cap Growth Stock Fund since it began operating in
October 1998. Prior to joining Trusco, Mr. Garfinkel served as a portfolio
manager with SunTrust Banks. He has more than 10 years of investment experience.
Mr. Jonathan Mote, CFA, CFP, served as Portfolio Manager of Trusco since August
1998. He has managed the Tax Sensitive Growth Stock Fund since it began
operating in December 1998. Prior to joining Trusco, Mr. Mote served as a
portfolio manager with SunTrust Banks. He has more than 14 years of investment
experience.
The U.S. Government Securities Fund is co-managed by Mr. Charles B. Leonard
and Mr. Michael L. Ford since it began operating in June 1994. Mr. Leonard,
CFA, has served as Senior Vice President of Trusco since 1986, and has more
than 28 years of investment experience. Mr. Ford has been a Portfolio Manager
of Trusco since April 1994, and has more than 15 years of investment
experience.
Mr. Robert S. Bowman, CFA, has served as Vice President of Trusco since
January 1999. He has managed the U.S. Treasury Money Market Fund since 1995.
Prior to joining Trusco, Mr. Bowman served as an assistant trader from 1994
to 1995, and Vice president since 1995 of Crestar Asset Management Company.
Mr. Bowman has more than 5 years of investment experience.
The Value Income Stock Fund is co-managed by Mr. Mills Riddick, CFA, and Mr. Dan
Lewis. Mr. Riddick has served as a Managing Director of STI since 1994. He has
managed the Value Income Stock Fund since April 1995. He has more than 17 years
of investment experience. Mr. Lewis has served as a portfolio manager of STI
since 1993. He has been an analyst of the Value Income Stock Fund since 1995. He
has more than 7 years of investment experience.
PURCHASING AND SELLING FUND SHARES
This section tells you how to buy and sell (sometimes called "redeem") Trust
Shares of the Funds.
HOW TO PURCHASE FUND SHARES
The Funds offer Trust Shares only to financial institutions or intermediaries,
including subsidiaries of SunTrust Banks, Inc. (SunTrust), for their own or
their customers' accounts for which they act as fiduciary, agent, investment
adviser, or custodian. As a result, you, as a customer of a financial
institution may purchase Trust Shares through accounts made with financial
institutions and potentially through the Preferred Portfolio Account (an asset
allocation account available through SunTrust Securities, Inc.). Trust Shares
will be held of record by (in the name of) your financial institution. Depending
upon the terms of your account, however, you may have, or be given, the right to
vote your Trust Shares. The Funds may reject any purchase order if it is
determined that accepting the order would not be in the best interests of the
STI Classic Funds or its shareholders. If you are no longer eligible to
participate in a 401(k) plan that holds Trust Shares of a Life Vision Portfolio
on your behalf, you may exchange those shares for
<PAGE>
Investor Shares of the underlying Funds held by that Portfolio. There is no
sales charge for such an exchange.
WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day). But you may not do so for shares of the Money Market
Funds on federal holidays.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Funds receive your purchase order. Each Fund
calculates its NAV once each Business Day at the regularly-scheduled close of
normal trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern
time). So, for you to receive the current Business Day's NAV for each Fund
(except the Money Market Funds), generally the Funds must receive your purchase
order before 4:00 p.m. Eastern time.
Each Money Market Fund calculates its NAV once each Business Day at the
regularly-scheduled close of normal trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time.) So, for you to be eligible to receive
dividends declared on the day you submit your purchase order, the Money Market
Funds must generally receive your order before 3:00 p.m. Eastern time and
receive federal funds (readily available funds) before 4:00 p.m. Eastern time.
Otherwise, your purchase order will be effective the following Business Day, as
long as each Money Market Fund receives federal funds before calculating its NAV
the following day.
FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES, AND OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE REQUESTS TO SUNTRUST OR OTHER
FINANCIAL INSTITUTIONS AT AN EARLIER TIME FOR YOUR TRANSACTION TO BECOME
EFFECTIVE THAT DAY. THIS ALLOWS THE FINANCIAL INSTITUTION TIME TO PROCESS YOUR
REQUEST AND TRANSMIT IT TO THE ADMINISTRATOR OR TRANSFER AGENT IN TIME TO MEET
THE ABOVE STATED FUND CUT-OFF TIMES. FOR MORE INFORMATION ABOUT HOW TO PURCHASE
OR SELL FUND SHARES, INCLUDING SPECIFIC SUNTRUST OR OTHER FINANCIAL INSTITUTIONS
INTERNAL ORDER ENTRY CUT-OFF TIMES, PLEASE CONTACT YOUR FINANCIAL INSTITUTION
DIRECTLY.
HOW THE FUNDS CALCULATE NAV
In calculating NAV, each Fund (except the Money Market Funds) generally values
its investment portfolio at market price. In calculating NAV for each Money
Market Fund, each Fund generally values its investment portfolio using the
amortized cost valuation method, which is described in detail in the SAI. If
market prices are unavailable or a Fund thinks that the market price or
amortized cost valuation method is unreliable, fair value prices may be
determined in good faith using methods approved by the Board of Trustees. Each
Money Market Fund expects its NAV to remain constant at $1.00 per share,
although the Fund cannot guarantee this.
Some Funds hold securities that are listed on foreign exchanges. These
securities may trade on weekends or other days when the Funds do not
calculate NAV. As a result, the market value of these investments may change
on days when you cannot purchase or sell Fund shares.
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets in
the Fund.
<PAGE>
HOW TO SELL YOUR FUND SHARES
You may sell your shares on any Business Day by contacting SunTrust or your
financial institution. SunTrust or your financial institution will give you
information about how to sell your shares including any specific cut-off times
required.
Holders of Trust Shares may sell shares by following the procedures established
when they opened their account or accounts with the Funds or with their
financial institution or intermediary. The sale price of each share will be the
next NAV determined after the Funds receive your request.
Redemption orders must be received by the Money Market Funds on a Business
Day before 3:00 p.m. Eastern time. Orders received after this time will be
executed the following Business Day.
RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days
after the Adviser receives your request, but it may take up to seven days.
REDEMPTIONS IN KIND
The Funds generally pay sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Funds' remaining shareholders) the Funds might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were you would probably have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the New York Stock Exchange
restricts trading, the SEC declares an emergency or for other reasons. More
information about this is in the SAI.
TELEPHONE TRANSACTIONS
Purchasing and selling Fund shares over the telephone is extremely convenient,
but not without risk. Although the Fund has certain safeguards and procedures to
confirm the identity of callers and the authenticity of instructions, the Fund
is not responsible for any losses or costs incurred by following telephone
instructions the Fund reasonably believes to be genuine. If you or your
financial institution transact with the Fund over the telephone, you will
generally bear the risk of any loss.
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its income as follows:
QUARTERLY
- ----------------------------------------------------------------------
BALANCED FUND
CAPITAL APPRECIATION FUND
CORE EQUITY FUND
E-COMMERCE OPPORTUNITY FUND
GROWTH AND INCOME FUND
INVESTMENT GRADE BOND FUND
MID-CAP EQUITY FUND
SMALL CAP EQUITY FUND
SMALL CAP GROWTH STOCK FUND
TAX SENSITIVE GROWTH STOCK FUND
VALUE INCOME STOCK FUND
LIFE VISION BALANCED PORTFOLIO
LIFE VISION GROWTH AND INCOME PORTFOLIO
LIFE VISION MAXIMUM GROWTH PORTFOLIO
ANNUALLY
- ----------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
The Bond and Money Market Funds declare dividends daily and pay these dividends
monthly. Each Fund makes distributions of capital gains, if any, at least
annually. If you own Fund shares on a Fund's record date, you will be entitled
to receive the distribution.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Funds in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the
Funds receive your written notice. To cancel your election, simply send the
Funds written notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below the Funds have summarized some important tax
issues that affect the Funds and their shareholders. This summary is based on
current tax laws, which may change.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE IS A TAXABLE EVENT.
The International Equity and International Equity Index Funds may be able to
pass along a tax credit for foreign income taxes they pay. Each Fund will
notify you if it gives you the credit.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Trust Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of
the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the table represent
the rate that you would have earned (or lost) on an investment in a Fund,
assuming you reinvested all of your dividends and distributions. The
information for each Fund, except the Growth and Income Fund and U.S.
Treasury Money Market Fund, and the Life Vision Balanced Portfolio, Life
Vision Growth and Income Portfolio, and Life Vision Maximum Growth Portfolio
for the periods ended prior to May 31, 1999 have been audited by Arthur
Andersen LLP, independent public accountants. The financial highlights for
the Growth and Income Fund and U.S. Treasury Money Market Fund, and the Life
Vision Balanced Portfolio, Life Vision Growth and Income Portfolio, and Life
Vision Maximum Growth Portfolio for the periods ended prior to May 31, 1999
have been audited by Deloitte & Touche LLP, independent accountants. The
report of Arthur Andersen LLP, along with each Fund's financial statements,
appears in the annual report that accompanies the SAI, at no charge by
calling 1-800-874-4770.
<PAGE>
FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE INDICATED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET
REALIZED
NET AND NET
ASSET UNREALIZED DISTRIBUTION ASSET RATIO OF
VALUE NET GAINS DISTRIBUTIONS FROM VALUE NET ASSETS EXPENSES
BEGINNING INVESTMENT (LOSSES) FROM NET REALIZED END END OF TO
OF INCOME ON INVESTMENT CAPITAL OF TOTAL PERIOD AVERAGE
PERIOD (LOSS) INVESTMENTS INCOME GAINS PERIOD RETURN+ (000) NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $13.09 $0.28 $1.09 $(0.28) $(0.92) $13.26 10.98% $251,752 0.97%
1998 11.94 0.31 2.19 (0.32) (1.03) 13.09 22.15 188,465 0.96
1997 11.55 0.33 1.47 (0.32) (1.09) 11.94 16.66 151,358 0.95
1996 10.26 0.33 1.41 (0.34) (0.11) 11.55 17.26 111,638 0.95
1995 9.76 0.33 0.49 (0.32) -- 10.26 8.72 89,051 0.95
CAPITAL
APPRECIATION FUND
TRUST SHARES
1999 $16.48 $ 0.05 $2.70 $(0.06) $(2.55) $16.62 17.83% $1,966,842 1.17%
1998 15.09 0.09 3.96 (0.09) (2.57) 16.48 29.51 1,532,587 1.16
1997 14.90 0.12 3.13 (0.12) (2.94) 15.09 24.66 1,085,128 1.15
1996 12.18 0.12 3.32 (0.13) (0.59) 14.90 28.97 981,498 1.15
1995 11.99 0.16 0.57 (0.14) (0.40) 12.18 6.63 984,205 1.15
GROWTH AND INCOME
FUND (A)
TRUST SHARES
1999(1) $15.10 $ 0.04 $ 1.97 $(0.02) $(1.00) $16.09 14.24% $ 634,279 1.14%
FOR THE YEARS ENDED
NOVEMBER 30:
1998 16.55 0.09 1.64 (0.09) (3.09) 15.10 13.64% 577,042 1.03%
1997 13.39 0.14 3.24 (0.15) (0.07) 16.55 25.41 590,824 1.02
1996 11.60 0.17 2.38 (0.17) (0.59) 13.39 22.68 553,648 1.02
1995 10.73 0.24 2.62 (0.26) (1.73) 11.60 28.76 220,386 1.02
1994 11.38 0.20 (0.24) (0.19) (0.42) 10.73 (0.49) 166,713 1.01
<CAPTION>
RATIO OF
RATIO OF RATIO OF NET INVESTMENT
NET EXPENSES TO INCOME
INVESTMENT AVERAGE NET TO AVERAGE NET
INCOME ASSETS ASSETS
TO (EXCLUDING (EXCLUDING PORTFOLIO
AVERAGE WAIVERS AND WAIVERS AND TURNOVER
NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
- ---------------------------------------------------------------------------
BALANCED FUND
TRUST SHARES
<S> <C> <C> <C> <C>
1999 2.19% 1.06% 2.10% 179%
1998 2.51 1.08 2.39 154
1997 2.89 1.08 2.76 197
1996 3.00 1.09 2.86 155
1995 3.44 1.11 3.28 157
CAPITAL
APPRECIATION FUND
TRUST SHARES
1999 0.29% 1.26% 0.20% 147%
1998 0.61 1.27 0.50 194
1997 0.83 1.25 0.73 141
1996 0.90 1.27 0.78 156
1995 1.38 1.28 1.25 128
GROWTH AND INCOME
FUND (A)
TRUST SHARES
1999(1) 0.49% 1.43% 0.20% 31%
FOR THE YEARS ENDED
NOVEMBER 30:
1998 0.63% 1.21 0.45% 71%
1997 0.92 1.17 0.77 100
1996 1.38 1.17 1.23 82
1995 2.16 1.17 2.01 175
1994 1.82 1.01 1.82 116
</TABLE>
+ Returns are for the period indicated and have not been annualized. total
return figures do not reflect applicable sales loads.
(1) For the six month period ended May 31, 1999. All ratios for the period have
been annualized.
(A) On May 24, 1999, the CrestFunds Value Fund, Life Vision Balanced
Porfolio, Life Vision Growth and Income Portfolio, Life Vision
Maximum Growth Portfolio, and U.S. Treasury Money Market Fund
exchanged all of its assets and certain liabilities for shares
of the Growth and Income Fund. The CrestFunds Value Fund is the
accounting survivor in this transaction, and as a result, its
basis of accounting for assets and liabilities and its operating
results for the periods prior to May 24, 1999 have been carried
forward in these financial highlights.
<PAGE>
FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE INDICATED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET
REALIZED
NET AND NET
ASSET UNREALIZED DISTRIBUTION ASSET RATIO OF
VALUE NET GAINS DISTRIBUTIONS FROM VALUE NET ASSETS EXPENSES
BEGINNING INVESTMENT (LOSSES) FROM NET REALIZED END END OF TO
OF INCOME ON INVESTMENT CAPITAL OF TOTAL PERIOD AVERAGE
PERIOD (LOSS) INVESTMENTS INCOME GAINS PERIOD RETURN+ (000) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL
EQUITY FUND
TRUST SHARES
1999 $15.00 $ -- $(1.14) $(0.05) $(0.84) $12.97 (7.43%) $573,255 1.47%
1998 13.63 0.04 2.69 (0.04) (1.32) 15.00 21.87 628,870 1.47
1997 11.40 0.03 2.57 (0.02) (0.35) 13.63 23.29 489,325 1.46
1996(2) 10.00 0.05 1.35 -- -- 11.40 14.00 213,306 1.46
INTERNATIONAL
EQUITY INDEX FUND
TRUST SHARES
1999 $13.31 $ 0.09 $ 0.85 $(0.24) $(2.19) $11.82 7.87% $74,616 1.07%
1998 11.34 0.11 2.65 (0.11) (0.68) 13.31 25.82 56,200 1.06
1997 10.96 0.10 0.69 (0.11) (0.30) 11.34 7.48 53,516 1.05
1996 10.24 0.10 0.84 (0.13) (0.09) 10.96 9.29 90,980 1.05
1995(3) 10.00 0.08 0.19 (0.02) (0.01) 10.24 2.69 89,446 1.05
INVESTMENT GRADE
BOND FUND
TRUST SHARES
1999 $10.65 $ 0.56 $(0.11) $(0.56) $(0.18) $10.36 4.25% $1,149,068 0.77%
1998 10.16 0.60 0.49 (0.60) -- 10.65 10.92 793,488 0.76
1997 10.07 0.60 0.09 (0.60) -- 10.16 6.99 633,646 0.75
1996 10.26 0.60 (0.19) (0.60) -- 10.07 4.02 599,514 0.75
1995 9.89 0.61 0.37 (0.61) -- 10.26 10.39 543,308 0.75
LIMITED-TERM
FEDERAL MORTGAGE
SECURITIES FUND
TRUST SHARES
1999 $10.12 $ 0.54 $(0.06) $(0.54) $(0.12) $9.94 4.75% $135,256 0.67%
1998 10.02 0.58 0.11 (0.58) (0.01) 10.12 7.12 137,488 0.66
1997 9.99 0.58 0.04 (0.58) (0.01) 10.02 6.43 123,903 0.65
1996 10.11 0.62 (0.14) (0.60) -- 9.99 4.84 73,370 0.65
1995(4) 10.00 0.58 0.13 (0.60) -- 10.11 7.50 41,823 0.65
<CAPTION>
RATIO OF
RATIO OF RATIO OF NET INVESTMENT
NET EXPENSES TO INCOME (LOSS)
INVESTMENT AVERAGE NET TO AVERAGE NET
INCOME ASSETS ASSETS
(LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO
AVERAGE WAIVERS AND WAIVERS AND TURNOVER
NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
- -------------------------------------------------------------------------------
INTERNATIONAL
EQUITY FUND
TRUST SHARES
<S> <C> <C> <C> <C>
1999 0.68% 1.52% 0.63% 161%
1998 0.61 1.48 0.60 108
1997 0.51 1.51 0.46 139
1996(2) 1.36 1.65 1.17 113
INTERNATIONAL
EQUITY INDEX FUND
TRUST SHARES
1999 0.69% 1.17% 0.59% 32%
1998 0.88 1.18 0.76 1
1997 0.71 1.15 0.61 2
1996 0.84 1.19 0.70 30
1995(3) 1.13 1.31 0.87 10
INVESTMENT GRADE
BOND FUND
TRUST SHARES
1999 5.25% 0.85% 5.17% 221%
1998 5.67 0.86 5.57 109
1997 5.89 0.85 5.79 298
1996 5.81 0.87 5.69 184
1995 6.22 0.88 6.09 238
LIMITED-TERM
FEDERAL MORTGAGE
SECURITIES FUND
TRUST SHARES
1999 5.28% 0.77% 5.18% 379%
1998 5.75 0.77 5.64 163
1997 5.81 0.78 5.68 133
1996 6.04 0.84 5.85 83
1995(4) 6.43 0.93 6.15 68
</TABLE>
+ Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(2) Commenced operations on December 1, 1995. All ratios for the period have
been annualized.
(3) Commenced operations on June 6, 1994. All ratios for the period have been
annualized.
(4) Commenced operations on June 7, 1994. All ratios for the period have been
annualized.
<PAGE>
FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE INDICATED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET
REALIZED
NET AND NET
ASSET UNREALIZED DISTRIBUTION ASSET RATIO OF
VALUE NET GAINS DISTRIBUTIONS FROM VALUE NET ASSETS EXPENSES
BEGINNING INVESTMENT (LOSSES) FROM NET REALIZED END END OF TO
OF INCOME ON INVESTMENT CAPITAL OF TOTAL PERIOD AVERAGE
PERIOD (LOSS) INVESTMENTS INCOME GAINS PERIOD RETURN+ (000) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
MID-CAP EQUITY FUND
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $13.79 $ 0.01 $0.07 $ -- $(1.19) $12.68 1.61% $254,055 1.17%
1998 13.21 -- 2.54 -- (1.96) 13.79 21.14 337,825 1.16
1997 12.76 0.03 1.69 (0.05) (1.22) 13.21 14.23 287,370 1.15
1996 11.00 0.08 2.63 (0.08) (0.87) 12.76 25.54 253,905 1.15
1995 9.85 0.08 1.15 (0.08) -- 11.00 12.56 125,562 1.15
SHORT-TERM BOND FUND
TRUST SHARES
1999 $10.05 $0.51 $(0.10) $(0.52) $(0.03) $ 9.91 4.06% $209,904 0.67%
1998 9.90 0.55 0.16 (0.55) (0.01) 10.05 7.31 120,422 0.66
1997 9.86 0.53 0.07 (0.53) (0.03) 9.90 6.30 89,701 0.65
1996 9.98 0.54 (0.10) (0.54) (0.02) 9.86 4.45 91,156 0.65
1995 9.79 0.53 0.19 (0.53) -- 9.98 7.60 60,952 0.65
SHORT-TERM U.S.
TREASURY SECURITIES
FUND TRUST SHARES
1999 $ 9.97 $0.47 $(0.02) $(0.47) $ -- $ 9.95 4.59% $ 56,027 0.67%
1998 9.88 0.51 0.10 (0.52) -- 9.97 6.30 46,920 0.66
1997 9.84 0.51 0.04 (0.51) -- 9.88 5.76 21,988 0.65
1996 9.93 0.55 (0.09) (0.55) -- 9.84 4.73 10,149 0.65
1995 9.82 0.47 0.11 (0.47) -- 9.93 6.11 9,599 0.65
SMALL CAP EQUITY
FUND TRUST SHARES
1999 $12.88 $0.13 $(2.57) $(0.13) $(0.61) $ 9.70 (18.72%) $301,984 1.22%
1998 11.07 0.14 2.41 (0.12) (0.62) 12.88 23.59 390,841 1.21
1997(1) 10.00 0.05 1.04 (0.02) -- 11.07 10.97 131,049 1.20
<CAPTION>
RATIO OF
RATIO OF RATIO OF NET INVESTMENT
NET EXPENSES TO INCOME (LOSS)
INVESTMENT AVERAGE NET TO AVERAGE NET
INCOME ASSETS ASSETS
(LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO
AVERAGE WAIVERS AND WAIVERS AND TURNOVER
NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
- -------------------------------------------------------------------------------
MID-CAP EQUITY FUND
TRUST SHARES
<S> <C> <C> <C> <C>
1999 (0.47%) 1.28% (0.58%) 76%
1998 (0.29) 1.27 (0.40) 129
1997 0.23 1.26 0.12 152
1996 0.70 1.29 0.56 116
1995 0.88 1.32 0.71 66
SHORT-TERM BOND FUND
TRUST SHARES
1999 5.12% 0.77% 5.02% 108%
1998 5.47 0.79 5.34 87
1997 5.37 0.78 5.24 118
1996 5.39 0.81 5.23 163
1995 5.49 0.85 5.29 200
SHORT-TERM U.S.
TREASURY SECURITIES
FUND
TRUST SHARES
1999 4.69% 0.78% 4.58% 57%
1998 5.19 0.84 5.01 39
1997 5.23 0.92 4.96 93
1996 5.56 1.00 5.21 94
1995 4.91 1.08 4.48 88
SMALL CAP EQUITY
FUND
TRUST SHARES
1999 1.27% 1.27% 1.22% 63%
1998 1.07 1.31 0.97 55
1997(1) 1.86 1.37 1.69 27
</TABLE>
+ Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(1) Commenced operations on January 31, 1997. All ratios for the period have
been annualized.
<PAGE>
STI CLASSIC EQUITY FUNDS
FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE INDICATED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET
REALIZED
NET AND NET
ASSET UNREALIZED DISTRIBUTION ASSET RATIO OF
VALUE NET GAINS DISTRIBUTIONS FROM VALUE NET ASSETS EXPENSES
BEGINNING INVESTMENT (LOSSES) FROM NET REALIZED END END OF TO
OF INCOME ON INVESTMENT CAPITAL OF TOTAL PERIOD AVERAGE
PERIOD (LOSS) INVESTMENTS INCOME GAINS PERIOD RETURN+ (000) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH
STOCK FUND
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999(2) $10.00 $(0.05) $ 4.62 $ -- $(0.02) $14.55 45.70% $152,290 1.20%
TAX SENSITIVE GROWTH
STOCK FUND
TRUST SHARES
1999(3) $25.61 $0.02 $ 4.34 $(0.01) $ -- $29.96 17.04% $223,543 1.20%
U.S. GOVERNMENT
SECURITIES FUND
TRUST SHARES
1999 $10.46 $0.59 $(0.18) $(0.59) $ -- $10.28 3.90% $102,167 0.77%
1998 10.02 0.61 0.44 (0.61) -- 10.46 10.76 34,899 0.76
1997 9.91 0.62 0.11 (0.62) -- 10.02 7.54 19,471 0.75
1996 10.27 0.62 (0.33) (0.62) (0.03) 9.91 2.77 10,277 0.75
1995(4) 9.98 0.53 0.29 (0.53) -- 10.27 8.64 3,291 0.75
VALUE INCOME
STOCK FUND
TRUST SHARES
1999 $13.90 $0.24 $1.02 $(0.24) $(2.07) $12.85 11.13% $1,589,951 0.92%
1998 13.71 0.26 2.62 (0.27) (2.42) 13.90 23.10 1,725,418 0.92
1997 13.15 0.30 2.32 (0.30) (1.76) 13.71 22.18 1,488,062 0.91
1996 11.59 0.35 2.71 (0.34) (1.16) 13.15 27.91 1,244,399 0.92
1995 10.54 0.32 1.56 (0.32) (0.51) 11.59 19.06 991,977 0.95
<CAPTION>
RATIO OF
RATIO OF RATIO OF NET INVESTMENT
NET EXPENSES TO INCOME (LOSS)
INVESTMENT AVERAGE NET TO AVERAGE NET
INCOME ASSETS ASSETS
(LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO
AVERAGE WAIVERS AND WAIVERS AND TURNOVER
NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
- -------------------------------------------------------------------------------
SMALL CAP GROWTH
STOCK FUND
TRUST SHARES
<S> <C> <C> <C> <C>
1999(2) (0.48%) 1.49% (0.77%) 75%
TAX SENSITIVE GROWTH
STOCK FUND
TRUST SHARES
1999(3) 0.21% 1.34% 0.07% 18%
U.S. GOVERNMENT
SECURITIES FUND
TRUST SHARES
1999 5.58% 0.88% 5.47% 19%
1998 5.93 0.92 5.77 14
1997 6.19 1.02 5.92 21
1996 6.05 1.25 5.55 83
1995(4) 6.67 3.33 4.09 30
VALUE INCOME STOCK
FUND TRUST SHARES
1999 1.91% 0.92% 1.91% 69%
1998 1.85 0.92 1.85 99
1997 2.40 0.91 2.40 105
1996 2.86 0.92 2.86 134
1995 3.16 0.95 3.16 126
</TABLE>
+ Returns are for the period indicated and have not been annualized. Total
return figures do not include applicable sales loads.
(2) Commenced operations on October 8, 1998. All ratios for the period have
been annualized.
(3) Commenced operations on December 11, 1998. All ratios for the period have
been annualized.
(4) Commenced operations on July 31, 1994. All ratios for the period have
been annualized.
<PAGE>
STI CLASSIC EQUITY FUNDS
FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE INDICATED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET
REALIZED
NET AND NET
ASSET UNREALIZED DISTRIBUTION ASSET RATIO OF
VALUE NET GAINS DISTRIBUTIONS FROM VALUE NET ASSETS EXPENSES
BEGINNING INVESTMENT (LOSSES) FROM NET REALIZED END END OF TO
OF INCOME ON INVESTMENT CAPITAL OF TOTAL PERIOD AVERAGE
PERIOD (LOSS) INVESTMENTS INCOME GAINS PERIOD RETURN+ (000) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
PRIME QUALITY MONEY
MARKET FUND
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 $0.05 $-- $(0.05) $-- $1.00 4.83% $3,903,232 0.60%
1998 1.00 0.05 -- (0.05) -- 1.00 5.22% 1,880,229 0.59%
1997 1.00 0.05 -- (0.05) -- 1.00 5.01% 1,086,555 0.58%
1996 1.00 0.05 -- (0.05) -- 1.00 5.25% 1,050,800 0.58%
1995 1.00 0.05 -- (0.05) -- 1.00 4.79% 799,189 0.58%
U.S. GOVERNMENT
SECURITIES MONEY
MARKET FUND
TRUST SHARES
1999 $1.00 $0.04 $-- $(0.04) $-- $1.00 4.57% $404,459 0.63%
1998 1.00 0.05 -- (0.05) -- 1.00 5.04% 377,490 0.62%
1997 1.00 0.05 -- (0.05) -- 1.00 4.83% 344,350 0.61%
1996 1.00 0.05 -- (0.05) -- 1.00 5.14% 325,493 0.61%
1995 1.00 0.05 -- (0.05) -- 1.00 4.67% 434,111 0.61%
U.S. TREASURY MONEY
MARKET FUND (A)
TRUST SHARES
1999* $1.00 $0.02 $-- $(0.02) $-- $1.00 2.08% $760,833 0.68%
FOR THE YEAR ENDED
NOVEMBER 30:
1998 1.00 0.05 -- (0.05) -- 1.00 4.89% 699,923 0.66%
1997 1.00 0.05 -- (0.05) -- 1.00 4.91% 632,381 0.65%
1996 1.00 0.05 -- (0.05) -- 1.00 4.80% 389,051 0.66%
1995 1.00 0.05 -- (0.05) -- 1.00 5.29% 370,454 0.66%
<CAPTION>
RATIO OF
RATIO OF RATIO OF NET INVESTMENT
NET EXPENSES TO INCOME (LOSS)
INVESTMENT AVERAGE NET TO AVERAGE NET
INCOME ASSETS ASSETS
(LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO
AVERAGE WAIVERS AND WAIVERS AND TURNOVER
NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
- -------------------------------------------------------------------------------
PRIME QUALITY MONEY
MARKET FUND
TRUST SHARES
<S> <C> <C> <C> <C>
1999 4.69% 0.77% 4.52%
1998 5.10% 0.77% 4.92%
1997 4.90% 0.76% 4.72%
1996 5.11% 0.78% 4.91%
1995 4.77% 0.79% 4.56%
U.S. GOVERNMENT
SECURITIES MONEY
MARKET FUND
TRUST SHARES
1999 4.47% 0.76% 4.34%
1998 4.92% 0.78% 4.76%
1997 4.73% 0.76% 4.58%
1996 5.02% 0.78% 4.85%
1995 4.64% 0.80% 4.45%
U.S. TREASURY MONEY
MARKET FUND (A)
TRUST SHARES
1999* 4.10% 0.83% 3.95%
FOR THE YEAR ENDED
NOVEMBER 30:
1998 4.77% 0.81% 4.62%
1997 4.82% 0.80% 4.67%
1996 4.69% 0.81% 4.54%
1995 5.16% 0.81% 5.01%
</TABLE>
* For the period December 1, 1998 TO May 31, 1999. All ratios for the period
have been annualized.
+ Total return is for the period indicated and has not been annualized.
(A) On May 24, 1999, the CrestFunds Value Fund, Life Vision Balanced
Portfolio, Life Vision Growth and Income Portfolio, Life Vision Maximum
Growth Portfolio, and U.S. Treasury Money Market Fund exchanged all of
its assets and certain liabilities for shares of the Growth and Income
Fund. The CrestFunds Value Fund is the accounting survivor in this
transaction, and as a result, its basis of accounting for assets and
liabilities and its operating results for the periods prior to May 24,
1999 have been carried forward in these finanical highlights.
<PAGE>
STI CLASSIC EQUITY FUNDS
FOR THE PERIODS ENDED MAY 31,
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET
REALIZED
NET AND NET
ASSET UNREALIZED DISTRIBUTION ASSET RATIO OF
VALUE NET GAINS DISTRIBUTIONS FROM VALUE NET ASSETS EXPENSES
BEGINNING INVESTMENT (LOSSES) FROM NET REALIZED END END OF TO
OF INCOME ON INVESTMENT CAPITAL OF TOTAL PERIOD AVERAGE
PERIOD (LOSS) INVESTMENTS INCOME GAINS PERIOD RETURN+ (000) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
LIFE VISION BALANCED
PORTFOLIO (A)
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999(1) $11.01 $0.11 $0.56 $(0.09) $(0.79) $10.80 6.35% $88,188 0.27%
FOR THE YEARS ENDED
NOVEMBER 30:
1998 10.46 0.24 0.58 (0.24) (0.03) 11.01 7.90 93,211 0.25
1997(2) 10.00 0.12 0.45 (0.11) -- 10.46 5.70 89,442 0.25
LIFE VISION GROWTH
AND INCOME PORTFOLIO (A)
TRUST SHARES
1999(1) $11.06 $0.08 $0.69 $(0.06) $(1.44) $10.33 7.75% $21,950 0.27%
FOR THE YEARS ENDED
NOVEMBER 30:
1998 10.51 0.18 0.56 (0.18) (0.01) 11.06 7.12 19,042 0.25
1997(2) 10.00 0.09 0.51 (0.09) -- 10.51 5.97 22,521 0.25
LIFE VISION MAXIMUM
GROWTH PORTFOLIO (A)
TRUST SHARES
1999(1) $11.32 $0.02 $1.13 $(0.01) $(1.15) $11.31 10.99% $18,699 0.27%
FOR THE YEARS ENDED
NOVEMBER 30:
1998 10.65 0.03 0.67 (0.03) -- 11.32 6.53 16,230 0.25
1997(2) 10.00 0.03 0.65 (0.03) -- 10.65 6.82 13,712 0.25
<CAPTION>
RATIO OF
RATIO OF RATIO OF NET INVESTMENT
NET EXPENSES TO INCOME (LOSS)
INVESTMENT AVERAGE NET TO AVERAGE NET
INCOME ASSETS ASSETS
(LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO
AVERAGE WAIVERS AND WAIVERS AND TURNOVER
NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
- -------------------------------------------------------------------------------
LIFE VISION BALANCED
PORTFOLIO (A)
TRUST SHARES
<S> <C> <C> <C> <C>
1999(1) 1.90% 0.42% 1.75% 48%
FOR THE YEARS ENDED
NOVEMBER 30:
1998 2.21 0.42 2.04 52
1997(2) 2.66 0.42 2.49 43
LIFE VISION GROWTH
AND INCOME PORTFOLIO
TRUST SHARES
1999(1) 1.38% 0.60% 1.05% 40%
FOR THE YEARS ENDED
NOVEMBER 30:
1998 1.68 0.59 1.34 57
1997(2) 2.11 0.59 1.77 25
LIFE VISION MAXIMUM
GROWTH PORTFOLIO (A)
TRUST SHARES
1999(1) 0.28% 0.63% (0.08%) 33%
FOR THE YEARS ENDED
NOVEMBER 30:
1998 0.23 0.66 (0.18) 75
1997(2) 0.72 0.73 0.24 34
</TABLE>
+ Returns are for the period indicated and have not been annualized. Total
return figures do not include applicable sales loads.
(A) On May 24, 1999, the CrestFunds Value Fund, Life Vision Balanced
Portfolio, Life Vision Growth and Income Portfolio, Life Vision
Maximum Growth Portfolio, and U.S. Treasury Money Market Fund
exchanged all of its assets and certain liabilities for shares
of the Growth and Income Fund. The CrestFunds Value Fund is the
accounting survivor in this transaction, and as a result, its
basis of accounting for assets and liabilities and its operating
results for the periods prior to May 24, 1999 have been carried
forward in these financial highlights.
(1) For the six month period ended May 31, 1999. All ratios for the
period have been annualized.
(2) Commenced operations on June 30, 1997. All
ratios for the period have been annualized.
<PAGE>
STI CLASSIC FUNDS
INVESTMENT ADVISERS
STI Capital Management, N.A.
P.O. Box 3808
Orlando, FL 32802
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, GA 30303
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated October 1, 1999, includes detailed information about the STI
Classic Funds. The SAI is on file with the SEC and is incorporated by reference
into this prospectus. This means that the SAI, for legal purposes, is a part of
this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends. The reports
also contain detailed financial information about the Funds.
TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-874-4770
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, PA 19456
<PAGE>
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about the STI Classic Funds, from the SEC's website
("http://www.sec.gov"). You may review and copy documents at the SEC Public
Reference Room in Washington, DC (for information call 1-800-SEC-0330). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-6009. The STI Classic Funds' Investment Company Act
registration number is 811-06557.
<PAGE>
STI CLASSIC FUNDS
EQUITY FUNDS
INVESTOR SHARES AND FLEX SHARES
PROSPECTUS
OCTOBER 1, 1999
BALANCED FUND
CAPITAL APPRECIATION FUND (FORMERLY CAPITAL GROWTH FUND)
GROWTH AND INCOME FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
MID-CAP EQUITY FUND
SMALL CAP EQUITY FUND
SMALL CAP GROWTH STOCK FUND
TAX SENSITIVE GROWTH STOCK FUND
VALUE INCOME STOCK FUND
INVESTMENT ADVISERS
STI CAPITAL MANAGEMENT, N.A.
TRUSCO CAPITAL MANAGEMENT, INC.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
HOW TO READ THIS PROSPECTUS
The STI Classic Funds is a mutual fund family that offers shares in separate
investment portfolios (Funds). The Funds have individual investment goals and
strategies. This prospectus gives you important information about the Investor
Shares and Flex Shares of the Funds that you should know before investing.
Please read this prospectus and keep it for future reference.
Investor Shares and Flex Shares have different expenses and other
characteristics, allowing you to choose the class that best suits your needs.
You should consider the amount you want to invest, how long you plan to have it
invested, and whether you plan to make additional investments.
INVESTOR SHARES
- FRONT-END SALES CHARGE
- 12B-1 FEES
- $2,000 MINIMUM INITIAL INVESTMENT
FLEX SHARES
- CONTINGENT DEFERRED SALES CHARGE
- HIGHER 12B-1 FEES
- $5,000 MINIMUM INITIAL INVESTMENT
<PAGE>
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN WHICH IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
<TABLE>
<CAPTION>
PAGE
<S> <C>
BALANCED FUND................................................. 2
CAPITAL APPRECIATION FUND..................................... 4
GROWTH AND INCOME FUND........................................ 6
INTERNATIONAL EQUITY FUND..................................... 8
INTERNATIONAL EQUITY INDEX FUND............................... 10
MID-CAP EQUITY FUND........................................... 12
SMALL CAP EQUITY FUND......................................... 14
SMALL CAP GROWTH STOCK FUND................................... 16
TAX SENSITIVE GROWTH STOCK FUND............................... 18
VALUE INCOME STOCK FUND....................................... 20
MORE INFORMATION ABOUT RISK................................... 22
EACH FUND'S OTHER INVESTMENTS................................. 23
THE INVESTMENT ADVISERS AND PORTFOLIO MANAGERS................ 23
PURCHASING, SELLING AND EXCHANGING FUND SHARES................ 25
DIVIDENDS AND DISTRIBUTIONS................................... 30
TAXES......................................................... 30
FINANCIAL HIGHLIGHTS.......................................... 31
HOW TO OBTAIN MORE INFORMATION ABOUT THE
STI CLASSIC FUNDS............................................. 38
</TABLE>
[INSERT ICONS HERE]
<PAGE>
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal.
The investment managers invest Fund assets in a way that they believe will
help a Fund achieve its goal. Still, investing in each Fund involves risk and
there is no guarantee that a Fund will achieve its goal. An investment
manager's judgments about the markets, the economy, or companies may not
anticipate actual market movements, economic conditions or company
performance, and these judgments may affect the return on your investment. In
fact, no matter how good a job an investment manager does, you could lose
money on your investment in the Fund, just as you could with other
investments. A Fund share is not a bank deposit and it is not insured or
guaranteed by the FDIC or any government agency.
The value of your investment in a Fund is based on the market value of the
securities the Fund holds. These prices change daily due to economic and
other events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund of a change in the value of a single security will depend on
how widely the Fund diversifies its holdings.
<PAGE>
BALANCED FUND
FUND SUMMARY
INVESTMENT GOAL
PRIMARY U.S. common stocks
SECONDARY Bonds
INVESTMENT FOCUS Capital appreciation and current income
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with a
history of earnings growth and bonds
with minimal risk
INVESTOR PROFILE Investors who want income from their
investment, as well as an increase in
its value
INVESTMENT STRATEGY
The Balanced Fund invests in common and preferred stocks, convertible
securities, U.S. government obligations and investment grade corporate bonds.
In selecting stocks for the Fund, the Adviser attempts to identify
high-quality companies with a history of earnings growth. In selecting bonds,
the Adviser tries to minimize risk while attempting to outperform selected
market indices. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and
additional capital gains tax liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies
may report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies
may suffer a decline in response. These factors contribute to price
volatility, which is the principal risk of investing in the Fund.
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if
interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also,
longer-term securities are generally more volatile, so the average maturity
or duration of these securities affects risk.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES
HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
<TABLE>
<S> <C>
1995 25.08%
1996 11.85%
1997 20.71%
1998 19.21%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
12.52% -5.81%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 5.21%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX AND THE S&P 500 INDEX.
<TABLE>
<CAPTION>
SINCE
INVESTOR SHARES 1 YEAR INCEPTION
- -------------------------------------------------- -------- -----------
<S> <C> <C>
BALANCED FUND 14.75% 13.01%*
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX 9.47% 7.11%**
S&P 500 INDEX 28.60% 23.66%**
</TABLE>
* SINCE 1/3/94
** SINCE 1/31/94
<TABLE>
<CAPTION>
SINCE
FLEX SHARES 1 YEAR INCEPTION
- -------------------------------------------------- -------- -----------
<S> <C> <C>
BALANCED FUND 16.28% 16.98%*
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX 9.47% 8.23%**
S&P 500 INDEX 28.60% 28.61%**
</TABLE>
* SINCE 6/14/95
** SINCE 6/30/95
<PAGE>
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers Government/Corporate Bond Index
is a widely-recognized, market value-weighted (higher market value bonds have
more influence than lower market value bonds) index of U.S. Treasury securities,
U.S. government agency obligations, corporate debt backed by the U.S.
government, fixed-rate nonconvertible corporate debt securities, Yankee bonds,
and nonconvertible debt securities issued by or guaranteed by foreign
governments and agencies. All securities in the Index are rated investment grade
(BBB) or higher, with maturities of at least 1 year. The S&P 500 Index is a
widely-recognized, market value-weighted (higher market value stocks have more
influence than lower market value stocks) index of 500 stocks designed to mimic
the overall equity market's industry weightings.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
</TABLE>
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR
OF YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Investment Advisory Fees 0.95% 0.95%
Distribution and Service (12b-1) Fees 0.28% 1.00%
Other Expenses 0.20% 0.20%
----- -----
Total Annual Fund Operating Expenses 1.43% 2.15%
</TABLE>
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $515 $810 $1,127 $2,024
FLEX SHARES $418 $673 $1,154 $2,483
</TABLE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $515 $810 $1,127 $2,024
FLEX SHARES $218 $673 $1,154 $2,483
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES FOR INVESTOR SHARES ARE 0.86%, 0.21% AND 1.27%, RESPECTIVELY. ACTUAL
INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR
FLEX SHARES ARE 0.86%, 0.97% AND 2.03%, RESPECTIVELY. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."
<PAGE>
CAPITAL APPRECIATION FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with above
average growth potential
INVESTOR PROFILE Investors who want the value of their
investment to grow, but do not need to receive
income on their investment
INVESTMENT STRATEGY
The Capital Appreciation Fund invests primarily in U.S. common stocks and
other equity securities that the Adviser believes are undervalued by the
stock market. In selecting investments for the Fund, the Adviser chooses
companies that it believes have above average growth potential. The Adviser
rotates the Fund's investments among various market sectors based on the
Adviser's research of business cycles. The Adviser's strategy focuses on
large cap stocks with a strong growth history. Due to its investment
strategy, the Fund may buy and sell securities frequently. This may result in
higher transaction costs and additional capital gains tax liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies
may report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies
may suffer a decline in response. These factors contribute to price
volatility, which is the principal risk of investing in the Fund.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES
HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
<TABLE>
<S> <C>
1993 9.27%
1994 -8.01%
1995 30.33%
1996 19.50%
1997 30.34%
1998 27.26%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
22.78% -11.26%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 10.12%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998, TO THOSE OF THE S&P 500 INDEX.
<TABLE>
<CAPTION>
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ---------------------------- ------- ------- ---------------
<S> <C> <C> <C>
CAPITAL APPRECIATION FUND 22.47% 18.00% 17.67%*
S&P 500 INDEX 28.60% 24.05% 21.27%**
</TABLE>
* SINCE 6/9/92
** SINCE 6/30/92
<TABLE>
<CAPTION>
FLEX SHARES 1 YEAR SINCE INCEPTION
- --------------------------- -------------- -----------------
<S> <C> <C>
CAPITAL APPRECIATION FUND 24.57% 25.68%*
S&P 500 INDEX 28.60% 28.61%**
</TABLE>
* SINCE 6/1/95
** SINCE 6/30/95
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of 500 stocks designed to mimic the overall equity market's
industry weightings.
<PAGE>
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
</TABLE>
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR
OF YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Investment Advisory Fees 1.15% 1.15%
Distribution and Service (12b-1) Fees 0.68% 1.00%
Other Expenses 0.13% 0.23%
----- -----
Total Annual Fund Operating Expenses 1.96% 2.38%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $567 $967 $1,393 $2,575
FLEX SHARES $441 $742 $1,270 $2,716
</TABLE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $567 $967 $1,393 $2,575
FLEX SHARES $241 $742 $1,270 $2,716
</TABLE>
<PAGE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES FOR INVESTOR SHARES ARE 1.06%, 0.63% AND 1.82%, RESPECTIVELY.
INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR
FLEX SHARES ARE 1.06%, 1.00% AND 2.29%, RESPECTIVELY. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."
<PAGE>
GROWTH AND INCOME FUND
FUND SUMMARY
INVESTMENT GOAL
PRIMARY Long-term capital appreciation
SECONDARY Current income
INVESTMENT FOCUS Equity securities
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify
securities of companies with
market capitalizations of at
least $1 billion with
attractive valuation and/or
above average earnings
momentum relative either to
their sectors or the market as
a whole
INVESTOR PROFILE Investors who are looking for
capital appreciation
potential and income with
less volatility than the
equity markets as a whole
INVESTMENT STRATEGY
The Growth and Income Fund invests primarily in equity securities, including
common stock and listed American Depository Receipts (ADR's), of domestic and
foreign companies with market capitalizations of at least $1 billion.
However, the average market capitalization can vary throughout a full market
cycle and will be flexible to allow the Adviser to capture market
opportunities. The Adviser uses a quantitative screening process to identify
companies with an attractive fundamental profile. The portfolio management
team selects stocks of companies with strong financial quality and above
average earnings momentum to secure the best relative values in each economic
sector.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the
<PAGE>
value of a Fund's investments. These currency movements may happen separately
from and in response to events that do not otherwise affect the value of the
security in the issuer's home country.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES
HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
<TABLE>
<S> <C>
1994 -0.91%
1995 29.45%
1996 19.12%
1997 27.58%
1998 18.25%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.35% -10.35%
(6/30/97) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 12.81%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE S&P 500 INDEX.
<TABLE>
<CAPTION>
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- -------------------------- ------------- ------------- -----------------
<S> <C> <C> <C>
GROWTH AND INCOME FUND 13.78% 17.28% 16.22%*
S&P 500 INDEX 28.60% 24.05% 22.40%**
</TABLE>
* SINCE 5/7/93
** SINCE 5/31/93
<TABLE>
<CAPTION>
FLEX SHARES 1 YEAR SINCE INCEPTION
- ---------------------------------------- -------------- -----------------
<S> <C> <C>
GROWTH AND INCOME FUND 15.28% 21.50%*
S&P 500 INDEX 28.60% 29.32%**
</TABLE>
* SINCE 4/5/95
** SINCE 4/30/95
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an
<PAGE>
index had expenses, its performance would be lower. The S&P 500 Index is a
widely-recognized, market value-weighted (higher market value stocks have
more influence than lower market value stocks) index of 500 stocks designed
to mimic the overall equity market's industry weightings.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
</TABLE>
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR
OF YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Investment Advisory Fees 0.90% 0.90%
Distribution and Service (12b-1) Fees 0.25% 1.00%
Other Expenses 0.20% 0.22%
----- -----
Total Annual Fund Operating Expenses 1.35% 2.12%
</TABLE>
* EXPENSE INFORMATION IN THE TABLE HAS BEEN RESTATED TO REFLECT
CURRENT FEES.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $507 $787 $1,087 $1,938
FLEX SHARES $415 $664 $1,139 $2,452
</TABLE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $507 $787 $1,087 $1,938
FLEX SHARES $215 $664 $1,139 $2,452
</TABLE>
<PAGE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES FOR INVESTOR SHARES ARE 0.90%, 0.08% AND 1.18%, RESPECTIVELY. ACTUAL
INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR
FLEX SHARES ARE 0.90%, 0.81% AND 1.93%, RESPECTIVELY. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."
<PAGE>
INTERNATIONAL EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Foreign common stocks
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued companies
with good fundamentals
INVESTOR PROFILE Investors who want an increase in the value
of their investment without regard to
income; are willing to accept the increased
risks of international investing of the
possibility of higher returns; and want
exposure to a diversified portfolio of
international stocks
INVESTMENT STRATEGY
The International Equity Fund invests primarily in common stocks and other
equity securities of foreign companies. In selecting investments for the Fund,
the Adviser diversifies the Fund's investments among at least three foreign
countries. The Fund invests primarily in developed countries, but may invest in
countries with emerging markets. The Adviser's "bottom-up" approach to stock
selection focuses on individual stocks and fundamental characteristics of
companies. The Adviser's goal is to find companies with top management, quality
products and sound financial positions, that are trading at a discount. Due to
its investment strategy, the Fund may buy and sell securities frequently. This
may result in higher transaction costs and additional capital gains tax
liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, foreign common
stocks, may underperform other equity market segments or the equity markets as a
whole.
<PAGE>
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
Emerging market countries are countries that the World Bank or the United
Nations considers to be emerging or developing. Emerging markets may be more
likely to experience political turmoil or rapid changes in market or economic
conditions than more developed countries. In addition, the financial stability
of issuers (including governments) in emerging market countries may be more
precarious than in other countries. As a result, there will tend to be an
increased risk of price volatility associated with the Fund's investments in
emerging market countries, which may be magnified by currency fluctuations
relative to the U.S. dollar.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to December 1995, when the Fund began operating, represent the
performance of the Adviser's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The periods from December 1995 to January 1996 represent the
performance of the Trust Shares of the Fund. Trust Shares have lower expenses
than Investor and Flex Shares, which results in higher performance shown below.
The Adviser's collective fund was not a registered mutual fund so it was not
subject to the same investment and tax restrictions as the Fund. If it had been,
the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE PERIODS FROM JANUARY 1996 TO THE PRESENT REPRESENT THE
PERFORMANCE OF THE INVESTOR SHARES OF THE FUND. THE CHART DOES NOT REFLECT SALES
CHARGES. IF SALES CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE
SHOWN BELOW.*
<TABLE>
<S> <C>
1996 21.58%
1997 13.01%
1998 10.69%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C> <C>
16.74% -18.33%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 2.69%.
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, AND FAR EAST (MSCI EAFE) INDEX.
<TABLE>
<CAPTION>
INVESTOR SHARES 1 YEAR SINCE INCEPTION
- ----------------------------------------- --------------- -----------------
<S> <C> <C>
INTERNATIONAL EQUITY FUND 6.53% 19.75%*
MSCI EAFE INDEX 20.00% 10.87%*
<CAPTION>
* SINCE 1/31/95
FLEX SHARES 1 YEAR SINCE INCEPTION
- ----------------------------------------- --------------- -----------------
<S> <C> <C>
INTERNATIONAL EQUITY FUND 7.91% 20.31%*
MSCI EAFE INDEX 20.00% 10.87%*
* SINCE 1/31/95
</TABLE>
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The MSCI EAFE Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of over 900
securities listed on the stock exchanges in Europe, Australasia and the Far
East.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
</TABLE>
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR
OF YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Investment Advisory Fees 1.25% 1.25%
Distribution and Service (12b-1) Fees 0.33% 1.00%
Other Expenses 0.35% 0.59%
----- -----
Total Annual Fund Operating Expenses 1.93% 2.84%
</TABLE>
* Expense information in the table has been restated to reflect current fees.
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $564 $958 $1,378 $2,544
FLEX SHARES $487 $880 $1,499 $3,166
</TABLE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $564 $958 $1,378 $2,544
FLEX SHARES $287 $880 $1,499 $3,166
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES FOR INVESTOR SHARES ARE 1.20%, 0.28% AND 1.83%, RESPECTIVELY. ACTUAL
INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR
FLEX SHARES ARE 1.20%, 0.74% AND 2.53%, RESPECTIVELY. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."
<PAGE>
INTERNATIONAL EQUITY INDEX FUND
FUND SUMMARY
INVESTMENT GOAL Investment results that correspond to the performance of
the MSCI EAFE-GDP Index
INVESTMENT FOCUS Foreign common stocks in MSCI EAFE-GDP Index
SHARE PRICE
VOLATILITY High
PRINCIPAL INVESTMENT
STRATEGY Statistical analysis to track the Index
INVESTOR PROFILE Aggressive investors who want exposure to foreign markets
and are willing to accept the increased risks of foreign
investing for the possibility of higher returns
INVESTMENT STRATEGY
The International Equity Index Fund invests primarily in common stocks of
foreign companies. In selecting investments for the Fund, the Adviser chooses
companies included in the MSCI EAFE-GDP Index, an index of equity securities of
companies located in Europe, Australasia and the Far East. While the Fund is
structured to have overall investment characteristics similar to those of the
Index, it selects a sample of stocks within the index using a statistical
process. So, the Fund will not hold all stocks included in the Index.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the stock
markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, foreign common
stocks, may underperform other market segments or the equity markets as a whole.
<PAGE>
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
In addition to the above mentioned risks, the Adviser may not be able to match
the performance of the Fund's benchmark.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES
HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
<TABLE>
<S> <C>
1995 10.20%
1996 5.78%
1997 8.44%
1998 29.68%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
21.20% -13.09%
(12/13/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 5.93%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, AND FAR EAST-GROSS DOMESTIC PRODUCT (MSCI
EAFE-GDP) WEIGHTED INDEX.
<TABLE>
<CAPTION>
INVESTOR SHARES 1 YEAR SINCE INCEPTION
- ---------------------------------------- -------------- -----------------
<S> <C> <C>
INTERNATIONAL EQUITY INDEX FUND 24.85% 9.79%*
MSCI EAFE-GDP INDEX 25.12% 9.42%**
</TABLE>
* SINCE 6/6/94
** SINCE 6/30/94
<PAGE>
<TABLE>
<CAPTION>
FLEX SHARES 1 YEAR SINCE INCEPTION
- ---------------------------------------- -------------- -----------------
<S> <C> <C>
INTERNATIONAL EQUITY INDEX FUND 26.70% 12.53%*
MSCI EAFE-GDP INDEX 25.12% 11.60%**
</TABLE>
* SINCE 6/8/95
** SINCE 6/30/95
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The MSCI EAFE-GDP Weighted Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of over 900 securities listed on the stock exchanges in
Europe, Australasia and the Far East. The index is weighted by the gross
domestic product of the various countries in the index.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
</TABLE>
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR
OF YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Investment Advisory Fees 0.90% 0.90%
Distribution and Service (12b-1) Fees 0.38% 1.00%
Other Expenses 0.38% 0.67%
----- -----
Total Annual Fund Operating Expenses 1.66% 2.57%
</TABLE>
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $537 $879 $1,243 $2,267
FLEX SHARES $460 $799 $1,365 $2,905
</TABLE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $537 $879 $1,243 $2,267
FLEX SHARES $260 $799 $1,365 $2,905
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES FOR INVESTOR SHARES ARE 0.79%, 0.30% AND 1.47%, RESPECTIVELY. ACTUAL
INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR
FLEX SHARES ARE 0.79%, 0.66% AND 2.12%, RESPECTIVELY. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."
<PAGE>
MID-CAP EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS U.S. mid-cap common stocks
SHARE PRICE VOLATILITY Moderate to high
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with
above average growth potential at an
attractive price
INVESTOR PROFILE Investors who want the value of their
investment to grow and who are willing
to accept more volatility for the
possibility of higher returns
INVESTMENT STRATEGY
The Mid-Cap Equity Fund invests primarily in a diversified portfolio of common
stocks and other equity securities of U.S. companies. In selecting investments
for the Fund, the Adviser primarily chooses companies that have small- to
mid-sized market capitalizations (i.e., companies with market capitalizations of
$500 million to $10 billion and companies in the S&P MidCap 400 Index) and that
have above average growth potentials at attractive prices. The Adviser evaluates
companies based on their industry sectors and the market in general. The Fund
maintains holdings in the industries that appear to perform best during a given
business cycle. The Adviser analyzes companies that are in favored industries
based on their fundamental characteristics, such as growth rates and earnings.
The Adviser does not consider current income in selecting investments for the
Fund.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's
securities may fluctuate drastically from day-to-day. Individual companies
may report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies
may suffer a decline in response. These factors contribute to price
volatility, which is the principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, mid-cap common
stocks, may underperform other equity market segments or the equity markets as a
whole.
The small- to-mid-sized capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these small companies may have limited product lines,
markets and financial resources, and may
<PAGE>
depend upon a relatively small management group. Therefore, small cap and
mid-cap stocks may be more volatile than those of larger companies. These
securities may be traded over-the-counter or listed on an exchange and may or
may not pay dividends.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES
HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
<TABLE>
<CAPTION>
<S> <C>
1995 30.57%
1996 14.93%
1997 20.67%
1998 5.98%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
24.52% -20.00%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 6.35%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE S&P MIDCAP 400 INDEX.
<TABLE>
<CAPTION>
INVESTOR SHARES 1 YEAR SINCE INCEPTION
- ---------------------------------------- -------------- -----------------
<S> <C> <C>
MID-CAP EQUITY FUND 2.00% 12.79%*
S&P MIDCAP 400 INDEX 19.12% 18.63%*
</TABLE>
* SINCE 1/31/94
<TABLE>
<CAPTION>
FLEX SHARES 1 YEAR SINCE INCEPTION
- ---------------------------------------- -------------- -----------------
<S> <C> <C>
MID-CAP EQUITY FUND 3.46% 15.05%*
S&P MIDCAP 400 INDEX 19.12% 23.44%**
</TABLE>
* SINCE 6/5/95
** SINCE 6/30/95
<PAGE>
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P MidCap Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of 400 domestic
mid-cap stocks chosen for market size, liquidity, and industry group
representation.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
</TABLE>
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR
OF YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Investment Advisory Fees 1.15% 1.15%
Distribution and Service (12b-1) Fees 0.43% 1.00%
Other Expenses 0.18% 0.33%
----- -----
Total Annual Fund Operating Expenses 1.76% 2.48%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $547 $908 $1,293 $2,370
FLEX SHARES $451 $773 $1,321 $2,816
</TABLE>
<PAGE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $547 $908 $1,293 $2,370
FLEX SHARES $251 $773 $1,321 $2,816
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES FOR INVESTOR SHARES ARE 1.04%, 0.40% AND 1.62%, RESPECTIVELY. ACTUAL
INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR
FLEX SHARES ARE 1.04%, 0.85% AND 2.22%, RESPECTIVELY. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."
<PAGE>
SMALL CAP EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL
PRIMARY Capital appreciation
SECONDARY Current income
INVESTMENT FOCUS U.S. small cap common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued
small cap stocks
INVESTOR PROFILE Investors who primarily want the value of
their investment to grow, but want to receive
some income from their investment
INVESTMENT STRATEGY
The Small Cap Equity Fund invests primarily in common stocks of U.S.
companies. In selecting investments for the Fund, the Adviser chooses common
stocks of small sized companies (i.e., companies with market capitalizations
under $1 billion) that it believes are undervalued in the market.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
stock markets have moved in cycles, and the value of the Fund's securities
may fluctuate drastically from day-to-day. Individual companies may report
poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is
the principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, small
capitalization common stocks, may underperform other equity market segments
or the equity markets as a whole.
The smaller capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more
established companies. In particular, these small companies may have limited
product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small cap stocks may be more
volatile than those of larger companies. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future. The periods prior to January 1997, when the Fund began operating,
represent the performance of the Adviser's similarly managed collective
investment fund. This past performance has been adjusted to reflect current
expenses for Trust Shares of the Fund. The periods from January 1997 to June
1997 represent the performance of Trust Shares of the Fund. The periods from
June 1997 to the present represent the performance of the Flex Shares of the
Fund. Trust Shares have lower expenses than Flex Shares, which results in
higher performance shown below. The Adviser's collective fund was not a
registered mutual fund so it was not subject to the same investment and tax
restrictions as the Fund. If it had been, the collective fund's performance
would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST AND FLEX
SHARES FROM YEAR TO YEAR. THE CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
<TABLE>
<S> <C>
1995 30.99%
1996 34.25%
1997 31.79%
1998 -14.33%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
14.91% -22.14%
(6/30/97) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS -3.42%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE FRANK RUSSELL 2000 SMALL STOCK INDEX.
<TABLE>
<CAPTION>
INVESTOR SHARES 1 YEAR SINCE INCEPTION
- ---------------------------------------- -------------- -----------------
<S> <C> <C>
SMALL CAP EQUITY FUND -15.94% 17.33%*
FRANK RUSSELL 2000 SMALL STOCK INDEX -2.55% 13.71%*
</TABLE>
* SINCE 8/31/94
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Frank Russell 2000 Small Stock Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of the 2,000 smallest U.S. companies out of the 3,000
largest companies.
<PAGE>
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
FLEX SHARES
- ----------------------------------------------------- ------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)* 2.00%
</TABLE>
* THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR
OF YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
FLEX SHARES
- ----------------------------------------------------------------- -----------
<S> <C>
Investment Advisory Fees 1.15%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses 0.40%
-----
Total Annual Fund Operating Expenses 2.55%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
$458 $793 $1,355 $2,885
</TABLE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
$258 $793 $1,355 $2,885
</TABLE>
<PAGE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES FOR FLEX SHARES ARE 1.10%, 0.77% AND 2.27%, RESPECTIVELY. The Adviser
and Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."
<PAGE>
SMALL CAP GROWTH STOCK FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS U.S. small cap common stocks of
growth companies
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Identifies small cap companies with
above average growth potential
INVESTOR PROFILE Investors who want the value of their
investment to grow, but do not need
current income
INVESTMENT STRATEGY
The Small Cap Growth Stock Fund invests primarily in small U.S. companies
with market capitalizations between $50 million and $3 billion. The Adviser
selects companies that demonstrate above average earnings and sales growth
potential. The selected companies tend to have an established operating
history and a sold balance sheet.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
stock markets have moved in cycles, and the value of the Fund's securities
may fluctuate drastically from day-to-day. Individual companies may report
poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is
the principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, small
capitalization growth stocks, may underperform other equity market segments
or the equity markets as a whole.
The smaller capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more
established companies. In particular, these small companies may have limited
product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small cap stocks may be more
volatile than those of larger companies. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
<PAGE>
PERFORMANCE INFORMATION
The Small Cap Growth Stock Fund commenced operations on October 8, 1998, and
therefore does not have a performance history for a full calendar year.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- -------------------------------------------------- --------------- -----------
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)* None 2.00%
</TABLE>
* THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR OF
YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Investment Advisory Fees 1.15% 1.15%
Distribution and Service (12b-1) Fees 0.50% 1.00%
Other Expenses 0.25%* 1.04%
----- -----
Total Annual Fund Operating Expenses 1.90% 3.19%
</TABLE>
* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Flex Shares $522 $983 $1,669 $3,494
Investor Shares $561 $950 $1,363 $2,514
</TABLE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Flex Shares $322 $983 $1,669 $3,494
Investor Shares $561 $950 $1,363 $2,514
</TABLE>
<PAGE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES ARE 0.86%, 0.35% AND 2.25%, RESPECTIVELY. The Adviser and Distributor
could discontinue these voluntary waivers at any time. For more information
about these fees, see "Investment Advisers" and "Distribution of Fund Shares."
<PAGE>
TAX SENSITIVE GROWTH STOCK FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital growth with nominal
dividend income
INVESTMENT FOCUS U.S. common stocks of growth companies
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies that have
above-average growth potential and uses a
low portfolio turnover strategy to reduce
capital gains distributions
INVESTOR PROFILE Investors who want to increase the value
of their investment while minimizing taxable
capital gains distributions
INVESTMENT STRATEGY
The Tax Sensitive Growth Stock Fund primarily invests in a diversified portfolio
of common stocks of financially strong U.S. growth companies. Many of these
companies have a history of stable or rising dividend payout policies.
The Adviser attempts to minimize the impact of capital gains taxes on investment
returns by using a low turnover rate (generally 50% or less) strategy, in
conjunction with other tax management strategies. These strategies may lead to
lower capital gains distributions and, therefore, lower capital gains taxes.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases common stocks, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the stock
markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, common stocks of
U.S. growth companies, may underperform other equity market segments or the
equity markets as a whole.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over-the-counter or listed on an exchange and may
or may not pay dividends.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to December 1998, when the Fund began operating, represent the
performance of the Adviser's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Flex Shares
of the Fund. The Adviser's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S FLEX SHARES
FROM YEAR TO EYAR. THE CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES
HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
<TABLE>
<S> <C>
1996 21.04%
1997 28.76%
1998 31.73%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
27.74% -9.96%
(12/31/98) (9/30/98)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 17.00%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE S&P 500 INDEX AND THE LIPPER GROWTH AND
INCOME FUND INDEX..
<TABLE>
<CAPTION>
FLEX SHARES 1 YEAR SINCE INCEPTION
- -------------------------------------------- --------------- ------------------
<S> <C> <C>
TAX SENSITIVE GROWTH STOCK FUND 29.73% 27.15%*
S&P 500 INDEX 28.60% 28.23%**
LIPPER GROWTH AND INCOME FUNDS INDEX 13.58% 20.25%
</TABLE>
* SINCE 12/31/95
** SINCE 12/31/95
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of 500 stocks designed to mimic the overall equity market's
industry weightings. The Lipper Growth and Income Funds Index is a
widely-recognized composite of mutual funds that have growth-of earnings
orientations and income requirements for level and/or rising dividends.
<PAGE>
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
FLEX SHARES
- ----------------------------------------------------- ----------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)* 2.00%
</TABLE>
* THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR
OF YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
FLEX SHARES
- ---------------------------------------------------------------- -------------
<S> <C>
Investment Advisory Fees 1.15%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses 0.33%
-----
Total Annual Fund Operating Expenses 2.48%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$451 $773 $1,321 $2,816
</TABLE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$251 $773 $1,321 $2,816
</TABLE>
<PAGE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES ARE 1.01%, 0.91% AND 2.25%, RESPECTIVELY. The Adviser and Distributor
could discontinue these voluntary waivers at any time. For more information
about these fees, see "Investment Advisers" and "Distribution of Fund Shares."
<PAGE>
VALUE INCOME STOCK FUND
FUND SUMMARY
INVESTMENT GOAL
PRIMARY Current income
SECONDARY Capital appreciation
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify high dividend-paying,
undervalued stocks
INVESTOR PROFILE Investors who are looking for current income
and capital appreciation with less
volatility than the average stock fund
INVESTMENT STRATEGY
The Value Income Stock Fund invests primarily in common stocks and other equity
securities of U.S. companies. In selecting investments for the Fund, the Adviser
primarily chooses companies that have a market capitalization of at least $500
million and that have a history of paying regular dividends. The Adviser focuses
on high dividend-paying stocks that trade below their historical value. The
Adviser's "bottom-up" approach to stock selection emphasizes individual stocks
over economic trends.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future. The periods prior to February 1993, when the Fund began operating,
represent the performance of the Adviser's similarly managed collective
investment fund. This past performance has been adjusted to reflect current
expenses for Investor Shares of the Fund. The Adviser's collective fund was
not a registered mutual fund so it was not subject to the same investment and
tax restrictions as the Fund. If it had been, the collective fund's
performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE PERIODS FROM FEBRUARY 1993 TO THE PRESENT REPRESENT
THE PERFORMANCE OF THE FUND'S INVESTOR SHARES. THE CHART DOES NOT REFLECT
SALES CHARGES. IF SALES CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS
THAN THOSE SHOWN BELOW.*
<TABLE>
<S> <C>
1990 -4.93%
1991 39.30%
1992 20.05%
1993 10.86%
1994 2.87%
1995 35.50%
1996 19.06%
1997 26.57%
1998 10.16%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
18.56% -14.86%
(3/31/91) (9/30/90)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 6/30/99 WAS 13.34%.
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1998, TO THOSE OF THE S&P/BARRA VALUE INDEX AND THE LIPPER
EQUITY INCOME FUND INDEX.
<TABLE>
<CAPTION>
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ---------------------------------------- -------------- ------------- -----------------
<S> <C> <C> <C>
VALUE INCOME STOCK FUND 6.02% 17.36% 16.42%*
S&P/BARRA VALUE INDEX 14.68% 19.88% 15.76%*
LIPPER EQUITY INCOME FUND INDEX 11.78% 16.62% 13.53%*
</TABLE>
* SINCE 10/31/89
<TABLE>
<CAPTION>
FLEX SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ---------------------------------------- -------------- ------------- -----------------
<S> <C> <C> <C>
VALUE INCOME STOCK FUND 7.50% 17.83% 16.71%*
S&P/BARRA VALUE INDEX 14.68% 19.88% 15.76%*
LIPPER EQUITY INCOME FUND INDEX 11.78% 16.62% 13.53%*
</TABLE>
* SINCE 10/31/89
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P/BARRA Value Index is a widely-recognized
index of the stocks in the S&P 500 Index that have lower price-to-book
ratios. The Lipper Equity Income Fund Index is an equally weighted index of
typically the 30 largest funds that seek relatively high current income and
growth of income through investing 60% or more of their portfolios in
equities.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
</TABLE>
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN 1 YEAR
OF YOUR PURCHASE. SEE "SELLING FUND SHARES."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- --------------------------------------------------- ---------------- -----------
<S> <C> <C>
Investment Advisory Fees 0.80% 0.80%
Distribution and Service (12b-1) Fees 0.33% 1.00%
Other Expenses 0.15% 0.23%
----- -----
Total Annual Fund Operating Expenses 1.28% 2.03%
</TABLE>
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $500 $766 $1,051 $1,862
FLEX SHARES $406 $637 $1,093 $2,358
</TABLE>
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
INVESTOR SHARES $500 $766 $1,051 $1,862
FLEX SHARES $206 $637 $1,093 $2,358
</TABLE>
FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net assets.
These expenses are deducted from Fund assets. The table shows the highest
expenses that could be currently charged to the Fund. Actual expenses are lower
because the Adviser and Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES FOR INVESTOR SHARES ARE 0.80%, 0.33% AND 1.28%, RESPECTIVELY. ACTUAL
INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR
FLEX SHARES ARE 0.80%, 0.99% AND 2.02%, RESPECTIVELY. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."
<PAGE>
MORE INFORMATION ABOUT RISK
EQUITY RISK -- Equity securities include public and privately ALL FUNDS
issued equity securities, common and preferred stocks,
warrants, rights to subscribe to common stock and
convertible securities, as well as instruments that
attempt to track the price movement of equity indices.
Investments in equity securities and equity derivatives
in general are subject to market risks that may cause
their prices to fluctuate over time. The value of
securities convertible into equity securities, such as
warrants or convertible debt, is also affected by
prevailing interest rates, the credit quality of the
issuer and any call provision. Fluctuations in the value
of equity securities in which a mutual fund invests will
cause a fund's net asset value to fluctuate. An
investment in a portfolio of equity securities may be
more suitable for long-term investors who can bear the
risk of these share price fluctuations.
FIXED INCOME RISK -- The market value of fixed income BALANCED FUND
investments change in response to interest rate changes
and other factors. During periods of falling interest
rates, the values of outstanding fixed income securities
generally rise. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of
longer maturity securities are also subject to greater
market fluctuations as a result of changes in interest
rates. In addition to these fundamental risks, different
types of fixed income securities may be subject to the
following additional risk:
CREDIT RISK -- The possibility that an issuer BALANCED FUND
will be unable to make timely payments of
either principal or interest.
<PAGE>
FOREIGN SECURITY RISKS-- Investments in GROWTH AND INCOME FUND
securities of foreign companies or INTERNATIONAL EQUITY FUND
governments can be more volatile than INTERNATIONAL EQUITY INDEX FUND
investments in U.S. companies or
governments. Diplomatic, political, or
economic developments, including
nationalization or appropriation, could
affect investments in foreign countries.
Foreign securities markets generally have
less trading volume and less liquidity
than U.S. markets. In addition, the value
of securities denominated in foreign
currencies, and of dividends from such
securities, can change significantly when
foreign currencies strengthen or weaken
relative to the U.S. dollar. Foreign
companies or governments generally are not
subject to uniform accounting, auditing,
and financial reporting standards
comparable to those applicable to domestic
U.S. companies or governments. Transaction
costs are generally higher than those in
the U.S. and expenses for custodial
arrangements of foreign securities may be
somewhat greater than typical expenses for
custodial arrangements of similar U.S.
securities. Some foreign governments levy
withholding taxes against dividend and
interest income. Although in some
countries a portion of these taxes are
recoverable, the non-recovered portion
will reduce the income received from the
securities comprising the portfolio.
TRACKING ERROR RISK -- Factors such as Fund INTERNATIONAL EQUITY INDEX FUND
expenses, imperfect correlation between the
Fund's investments and those of their
benchmarks, rounding of share prices,
changes to the benchmark, regulatory
policies, and leverage, may affect their
ability to achieve perfect correlation.
The magnitude of any tracking error may be
affected by a higher portfolio turnover
rate. Because an index is just a composite
of the prices of the securities it
represents rather than an actual portfolio
of those securities, an index will have no
expenses. As a result, a Fund, which will
have expenses such as taxes, custody,
management fees and other operation costs,
and brokerage, may not achieve its
investment objective of accurately
correlating to an index.
<PAGE>
YEAR 2000 RISK-- The Funds depend on the smooth functioning ALL FUNDS
of computer systems in almost every aspect of their
business. Like other mutual funds, businesses and
individuals around the world, the Funds could be
adversely affected if the computer systems used by their
service providers do not properly process dates on and
after January 1, 2000, and distinguish between the year
2000 and the year 1900. The Funds have asked their
mission critical service providers whether they expect to
have their computer systems adjusted for the year 2000
transition, and have sought and received assurances from
such service providers that they are devoting significant
resources to prevent material adverse consequences to the
Funds. While it is likely that such assurances have been
received, the Funds and their shareholders may experience
losses if these assurances prove to be incorrect or as a
result of year 2000 computer difficulties experienced by
issuers of portfolio securities or third parties, such as
custodians, banks, broker-dealers or others with which
the Funds do business.
Furthermore, many foreign countries are not as prepared
as the U.S. for the year 2000 transition. As a result,
computer difficulties in foreign markets and with foreign
institutions as a result of the year 2000 may add to the
possibility of losses to the Funds and their shareholders.
<PAGE>
EACH FUND'S OTHER INVESTMENTS
This prospectus describes the Funds' primary strategies, and the Funds will
normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, each Fund also may invest in other securities, use other
strategies and engage in other investment practices. These investments and
strategies, as well as those described in this prospectus, are described in
detail in the Statement of Additional Information (SAI).
The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, each Fund may invest up to
100% of its assets in cash, money market instruments, repurchase agreements
and short-term obligations. The Small Cap Equity Fund also may invest in
investment grade fixed income securities and mid- to large cap common stocks
that would not ordinarily be consistent with a Fund's objective. A Fund will
do so only if the Adviser believes that the risk of loss outweighs the
opportunity for capital gains or higher income. Of course, a Fund cannot
guarantee that it will achieve its investment goal.
INVESTMENT ADVISERS
The Investment Advisers make investment decisions for the Funds and
continuously review, supervise and administer each Fund's respective
investment program. The Board of Trustees supervises the Advisers and
establishes policies that the Advisers must follow in its management
activities.
STI Capital Management, N.A., (STI) P.O. Box 3808, Orlando, Florida 32802,
serves as the Adviser to the Balanced Fund, Capital Appreciation Fund,
International Equity Fund, Mid-Cap Equity Fund, Small Cap Equity Fund, and
Value Income Stock Fund. As of July 1, 1999, STI had approximately $14.5
billion in assets under management. For the fiscal period ended May 31, 1999,
STI received advisory fees of:
<TABLE>
<S> <C>
BALANCED FUND 0.86%
CAPITAL APPRECIATION FUND 1.06%
INTERNATIONAL EQUITY FUND 1.20%
MID-CAP EQUITY FUND 1.04%
SMALL CAP EQUITY FUND 1.10%
VALUE INCOME STOCK FUND 0.80%
</TABLE>
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Core Equity Fund, E-Commerce
Opportunity Fund, Growth and Income Fund, International Equity Index Fund, Small
Cap Growth Stock Fund, and Tax Sensitive Growth Stock Fund. As of July 1, 1999,
Trusco had approximately $30 billion in assets under management. For the fiscal
period ended May 31, 1999, Trusco received advisory fees of:
<TABLE>
<S> <C>
INTERNATIONAL EQUITY INDEX FUND 0.79%
</TABLE>
The Small Cap Growth Stock and Tax Sensitive Growth Stock Funds had not
completed a full fiscal year and the Core Equity and E-Commerce Opportunity
Funds had not commenced operations as of May 31, 1999.
<PAGE>
Prior to May 24, 1999, Crestar Asset Management Company served as the Adviser
to the predecessor of the Growth and Income Fund. For the period ended May
31, 1999, Crestar Asset Management Company and/or Trusco received advisory
fees of 0.75% for the Growth and Income Fund.
The Advisers may use their affiliates as brokers for Fund transactions.
PORTFOLIO MANAGERS
The Balanced Fund is co-managed by Mr. Anthony R. Gray, Mr. L. Earl Denney,
CFA, and Mr. Dave E. West, CFA. Mr. Gray manages the equity portion of the
Fund. Mr. Denney and Mr. West co-manage the fixed income portion of the
Fund. Mr. Gray has served as Chairman and Chief Investment Officer of STI
since 1979. He has more than 30 years of investment experience. Mr. West has
served as a Managing Director of STI and has worked there since 1985. He has
more than 13 years of investment experience. Mr. Denney is a Managing
Director of STI and has worked there since 1983. He has more than 20 years
of investment experience.
Mr. Anthony Gray has served as Chairman and Chief Investment Officer of STI
since 1979. He has managed the Capital Appreciation Fund since it began
operating in June 1992. He has more than 30 years of investment experience.
Mr. Robert J. Rhodes, CFA, has served as Senior Vice President of Trusco
since 1973. He has managed the Core Equity Fund since it began operating in
October 1999. He has more than 26 years of investment experience.
Mr. Alan S. Kelley has served as a portfolio manager of Trusco since 1999. He
has managed the E-Commerce Opportunity Fund since it began operating in
October 1999. Prior to joining Trusco, Mr. Kelley served as a portfolio
manager with SunTrust Bank, Atlanta from 1995 to 1999. Prior to 1995, he was
a portfolio manager of Urban Equities, LLC. He has more than 5 years of
investment experience.
Mr. Jeffrey E. Markunas, CFA, has served as lead portfolio manager of the
Growth and Income Fund since it began operating in September 1992. Since
1992, he has served as Senior Vice President and Director of Equity
Management for Crestar Asset Management Company. Additionally, he was named
Senior Vice President of Trusco in January 1999. Mr. Markunas has more than
17 years of investment experience.
Mr. Ned Dau has served as Managing Director of STI since 1997. He has managed
the International Equity Fund since May 1997. Prior to joining STI Capital
Management, N.A., Mr. Dau served as senior international equity analyst for
American Express Financial Advisers from 1996 to 1997 and as an international
portfolio manager for the Principal Financial Group from 1992 to 1995. He has
more than 8 years of investment experience.
The International Equity Index Fund is managed by Mr. Chad Deakins and
co-managed by Mr. Robert J. Rhodes. Mr. Deakins has served as a portfolio
manager at Trusco since February 1999 and as a portfolio assistant since
1996. He has managed the International Equity Index Fund since February 1999.
Prior to joining Trusco, Mr. Deakins worked at SunTrust Banks or an
affiliate. He has more than 4 years of investment experience. He has
co-managed the
<PAGE>
International Equity Index Fund since it began operating in June 1994. He
has more than 26 years of investment experience.
Mr. John Hamlin has served as portfolio manager of STI since March 1999. He
has managed the Mid-Cap Equity Fund since April 1999. Prior to joining STI,
Mr. Hamlin served as Portfolio Manager at Phoenix Investment Counsel, Inc.
from 1992 to 1999. He has more than 10 years of investment experience.
Mr. Brett Barner, CFA, has served as a Managing Director of STI since 1994.
He has managed the Small Cap Equity Fund since it began operating in January
1997. He has more than 15 years of investment experience.
Mr. Mark D. Garfinkel, CFA, has served as a Portfolio Manager of Trusco since
1994. He has managed the Small Cap Growth Stock Fund since it began
operating in October 1998. Prior to joining Trusco, Mr. Garfinkel served as
a portfolio manager with SunTrust Bank. He has more than 10 years of
investment experience.
Mr. Jonathan Mote, CFA, CFP, served as Portfolio Manager of Trusco since
August 1998. He has managed the Tax Sensitive Growth Stock Fund since it
began operating in December 1998. Prior to joining Trusco, Mr. Mote served as
a portfolio manager with SunTrust Banks. He has more than 13 years of
investment experience.
The Value Income Stock Fund is co-managed by Mr. Mills Riddick, CFA, and Mr.
Dan Lewis. Mr. Riddick has served as a Managing Director of STI since 1994.
He has managed the Value Income Stock Fund since April 1995. He has more
than 15 years of investment experience. Mr. Lewis has served as a portfolio
manager of STI since 1993. He has been an analyst of the Value Income Stock
Fund since 1995. He has more than 7 years of investment experience.
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to buy, sell (sometimes called "redeem") or
exchange Investor Shares and Flex Shares of the Funds.
<PAGE>
HOW TO PURCHASE FUND SHARES
A SunTrust Securities Investment Consultant can assist you in opening a
brokerage account which will be used for all transactions regarding the
purchase of STI Classic Funds. Once your account is established, you may buy
shares of the Funds by:
- Mail
- Telephone (1-800-874-4770)
- Wire
- Automated Clearing House (ACH)
You may also buy shares through Investment Consultants of certain
correspondent banks of SunTrust Banks, Inc. (SunTrust) and other financial
institutions that are authorized to place trades in Funds shares for their
customers. Please contact your financial institution directly and follow its
procedures for Fund Share transactions. Your institution may charge a fee for
its services, in addition to the fees charged by the Fund. You will also
generally have to address your correspondence or questions regarding a Fund
to your institution. A Fund may reject any purchase order if it is determined
that accepting the order would not be in the best interests of STI Classic
Funds or its shareholders.
WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Funds receive your purchase order. Each Fund
calculates its NAV once each Business Day at the regularly-scheduled close of
normal trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern
time). So, for you to receive the current Business Day's NAV for each Fund,
generally the Funds must receive your purchase order before 4:00 p.m. Eastern
time.
FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES, AND OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE, SALE AND EXCHANGE REQUESTS TO SUNTRUST
OR OTHER FINANCIAL INSTITUTIONS AT AN EARLIER TIME FOR YOUR TRANSACTION TO
BECOME EFFECTIVE THAT DAY. THIS ALLOWS THE FINANCIAL INSTITUTION TIME TO PROCESS
YOUR REQUEST AND TRANSMIT IT TO THE ADMINISTRATOR OR TRANSFER AGENT IN TIME TO
MEET THE ABOVE STATED FUND CUT-OFF TIMES. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE, SELL OR EXCHANGE FUND SHARES, INCLUDING SPECIFIC SUNTRUST OR OTHER
FINANCIAL INSTITUTIONS INTERNAL ORDER ENTRY CUT-OFF TIMES, PLEASE CONTACT YOUR
FINANCIAL INSTITUTION DIRECTLY.
HOW THE FUNDS CALCULATE NAV
In calculating NAV, each Fund generally values its investment portfolio at
market price. If market prices are unavailable or a Fund thinks that the market
price is unreliable, fair value prices may be determined in good faith using
methods approved by the Board of Trustees.
<PAGE>
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets in
the Fund.
MINIMUM PURCHASES
To purchase shares for the first time, you must invest in any Fund at least:
<TABLE>
<CAPTION>
CLASS DOLLAR AMOUNT
<S> <C>
Investor Shares $2,000
Flex Shares $5,000 ($2,000 for retirement plans)
</TABLE>
Your subsequent investments in any Fund must be made in amounts of at least
$1,000 or, if you pay by a statement coupon, $100. A Fund may accept
investments of smaller amounts for either class of shares at its discretion.
FUNDLINK
FUNDLINK is a telephone activated service that allows you to transfer money
quickly and easily between the STI Classic Funds and your SunTrust bank
account(s). To use FUNDLINK, you must first contact your SunTrust Bank
Investment Consultant and complete the FUNDLINK application and authorization
agreements. Once you have signed up to use FUNDLINK, simply call SunTrust at
1-800-428-6970 to complete all of your purchase and redemption transactions.
SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with a SunTrust affiliate bank, you
may purchase shares of either class automatically through regular deductions
from your account. With a $500 minimum initial investment, you may begin
regularly-scheduled investments from $50 to $100,000 once or twice a month. If
you are buying Flex Shares, you should plan on investing at least $5,000 per
Fund during the first two years. The Distributor may close your account if you
do not meet this minimum investment requirement at the end of two years.
SALES CHARGES
FRONT-END SALES CHARGES -- INVESTOR SHARES
The offering price of Investor Shares is the NAV next calculated after a Fund
receives your request, plus the front-end sales charge.
<PAGE>
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:
<TABLE>
<CAPTION>
YOUR SALES CHARGE AS YOUR SALES CHARGE AS A
IF YOUR INVESTMENT IS: A PERCENTAGE OF OFFERING PRICE PERCENTAGE OF YOUR NET INVESTMENT
- ----------------------------------- -------------------------------- -----------------------------------
<S> <C> <C>
LESS THAN $100,000 3.75% 3.90%
$100,000 BUT LESS THAN $250,000 3.25% 3.36%
$250,000 BUT LESS THAN $1,000,000 2.50% 2.56%
$1,000,000 AND OVER 1.50% 1.52%
</TABLE>
WAIVER OF FRONT-END SALES CHARGE -- INVESTOR SHARES
The front-end sales charge will be waived on Investor Shares purchased:
- through reinvestment of dividends and distributions;
- through a SunTrust Securities, Inc. asset allocation account;
- by persons repurchasing shares they redeemed within the last 60 days
(see Repurchase of Investor Shares);
- by employees, and members of their immediate family, of SunTrust and its
affiliates;
- by persons reinvesting distributions from qualified employee
benefit retirement plans and rollovers from individual retirement
accounts ("IRAs") previously with the Trust department of a bank
affiliated with SunTrust;
- by persons investing an amount less than or equal to the value of an
account distribution when an account for which a bank affiliated with
SunTrust acted in a fiduciary, administrative, custodial or investment
advisory capacity is closed; or
- through dealers, retirement plans, asset allocation programs and financial
institutions that, under their dealer agreements with the Distributor or
otherwise, do not receive any portion of the front-end sales charge.
REPURCHASE OF INVESTOR SHARES
You may repurchase any amount of Investor Shares of any Fund at NAV (without the
normal front-end sales charge), up to the limit of the value of any amount of
Investor Shares (other than those which were purchased with reinvested dividends
and distributions) that you redeemed within the past 60 days. In effect, this
allows you to reacquire shares that you may have had to redeem, without
re-paying the front-end sales charge. To exercise this privilege, the Funds must
receive your purchase order within 60 days of your redemption. IN ADDITION, YOU
MUST NOTIFY THE FUND WHEN YOU SEND IN YOUR PURCHASE ORDER THAT YOU ARE
REPURCHASING SHARES.
REDUCED SALES CHARGES -- INVESTOR SHARES
RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate,
this right allows you to add the value of the Investor Shares you already own
to the amount that you are currently purchasing. The Funds will combine the
value of your current purchases with the current value of any Investor Shares
you purchased previously for (i) your account, (ii) your spouse's account,
(iii) a joint account with your spouse, or (iv) your minor children's trust
or custodial accounts. A fiduciary purchasing shares for the same fiduciary
account, trust or estate may also use this right of accumulation. The Funds
will only consider the value of Investor Shares purchased previously that
were sold subject to a sales charge. To be entitled to a reduced sales charge
based on shares already owned, you must ask the Funds for the reduction at
the time of purchase. You must provide the Funds with your account number(s)
and, if applicable, the account numbers for your spouse
<PAGE>
and/or children (and provide the children's ages). The Funds may
amend or terminate this right of accumulation at any time.
LETTER OF INTENT. You may purchase Investor Shares at the sales charge rate
applicable to the total amount of the purchases you intend to make over a
13-month period. In other words, a Letter of Intent allows you to purchase
Investor Shares of a Fund over a 13-month period and receive the same sales
charge as if you had purchased all the shares at the same time. The Funds
will only consider the value of Investor Shares sold subject to a sales
charge. As a result, shares of the Investor Shares purchased with dividends
or distributions will not be included in the calculation. To be entitled to a
reduced sales charge based on shares you intend to purchase over the 13-month
period, you must send the Funds a Letter of Intent. In calculating the total
amount of purchases you may include in your letter purchases made up to 90
days before the date of the Letter. The 13-month period begins on the date of
the first purchase, including those purchases made in the 90-day period
before the date of the Letter. Please note that the purchase price of these
prior purchases will not be adjusted.
You are not legally bound by the terms of your Letter of Intent to purchase
the amount of your shares stated in the Letter. The Letter does, however,
authorize the Fund to hold in escrow 3.75% of the total amount you intend to
purchase. If you do not complete the total intended purchase at the end of
the 13-month period, the Fund's transfer agent will redeem the necessary
portion of the escrowed shares to make up the difference between the reduced
rate sales charge (based on the amount you intended to purchase) and the
sales charge that would normally apply (based on the actual amount you
purchased).
COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the
appropriate sales charge rate, the Fund will combine same day purchases of
Investor Shares (that are subject to a sales charge) made by you, your spouse
and your minor children (under age 21). This combination also applies to
Investor Shares you purchase with a Letter of Intent.
CONTINGENT DEFERRED SALES CHARGES -- FLEX SHARES
You do not pay a sales charge when you purchase Flex Shares. The offering
price of Flex Shares is simply the next calculated NAV. But if you sell your
shares within the first year after your purchase, you will pay a contingent
deferred sales charge equal to 2.00% for either (1) the NAV of the shares at
the time of purchase, or (2) NAV of the shares next calculated after the Fund
receives your sale request, whichever is less. The sales charge does not
apply to shares you purchase through reinvestment of dividends or
distributions. So, you never pay a deferred sales charge on any increase in
your investment above the initial offering price. This sales charge does not
apply to exchanges of Flex Shares of one Fund for Flex Shares of another Fund.
The contingent deferred sales charge will be waived if you sell your Flex
Shares for the following reasons:
- make certain withdrawals from a retirement plan (not including IRAs);
- because of death or disability; or
- for certain payments under the Systematic Withdrawal Plan
(which is discussed later).
OFFERING PRICE OF FUND SHARES
<PAGE>
The offering price of Investor Shares is the NAV next calculated after the
transfer agent receives your request, plus the front-end sales load. The
offering price of Flex Shares is simply the next calculated NAV.
HOW TO SELL YOUR FUND SHARES
If you own your shares through a brokerage account with SunTrust Securities,
you may sell (sometimes called "redeem") your shares on any Business Day by
contacting SunTrust Securities directly by mail or telephone at
1-800-874-4770. The minimum amount for telephone redemptions is $1,000.
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.
If you would like to sell $25,000 or more of your shares, please notify the Fund
in writing and include a signature guarantee by a bank or other financial
institution (a notarized signature is not sufficient).
The sale price of each share will be the next NAV determined after the Fund
receives your request less, in the case of Flex Shares, any applicable deferred
sales charge.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a SunTrust affiliates bank, electronically transferred to
your account.
RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days after
the Funds receive your request. Your proceeds can be wired to your bank account
(subject to a $7.00 fee) or sent to you by check. IF YOU RECENTLY PURCHASED YOUR
SHARES BY CHECK OR THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL
YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS).
REDEMPTIONS IN KIND
The Funds generally pay sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Funds' remaining shareholders) the Funds might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were you would probably have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below the required minimum you may be required to
sell your shares. The account balance minimums are:
<PAGE>
<TABLE>
<CAPTION>
CLASS DOLLAR AMOUNT
<S> <C>
Investor Shares $2,000
Flex Shares $5,000
</TABLE>
But, the Funds will always give you at least 60 days written notice to give you
time to add to your account and avoid the sale of your shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the New York Stock Exchange
restricts trading, the SEC declares an emergency or for other reasons. More
information about this is in the SAI.
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day by contacting SunTrust
Securities or your financial institution by mail or telephone. Exchange
requests must be for an amount of at least $1,000.
You may exchange your shares up to four times during a calendar year. If you
exchange your shares more than four times during a year, you may be charged a
$10.00 fee for each additional exchange. You will be notified before any fee is
charged.
IF YOU RECENTLY PURCHASED SHARES BY CHECK, OR THROUGH ACH, YOU MAY NOT BE ABLE
TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15
dAYS). This exchange privilege may be changed or canceled at any time
upon 60 days notice.
EXCHANGES
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Funds receive your exchange request.
INVESTOR SHARES
You may exchange Investor Shares of any Fund for Investor Shares of any other
Fund. If you exchange shares that you purchased without a sales charge or with a
lower sales charge into a Fund with a sales charge or with a higher sales
charge, the exchange is subject to an incremental sales charge (e.g., the
difference between the lower and higher applicable sales charges). If you
exchange shares into a Fund with the same, lower or no sales charge there is no
incremental sales charge for the exchange.
FLEX SHARES
You may exchange Flex Shares of any Fund for Flex Shares of any other Fund.
TELEPHONE TRANSACTIONS
<PAGE>
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions the Fund reasonably believes to be genuine. If
you or your financial institution transact with the Fund over the telephone, you
will generally bear the risk of any loss.
<PAGE>
DISTRIBUTION OF FUND SHARES
Each Fund has adopted a distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of a
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Distribution fees, as a percentage of average daily net assets are as follows:
For Investor Shares
<TABLE>
<S> <C>
BALANCED FUND 0.28%
CAPITAL APPRECIATION FUND 0.68%
CORE EQUITY FUND 0.45%
E-COMMERCE OPPORTUNITY FUND 0.55%
GROWTH AND INCOME FUND 0.25%
INTERNATIONAL EQUITY FUND 0.33%
INTERNATIONAL EQUITY INDEX FUND 0.33%
MID-CAP EQUITY FUND 0.43%
VALUE INCOME STOCK FUND 0.33%
</TABLE>
For Flex Shares the maximum distribution fee is 1.00% of the average daily net
assets of each Fund.
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide incentives, in the
form of cash or other compensation, including merchandise, airline vouchers,
trips and vacation packages, to dealers selling shares of a Fund.
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its income as follows:
<TABLE>
<CAPTION>
QUARTERLY ANNUALLY
- --------- --------
<S> <C>
BALANCED FUND INTERNATIONAL EQUITY FUND
CAPITAL APPRECIATION FUND INTERNATIONAL EQUITY INDEX FUND
CORE EQUITY FUND
E-COMMERCE OPPORTUNITY FUND
GROWTH AND INCOME FUND
MID-CAP EQUITY FUND
SMALL CAP EQUITY FUND
SMALL CAP GROWTH STOCK FUND
TAX SENSITIVE GROWTH STOCK FUND
VALUE INCOME STOCK FUND
</TABLE>
Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive the
distribution.
<PAGE>
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.
TAXES
PLEASE CONSULT YOUR TAX aDVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below the Funds have summarized some important tax
issues that affect the Funds and their shareholders. This summary is based on
current tax laws, which may change.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE OR EXCHANGE IS A TAXABLE EVENT.
The International Equity Fund and International Equity Index Fund may be able
to pass along a tax credit for foreign income taxes they pay. Each Fund will
notify you if it gives you the credit.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Investor Shares and
Flex Shares of each Fund. This information is intended to help you understand
each Fund's financial performance for the past five years, or, if shorter, the
period of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the table represent
the rate that you would have earned (or lost) on an investment in a Fund,
assuming you reinvested all of your dividends and distributions. This
information for each Fund except the Growth and Income Fund for the periods
ended prior to May 31, 1999 have been audited by Arthur Andersen LLP,
independent public accountants. The financial highlights for the Growth and
Income Fund for the periods ended prior to May 31, 1999 have been audited by
Deloitte & Touche LLP, independent public accountants. The reports of Arthur
Andersen LLP, along with each Fund's financial statements, appears in the annual
report that accompanies the SAI. You can obtain the annual report, which
contains more performance information, at no charge by calling 1-800-874-4770.
<PAGE>
FOR THE PERIODS ENDED MAY 31,
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOS RETURN(+)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCED FUND
INVESTOR SHARES
1999 $13.14 $ 0.24 $ 1.10 $(0.24) $(0.92) $13.32 10.70%
1998 11.99 0.28 2.19 (0.29) (1.03) 13.14 21.72
1997 11.60 0.29 1.48 (0.29) (1.09) 11.99 16.27
1996 10.30 0.30 1.41 (0.30) (0.11) 11.60 16.88
1995 9.79 0.28 0.51 (0.28) -- 10.30 8.29
FLEX SHARES
1999 $13.02 $ 0.16 $ 1.07 $(0.16) $(0.92) $13.17 9.84%
1998 11.90 0.20 2.16 (0.21) (1.03) 13.02 20.85
1997 11.53 0.22 1.45 (0.21) (1.09) 11.90 15.40
1996(1) 10.36 0.24 1.29 (0.25) (0.11) 11.53 15.58
CAPITAL APPRECIATION FUND
INVESTOR SHARES
1999 $16.43 $(0.05) $ 2.70 $ -- $(2.55) $16.53 17.20%
1998 15.06 (0.01) 3.95 -- (2.57) 16.43 28.71
1997 14.89 0.03 3.10 (0.02) (2.94) 15.06 23.74
1996 12.17 0.03 3.32 (0.04) (0.59) 14.89 28.18
1995 11.98 0.09 0.57 (0.07) (0.40) 12.17 5.93
FLEX SHARES
1999 $16.22 $(0.09) $ 2.60 $ -- $(2.55) $16.18 16.50%
1998 14.96 (0.04) 3.87 -- (2.57) 16.22 28.12
1997 14.84 (0.01) 3.07 -- (2.94) 14.96 23.24
1996(2) 12.20 0.02 3.26 (0.05) (0.59) 14.84 27.48
INVESTOR SHARES
1999(3) $15.21 $ 0.04 $ 1.99 $(0.05) $(1.00) $16.21 $14.31
FOR THE YEARS ENDED NOVEMBER 30:
1998 16.64 0.10 1.66 (0.10) (3.09) 15.21 13.69%
1997 13.47 0.13 3.25 (0.14) (0.07) 16.64 25.42
1996 11.66 0.17 2.39 (0.16) (0.59) 13.47 22.63
1995 10.78 0.25 2.62 (0.26) (1.73) 11.66 28.71
1994 11.42 0.18 (0.22) (0.18) (0.42) 10.78 (0.45)
FLEX SHARES
1999(3) $15.14 $(0.01) $ 1.97 $ -- $(1.00) $16.10 13.85%
FOR THE YEARS ENDED NOVEMBER 30:
1998 16.59 (0.01) 1.64 -- (3.08) 15.14 12.78%
1997 13.44 0.04 3.23 (0.05) (0.07) 16.59 24.63
1996 11.64 0.09 2.38 (0.08) (0.59) 13.44 21.81
1995(4) 11.11 0.12 1.62 (0.14) (1.07) 11.64 15.78
INTERNATIONAL EQUITY FUND
INVESTOR SHARES
1999 $14.92 $(0.09) $(1.10) $ -- $(0.84) $12.89 (7.82%)
1998 13.58 0.02 2.64 -- (1.32) 14.92 21.39
1997 11.38 (0.01) 2.56 -- (0.35) 13.58 22.85
1996(3) 10.44 0.04 0.90 -- -- 11.38 9.00
FLEX SHARES
1999 $14.68 $(0.29) $(0.97) $ -- $(0.84) $12.58 (8.48%)
1998 13.47 0.07 2.46 -- (1.32) 14.68 20.54
1997 11.37 (0.04) 2.49 -- (0.35) 13.47 21.98
1996(3) 10.44 0.02 0.91 -- -- 11.37 8.91
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF RATIO OF EXPENSES TO INCOME (LOSS) TO
NET ASSETS EXPENSES TO NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
END OF AVERAGE NET INCOME (LOSS) TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
PERIOD (000) ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCED FUND
INVESTOR SHARES
1999 $ 14,962 1.27% 1.89% 1.43% 1.73% 179%
1998 8,313 1.26 2.21 1.59 1.88 154
1997 6,012 1.25 2.58 1.64 2.19 197
1996 4,896 1.25 2.70 1.89 2.06 155
1995 3,765 1.25 3.17 1.80 2.62 157
FLEX SHARES
1999 $ 73,526 2.03% 1.13% 2.15% 1.01% 179%
1998 27,625 2.02 1.41 2.23 1.20 154
1997 6,067 2.01 1.84 2.45 1.40 197
1996(1) 3,131 2.00 1.85 2.97 0.88 155
CAPITAL APPRECIATION
INVESTOR SHARES
1999 $311,120 1.82% (0.30%) 1.96% (0.44%) 147%
1998 271,044 1.81 (0.03) 2.01 (0.23) 194
1997 218,660 1.80 0.19 2.02 (0.03) 141
1996 191,078 1.80 0.24 2.08 (0.04) 156
1995 160,875 1.80 0.73 2.10 0.43 128
FLEX SHARES
1999 $162,100 2.29% (0.86%) 2.38% (0.95%) 147%
1998 106,670 2.26 (0.46) 2.37 (0.57) 194
1997 36,753 2.27 (0.29) 2.43 (0.45) 141
1996(2) 10,969 2.27 (0.29) 2.68 (0.70) 156
INVESTOR SHARES
1999(3) $36,958 $1.08% $0.54% 1.17% 0.45% 31%
FOR THE YEARS ENDED NOVEMBER 30:
1998 34,434 1.03% 0.63% 1.18 0.48 71%
1997 28,112 1.03 0.89 1.18 0.74 100
1996 17,997 1.03 1.35 1.18 1.20 82
1995 12,633 1.03 2.14 1.18 1.99 175
1994 8,115 1.02 1.81 1.04 1.79 116
FLEX SHARES
1999(3) $35,163 1.83% (0.21%) 1.97% (0.35%) 31%
FOR THE YEARS ENDED NOVEMBER 30:
1998 25,656 1.78 (0.13%) 2.05 (0.38%) 71
1997 18,269 1.73 0.15 2.09 (0.20) 100
1996 5,131 1.68 0.71 2.03 0.36 82
1995(4) 2,086 1.68 1.13 2.03 0.78 175
INTERNATIONAL EQUITY FUND
INVESTOR SHARES
1999 $ 14,145 1.83% 0.30% 1.93% 0.20% 161%
1998 17,383 1.82 0.24 1.91 0.15 108
1997 10,674 1.81 0.18 2.05 (0.06) 139
1996(3) 3,448 1.81 1.73 3.14 0.40 113
FLEX SHARES
1999 $ 17,103 2.53% (0.40%) 2.82% (0.69%) 161%
1998 21,164 2.52 (0.46) 2.58 (0.52) 108
1997 8,375 2.51 (0.27) 3.03 (0.79) 139
1996(3) 953 2.51 1.08 5.86 (2.27) 113
</TABLE>
<PAGE>
+ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
TOTAL RETURN FIGURES DO NOT INCLUDE APPLICABLE SALES LOADS.
(1) COMMENCED OPERATIONS ON JUNE 14, 1995. ALL RATIOS FOR THE PERIOD HAVE
BEEN ANNUALIZED.
(2) COMMENCED OPERATIONS ON JUNE 1, 1995. ALL RATIOS FOR THE PERIOD HAVE BEEN
ANNUALIZED.
(3) COMMENCED OPERATIONS ON JANUARY 2, 1996. ALL RATIOS FOR THE
PERIOD HAVE BEEN ANNUALIZED.
<PAGE>
FOR THE PERIODS ENDED MAY 31,
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOS RETURN(+)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY INDEX FUND
INVESTOR SHARES
1999 $13.20 $(0.11) $ 0.98 $(0.18) $(2.19) $11.70 7.33%
1998 11.26 0.16 2.53 (0.07) (0.68) 13.20 25.25
1997 10.88 0.03 0.72 (0.07) (0.30) 11.26 7.12
1996 10.20 0.05 0.85 (0.13) (0.09) 10.88 8.90
1995(3) 10.00 0.05 0.17 (0.01) (0.01) 10.20 2.18
FLEX SHARES
1999 $13.17 $(0.15) $ 0.94 $(0.04) $(2.19) $11.73 6.68%
1998 11.24 0.17 2.44 -- (0.68) 13.17 24.50
1997 10.87 (0.05) 0.72 -- (0.30) 11.24 6.41
1996(4) 10.24 -- 0.82 (0.10) (0.09) 10.87 8.32
MID-CAP EQUITY FUND
INVESTOR SHARES
1999 $13.67 $(0.06) $ 0.08 $ -- $ (1.19) $12.50 1.17%
1998 13.17 (0.03) 2.49 -- (1.96) 13.67 20.56
1997 12.74 (0.03) 1.69 (0.01) (1.22) 13.17 13.76
1996 10.99 0.03 2.62 (0.03) (0.87) 12.74 24.93
1995 9.84 0.03 1.15 (0.03) -- 10.99 11.96
FLEX SHARES
1999 $13.42 $(0.14) $ 0.08 $ -- $ (1.19) $12.17 0.56%
1998 13.04 (0.04) 2.38 -- (1.96) 13.42 19.80
1997 12.69 (0.07) 1.64 -- (1.22) 13.04 13.06
1996(5) 11.13 -- 2.45 (0.02) (0.87) 12.69 23.00
SMALL CAP EQUITY FUND
FLEX SHARES
1999 $12.80 $ 0.01 $ (2.53) $(0.02) $(0.61) $ 9.65 (19.52%)
1998(6) 11.28 0.03 2.17 (0.06) (0.62) 12.80 22.29
SMALL CAP GROWTH STOCK FUND
FLEX SHARES
1999(7) $10.00 $(0.19) $ 4.67 $ -- $(0.02) $14.46 44.78%
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF RATIO OF EXPENSES TO INCOME (LOSS) TO
NET ASSETS EXPENSES TO NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
END OF AVERAGE NET INCOME (LOSS) TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
PERIOD (000) ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY INDEX FUND
INVESTOR SHARES
1999 $ 4,909 1.47% 0.25% 1.71% 0.01% 32%
1998 7,141 1.46 0.50 1.84 0.12 1
1997 5,592 1.45 0.28 1.88 (0.15) 2
1996 5,597 1.45 0.48 2.06 (0.13) 30
1995(3) 3,960 1.45 0.67 2.44 (0.32) 10
FLEX SHARES
1999 $ 1,465 2.12% (0.30%) 2.92% (1.10%) 32%
1998 1,469 2.11 (0.03) 3.52 (1.44) 1
1997 900 2.10 (0.39) 3.69 (1.98) 2
1996(4) 917 2.10 (0.24) 4.14 (2.28) 30
MID-CAP EQUITY FUND
INVESTOR SHARES
1999 $19,230 1.62% (0.90%) 1.76% (1.04%) 76%
1998 24,930 1.61 (0.75) 1.84 (0.98) 129
1997 20,245 1.60 (0.21) 1.85 (0.46) 152
1996 17,971 1.60 0.25 1.96 (0.11) 116
1995 7,345 1.60 0.43 2.27 (0.24) 66
FLEX SHARES
1999 $15,804 2.22% (1.52%) 2.48% (1.78%) 76%
1998 19,042 2.21 (1.37) 2.47 (1.63) 129
1997 10,120 2.20 (0.85) 2.58 (1.23) 152
1996(5) 5,029 2.20 (0.37) 3.04 (1.21) 116
SMALL CAP EQUITY FUND
FLEX SHARES
1999 $19,465 2.27% 0.21% 2.55% (0.07%) 63%
1998(6) 40,613 2.06 0.01 2.35 (0.28) 55
SMALL CAP GROWTH STOCK FUND
FLEX SHARES
1999(7) $ 6,158 2.25% (1.50%) 3.19% (2.44%) 75%
</TABLE>
+ Returns are for the period indicated and have not been annualized.
Total return figures do not include applicable sales loads.
(3) Commenced operations on January 2, 1996.
All ratios for the period have been annualized.
(4) Commenced operations on June 8, 1994. All ratios for the period have been
annualized.
(5) Commenced operations on June 5, 1995. All ratios for the period have
been annualized.
(6) Commenced operations on June 5, 1997. All ratios for the period have
been annualized.
(7) Commenced operations on October 8, 1998. All ratios for the period have been
annualized.
(8) Commenced operations on June 5, 1995. All ratios for the period
have been annualized.
(A) On May 24, 1999, the CrestFunds Value Fund exchanged all of its assets and
certain liabilities for shares of the Growth and Income Fund. The
CrestFunds Value Fund is the accounting survivor in this transaction, and as
a result, its basis of accounting for assets and liabilities and its
operating results for the periods prior to May 24, 1999 have been carried
forward in these financial highlights.
<PAGE>
FOR THE PERIODS ENDED MAY 31,
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOS RETURN+
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TAX SENSITIVE GROWTH STOCK FUND
FLEX SHARES
1999(9) $25.52 $(0.04) $ 4.37 $ -- $ -- $29.85 16.97%
VALUE INCOME STOCK FUND
INVESTOR SHARES
1999 $13.87 $ 0.19 $ 1.02 $(0.20) $(2.07) $12.81 10.71%
1998 13.68 0.20 2.62 (0.21) (2.42) 13.87 22.71
1997 13.13 0.25 2.32 (0.26) (1.76) 13.68 21.69
1996 11.58 0.30 2.71 (0.30) (1.16) 13.13 27.39
1995 10.52 0.28 1.56 (0.27) (0.51) 11.58 18.71
FLEX SHARES
1999 $13.75 $ 0.10 $ 1.01 $(0.11) $(2.07) $12.68 9.91%
1998 13.61 0.12 2.57 (0.13) (2.42) 13.75 21.76
1997 13.08 0.18 2.29 (0.18) (1.76) 13.61 20.91
1996(10) 11.59 0.26 2.65 (0.26) (1.16) 13.08 26.52
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF RATIO OF EXPENSES TO INCOME (LOSS) TO
NET ASSETS EXPENSES TO NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
END OF AVERAGE NET INCOME (LOSS) TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
PERIOD (000) ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TAX SENSITIVE GROWTH STOCK FUND
FLEX SHARES
1999(9) $ 75,875 2.25% (0.80%) 2.48% (1.03%) 18%
VALUE INCOME STOCK
INVESTOR SHARES
1999 $ 194,312 1.28% 1.55% 1.28% 1.55% 69%
1998 210,591 1.27 1.47 1.27 1.47 99
1997 165,999 1.30 2.01 1.31 2.00 105
1996 130,597 1.30 2.47 1.37 2.40 134
1995 92,256 1.30 2.80 1.41 2.69 126
FLEX SHARES
1999 $ 167,000 2.02% 0.81% 2.03% 0.80% 69%
1998 180,530 2.01 0.78 2.01 0.78 99
1997 73,466 2.00 1.33 2.03 1.30 105
1996(10) 26,298 2.00 1.72 2.15 1.57 134
</TABLE>
+ Returns are for the period indicated and have not been annualized.
Total return figures do not include applicable sales loads.
(9) Commenced operations on December 15, 1998. All ratios for the period
have been annualized.
(10) Commenced operations on June 1, 1995. All ratios for the period have
been annualized.
<PAGE>
STI CLASSIC FUNDS
INVESTMENT ADVISERS
STI Capital Management, N.A.
P.O. Box 3808
Orlando, FL 32802
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, GA 30303
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated October 1, 1999, includes detailed information about the STI
Classic Funds. The SAI is on file with the SEC and is incorporated by reference
into this prospectus. This means that the SAI, for legal purposes, is a part of
this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends. The reports
also contain detailed financial information about the Funds.
TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-874-4770
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, PA 19456
<PAGE>
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about the STI Classic Funds, from the SEC's website
("http://www.sec.gov"). You may review and copy documents at the SEC Public
Reference Room in Washington, DC (for information call 1-800-SEC-0330). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-6009. The STI Classic Funds' Investment Company Act
registration number is 811-06557.
<PAGE>
STI CLASSIC FUNDS
INVESTMENT ADVISORS:
STI CAPITAL MANAGEMENT, N.A.
TRUSCO CAPITAL MANAGEMENT, INC.
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
STI Classic Funds (the "Trust") and should be read in conjunction with the
Trust's prospectuses dated October 1, 1999. Prospectuses may be obtained through
the Distributor, SEI Investments Distribution Co., One Freedom Valley Drive,
Oaks, Pennsylvania 19456.
TABLE OF CONTENTS
PAGE
THE TRUST....................................................................B-2
ADDITIONAL INFORMATION ABOUT CERTAIN FUNDS...................................B-3
DESCRIPTION OF PERMITTED INVESTMENTS........................................B-20
INVESTMENT LIMITATIONS......................................................B-38
INVESTMENT ADVISERS.........................................................B-41
THE ADMINISTRATOR...........................................................B-45
THE DISTRIBUTOR.............................................................B-47
THE TRANSFER AGENT..........................................................B-54
THE CUSTODIAN...............................................................B-54
INDEPENDENT PUBLIC ACCOUNTANTS..............................................B-54
LEGAL COUNSEL...............................................................B-54
TRUSTEES AND OFFICERS OF THE TRUST..........................................B-54
PERFORMANCE INFORMATION.....................................................B-57
COMPUTATION OF YIELD........................................................B-57
CALCULATION OF TOTAL RETURN.................................................B-63
PURCHASING SHARES...........................................................B-68
REDEEMING SHARES............................................................B-69
DETERMINATION OF NET ASSET VALUE............................................B-70
TAXES.......................................................................B-70
FUND TRANSACTIONS...........................................................B-73
TRADING PRACTICES AND BROKERAGE.............................................B-73
DESCRIPTION OF SHARES.......................................................B-73
SHAREHOLDER LIABILITY.......................................................B-80
LIMITATION OF TRUSTEES' LIABILITY...........................................B-80
YEAR 2000...................................................................B-80
5% AND 25% SHAREHOLDERS.....................................................B-81
EXPERTS.....................................................................B-95
APPENDIX A: FINANCIAL STATEMENTS.............................................F-1
October 1, 1999
<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. Shareholders
at present may purchase shares of the Funds through one, two or 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 Share of each Fund
represents an equal proportionate interest in that portfolio. See "Description
of Shares." This Statement of Additional Information relates to each class of
the following funds:
<TABLE>
<CAPTION>
TRUST SHARES INVESTOR SHARES FLEX SHARES
EQUITY FUNDS
- ------------
<S> <C> <C> <C>
Capital Appreciation Fund X X X
Core Equity Fund X X X
E-Commerce Opportunity Fund X X X
Emerging Markets Equity Fund X
Growth and Income Fund X X X
International Equity Fund X X X
International Equity Index Fund X X X
Mid-Cap Equity Fund X X X
Small Cap Equity Fund X X
Small Cap Growth Stock Fund X X X
Sunbelt Equity Fund X X X
Tax Sensitive Growth Stock Fund X X
Value Income Stock Fund X X X
<CAPTION>
BALANCED FUND
- -------------
Balanced Fund X X X
<CAPTION>
BOND FUNDS
- ----------
Investment Grade Tax-Exempt Bond Fund X X X
Limited-Term Federal Mortgage Securities Fund X X X
Short-Term U.S. Treasury Securities Fund X X X
Short-Term Bond Fund X X X
U.S. Government Securities Fund X X X
<CAPTION>
TAX-EXEMPT BOND FUNDS
- ---------------------
Florida Tax-Exempt Bond Fund X X X
Georgia Tax-Exempt Bond Fund X X X
Investment Grade Tax-Exempt Bond Fund X X X
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
TRUST SHARES INVESTOR SHARES FLEX SHARES
<S> <C> <C> <C>
Maryland Municipal Bond Fund X X
Virginia Intermediate Municipal Bond Fund X X
Virginia Municipal Bond Fund X X
<CAPTION>
MONEY MARKET FUNDS
- ------------------
Prime Quality Money Market Fund X X X
Tax-Exempt Money Market Fund X X
Tax-Free Money Market Fund X X
U.S. Government Securities Money Market Fund X X
U.S. Treasury Money Market Fund X
<CAPTION>
LIFE VISION PORTFOLIOS
- ----------------------
Balanced Portfolio X
Growth and Income Portfolio X
Maximum Growth Portfolio X
</TABLE>
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.
ADDITIONAL INFORMATION ABOUT CERTAIN FUNDS
EQUITY FUNDS
- ------------
CAPITAL APPRECIATION FUND
The Capital Appreciation Fund invests primarily in a diversified portfolio of
common stocks, warrants, and securities convertible into common stocks which, in
the Fund's Adviser's opinion, are undervalued in the marketplace at the time of
purchase. In selecting securities for the Fund, its Adviser will evaluate
factors believed to affect capital appreciation such as the issuer's background,
industry position, historical returns on equity and experience and
qualifications of the management team. Dividend and interest income should be
considered incidental to the growth of capital. The Fund's Adviser will rotate
the Capital Appreciation Fund's holdings between various market sectors based on
economic analysis of the overall business cycle. Under normal conditions, at
least 65% of the total assets of the Capital Appreciation Fund will be invested
in common stocks.
All of the common stocks in which the Fund invests are traded on registered
exchanges or on the over-the-counter market in the United States. Assets of the
Capital Appreciation Fund not invested in the securities described above may be
invested in U.S. dollar denominated equity securities of foreign issuers
(including sponsored American Depositary Receipts ("ADRs") that are traded on
exchanges or listed on National
B-3
<PAGE>
Association of Securities Dealers Automated Quotations ("NASDAQ"); securities
issued by money market mutual funds; pay-in-kind securities; and bonds. The
bonds that the Capital Appreciation Fund may purchase may be rated in any rating
category or may be unrated, provided that no more than 10% of the Fund's total
assets will be invested in bonds rated below BBB by Standard & Poor's
Corporation ("S&P"), rated below Baa by Moody's Investors Services, Inc.
("Moody's"), or of comparable quality not rated by S&P or Moody's. In addition,
the Fund may invest up to 10% of its assets in restricted securities.
GROWTH AND INCOME FUND
The Growth and Income Fund seeks to provide long-term capital appreciation and,
as a secondary objective, current income, by investing primarily in income
producing equity securities of companies with large market capitalizations.
The Fund's investments will be broadly diversified among major economic sectors
and among those securities with above-average total return potential. A number
of valuation criteria are considered in the equity selection process, the
principal one being the issue's price to earnings ("P/E") ratio in relation to
other stocks in the same industry. Stocks with the lowest P/E ratios, along with
strong financial quality and above-average earnings momentum, are selected to
secure the best relative values in each economic sector. The Adviser believes
that this approach will produce a portfolio with less volatility and greater
dividend yield than the market as a whole. The Fund will invest primarily in the
income producing equity securities of companies with market capitalizations of
at least $1 billion.
The Fund will invest primarily in domestic and foreign common stock and in
securities convertible into common stock, such as convertible bonds and
convertible preferred stock rated investment-grade. The Adviser will select
stocks for this Fund from a list of companies traded in the U.S. securities
markets, including sponsored ADRs of qualifying foreign companies. A qualitative
screening process is employed to exclude companies with poor earnings results or
highly leveraged balance sheets in an effort to construct a portfolio with low
risk characteristics relative to the major stock market indices, although it is
not the intention of the Fund to match the risk or performance characteristics
of any index. As a non-fundamental investment policy, the Fund may to the extent
consistent with its investment objective, invest in any debt security in which
the Fund may invest. As a non-fundamental investment policy, the Growth and
Income Fund may also invest up to 10% of its assets in the U.S. Treasury
obligations.
Although the Growth and Income Fund intends under normal circumstances to be
fully invested at all times in the securities mentioned above, the Fund may make
substantial temporary investments in high-quality, short-term debt securities
and money market instruments, including repurchase agreements, and in shares of
other open-end management investment companies which invest primarily in money
market instruments, when the Adviser believes market conditions warrant a
defensive position. Should the Fund elect to purchase shares of money market
funds, it will incur additional expenses charged by that money market fund, such
as management fees.
INTERNATIONAL EQUITY FUND
The International Equity Fund, under normal market conditions, will invest at
least 65% of its assets in equity securities of foreign issuers consisting of:
common and preferred stocks, warrants, options and securities convertible into
common stock.
B-4
<PAGE>
Securities of foreign issuers purchased by the Fund may be purchased in foreign
markets, on United States registered exchanges, the over-the-counter market or
in the form of sponsored or unsponsored ADRs traded on registered exchanges or
NASDAQ, or sponsored or unsponsored European Depositary Receipts ("EDRs").
The Fund may enter into forward foreign currency contracts as a hedge against
possible variations in foreign exchange rates. A forward foreign currency
contract is a commitment to purchase or sell a specified currency, at a
specified future date, at a specified price. The Fund may enter into forward
foreign currency contracts to hedge a specific security transaction or to hedge
a portfolio position. The Fund also may purchase and write put and call options
on foreign currencies (traded on U.S. and foreign exchanges or over-the-counter
markets) to manage the portfolios exposure to changes in dollar exchange rates.
The Fund expects to be fully invested in the investments described above, but
may invest up to 35% of its total assets in bonds and debentures issued by
non-U.S. or U.S. companies, securities issued or guaranteed by foreign or U.S.
governments and foreign and U.S. commercial paper. The Fund may invest in
futures contracts, including stock index futures contracts, and options on
futures contracts. The bonds that the Fund may purchase may be rated in any
rating category or may be unrated provided that no more than 10% of the Fund's
total assets will be invested in bonds rated below BBB by S&P, rated below Baa
by Moody's, or of comparable quality not rated by S&P or Moody's. When investing
in bonds, the Fund may seek capital gains by taking advantage of price
appreciation caused by interest rate and credit quality changes. The Fund may
also purchase shares of closed-end investment companies that invest in the
securities of issuers in a single country or region. The Fund is also permitted
to acquire floating and variable rate securities, purchase securities on a
when-issued basis and purchase illiquid securities.
The Fund will invest in the foreign issues of at least three different countries
outside the United States. A foreign issue is one the issuer of which (1) is
organized under the laws of a specific country, or for which the principal
securities trading market is in a specific country or (2) derives a significant
proportion (at least 50 percent) of its revenues or profits from goods produced
or sold, investments made, or services performed in a specific country or which
have at least 50 percent of its assets situated in that country. The Fund will
invest primarily in developed countries (for example Japan, Canada and the
United Kingdom). In addition, the Fund may invest in securities of issuers whose
principal activities are in countries with emerging markets. The Fund defines an
emerging market country as any country the economy and market of which the World
Bank or the United Nations considers to be emerging or developing.
INTERNATIONAL EQUITY INDEX FUND
The International Equity Index Fund will invest substantially all and, under
normal market conditions, at least 65% of its assets in common and preferred
stocks; warrants; options; and securities convertible into common stock of
companies headquartered or based in the approximately twenty foreign countries
included in the MSCI EAFE-GDP Weighted Index. The Fund will invest only in the
over 900 companies included in the MSCI EAFE-GDP Weighted Index. Because it is
impractical to invest in every company included in the Index, the Fund will
select a representative sample of securities in each country using a
statistically-based optimization process.
The Fund will be constructed to have aggregate investment characteristics
similar to those of the MSCI EAFE-GDP Weighted Index. The Fund will invest in a
statistically selected sample of the securities included in the MSCI EAFE-GDP
Weighted Index, although not all countries or all companies within a country
will be represented in the Fund's portfolio of securities at any time. The Fund
expects to invest in approximately 300 stocks so that the results fall within a
targeted tracking error range. From time to time, adjustments may be made
B-5
<PAGE>
in the Fund's portfolio because of changes in the composition of the MSCI
EAFE-GDP Weighted Index. No attempt will be made to manage the portfolio using
traditional economic, financial and market analyses.
The Fund expects that there will be a close correlation between the Fund's
performance and that of the MSCI EAFE-GDP Weighted Index. A correlation of 1.00
would be achieved when the net asset value of the Fund, including the value of
its dividend and capital gains distributions, increases or decreases in exact
proportion to changes in the MSCI EAFE-GDP Weighted Index. The correlation
between the Fund and the MSCI EAFE-GDP Weighted Index is expected to be over
0.95 on an annual basis. The Fund's ability to track the MSCI EAFE-GDP Weighted
Index, however, may be affected by, among other things, transaction costs,
changes in either the composition of the MSCI EAFE-GDP Weighted Index or number
of shares outstanding for the component companies of the MSCI EAFE-GDP Weighted
Index, and the timing and amount of purchases and redemptions.
Securities of foreign issuers purchased by the Fund may be purchased in foreign
markets, on United States registered exchanges, the over-the-counter market or
in the form of sponsored or unsponsored ADRs traded on registered exchanges or
NASDAQ, or sponsored or unsponsored EDRs.
The Fund may enter into forward foreign currency contracts as a hedge against
possible variations in foreign exchange rates. A forward foreign currency
contract is a commitment to purchase or sell a specified currency, at a
specified future date, at a specified price. The Fund may enter into forward
foreign currency contracts to hedge a specific security transaction or to hedge
a portfolio position. These contracts may be bought or sold to protect the Fund,
to some degree, against a possible loss resulting from an adverse change in the
relationship between foreign currencies and the U.S. dollar.
The Fund expects to be fully invested in the investments described above, but
may invest up to 35% of its total assets in U.S. and non-U.S. denominated money
market instruments; repurchase agreements; futures contracts, including stock
index futures contracts; and options on futures contracts. Obligations relating
to futures contracts will be limited to 20% of the Fund's total assets. The Fund
is also permitted to acquire floating and variable rate securities; purchase
securities on a when-issued basis; and purchase illiquid securities.
MID-CAP EQUITY FUND
The Mid-Cap Equity Fund invests primarily in a diversified portfolio of common
stocks, preferred stocks, and securities convertible into common stocks of small
to mid-size companies, (i.e., $500 million to $10 billion, respectively, as
measured by their market capitalization), with above-average growth of earnings.
Under normal conditions, at least 80% of the total assets of the Fund will be
invested in equity securities, and as a matter of non-fundamental policy, the
Fund will invest at least 65% of its assets in mid-size companies. Current
income will not be an important criterion of investment selection and any such
income should be considered incidental. In selecting securities for the Fund,
the Fund's Adviser will evaluate factors such as the issuer's background,
industry position, historical returns on equity, and experience and
qualifications of the management team.
Most of the common stocks in which the Fund invests are traded on registered
exchanges or on the over-the-counter market in the United States. Assets of the
Fund not invested in the securities described above may be invested in U.S.
dollar denominated equity securities of foreign issuers (including sponsored
ADRs that are traded on exchanges or listed on NASDAQ); securities issued by
mutual funds; repurchase agreements; and bonds. The bonds that the Fund may
purchase, including nay variable or floating rate instruments, must be rated B
or better by S&P or Moody's, provided that this requirement shall not apply to
the Fund's purchase of bonds issued by the government of Canada or by various
supranational entities, and provided further that no more than
B-6
<PAGE>
10% of the Fund's total assets will be invested in bonds rated below BBB by S&P,
rated below Baa by Moody's, or of comparable quality not rated by S&P or
Moody's. The Fund may invest up to 10% of its assets in restricted securities.
SMALL CAP EQUITY FUND
The Small Cap Equity Fund invests substantially all, and under normal market
conditions at least 65%, of its assets in the equity securities of smaller
companies (i.e., companies with market capitalizations of less than $1 billion)
which, in the Adviser's opinion, are undervalued for above-average capital
growth. Any remaining assets may be invested in the equity securities of
companies with larger market capitalizations which the Adviser believes are also
undervalued. The Fund may also invest in U.S. dollar denominated equity
securities of foreign issuers (including ADRs). Equity securities include common
stock, preferred stock, warrants and rights to subscribe to common stock and, in
general, any security that is convertible into or exchangeable for common stock.
In order to meet liquidity needs, or for temporary defensive purposes, the Fund
may invest all or a portion of its assets in common stocks of larger, more
established companies, fixed income securities, repurchase agreements, cash or
money market securities. Fixed income securities will only be purchased if they
are rated investment grade or better by one or more NRSROs. Investment grade
bonds include securities rated at least BBB by S&P or Baa by Moody's. Money
market securities will only be purchased if they have been given one of the two
top ratings by two or more NRSROs, or if not rated, determined to be of
comparable quality by the Fund's Adviser. To the extent the Fund is engaged in
temporary defensive investing, the Fund may not be pursuing its investment
objective.
The Fund may engage in options transactions for hedging purposes only. The Fund
will not invest more than 20% of its total assets in unsponsored ADR facilities.
SUNBELT EQUITY FUND
The Sunbelt Equity Fund seeks to provide capital appreciation by investing
substantially all, and under normal market conditions at least 65%, of its
assets in common stocks; preferred stocks; warrants; and securities convertible
into common stock of U.S. companies headquartered and/or conducting a
substantial portion of their operations in (i.e., maintaining at least 50% of
their assets in or deriving at least 50% of their revenues and/or sales from)
the southern region of the United States. Current income will not be an
important criterion of investment selection and any such income should be
considered incidental. The Fund's Adviser will seek to identify and purchase
securities of companies that it believes to be undervalued and that possess a
strong balance sheet, a strong earnings record and adequate market liquidity.
Most of the common stocks in which the Fund invests are traded on registered
exchanges such as the New York or American Stock Exchange or on NASDAQ. The Fund
will invest no more than 10% of its assets in convertible securities rated below
BBB by S&P, rated below Baa by Moody's, or of comparable quality not rated by
S&P or Moody's. The Fund may invest up to 10% of its total assets in restricted
securities. The Fund may also purchase futures and options for hedging purposes.
Obligations relating to futures contracts will be limited to not more than 20%
of the Fund's total assets.
The Fund will invest primarily in stocks of U.S. companies headquartered and/or
operating in the following U.S. states: Texas, Arkansas, Alabama, Mississippi,
Tennessee, Kentucky, Florida, Virginia, Georgia, North
B-7
<PAGE>
Carolina, South Carolina and Louisiana. To the extent that the Fund's
investments are not as geographically dispersed across the U.S. as other funds
with comparable objectives, the impact of economic forces on and the relative
economic conditions of these states will be greater on Shareholders.
VALUE INCOME STOCK FUND
The Value Income Stock Fund seeks to provide current income by structuring its
investments in an attempt to maintain the Fund's yield at a level above the
average dividend yield of the securities comprising the S&P 500 Stock Index.
Achieving such a yield will be the Fund's primary consideration when purchasing
securities. A secondary consideration of the Fund will be capital appreciation.
The Fund will invest at least 80% of its total assets in equity securities.
Investments will consist primarily of common stocks, and, under normal market
conditions, at least 65% of the Fund's assets will be invested in common stocks
issued by corporations which have a history of paying regular dividends,
although there can be no assurance that such corporations will continue to pay
dividends. Other equity securities in which the Fund may invest are convertible
debt securities; preferred stocks and warrants which are convertible into or
exchangeable for common stocks; and U.S. dollar denominated equity securities of
foreign issuers (including sponsored ADRs that are traded on exchanges or listed
on NASDAQ). All of the common stocks in which the Fund invests are traded on
registered exchanges such as the New York or American Stock Exchange or on the
over-the-counter market in the United States (i.e., NASDAQ). The Fund may also
purchase debt securities (corporate debt obligations and U.S. Treasury
obligations) which may be rated in any rating category or may be unrated,
provided that no more than 10% of the Fund's total assets will be invested in
bonds rated below BBB by S&P, rated below Baa by Moody's, or of comparable
quality not rated by S&P or Moody's. The Fund may also invest in futures and
options.
The Fund will invest primarily in stocks of companies operating in all aspects
of the U.S. and world economies that have a market capitalization of at least
$500 million, and that the Fund's Adviser believes possess fundamentally
favorable long-term characteristics. However, stocks of companies with smaller
market capitalizations and stocks that are out of favor in the financial
community and in which little opportunity for price appreciation is recognized
by the financial community may also be purchased if the Fund's Adviser believes
they are undervalued.
BALANCED FUND
The Balanced Fund seeks to provide capital appreciation and current income
through investments in a diversified portfolio of common and preferred stocks,
warrants, securities convertible into common stocks, and investment grade fixed
income securities. Under normal conditions, no more than 70% of the total assets
of the Fund will be invested in common stocks and other equity securities, and
no more than 60% of the Fund's total assets will be invested in bonds and other
fixed income securities. The Fund will maintain at least 25% of its total assets
in senior fixed income securities.
In selecting equity securities for the Fund, the Fund's Adviser will evaluate
factors believed to affect capital appreciation such as the issuer's background,
industry position, historical returns on equity and experience and
qualifications of the management team. The Fund's Adviser will rotate the Fund's
holdings between various market sectors based on economic analysis of the
overall business cycle.
B-8
<PAGE>
All of the common stocks in which the Fund invests are traded on registered
exchanges or on NASDAQ. Assets of the Fund not invested in the securities
described above may be invested in U.S. dollar denominated equity securities of
foreign issuers (including sponsored ADRs that are traded on exchanges or listed
on NASDAQ), securities issued by investment companies, and bonds.
The Fund will invest in investment grade fixed income securities rated BBB or
better by S&P or Baa or better by Moody's or, if not rated by S&P or Moody's, of
comparable quality at the time of purchase as determined by the Fund's Adviser,
including corporate debt obligations; mortgage-backed securities, collateralized
mortgage obligations and asset-backed securities; obligations issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities; custodial receipts involving U.S. Treasury obligations;
securities of the government of Canada and its provincial and local governments;
securities issued or guaranteed by foreign governments, their political
subdivisions, agencies or instrumentalities; and obligations of supranational
entities. No more than 25% of the Fund's assets will be invested in securities
rated BBB by S&P or Baa by Moody's or, if not rated by S&P or Moody's, of
comparable quality at the time of purchase as determined by the Fund's Adviser.
The Fund may purchase mortgage-backed securities issued or guaranteed as to the
payment of principal and interest by the U.S. Government, its agencies or
instrumentalities or, subject to a limit of 25% of the Fund's assets,
mortgage-backed securities issued by private issuers. These mortgage-backed
securities may be backed or collateralized by fixed, adjustable or floating rate
mortgages. The Fund may also invest in asset backed securities which consist of
securities backed by company receivables, truck and auto loans, leases, credit
card receivables and home equity loans.
In order to reduce interest rate risk, the Fund may purchase floating or
variable rate securities. It may also buy securities on a when-issued basis,
putable securities, pay-in-kind securities and zero coupon securities. The Fund
may also invest in futures and options. Some floating or variable rate
securities will be subject to interest rate "caps" or "floors."
BOND FUNDS
- ----------
INVESTMENT GRADE BOND FUND
The Investment Grade Bond Fund will invest only in those obligations deemed
investment grade obligations rated BBB or better by S&P or Baa or better by
Moody's or, if not rated by S&P or Moody's, of comparable quality at the time of
purchase as determined by the Fund's Adviser, including corporate debt
obligations; mortgage-backed securities, collateralized mortgage obligations
("CMOs") and asset-backed securities; obligations issued or guaranteed as to
principal and interest by the U.S. Government, its agencies or
instrumentalities; custodial receipts involving U.S. Treasury obligations;
securities of the government of Canada and its provincial and local governments;
securities issued or guaranteed by foreign governments, their political
subdivisions, agencies or instrumentalities; obligations or supranational
entities and sponsored ADRs that are traded on exchanges or listed on NASDAQ.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in corporate and government bonds and debentures. No more than 25% of
the Fund's assets will be invested in securities rated BBB by S&P or Baa by
Moody's or, if not rated by S&P or Moody's, of comparable quality at the time of
purchase as determined by the Fund's Adviser.
The Fund may purchase mortgage-backed securities issued or guaranteed as to the
payment of principal and interest by the U.S. Government, its agencies or
instrumentalities or, subject to a limit of 35% of the Fund's
B-9
<PAGE>
assets, mortgage-backed securities issued by private issuers. These
mortgage-backed securities may be backed or collateralized by fixed, adjustable
or floating rate mortgages. The Fund may also invest in asset-backed securities
which consist of securities backed by company receivables, truck and auto loans,
leases, credit card receivables and home equity loans.
In order to reduce interest rate risk, and subject to a general limit of 25% of
the Fund's assets, the Fund may purchase floating or variable rate securities.
Some floating or variable rate securities will be subject to interest rate
"caps" or "floors." It may also buy securities on a when-issued basis, putable
securities, medium term notes, and zero coupon securities. The Fund may also
invest up to 10% of its assets in restricted securities. The Fund may also
engage in futures and options.
Under normal market conditions, it is anticipated that the Fund's average
weighted maturity will range from 4 to 10 years. In the case of mortgage related
securities and asset-backed securities, maturity will be determined based on the
expected average life of the security. The Fund may shorten its average weighted
maturity to as little as 90 days if deemed appropriate for temporary defensive
purposes. By so limiting the maturity of its investments, the Fund expects that
its net asset value will experience less price movement in response to changes
in interest rates than the net asset values of mutual funds investing in similar
credit quality securities with longer maturities.
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
Under normal market conditions, the Fund will invest at least 65% of its assets
in obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, including mortgage-backed securities issued or guaranteed by
U.S. Government agencies such as the Government National Mortgage Association
("GNMA"), the Federal National Mortgage Association ("FNMA") or the Federal Home
Loan Mortgage Corporation ("FHLMC"). Mortgage-backed securities consisting of
CMOs and real estate mortgage investment conduits ("REMICs") purchased by the
Fund will be issued or guaranteed as to payment of principal and interest by the
U.S. Government, its agencies or instrumentalities or, if issued by private
issuers, rated in one of the two highest rating categories by a NRSRO.
The principal governmental issuers or guarantors of mortgage-backed securities
are GNMA, FNMA and FHLMC. Obligations of GNMA are backed by the full faith and
credit of the U.S. Government while obligations of FNMA and FHLMC are supported
by the respective agency only. The Fund may purchase mortgage-backed securities
that are backed or collateralized by fixed, adjustable or floating rate
mortgages.
Mortgage-backed securities that are not issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, including securities nominally
issued by a governmental entity (such as the Resolution Trust Corporation), are
not obligations of a governmental entity and thus may bear a risk of nonpayment.
The timely payment of principal and interest normally is supported, at least
partially, by various forms of insurance or guarantees. There can be no
assurance, however, that such credit enhancement will support full payment of
the principal and interest on such obligations. The average maturity of the
Fund's investment portfolio will typically range from 7 to 14 years.
With respect to the remaining 35% of its assets, the Fund may invest in
corporate or government bonds that carry a rating of Baa or better by Moody's or
BBB or better by S&P, or that are deemed by the Fund's Adviser to be of
comparable quality; commercial paper rated at the time of purchase within the
two highest ratings categories of an NRSRO; bankers' acceptances; certificates
of deposit and time deposits; and U.S. Treasury obligations, which
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<PAGE>
include custodial receipts and repurchase agreements involving securities that
constitute permissible investments for the Fund. The Fund intends to invest in
privately issued, mortgage-backed securities only if they are rated in one of
the two highest rating categories by an NRSRO.
The Fund may purchase securities on a forward commitment or when-issued basis,
which means that delivery and payment for such securities generally takes place
after the customary securities settlement period. The Fund may purchase floating
or variable rate securities, and may engage in dollar rolls.
SHORT-TERM BOND FUND
Under normal circumstances, the Short-Term Bond Fund will invest solely in
investment grade obligations rated BBB or better by S&P or Baa or better by
Moody's or, if not rated by S&P or Moody's, of comparable quality at the time of
purchase as determined by the Fund's Adviser consisting of debt obligations of
U.S. and foreign corporations; mortgage-backed securities; CMOs; asset-backed
securities; obligations (including mortgage-backed securities) issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities; and custodial receipts involving U.S. Treasury obligations;
(including Separately Traded Registered interest and Principal Securities
("STRIPS") and Coupon Under Book Entry System ("CUBES")). Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
corporate and government bonds and debentures. No more than 25% of the Fund's
assets will be invested in securities rated BBB by S&P or Baa by Moody's or, if
not rated by S&P or Moody's, of comparable quality at the time of purchase by
the Fund's Adviser.
The Fund may purchase, without limitation, mortgage-backed securities issued or
guaranteed as to the payment of principal and interest by the U.S. Government,
its agencies or instrumentalities and, subject to a limit of 25% of the Fund's
assets, mortgage-backed securities issued by private issuers. These
mortgage-backed securities may be backed or collateralized by fixed, adjustable
or floating rate mortgages. The Fund may also invest in asset-backed securities,
which consist of securities backed by company receivables, truck and auto loans;
leases; credit card receivables; and home equity loans. The Fund will purchase
mortgage-backed and asset-backed securities only if they are rated at least AA
by S&P or Aa by Moody's or, if unrated, determined to be of comparable quality
at the time of purchase by the Fund's Adviser.
The Fund may purchase securities on a when-issued basis and may acquire floating
or variable rate securities, medium term notes, putable securities, and zero
coupon securities. The Fund may also purchase securities issued by foreign
governments and supranational agencies. The Fund may also invest in municipal
securities when the Fund's Adviser feels it is consistent with the Fund's
investment objective. The Fund will not invest in municipal securities unless
the Fund's Adviser believes that the yield will be higher than the yield for
comparable taxable investments in which the Fund is permitted to invest. The
following quality criteria apply to the Fund's investments in municipal
securities. The Fund's investments in municipal notes 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 or better
at the time of investment by Moody's, (iii) which are rated SP-2 or better at
the time of investment by S&P, or (iv) which, if not rated, are of equivalent
quality to MIG-2, V-MIG-2, or SP-2 or better in the Adviser's judgment. The
Fund's investment in municipal bonds will be limited to bonds rated BBB or
better by S&P or Baa or better by Moody's, or, if not rated by S&P or Moody's,
deemed by the Fund's Adviser to be of comparable quality. For the Fund's
investments in other types of tax-exempt municipal investments, such as
participation interests in municipal lease/purchase agreements, the quality of
the underlying credit or of the bank providing a credit support arrangement
must, in the Fund's Adviser's opinion, be equivalent to the municipal note or
bond ratings stated above. The Fund is also authorized to invest up to 10% of
its assets
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in restricted securities, including Rule 144A securities, that the Fund's
Adviser determines are liquid under guidelines adopted by the Trust's Board of
Trustees. The Fund may also enter into bond futures contracts and options on
bond futures contracts and engage in securities lending.
The Fund intends to maintain a dollar-weighted average maturity of 4 years or
less, and the maximum remaining maturity for any security held by the Fund is
seven and one-half years. Under normal market conditions it is anticipated that
the Fund's dollar-weighted average maturity will range from 2 to 4 years. In the
case of mortgage-related securities and asset-backed securities, maturity will
be determined based on the expected average life of the security. The Fund may
shorten its average weighted maturity to as little as 90 days if deemed
appropriate for temporary defensive purposes. By so limiting the maturity of its
investments, the Fund expects that its net asset value will experience less
price movement in response to changes in interest rates than the net asset
values of mutual funds investing in similar credit quality securities with
longer maturities.
SHORT-TERM U.S. TREASURY SECURITIES FUND
The Short-Term U.S. Treasury Securities Fund will invest exclusively in
obligations issued by the U.S. Treasury with maximum remaining maturities of 3
years or less. U.S. Treasury securities are considered to be among the safest,
as to timely principal and interest payments, investments available. The Fund
will not invest in repurchase agreements. The Fund may borrow money for
temporary or emergency purposes in an amount not exceeding one-third of its
total assets, but has no present intention to do so.
Under normal market conditions, it is anticipated that the Fund's average
maturity will range from one to two years. Furthermore, for temporary defensive
purposes during periods when the Fund's Adviser determines that market
conditions warrant, the Short-Term U.S. Treasury Securities Fund may reduce its
average weighted maturity to less than one year.
U.S. GOVERNMENT SECURITIES FUND
Under normal market conditions, the Fund will invest at least 65% of its assets
in obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, including mortgage-backed securities issued or guaranteed by
U.S. Government agencies such as the GNMA, the FNMA or the FHLMC.
Mortgage-backed securities consisting of CMOs and REMICs purchased by the Fund
will be issued or guaranteed as to payment of principal and interest by the U.S.
Government, its agencies or instrumentalities or, if issued by private issuers,
rated in one of the two highest rating categories by a NRSRO.
The principal governmental issuers or guarantors of mortgage-backed securities
are GNMA, FNMA and FHLMC. Obligations of GNMA are backed by the full faith and
credit of the U.S. Government while obligations of FNMA and FHLMC are supported
by the respective agency only. The Fund may purchase mortgage-backed securities
that are backed or collateralized by fixed, adjustable or floating rate
mortgages.
Mortgage-backed securities that are not issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, including securities nominally
issued by a governmental entity (such as the Resolution Trust Corporation), are
not obligations of a governmental entity and thus may bear a risk of nonpayment.
The timely payment of principal and interest normally is supported, at least
partially, by various forms of insurance or guarantees. There can be no
assurance, however, that such credit enhancement will support full payment of
the principal and interest on such obligations. The average maturity of the
Fund's investment portfolio will typically range from 7 to 14 years.
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<PAGE>
With respect to the remaining 35% of its assets, the Fund may invest in
corporate or government bonds that carry a rating of Baa or better by Moody's or
BBB or better by S&P, or that are deemed by the Fund's Adviser to be of
comparable quality; commercial paper rated at the time of purchase within the
two highest ratings categories of an NRSRO; bankers' acceptances; certificates
of deposit and time deposits; and U.S. Treasury obligations, which include
custodial receipts and repurchase agreements involving securities that
constitute permissible investments for the Fund. The Fund intends to invest in
privately issued, mortgage-backed securities only if they are rated in one of
the two highest rating categories by an NRSRO.
The Fund may purchase securities on a forward commitment or when-issued basis,
which means that delivery and payment for such securities generally takes place
after the customary securities settlement period. The Fund may purchase floating
or variable rate securities, and may engage in dollar rolls.
TAX-EXEMPT BOND FUNDS
- ---------------------
FLORIDA TAX-EXEMPT BOND FUND
The Florida Tax-Exempt Bond Fund intends to be fully invested in municipal
securities the interest on which is exempt from regular federal income taxes
based on opinions from bond counsel to the issuers. The issuers of these
securities can be located in Florida, the District of Columbia, Puerto Rico and
other U.S. territories and possessions. It is a fundamental policy of the Fund
to invest at least 80% of its total assets in securities the income from which
is exempt from regular federal income tax and not treated as a preference item
for purposes of the alternative minimum tax. At least 65% of the Fund's assets
will be invested in Florida municipal bonds and debentures, and at least 75% of
its total assets invested in municipal bonds will be in securities rated A or
better by S&P or Moody's. 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 tax-exempt commercial
paper; and VMIG-1 or VMIG-2 in the case of variable rate demand obligations. No
more than 25% of the Fund's assets will be invested in bonds rated BBB by S&P or
Baa by Moody's. The Fund will only acquire securities not rated by S&P or
Moody's if, at the time of purchase, the Fund's Adviser determines that such
unrated obligations are of comparable quality to rated obligations that may be
acquired by the Fund.
The Fund may invest in commitments to purchase the above securities on a
when-issued or delayed delivery basis, floating or variable rate securities, and
may purchase municipal forwards, putable securities, medium term notes, and zero
coupon securities. The Fund's Adviser has discretion to invest up to 20% of the
Fund's total assets in taxable debt securities rated at least BBB or better by
S&P or Baa or better by Moody's or, if not rated by S&P or Moody's, of
comparable quality at the time of purchase as determined by the Fund's Adviser,
repurchase agreements, and securities subject to the alternative minimum tax.
The Fund may also invest in futures and options, but has no present intention to
do so for other than hedging purposes.
Under normal market conditions, it is anticipated that the Fund's average
weighted maturity will range from 6 to 25 years. The Fund may shorten its
average weighted maturity to as little as 90 days if deemed appropriate for
temporary defensive purposes.
GEORGIA TAX-EXEMPT BOND FUND
The Georgia Tax-Exempt Bond Fund intends to be fully invested in municipal
securities the interest on which is exempt from regular federal income taxes and
substantially exempt from State of Georgia income taxes based on
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opinions from bond counsel to the issuers. The issuers of these securities can
be located in Georgia, the District of Columbia, Puerto Rico and other U.S.
territories and possessions. It is a fundamental policy of the Fund to invest at
least 80% of its total assets in securities the income from which is exempt from
regular federal income tax and not treated as a preference items for purposes of
the alternative minimum tax. At least 65% of the Fund's assets will be invested
in Georgia municipal bonds and debentures, and at least 75% of its total assets
invested in municipal bonds will be in securities rated A or better by S&P or
Moody's. 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 tax-exempt commercial paper; and
VMIG-1 or VMIG-2 in the case of variable rate demand obligations. No more than
25% of the Fund's assets will be invested in bonds rated BBB by S&P or Baa by
Moody's. The Fund will only acquire securities not rated by S&P or Moody's if,
at the time of purchase, the Fund's Adviser determines that such unrated
obligations are of comparable quality to rated obligations that may be acquired
by the Fund.
The Fund may invest in commitments to purchase the above securities on a
when-issued or delayed delivery basis, floating or variable rate securities, and
may purchase municipal forwards, putable securities, medium term notes, and zero
coupon securities. The Fund's Adviser has discretion to invest up to 20% of the
Fund's total assets in taxable debt securities rated at least BBB or better by
S&P or Baa or better by Moody's or, if not rated by S&P or Moody's, of
comparable quality at the time of purchase as determined by the Fund's Adviser,
repurchase agreements, and securities subject to the alternative minimum tax.
The Fund may also invest in futures and options, but has no present intention to
do so for other than hedging purposes.
Under normal market conditions, it is anticipated that the Fund's average
weighted maturity will range from 6 to 25 years. The Fund may shorten its
average weighted maturity to as little as 90 days if deemed appropriate for
temporary defensive purposes.
INVESTMENT GRADE TAX-EXEMPT BOND FUND
The Investment Grade Tax-Exempt Bond Fund intends to be fully invested in
municipal securities the interest on which is exempt from regular federal income
taxes in the opinion of bond counsel to the issuer. The issuers of these
securities can be located in all fifty states, the District of Columbia, Puerto
Rico and other U.S. territories and possessions. It is a fundamental policy of
the Investment Grade Tax-Exempt bond Fund to invest at least 80% of its total
assets in securities the income from which is exempt from regular federal income
tax and not treated as a preference item for purposes of the alternative minimum
tax. At least 65% of the Fund's assets will be invested in municipal bonds and
debentures, and at least 75% of its total assets invested in municipal bonds
will be in securities rated A or better by S&P or Moody's. 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, P-1, P-2 in
the case of tax-exempt commercial paper; and VMIG-1 or VMIG-2 in the case of
variable rate demand obligations. The Fund will only acquire unrated securities
if, at the time of purchase, the Fund's Adviser determines that such unrated
obligations are of comparable quality to rated obligations that may be acquired
by the Fund.
The Fund may invest in commitments to purchase the above securities on a
when-issued or delayed delivery basis, floating or variable rate securities, and
may purchase municipal forwards, medium term notes, putable securities, and zero
coupon securities. The Fund's Adviser has discretion to invest up to 20% of the
Fund's total assets in taxable debt securities rated at least BBB or better by
S&P or Baa or better by Moody's or, if unrated, of comparable quality at the
time of purchase as determined by the Fund's Adviser, repurchase agreements, and
securities subject to the alternative minimum tax. The Fund may also invest up
to 10% of its assets in restricted
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<PAGE>
securities that the Fund's Adviser determines are liquid under guidelines
adopted by the Trust's Board of Trustees and may engage in futures and options
transactions.
Under normal market conditions, it is anticipated that the Fund's average
weighted maturity will range from 4 to 10 years. The Fund may shorten its
average weighted maturity to as little as 90 days if deemed appropriate for
temporary defensive purposes. By so limiting the maturity of its investments,
the Fund's net asset value is expected to experience less price movement in
response to changes in interest rates than the net asset values of mutual funds
investing in similar credit quality securities with longer maturities.
MARYLAND MUNICIPAL BOND FUND
The Maryland Municipal Bond Fund seeks to provide high current income exempt
from federal and Maryland income tax in a manner consistent with the
preservation of capital by investing in municipal bonds of investment-grade
quality. There are no limits on the dollar-weighted average portfolio maturity
of the Fund, and the Fund may acquire individual securities without regard to
their remaining maturities.
The Fund is non-diversified, which means that it has greater latitude than a
diversified fund with respect to the investment of its assets in the securities
of a relatively few municipal issuers. As a non-diversified fund, the Fund may
present greater risks than a diversified fund.
As a fundamental policy, at least 80% of the Fund's income will, under normal
circumstances, be exempt from regular federal income taxes. Interest on some
"private activity" municipal obligations is subject to the federal alternative
minimum tax ("AMT bonds"). AMT bonds are municipal obligations that benefit a
private or industrial user or finance a private facility. The Fund reserves the
right to invest up to 100% of its assets in AMT bonds.
As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in bonds that will, under normal circumstances, produce income that is exempt
from Maryland income taxes.
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
The Virginia Intermediate Municipal Bond Fund seeks to provide high current
income exempt from federal and Virginia income tax in a manner consistent with
the preservation of capital by investing in municipal bonds of investment-grade
quality. The Fund is managed to maintain a dollar-weighted average portfolio
maturity of between 5 and 10 years. The Fund may hold individual securities with
remaining maturities of more than 10 years, as long as the dollar-weighted
average maturity is no more than 10 years. Stability and growth of principal
also will be considered when choosing securities.
The Fund is non-diversified, which means that it has greater latitude than a
diversified fund with respect to the investment of its assets in the securities
of a relatively few municipal issuers. As a non-diversified fund, the Fund may
present greater risks than a diversified fund.
As a fundamental policy, at least 80% of the Fund's income will, under normal
circumstances, be exempt from regular federal income taxes. Interest on some
"private activity" municipal obligations is subject to the federal AMT bonds.
AMT bonds are municipal obligations that benefit a private or industrial user or
finance a private facility. The Fund reserves the right to invest up to 100% of
its assets in AMT bonds, although the Fund has no current intention of investing
in such securities.
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<PAGE>
As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in bonds that will, under normal circumstances, produce income that is exempt
from Virginia income taxes.
VIRGINIA MUNICIPAL BOND FUND
The Virginia Municipal Bond Fund seeks to provide high current income exempt
from federal and Virginia income tax in a manner consistent with the
preservation of capital by investing in municipal bonds of investment-grade
quality. There are no limits on the dollar-weighted average portfolio maturity
of the Fund, and the Fund may acquire individual securities without regard to
their remaining maturities.
The Fund is non-diversified, which means that it has greater latitude than a
diversified fund with respect to the investment of its assets in the securities
of a relatively few municipal issuers. As a non-diversified fund, the Fund may
present greater risks than a diversified fund.
As a fundamental policy, at least 80% of the Fund's income will, under normal
circumstances, be exempt from regular federal income taxes. Interest on some
"private activity" municipal obligations is subject to the federal AMT bonds.
AMT bonds are municipal obligations that benefit a private or industrial user or
finance a private facility. The Fund reserves the right to invest up to 100% of
its assets in AMT bonds, although the Fund has no current intention of investing
in such securities.
As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in bonds that will, under normal circumstances, produce income that is exempt
from Virginia income taxes.
MONEY MARKET FUNDS
- ------------------
PRIME QUALITY MONEY MARKET FUND
The Prime Quality Money Market Fund will invest in money market instruments
denominated in U.S. dollars consisting of (i) U.S. Treasury obligation; (ii)
custodial receipts representing interests in component parts of U.S. Treasury
obligations; (iii) obligations issued or guaranteed as to principal and interest
by agencies and instrumentalities of the U.S. Government; (iv) commercial paper
issued by domestic and foreign issuers rated in the highest short-term rating
category by one or more NRSROs or, if not rated, determined by the Fund's
Adviser to be of comparable quality; (v) high quality obligations (including
certificates of deposit, time deposits, bankers' acceptances, Eurodollar and
Yankee bank obligations) of U.S. commercial banks (including foreign branches of
such banks), and U.S. and London branches of foreign banks or savings and loan
and thrift institutions that are members of the Federal Reserve System, the
Federal Deposit Insurance Corporation, or the Federal Savings and Loan Insurance
Corporation; (vi) high quality short-term corporate obligations issued by
companies with commercial paper meeting the ratings indicated in (iv), above,
or, if not rated, determined by the Fund's Adviser to be of comparable quality;
(vii) repurchase agreements involving such obligations; (viii) high quality
obligations of supranational entities satisfying the credit ratings described in
(iv), above, or, if not rated, determined by the Fund's Adviser to be of
comparable quality; and (ix) medium term notes. The Fund may not invest more
than 25% of its total assets in obligations issued by foreign branches of U.S.
Banks and London branches of foreign banks. The Fund may purchase securities
subject to standby commitments. As a money market fund, the Fund is subject to
limitations on the percentage of its assets that may be invested in any one
issuer and on the percentage that may be invested in securities carrying the
second highest rating assigned by the requisite NRSROs.
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<PAGE>
TAX-EXEMPT MONEY MARKET FUND
The Tax-Exempt Money Market Fund intends to be fully invested in securities the
interest on which is exempt from regular federal income taxes in the opinion of
bond counsel to the issuer. It is a fundamental policy of the Tax-Exempt Money
Market Fund to invest at least 80% of its total assets in securities the income
from which is exempt from regular federal income taxes and not treated as a
preference item for purposes of the alternative minimum tax. The Fund may invest
in high quality, U.S. dollar denominated municipal securities of issuers located
in all fifty states, the District of Columbia, Puerto Rico and other U.S.
territories rated in one of the two highest short-term rating categories by S&P
or Moody's or, if not rated, determined by the Fund's Adviser to be of
comparable quality. The Fund will primarily purchase municipal bonds with a
remaining maturity of 397 days or less, and will also acquire municipal notes
and tax-exempt commercial paper with similar maturities. The Fund may agree to
purchase short-term securities on a when-issued basis and may invest in
securities subject to standby commitments. Securities purchased on a when-issued
basis are subject to settlement within 45 days of the purchase date.
The Fund's Adviser has discretion to invest up to 20% of the Fund's assets in
U.S. dollar denominated obligations consisting of taxable money market
instruments, obligations issued or guaranteed by the U.S. Government or its
agencies and instrumentalities, repurchase agreements and securities subject to
the alternative minimum tax.
TAX-FREE MONEY MARKET FUND
Tax-Free Money Market Fund invests only in high-quality municipal securities
that have remaining maturities at the time of purchase of 397 days or less.
Although the Fund will attempt to invest 100% of its assets in tax-exempt
municipal securities, the interest on which is exempt from federal income tax,
including the federal alternative minimum tax, the Fund reserves the right to
invest up to 20% of the value of its net assets in securities, including private
activity bonds, the interest on which is fully taxable or subject to the
alternative minimum tax. As a fundamental policy, at least 80% of the Fund's
income will, under normal circumstances, be exempt from federal income including
the federal alternative minimum tax.
The Tax-Free Money Market Fund will invest in municipal obligations whose
interest payments are exempt from federal income tax. Municipal obligations,
which are issued by states, cities, municipalities or municipal agencies, will
include variable rate demand obligations ("VRDOs"), tax anticipation notes
("TANS"), revenue anticipation notes ("RANS"), bond anticipation notes ("BANS"),
construction loan notes, and tax-exempt commercial paper. The Fund may also
invest in municipal bonds within the maturity limitations discussed above and
may enter into commitments to purchase these securities on a delayed-delivery
basis.
The Fund is non-diversified, which means that it has greater latitude than a
diversified fund to invest in the securities of a relatively few municipal
issuers. As a non-diversified fund, the Fund may present greater risks than a
diversified fund.
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
The U.S. Government Securities Money Market Fund will invest exclusively in U.S.
Treasury obligations, U.S. Government Subsidiary Corporation securities (e.g.,
GNMA Securities) and repurchase agreements with dealers selected pursuant to
guidelines adopted by the Trust's Board of Trustees and collateralized by U.S.
Treasury securities and U.S. Government Subsidiary Corporation securities.
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<PAGE>
U.S. TREASURY MONEY MARKET FUND
The U.S. Treasury Money Market Fund's investments are limited to obligations
having a remaining maturity of 397 days or less that are issued by the U.S.
Treasury and repurchase agreements that provide for repurchase within 397 days
and that are collateralized by obligations issued or guaranteed by the U.S.
Treasury. The investment policies of the Fund may result in a lower yield than
that of other money market funds, such as the Prime Quality Money Market Fund,
which may invest in other types of instruments.
The U.S. Treasury Money Market Fund limits its investments so as to obtain the
highest investment quality rating by an NRSRO. These quality ratings are based
on, but not limited to, an analysis of the Fund's operational policies,
investment strategies and management. These rating organizations also many
undertake an ongoing analysis and assessment of these criteria in order to
continually update the Fund's rating.
LIFE VISION PORTFOLIOS
- ----------------------
The Portfolios provide investors with the opportunity to pursue three distinct
asset allocation strategies implemented through investments in shares of
selected STI Classic Funds. By investing in the Portfolios, investors have the
opportunity to diversify and allocate their assets among the broad range of
funds in STI Classic Funds. The Adviser simplifies the diversification and asset
allocation process by reviewing, analyzing, selecting, monitoring, reallocating
and rebalancing each Portfolio's holdings of STI Classic Funds for investors.
The assets of each Portfolio will be allocated among underlying STI Classic
Funds in accordance with its investment objective, the Adviser's outlook for the
economy, the financial markets and the relative market valuations of the
underlying STI Classic Funds. Each Portfolio has the ability to invest its
assets allocated to a particular asset class in one or more of the underlying
STI Classic Funds, which have differing investment objectives, policies and risk
characteristics. The risks associated with investing in a Portfolio will vary
depending upon how the assets within its asset classes are allocated from time
to time among the underlying STI Classic Funds. Although the Portfolios
currently expect to invest in one or more of the underlying STI Classic Funds
identified below, the Adviser has the discretion to change the particular STI
Classic Funds used as underlying investments for the Portfolios. If the Adviser
determines in the future that it is in a Portfolio's best interest, the Adviser
may substitute or include other underlying STI Classic Funds, including STI
Classic Funds that do not currently exist.
STI PRIME QUALITY FUND
STI SHORT-TERM BOND FUND
STI INVESTMENT GRADE BOND FUND
STI U.S. GOVERNMENT SECURITIES FUND
STI CAPITAL APPRECIATION FUND
STI SMALL CAP GROWTH STOCK FUND
STI GROWTH AND INCOME FUND
The investment objective of each Portfolio is set forth below. Each Portfolio's
objective, the asset allocation percentage ranges described below, the list of
underlying STI Classic Funds described above, and those policies identified as
non-fundamental may be changed by the Company's Board of Directors without
shareholder approval. A Portfolio's investment policies identified as
fundamental may not be changed except by approval of the majority of the
outstanding shares of that Portfolio. The Adviser will manage each Portfolio
consistent with
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that Portfolio's investment objective and policies. There is no assurance that a
Portfolio will achieve its investment objective.
STI BALANCED PORTFOLIO
The STI Balanced Portfolio seeks both capital appreciation and current income.
Under normal market conditions, the Portfolio will invest primarily in shares of
underlying STI Classic Funds that invest primarily in equity securities, but at
least 25% of the Portfolio's total assets will be invested in shares of
underlying STI Classic Funds that invest primarily in fixed-income securities.
The Portfolio's remaining assets may be invested in shares of underlying STI
Classic Funds that are money market funds, securities issued by the U.S.
Government, its agencies or instrumentalities, repurchase agreements and
short-term paper.
In general, relative to the other Portfolios, the STI Balanced Portfolio should
offer investors a balanced level of income and capital appreciation, while
subjecting investors to a lower level of principal risk.
STI GROWTH AND INCOME PORTFOLIO
The STI Growth and Income Portfolio seeks to provide long-term capital
appreciation, with current income as a secondary objective. Under normal market
conditions, at least 80% of the Portfolio's total assets will be invested in
shares of underlying STI Classic Funds that invest primarily in either equity
securities that seek capital appreciation, or invest primarily in fixed-income
securities that seek income. The Portfolio's remaining assets may be invested in
shares of underlying STI Classic Funds that are money market funds, securities
issued by the U.S. Government, its agencies or instrumentalities, repurchase
agreements and short-term paper.
In general, relative to the other Portfolios, the STI Growth and Income
Portfolio should offer investors the potential for a medium to high level of
capital growth and the potential for a medium level of income, while subjecting
investors to a medium level of principal risk.
STI MAXIMUM GROWTH PORTFOLIO
The STI Maximum Growth Portfolio seeks to provide a high level of capital
appreciation, without regard to current income. Under normal market conditions,
at least 80% of the Portfolio's total assets will be invested in shares of
underlying STI Classic Funds that invest primarily in equity securities that
seek capital appreciation. The Portfolio's remaining assets may be invested in
shares of underlying STI Classic Funds that invest primarily in fixed-income
securities, shares of underlying STI Classic Funds that are money market funds,
securities issued by the U.S. Government, its agencies or instrumentalities,
repurchase agreements and short-term paper.
In general, relative to the other Portfolios, the STI Maximum Growth Portfolio
should offer investors the potential for a high level of capital growth, and the
potential for a lower level of current income, while subjecting investors to a
medium to high level of principal risk.
GENERAL INVESTMENT POLICIES OF THE PORTFOLIOS
To achieve each Portfolio's investment objective, the Adviser will attempt to
identify and select a diversified portfolio of underlying STI Classic Funds. In
the selection process, the Adviser analyzes many factors, including the
underlying STI Classic Funds' investment objectives, total return, volatility
and expenses. Each Portfolio invests a percentage of its assets, within
percentage ranges the Adviser believes appropriate, in select underlying
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STI Classic Funds, which are separately-managed series of the Company. The
percentages will reflect the extent to which each Portfolio invests in the
particular market segment represented by each underlying fund in STI Classic
Funds, and the varying degrees of potential investment risk and reward
represented by each Portfolio's investments in those corresponding underlying
funds. These percentage ranges may change when it is appropriate in light of
each Portfolio's investment objective. Each Portfolio may invest up to 100% of
its assets in shares of the underlying STI Classic Funds. In addition, when the
Adviser deems it appropriate, for temporary defensive purposes, each Portfolio
may invest 100% of its assets directly in securities issued by the U.S.
Government or its agencies or instrumentalities, repurchase agreements,
short-term paper and shares of underlying STI Classic Funds that are money
market funds (and shares of unaffiliated money market funds, as permitted by the
SEC). To the extent that a Portfolio is engaged in temporary defensive
investing, it will not be pursuing its investment objective. When the Adviser
deems it appropriate, in order to meet liquidity needs, each Portfolio may
invest its assets directly in securities issued by the U.S. Government or its
agencies or instrumentalities, repurchase agreements, short-term paper and
shares of underlying STI Classic Funds that are money market funds (and shares
of unaffiliated money market funds, as permitted by the SEC).
The following risk factors are associated with a Portfolio's investments in
underlying STI Classic Funds:
- - When the Portfolios invest in underlying STI Classic Funds, shareholders
will be exposed to the risks associated with investing in those underlying
STI Classic Funds. Those risks include risks associated with investing in
foreign securities, asset-backed securities, delayed delivery transactions,
ADRs, mortgage-backed securities, repurchase agreements and reverse
repurchase agreements.
- - The Portfolios and the underlying STI Classic Funds have the same officers,
Trustees and often the same investment advisor, which may give rise to
certain conflicts of interest.
- - Each Portfolio's investment performance is substantially related to the
investment performance of the underlying STI Classic Funds.
- - Investing in the underlying STI Classic Funds involves certain additional
expenses that would not be present in a direct investment in the underlying
STI Classic Funds. When a Portfolio invests in underlying STI Classic
Funds, shareholders bear not only the Portfolio's expenses, but also the
expenses of the underlying STI Classic Funds.
DESCRIPTION OF PERMITTED INVESTMENTS
AMERICAN DEPOSITARY RECEIPTS (ADRS), EUROPEAN DEPOSITARY RECEIPTS (EDRS) AND
GLOBAL DEPOSITORY RECEIPTS (GDRS)
ADRs, EDRs, and GDRs are securities, typically issued by a U.S. financial
institution or a non-U.S. financial institution in the case of an EDR or GDR (a
"depositary"). The institution has ownership interests in a security, or a pool
of securities, issued by a foreign issuer and deposited with the depositary.
ADRs, EDRs and GDRs may be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary. An unsponsored facility may be
established by a depositary without participation by the issuer of the
underlying security. 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
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deposited security or to pass through, to the holders of the receipts, voting
rights with respect to the deposited securities.
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ASSET-BACKED SECURITIES
Asset-backed securities are securities backed by non-mortgage assets such as
company receivables, truck and auto loans, leases and credit card receivables.
Other asset-backed securities may be created in the future. These securities 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. These securities are
generally issued as pass-through certificates, which represent undivided
fractional ownership interests in the underlying pool of assets. Asset-backed
securities may also be debt obligations, which are known as collateralized
obligations and are generally issued as the debt of a special purpose entity,
such as a trust, organized solely for the purpose of owning these assets and
issuing debt obligations.
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.
BANKERS' ACCEPTANCES
Bankers' acceptances are bills of exchange or time drafts drawn on and accepted
by a commercial bank. Bankers' acceptances are used by corporations to finance
the shipment and storage of goods. Maturities are generally six months or less.
BANK OBLIGATIONS
Bank obligations are short-term obligations issued by U.S. and foreign banks,
including bankers' acceptances, certificates of deposit, custodial receipts, and
time deposits. Eurodollar and Yankee Bank Obligations are U.S.
dollar-denominated certificates of deposit or time deposits issued outside the
U.S. by foreign branches of U.S. banks or by foreign banks.
CERTIFICATES OF DEPOSIT
Certificates of deposit are interest bearing instruments with a specific
maturity. They are issued by banks and savings and loan institutions in exchange
for the deposit of funds and normally can be traded in the secondary market
prior to maturity. Certificates of deposit with penalties for early withdrawal
will be considered illiquid.
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COMMERCIAL PAPER
Commercial paper is a term used to describe unsecured short-term promissory
notes issued by banks, municipalities, corporations and other entities.
Maturities on these issues vary from a few to 270 days.
COMMON AND PREFERRED STOCKS
Common and preferred stocks represent units of ownership in a corporation.
Owners of common stock typically are entitled to vote on important matters.
Owners of preferred stock ordinarily do not have voting rights, but are entitled
to dividends at a specified rate. Preferred stock has a prior claim to common
stockholders with respect to dividends.
CONVERTIBLE SECURITIES
Convertible securities are securities issued by corporations that are
exchangeable for a set number of another security at a prestated price. The
market value of a convertible security tends to move with the market value of
the underlying stock. The value of a convertible security is also affected by
prevailing interest rates, the credit quality of the issuer, and any call option
provisions.
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.
DEBT SECURITIES
Debt securities represent money borrowed that obligates the issuer (E.G., a
corporation, municipality, government, government agency) to repay the borrowed
amount at maturity (when the obligation is due and payable) and usually to pay
the holder interest at specific times (E.G., bonds, notes, debentures).
DOLLAR ROLLS
Dollar rolls are transactions in which securities are sold for delivery in the
current month and the seller contracts to repurchase substantially similar
securities on a specified future date. Any difference between the sale price and
the purchase price (plus interest earned on the cash proceeds of the sale) is
applied against the past interest income on the securities sold to arrive at an
implied borrowing rate.
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,
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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.
THE EURO
On January 1, 1999, the European Economic and Monetary Union (EMU) implemented a
new currency unit, the Euro, which is expected to reshape financial markets,
banking systems and monetary policies in Europe and other parts of the world.
The countries that converted or tied their currencies to the Euro include
Austria, Belgium, France, Germany, Luxembourg, the Netherlands, Ireland,
Finland, Italy, Portugal, and Spain. Financial transactions and market
information, including share quotations and company accounts, in participating
countries are denominated in Euros, although the bank notes used by
participating countries remain legal tender. Approximately 46% of the stock
exchange capitalization of the total European market may now be reflected in
Euros, and participating governments will issue their bonds in Euros. Monetary
policy for participating countries will be uniformly managed by a new central
bank, the European Central Bank (ECB).
Although it is not possible to predict the impact of the Euro implementation
plan on the Funds, the transition to the Euro may change the economic
environment and behavior of investors, particularly in European markets. For
example, investors may begin to view those countries participating in the EMU as
a single entity, and the Advisers may need to adapt investment strategies
accordingly. The process of implementing the Euro also may adversely affect
financial markets worldwide and may result in changes in the relative strength
and value of the U.S. dollar or other major currencies, as well as possible
adverse tax consequences. The transition to the Euro is likely to have a
significant impact on fiscal and monetary policy in the participating countries
and may produce unpredictable effects on trade and commerce generally. These
resulting uncertainties could create increased volatility in financial markets
world-wide.
EURODOLLAR AND YANKEE DOLLAR OBLIGATIONS
Eurodollar bank obligations are U.S. dollar denominated certificates of deposit
or time deposits issued outside the United States by foreign branches of U.S.
banks or by foreign banks. Yankee dollar obligations are U.S. dollar denominated
obligations issued in the United States by foreign banks.
FOREIGN SECURITIES
Foreign securities 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, Europaper and Yankee Certificates
of Deposit, and investments in Canadian Commercial Paper and foreign securities.
These instruments have 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.
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In making investment decisions for the Fund, the Adviser evaluates the risks
associated with investing Fund assets in a particular country, including risks
stemming from a country's financial infrastructure and settlement practices; the
likelihood of expropriation, nationalization or confiscation of invested assets;
prevailing or developing custodial practices in the country; the country's laws
and regulations regarding the safekeeping, maintenance and recovery of invested
assets, the likelihood of government-imposed exchange control restrictions which
could impair the liquidity of Fund assets maintained with custodians in that
country, as well as risks from political acts of foreign governments ("country
risks"). Of course, the Adviser cannot assure that the Fund will not suffer
losses resulting from investing in foreign countries.
Holding Fund assets in foreign countries through specific foreign custodians
presents additional risks, including but not limited to the risks that a
particular foreign custodian or depository will not exercise proper care with
respect to Fund assets or will not have the financial strength or adequate
practices and procedures to properly safeguard Fund assets.
By investing in foreign securities, the 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 Emerging
Markets, International Equity Index and International Equity Funds, when
included in appropriate amounts in a portfolio otherwise consisting of domestic
securities, may provide a source of increased diversification. The Emerging
Markets Equity, International Equity Index and International 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 Emerging
Markets, International Equity Index and International 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.
Emerging countries are 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.
FORWARD FOREIGN CURRENCY CONTRACTS
Forward foreign currency contracts involve obligations to purchase or sell a
specific currency amount at a future date, agreed upon by the parties, at a
price set at the time of the contract. A Fund may also enter into a contract to
sell, for a fixed amount of U.S. dollars or other appropriate currency, the
amount of foreign currency approximating the value of some or all of the Fund's
securities denominated in the foreign currency. A Fund may realize a gain or
loss from currency transactions.
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FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchase the right, in exchange for a premium, to assume a position in a futures
contract at a specified exercise price during the term of the option.
A Fund may use futures contracts, and related options for bona fide hedging
purposes, to offset changes in the value of securities held or expected to be
acquired. They may also be used to minimize fluctuations in foreign currencies
or to gain exposure to a particular market or instrument. A Fund will minimize
the risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges and for
which there appears to be a liquid secondary market.
Index futures are futures contracts for various indices that are traded on
registered securities exchanges. An index futures contract obligates the seller
to deliver (and the purchaser to take) an amount of cash equal to a specific
dollar amount times the difference between the value of a specific index at the
close of the last trading day of the contract and the price at which the
agreement is made.
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.
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 Advisers 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
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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.
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. 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.
HIGH YIELD SECURITIES
High yield securities, commonly referred to as junk bonds, are debt obligations
rated below investment grade, I.E., below BBB by S&P or Baa by Moody's, or their
unrated equivalents. The risks associated with investing in high yield
securities include:
(1) High yield, lower rated bonds involve greater risk of default or price
declines than investments in investment grade securities (E.G., securities
rated BBB or higher by S&P or Baa or higher by Moody's) due to changes in
the issuer's creditworthiness.
(2) The market for high risk, high yield securities may be thinner and less
active, causing market price volatility and limited liquidity in the
secondary market. This may limit the ability of a Fund to sell these
securities at their fair market values either to meet redemption requests,
or in response to changes in the economy or the financial markets.
(3) Market prices for high risk, high yield securities may also be affected
by investors' perception of the issuer's credit quality and the outlook for
economic growth. Thus, prices for high risk, high yield securities may move
independently of interest rates and the overall bond market.
(4) The market for high risk, high yield securities may be adversely
affected by legislative and regulatory developments.
HEDGING TECHNIQUES
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Hedging in an investment strategy designed to offset investment risks. Hedging
activities include, among other things, the use of options and futures. There
are risks associated with hedging activities, including: (1) the success of a
hedging strategy may depend on an ability to predict movements in the prices of
individual securities, fluctuations in markets, and movements in interest rates;
(2) there may be an imperfect or no correlation between the changes in market
value of the securities held by a Fund and the prices of futures and option on
futures; (3) there may not be a liquid secondary market for a futures contract
or option; and (4) trading restrictions or limitations may be imposed by an
exchange, and government regulations may restrict trading in futures contracts
and options.
ILLIQUID SECURITIES
Illiquid securities are securities that cannot be disposed of within seven days
at approximately the price at which they are being carried on a Fund's books.
INVESTMENT COMPANY SHARES
The Funds may purchase shares of other mutual funds to the extent consistent
with applicable law. 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 you
would indirectly bear a proportionate share of investment company operating
expenses, such as advisory fees.
INVESTMENT GRADE OBLIGATIONS
Investment grade obligations are debt obligations rated BBB by S&P or Baa by
Moody's, or their unrated equivalents. These securities are deemed to have
speculative characteristics.
LOAN PARTICIPATIONS
Loan participations are interest in loans to U.S. corporations which are
administered by the lending bank or agent for a syndicate of lending banks. In a
loan participation, the borrower corporation is the issuer of the participation
interest except to the extent the Fund derives its rights from the intermediary
bank. Because the intermediary bank does not guarantee a loan participation, a
loan participation is subject to the credit risks associated with the underlying
corporate borrower.
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.
MORTGAGE-BACKED SECURITIES
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Mortgage-backed securities are instruments that entitle the holder to a share of
all interest and principal payments from mortgages underlying the security. The
mortgages backing these securities include conventional thirty-year fixed rate
mortgages, graduated payment mortgages, adjustable rate mortgages, and floating
mortgages.
GOVERNMENT PASS-THROUGH SECURITIES
These are securities that are issued or guaranteed by a U.S. Government
agency representing an interest in a pool of mortgage loans. 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 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.
Government and private guarantees do not extend to the securities' value,
which is likely to vary inversely with fluctuations in interest rates.
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 as much 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.
PRIVATE PASS-THROUGH SECURITIES
Private pass-through securities are mortgage-backed securities issued by a
non-governmental agency, such as a trust. While they are generally
structured with one or more types of credit enhancement,
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private pass-through securities generally lack a guarantee by an entity
having the credit status of a governmental agency or instrumentality. The
two principal types of private mortgage-backed securities are
collateralized mortgage obligations ("CMOs") and real estate mortgage
investment conduits ("REMICs").
CMOS
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). CMOs are rated in one of the two highest categories by S&P or
Moody's. 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.
REMICS
REMICs 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 and are rated in one
of the two highest categories by S&P or Moody's.
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. GNMA REMIC Certificates are backed by the
full faith and credit of the U.S. Government.
STRIPPED MORTGAGE-BACKED SECURITIES
Stripped mortgage-backed securities 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.
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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 Advisers 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 Adviser. 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 Adviser will be the actual average life.
MUNICIPAL FORWARDS
Municipal forwards are forward commitments for the purchase of tax-exempt bonds
with a specified coupon to be delivered by an issuer at a future date, typically
exceeding 45 days but normally less than one year after the commitment date.
Municipal forwards are normally used as a refunding mechanism for bonds that may
only be redeemed on a designated future date (see "When-Issued Securities and
Municipal Forwards" for more information).
MUNICIPAL LEASE OBLIGATIONS
Municipal lease obligations are securities issued by state and local governments
and authorities to finance the acquisition of equipment and facilities. They
make take the form of a lease, an installment purchase contract, an conditional
sales contract, or a participation interest in any of the above.
MUNICIPAL SECURITIES
MUNICIPAL BONDS include general obligation bonds, revenue or special
obligation bonds, private activity and industrial development bonds and
participation interests in municipal bonds. General obligation bonds are
backed by the taxing power of the issuing municipality. Revenue bonds are
backed by the revenues of a project or facility (for example, tolls from a
bridge). Certificates of participation represent an interest in an
underlying obligation or commitment, such as an obligation issued in
connection with a leasing arrangement. The payment of principal and
interest on private activity and industrial development bonds generally is
totally dependent on the ability of a facility's user to meet its financial
obligations and the pledge, if any, of real and personal property as
security for the payment.
MUNICIPAL NOTES 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
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of investment by S&P, or (iv) which, if not rated by S&P or Moody's, are in
the Adviser'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 Adviser 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
include floating rate notes. Investments in such 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
Adviser's opinion be equivalent to the long-term bond or commercial paper
ratings stated above. The Adviser 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 Adviser will review the proceedings relating to the issuance
of municipal securities or the basis for such opinions.
OPTIONS
A 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
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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.
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.
OTHER INVESTMENTS
The Funds are not prohibited from investing in bank obligations issued by
clients of SEI Investments Company ("SEI Investments"), the parent company of
the Administrator and the Distributor. The purchase of Fund shares by these
banks or their customers will not be a consideration in deciding which bank
obligations the Funds will purchase. The Funds will not purchase obligations
issued by the Advisers.
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PAY-IN-KIND SECURITIES
Pay-In-Kind securities are debt obligations or preferred stock, that pay
interest or dividends in the form of additional debt obligations or preferred
stock.
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 Advisers 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.
RESOURCE RECOVERY BONDS
The Tax-Free Money Market Fund and the municipal bond funds may purchase
resource recovery bonds, which are a type of revenue bond issued to build
facilities such as solid waste incinerators or waste-to-energy plants.
Typically, a private corporation will be involved, at least during the
construction phase, and the revenue stream will be secured by fees or rents paid
by municipalities for use of the facilities. The viability of a resource
recovery project, environmental protection regulations, and project operator tax
incentives may affect the value and credit quality of resource recovery bonds.
RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS
Investments by a money market fund are subject to limitations imposed under
regulations adopted by the SEC. Under these regulations, money market funds may
acquire only obligations that present minimal credit risk and that are "eligible
securities," which means they are (i) rated, at the time of investment, by at
least two NRSROs (one if it is the only organization rating such obligation) in
the highest rating category or, if unrated, determined to be of comparable
quality (a "first tier security"), or (ii) rated according to the foregoing
criteria in the second highest rating category or, if unrated, determined to be
of comparable quality ("second tier security"). In the case of taxable money
market funds, investments in second tier securities are subject to further
constraints in that (i) no more than 5% of a money market fund's assets may be
invested in second tier securities and (ii) any
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investment in securities of any one such issuer is limited to the greater of 1%
of the money market fund's total assets or $1 million. A taxable money market
fund may not purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies of instrumentalities) if, as a
result, more than 5% of the total assets of the Fund would be invested the
securities of one issuer. A taxable money market fund may also hold more than 5%
of its assets in first tier securities of a single issuer for three "business
days" (that is, any day other than a Saturday, Sunday or customary business
holiday).
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") or an exemption
from registration. Permitted investments for the Funds include restricted
securities, and each such Fund may invest up to 15% of its net assets (10% for
the Money Market Funds) 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 Adviser pursuant to guidelines adopted
by the Board of Trustees. Under these guidelines, the particular Adviser 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 Adviser
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 Adviser to be of good standing and when, in the judgment of that
Adviser, 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 Adviser as a broker in these transactions.
SHORT-TERM OBLIGATIONS
Short-term obligations are debt obligations maturing (becoming payable) in 397
days or less, including commercial paper and short-term corporate obligations.
Short-term corporate obligations are short-term obligations issued by
corporations.
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STANDBY COMMITMENTS AND PUTS
The 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 Adviser believes present minimal credit
risks, and the Adviser 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 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 the total assets of such Fund calculated immediately after any such
put is acquired.
STRIPS
Separately Traded Interest and Principal Securities ("STRIPS") are component
parts of U.S. Treasury Securities traded through the Federal Book-Entry System.
An Adviser will only purchase STRIPS that it determines are liquid 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' Adviser 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' Adviser 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.
SUPRANATIONAL AGENCY OBLIGATIONS
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Supranational agency obligations are obligations of supranational entities
established through the joint participation of several governments, including
the Asian Development Bank, Inter-American Development Bank, International Bank
for Reconstruction and Development (also known as the "World Bank"), African
Development Bank, European Economic Community, European Investment Bank, and the
Nordic Investment Bank.
SWAPS, CAPS, FLOORS, COLLARS
Swaps, caps, floors and collars are hedging tools designed to permit the
purchaser to preserve a return or spread on a particular investment or portion
of its portfolio. They are also used to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date. 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.
U.S. GOVERNMENT AGENCY OBLIGATIONS
U.S. Government agency obligations are obligations issued or guaranteed by
agencies or instrumentalities of the U.S. Government. 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, 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. 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.
U.S. TREASURY OBLIGATIONS
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U.S. Treasury obligations consist of bills, notes and bonds issued by the U.S.
Treasury. They also consist of separately traded interest and principal
component parts of these obligations that are transferable through the Federal
book-entry system known as Separately Traded Registered Interest and Principal
Securities (STRIPS).
VARIABLE AND FLOATING RATE SECURITIES
Variable and floating rate instruments involve certain obligations that may
carry variable or floating rates of interest, and may involve a conditional or
unconditional demand feature. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market rates or indices. 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.
VARIABLE RATE MASTER DEMAND NOTES
Variable rate master demand 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 Adviser, 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. Variable rate master demand notes may or may not be backed by bank
letters of credit.
WARRANTS
Warrants give holders the right, but not the obligation, to buy shares of a
company at a given price, usually higher than the market price, during a
specified period.
WHEN-ISSUED SECURITIES AND MUNICIPAL FORWARDS
When-issued securities are securities that are delivered and paid for normally
within 45 days after the date of commitment to purchase. Municipal forwards call
for delivery of the underlying municipal security normally after 45 days but
before one year after the commitment date.
Although a Fund will only make commitments to purchase when-issued securities
and municipal forwards with the intention of actually acquiring the securities,
a Fund 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.
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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.
ZERO COUPON OBLIGATIONS
Zero coupon obligations are debt obligations that do not bear any interest, but
instead are issued at a deep discount from face value or par. The value of a
zero coupon obligation increases over time to reflect the interest accumulated.
Such obligations will not result in the payment of interest until maturity, and
will have greater price volatility than similar securities that are issued at
face value or par and pay interest periodically.
Investors will receive written notification at least thirty days prior to any
change in a Fund's investment objective. The phrase "principally invests" as
used in the prospectus means that the Fund invests at least 65% of its assets in
the securities as described in the sentence. Each tax-exempt fund invests at
least 80% of its total assets in securities with income exempt from federal
income and alternative minimum taxes.
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. The term "majority of the outstanding shares" means
the vote of (i) 67% or more of a Fund's shares present at a meeting, if more
than 50% of the outstanding shares of the Fund are present or represented by
proxy, or (ii) more than 50% of a Fund's outstanding shares, whichever is less.
ALL FUNDS (EXCEPT THE LIFE VISION PORTFOLIOS) 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, Emerging
Markets Equity Fund, International Equity Fund, International Equity
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Index Fund, Limited-Term Federal Mortgage Securities Fund, U.S. Government
Securities Fund, Small Cap Equity Fund and Value Income Stock Fund, and 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, U.S.
Government Securities, Limited-Term Federal Mortgage Securities,
International Equity Index, International Equity, and Small Cap 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.
11. Purchase securities of any issuer (except securities issued or guaranteed
by the United States, its agencies or instrumentalities and repurchase
agreements involving such securities) if as a result more than 5% of the
total assets of a Fund would be invested in the securities of such issuer;
provided, however, that a Fund may invest up to 25% of its total assets
without regard to this restriction as permitted by applicable law.
12. Purchase any securities which would cause more than 25% of the total assets
of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities, repurchase agreements involving such securities or
tax-exempt securities issued by governments or political subdivisions of
governments and, with respect
B-40
<PAGE>
to only the Money Market Funds, obligations issued by domestic branches of
U.S. banks or U.S. branches of foreign banks subject to the same
regulations as U.S. banks. For purposes of this limitation, (i) utility
companies will be divided to according to their services, for example, gas,
gas transmission, electric and telephone will each be considered a separate
industry; (ii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank
finance and diversified finance will each be considered a separate
industry; and (iii) supranational entities will be considered to be a
separate industry.
LIFE VISION PORTFOLIOS
A Portfolio may not:
1. Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities or securities issued by investment companies) if, as a
result, more than 5% of the total assets of a Portfolio would be invested
in the securities of such issuer; provided, however, that a Portfolio may
invest more than 25% of its assets without regard to this restrictions
permitted by applicable law.
2. Borrow money, except that a Portfolio (a) may borrow money for temporary or
emergency purposes in an amount not exceeding 5% of the Portfolio's total
assets determined at the time of the borrowing and (b) may borrow money
from banks or by engaging in reverse repurchase agreements. Asset coverage
of at least 300% is required for all borrowings, except where a Portfolio
has borrowed money for temporary purposes in amounts not exceeding 5% of
its total assets;
3. Underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the
Securities Act of 1933 (the "Securities Act") in the disposition of
restricted securities;
4. Issue senior securities (as defined in the 1940 Act), except as permitted
by rule, regulation or order of the Securities and Exchange Commission (the
"SEC");
5. Purchase the securities of any issuer (other than securities issuued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities or securities issued by investment companies) if, as a
result, more than 25% of the Portfolio's total assets would be invested in
the securities of companies whose principal business activities are in the
same industry. In addition, each Portfolio may not invest more than 25% of
its assets in underlying STI Classic Funds that, as a matter of policy,
concentrate their assets in any one industry. However, a Portfolio may
indirectly invest more than 25% of its total assets in one industry through
its investments in the underlying STI Classic Funds. Each Portfolio may
invest up to 100% of its assets in securities issued by investment
companies;
6. Purchase or sell real estate, unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent a Portfolio
from investing in securities or other instruments either issued by
companies that invest in real estate, backed by real estate or securities
of companies engaged in the real estate business);
7. Purchase or sell physical commodities, unless acquired as a result of
ownership of securities or other instruments; and
B-41
<PAGE>
8. Lend any security or make any other loan, except as permitted by the 1940
Act.
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, U.S.
Treasury Money Market Fund, and Tax-Exempt Money Market Funds) would be invested
in illiquid securities.
Each Portfolio does not currently intend to purchase securities on margin,
except that a Portfolio may obtain such short-term credits as are necessary for
the clearance of transactions.
Each Portfolio does not currently intend to sell securities short.
Each Portfolio does not currently intend to purchase or sell futures contracts
or put or call options.
Each Portfolio may not invest in shares of unaffiliated money market funds,
except as permitted by the SEC.
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 ADVISERS
The Trust and STI Capital Management, N.A., Trusco Capital Management, Inc., and
SunTrust Bank, Atlanta (the "Advisers") have entered into advisory agreements
with the Trust (the "Advisory Agreements"). The Advisers are indirect
wholly-owned subsidiaries of SunTrust Banks, Inc. ("SunTrust"). SunTrust is a
southeastern regional bank holding company with assets of $90.7 billion as of
July 1, 1999. The Advisory Agreements provide that each Adviser 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 Adviser but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by certain states, the Adviser and/or the
Administrator will bear the amount of such excess. The Adviser 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
B-42
<PAGE>
majority of the outstanding shares of the Funds, on not less than 30 days' nor
more than 60 days' written notice to the Adviser, or by the Adviser on 90 days'
written notice to the Trust.
For its advisory services, STI Capital Management is entitled to a fee, which is
calculated daily and paid monthly, at the annual rate of: .95% of the average
daily net assets of the Balanced Fund, 1.15% of the average daily net assets of
the Capital Appreciation Fund and Small Cap Equity Fund, 1.30% of the average
daily net assets of the Emerging Markets Equity Fund, .65% of the average daily
net assets of the Florida Tax-Exempt Bond Fund and Limited-Term Federal Mortgage
Securities Fund, 1.25% of the average daily net assets of the International
Equity Fund, .74% of the average daily net assets of the Investment Grade Bond
Fund and Investment Grade Tax-Exempt Bond Fund, and .80% of the average daily
net assets of the Value Income Stock Fund.
For its advisory services, SunTrust Bank, Atlanta is entitled to a fee, which
is calculated daily and paid monthly, at the annual rate of: .65% of the
average daily net assets of the Georgia Tax-Exempt Bond Fund. For its
advisory services, Trusco Capital Management is entitled to a fee, which is
calculated daily and paid monthly, at the annual rate of: 1.10% of the
average daily net assets of the Core Equity Fund and E-Commerce Opportunity
Fund, 1.30% of the average daily net assets of the Emerging Markets Equity
Fund, .90% of the average daily net assets of the Growth and Income Fund and
International Equity Index Fund, .65% of the average daily net assets of the
Maryland Municipal Bond Fund, Prime Quality Money Market Fund, Short-Term
Bond Fund, Short Term U.S. Treasury Securities Fund, U.S. Government
Securities Money Market Fund, U.S. Treasury Money Market Fund, Virginia
Intermediate Bond Fund, and Virginia Municipal Bond Fund, 1.15% of the
average daily net assets of the Small Cap Growth Stock Fund, Sunbelt Equity
Fund, and Tax Sensitive Growth Stock Fund, .55% of the average daily net
assets of the Tax-Exempt Money Market Fund, .40% of the average daily net
assets of the Tax-Free Money Market Fund, .74% of the average daily net
assets of the U.S. Government Securities Fund, .25% of the average daily net
assets of the Life Vision Balanced Portfolio, Life Vision Growth and Income
Portfolio and Life Vision Maximum Growth Portfolio.
For the fiscal years ended May 31, 1999, 1998, and 1997, the Funds paid the
following advisory fees:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
FEES PAID FEES WAIVED OR REIMBURSED
------------------------------------------------------------------------------------
FUND 1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $ 2,545,612 $ 1,561,250 $ 1,025,089 $ 248,175 $ 225,921 $ 151,557
- ----------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $23,290,783 $17,607,676 $12,775,800 $ 1,878,163 $ 1,818,241 $ 1,227,247
- ----------------------------------------------------------------------------------------------------------------
Core Equity Fund * * * * * *
- ----------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity * * * * * *
Fund
- ----------------------------------------------------------------------------------------------------------------
Emerging Markets Equity $ 353,884 $ 532,879 $ 84,210 $ 11,313 $ 90,361 $ 52,769
Fund
- ----------------------------------------------------------------------------------------------------------------
Growth and Income Fund+ $ 2,557,502 $ 4,336,987 $ 2,617,223 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------
International Equity Fund $ 7,655,210 $ 7,200,723 $ 4,336,172 $ 308,111 $ 69,504 $ 157,567
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
B-43
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
FEES PAID FEES WAIVED OR REIMBURSED
------------------------------------------------------------------------------------
FUND 1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
International Equity Index $ 563,401 $ 542,649 $ 578,197 $ 69,541 $ 76,513 $ 80,147
Fund
- ----------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 3,717,216 $ 3,846,835 $ 3,008,690 $ 354,916 $ 422,281 $ 318,871
- ----------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund $ 3,701,484 $ 3,249,839 $ 273,710 $ 161,431 $ 329,047 $ 48,251
- ----------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock $ 314,194 * * $ 78,750 * *
Fund
- ----------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 3,788,317 $ 4,772,466 $ 4,399,351 $ 417,491 $ 515,457 $ 42,535
- ----------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth $ 1,007,528 * * $ 123,598 * *
Stock Fund
- ----------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $15,302,049 $15,826,018 $12,025,425 $ 0 $ 0 $ 392
- ----------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond $ 803,898 $ 419,460 $ 220,701 $ 133,397 $ 120,797 $ 72,605
Fund
- ----------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt $ 575,142 $ 300,318 $ 181,715 $ 95,940 $ 93,650 $ 63,837
Bond Fund
- ----------------------------------------------------------------------------------------------------------------
Investment Grade Bond $ 6,499,072 $ 4,883,197 $ 4,147,888 $ 742,556 $ 794,236 $ 644,859
Fund
- ----------------------------------------------------------------------------------------------------------------
Investment Grade Tax- $ 1,381,082 $ 1,118,840 $ 1,081,635 $ 191,430 $ 208,488 $ 190,250
Exempt Bond Fund
- ----------------------------------------------------------------------------------------------------------------
Limited-Term Federal $ 955,171 $ 739,677 $ 540,017 $ 153,180 $ 158,869 $ 150,604
Mortgage Securities Fund
- ----------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond $ 84,391 $ 50,300 $ 18,497 $ 48,919 $ 61,300 $ 15,422
Fund+
- ----------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 889,938 $ 554,291 $ 485,613 $ 139,499 $ 164,522 $ 138,732
- ----------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury $ 352,070 $ 150,659 $ 83,694 $ 61,000 $ 77,862 $ 72,064
Securities Fund
- ----------------------------------------------------------------------------------------------------------------
U.S. Government $ 380,132 $ 187,053 $ 91,748 $ 57,540 $ 54,354 $ 58,637
Securities Fund
- ----------------------------------------------------------------------------------------------------------------
Virginia Intermediate $ 641,310 $ 1,248,000 $ 430,612 $ 0 $ 0 $ 0
Municipal Bond Fund+
- ----------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond $ 109,885 $ 167,000 $ 72,398 $ 19,517 $ 28,000 $ 12,074
Fund+
- ----------------------------------------------------------------------------------------------------------------
Prime Quality Money $17,530,383 $ 9,510,944 $ 7,586,108 $ 4,355,704 $ 2,699,560 $ 2,181,008
Market Fund
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
B-44
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
FEES PAID FEES WAIVED OR REIMBURSED
------------------------------------------------------------------------------------
FUND 1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money $ 4,121,914 $ 2,218 $ 1,687,976 $ 1,057,349 $ 881,994 $ 673,486
Market Fund
- ----------------------------------------------------------------------------------------------------------------
Tax-Free Money Market $ 606,611 $ 963,325 $ 732,401 $ 2,867 $ 0 $ 0
Fund+
- ----------------------------------------------------------------------------------------------------------------
U.S. Government $ 2,991,771 $ 1,983,590 $ 1,935,898 $ 607,412 $ 580,236 $ 518,656
Securities Money Market
Fund
- ----------------------------------------------------------------------------------------------------------------
U.S. Treasury Money $ 1,485,679 $ 2,412 $ 732,401 $ 20,972 $ 0 $ 0
Market Fund+
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
*Not in operation during the period.
+ Prior to May 24, 1999, advisory fees were paid by the predecessor to this
fund pursuant to an agreement between the CrestFunds and the Adviser for the
fiscal years ended November 30, 1999, November 30, 1998, and November 30,
1997, respectively.
Crestar Asset Management Company served as the Adviser to the predecessors of
the Life Vision Balanced, Life Vision Growth and Income, and Life Vision Maximum
Growth Portfolios.
For the fiscal years ended May 31, the Portfolios paid the following advisory
fees:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
FEES PAID FEES WAIVED OR REIMBURSED
-------------------------------------------------------------------------
FUND 1999 1998 1997 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Life Vision Balanced Portfolio+ $114,314 $233,180 $ 93,141 $ 54,595 $119,987 $ 48,499
- --------------------------------------------------------------------------------------------------------------
Life Vision Growth and $ 25,358 $ 53,342 $ 22,542 $ 15,141 $ 32,109 $ 13,685
Income Portfolio+
- --------------------------------------------------------------------------------------------------------------
Life Vision Maximum Growth $ 21,986 $ 39,508 $ 13,269 $ 13,352 $ 25,574 $ 9,042
Portfolio+
- --------------------------------------------------------------------------------------------------------------
</TABLE>
+ Prior to May 24, 1999, advisory fees were paid by the predecessor to
this fund pursuant to an agreement between The CrestFunds and the
Adviser for the fiscal years ended November 30, 1999, November 30,
1998, and November 30, 1997, respectively.
Each Adviser has agreed to waive its fees or reimburse expenses in order to
limit Fund expenses.
BANKING LAWS
Current interpretations of federal banking laws and regulations:
B-45
<PAGE>
- - prohibit SunTrust and the Advisers from sponsoring, organizing,
controlling, or distributing the Funds' shares; but
- - do not prohibit SunTrust or the Advisers generally from acting as an
investment Adviser, transfer agent, or custodian to the Funds or from
purchasing Fund shares as agent for and upon the order of a customer.
The Advisers believe that they may perform advisory and related services for the
Trust 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
Advisers from continuing to perform services for the Trust. 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
Advisers, or their affiliates, would consider performing additional services for
the Trust. We cannot predict whether these changes will be enacted. We also
cannot predict the terms that the Advisers, or their affiliates, might offer to
provide additional services.
THE ADMINISTRATOR
The Trust and SEI Investments Mutual Funds Services (the "Administrator") are
parties to the Administration 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 ("SEI 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
or sub-administrator to the following other mutual funds: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, Alpha Select Funds, The Arbor Fund, ARK
Funds, Armada Funds, Bishop Street Funds, Boston 1784 Funds(-Registered
Trademark-), CNI Charter Funds, CUFUND, The Expedition Funds, First American
Funds, Inc., First American Investment Funds, Inc., First American Strategy
Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund, Inc., Oak
Associates Funds, The Parkstone Advantage Fund, The PBHG Funds, Inc., PBHG
Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI
Daily Income Trust, SEI Index Funds, SEI Institutional International Trust, SEI
Institutional International Investments Trust, SEI Institutional Managed Trust,
SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Variable Trust, TIP
Funds and UAM Funds, Inc. II.
For its administrative services, the Administrator is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of: .12% of the first $1
billion of average aggregate net assets, .09% on the next $4 billion of average
aggregate net assets, .07% of the next $3 billion of average aggregate net
assets, .065% of the next $2 billion of average aggregate net assets, and .06%
thereafter.
B-46
<PAGE>
For the fiscal years ended May 31, 1999, 1998, and 1997, the Funds paid the
following administration fees:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
FEES PAID FEES WAIVED
-------------------------------------------------------------------------------------
FUND 1999 1998 1997 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $ 208,163 $ 136,092 $ 83,063 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $1,575,430 $1,218,000 $ 817,905 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Core Equity Fund * * * * * *
- ---------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund * * * * * *
- ---------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity Fund $ 21,195 $ 29,039 $ 6,932 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund + $ 493,155 $ 950,402 $ 523,466 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
International Equity Fund $ 476,693 $ 415,520 $ 240,114 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
International Equity Index Fund $ 48,702 $ 43,285 $ 48,464 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 253,448 $ 266,851 $ 194,430 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund $ 250,735 $ 229,578 $ 18,406 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Fund $ 20,515 * * $ 0 * *
- ---------------------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 258,093 $ 329,793 $ 283,101 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock $ 66,610 * * $ 0 * *
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $1,497,697 $1,427,644 $1,009,167 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 96,215 $ 60,551 $ 30,279 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $ 68,828 $ 44,095 $ 25,353 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Fund $ 683,010 $ 549,688 $ 435,278 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt $ 146,363 $ 128,433 $ 115,500 $ 0 $ 0 $ 0
Bond Fund
- ---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage $ 114,528 $ 99,420 $ 71,264 $ 0 $ 0 $ 0
Securities Fund
- ---------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond $ 32,996 $ 26,561 $ 4,627 $ 0 $ 0 $ 4,627
Fund+
- ---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 106,351 $ 80,065 $ 64,664 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury $ 42,157 $ 25,973 $ 16,075 $ 0 $ 0 $ 0
Securities Fund
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities $ 39,700 $ 23,704 $ 13,641 $ 0 $ 0 $ 0
Fund
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-47
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
FEES PAID FEES WAIVED
-------------------------------------------------------------------------------------
FUND 1999 1998 1997 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Virginia Intermediate $ 185,163 $ 375,000 $ 138,184 $ 0 $ 384 $ 0
Municipal Bond Fund +
- ---------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Fund + $ 27,344 $ 46,000 $ 18,111 $ 19,949 $ 36,000 $ 18,111
- ---------------------------------------------------------------------------------------------------------------------------
Prime Quality Money Market $2,092,485 $ 784,975 $ 661,962 $ 249,822 $ 570,531 $ 347,518
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market $ 583,271 $ 398,493 $ 288,647 $ 0 $ 9,560 $ 0
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Tax-Free Money Market Fund + $ 222,145 $ 366,000 $ 275,026 $ 0 $ 65 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities $ 358,833 $ 236,106 $ 212,454 $ 2,621 $ 46,908 $ 41,257
Money Market Fund
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market $ 549,645 $ 927,000 $ 592,194 $ 0 $ 0 $ 0
Fund +
- ---------------------------------------------------------------------------------------------------------------------------
Life Vision Balanced Portfolio + $ 19,970 $ 13,337
- ---------------------------------------------------------------------------------------------------------------------------
Life Vision Growth and Income $ 20,120 $ 18,179
Portfolio +
- ---------------------------------------------------------------------------------------------------------------------------
Life Vision Maximum Growth $ 20,472 $ 19,058
Portfolio +
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not in operation during the period.
+ Prior to May 24, 1999, administrator fees were paid by the predecessor to this
fund pursuant to an agreement between the CrestFunds and the Administrator for
the fiscal years ended November 30, 1999, November 30, 1998, and November 30,
1997, respectively.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI, and the Trust have entered into a distribution agreement (the
"Distribution Agreement") dated May 29, 1992. Under the Distribution Agreement,
the Distributor must use all reasonable efforts, consistent with its other
business, in connection with the continuous offering of Shares of the Trust. The
Distributor will receive no compensation for distribution of Trust Shares. In
addition, the Investor Shares of the Funds have a distribution plan (the
"Investor Plan"), and the Flex Shares of the Funds have a distribution and
service plan (the "Flex Plan").
The Distribution Agreement is renewable annually and may be terminated by the
Distributor, the disinterested Trustees, or by a majority vote of the
outstanding securities of the Trust upon not more than 60 days' written notice
by either party.
B-48
<PAGE>
For the fiscal years ended May 31, 1999, 1998, and 1997, the aggregate sales
charges payable to the Distributor with respect to the Investor Shares of the
Funds were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
AGGREGATE SALES CHARGE PAYABLE TO AMOUNT RETAINED BY DISTRIBUTOR
DISTRIBUTOR
FUND -------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $ 32,000 $ 48,373 $ 13,525 $ 7,780 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $1,916,000 $ 560,435 $ 264,747 $ 127,525 $ 312 $ 958
- ---------------------------------------------------------------------------------------------------------------------------------
Core Equity Fund * * * * * *
- ---------------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund * * * * * *
- ---------------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund + $ 26,000 $ 50,000 $ 323,215 $ 16,000 $ 50,000 $ 28,268
- ---------------------------------------------------------------------------------------------------------------------------------
International Equity Fund $ 51,756 $ 93,755 $ 0 $ 16,007 $ 16 $ 0
- ---------------------------------------------------------------------------------------------------------------------------------
International Equity Index Fund $ 22,000 $ 5,285 $ 0 $ 51,229 $ 16 $ 0
- ---------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 90,000 $ 93,073 $ 31,167 $ 6,975 $ 26 $ 61
- ---------------------------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 97,000 $ 57,613 $ 36,784 $ 6,801 $ 0 $ 47
- ---------------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $ 638,471 $ 576,856 $ 335,991 $ 0 $ 361 $ 100
- ---------------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 7,000 $ 7,296 $ 3,657 $ 2,173 $ 0 $ 24
- ---------------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $ 6,000 $ 7,871 $ 6,999 $ 6,260 $ 0 $ 97
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Fund $ 142,000 $ 54,658 $ 32,358 $ 36,642 $ 0 $ 62
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt $ 115,000 $ 10,402 $ 14,487 $ 11,683 $ 36 $ 20
Bond Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal $ 6,000 $ 485 $ 882 $ 1,486 $ 0 $ 11
Mortgage Securities Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 4,000 $ 1,056 $ 617 $ 4,278 $ 10 $ 0
- ---------------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury $ 5,000 $ 547 $ 796 $ 5,266 $ 4 $ 0
Securities Fund
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities $ 4,000 $ 23,873 $ 766 $ 1,771 $ 0 $ 3
Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate Municipal $ 6,000 $ 13,000 $ 25,358 $ 5,894 $ 13,000 $ 2,316
Bond Fund +
- ---------------------------------------------------------------------------------------------------------------------------------
Prime Quality Money Market $ 1,157 $ 716 N/A $ 188 $ 251 N/A
Fund
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities $ 104 $ 214 N/A $ 49 $ 27 N/A
Money Market Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $ 214 $ 190 N/A $ 58 $ 64 N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Tax-Free Money Market Fund $ 14 $ 33 N/A $ 14 $ 33 N/A
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Prior to May 24, 1999, sales charges were paid by the predecessor to this fund
pursuant to an agreement between the CrestFunds and the Distributor for the
fiscal years ended November 30, 1999, November 30, 1998, and November 30, 1997,
respectively.
B-49
<PAGE>
The following table shows the amount of front-end sales charge that is paid to
Investment Consultants (Dealers) as a percentage of the offering price of those
Shares:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
DEALERS' REALLOWANCE AS A PERCENTAGE OF OFFERING PRICE
--------------------------------------------------------------------
FUND(S) $100,000 but $250,000 but
Less than less than less than $1,000,000
$100,000 $250,000 $1,000,000 and over
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced, Capital Appreciation, Growth and 3.375% 2.925% 2.250% 1.350%
Income Fund, International Equity Index,
International Equity, Mid-Cap Equity, Small
Cap Equity, Sunbelt Equity, Value Income
Stock, Florida Tax-Exempt Bond, Georgia
Tax-Exempt Bond, Investment Grade Bond,
Investment Grade Tax-Exempt Bond, U.S.
Government Securities, and Virginia
Intermediate Bond Fund
- ---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage Securities Fund 2.250% 1.575% 1.125% None
- ---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund 1.800% 1.350% 0.900% None
- ---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund 0.900% 0.675% 0.450% None
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
For the fiscal years ended May 31, 1999, 1998 and 1997, the aggregate sales
charges payable to the Distributor with respect to the Flex Shares of the Funds
were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
AGGREGATE SALES CHARGE PAYABLE AMOUNT RETAINED BY DISTRIBUTOR
FUND TO DISTRIBUTOR
-------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $ 441,000 $ 11,758 $ 4,299 $ 14,028 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $1,276,420 $ 60,500 $ 18,958 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Core Equity Fund * * * * * *
- -------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund $ 136 * * * * *
- -------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund + $ 136,000 $ 203 $ 0 $ 21,000 $ 51,745 $ 22,970
- -------------------------------------------------------------------------------------------------------------------------
International Equity Fund $ 193,720 $ 23,393 $ 0 $ 51,000 $ 0 *
- -------------------------------------------------------------------------------------------------------------------------
International Equity Index Fund $ 12,866 $ 992 $ 0 $ 4,378 $ 0 *
- -------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 136,000 $ 8,666 $ 10,239 $ 25,502 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund $ 136,000 $ 0 $ 0 $ 63,824 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Fund $ 12,000 * * $ 8,257 * *
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-50
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
AGGREGATE SALES CHARGE PAYABLE AMOUNT RETAINED BY DISTRIBUTOR
FUND TO DISTRIBUTOR
-------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax Sensitive Growth Stock Fund $ 144,000 * * $ 8,880 * *
- -------------------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 63,000 $ 4,183 $ 8,144 $ 19,557 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $ 1,000 $ 112,674 $ 41,778 $ 9,021 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 115,000 $ 2,556 $ 1,632 $ 47,200 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $ 100,000 $ 3,920 $ 2,915 $ 41,114 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Fund $ 183,000 $ 10,040 $ 5,684 $ 47,023 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt $ 107,000 $ 2,900 $ 10,407 $ 29,696 $ 0 $ 0
Bond Fund
- -------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage $ 18,000 $ 2,805 $ 2,067 $ 17,676 $ 0 $ 0
Securities Fund
- -------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond Fund + $ 24,464 $ 18 $ 0 $ 0 $ 1,000 $ 1,644
- -------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 21,000 $ 1,395 $ 1,678 $ 20,743 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury $ 27,000 $ 2,377 $ 8,261 $ 26,536 $ 0 $ 0
Securities Fund
- -------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund $ 54,000 $ 2,014 $ 2,823 $ 21,800 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Fund + $ 25,146 $ 26 $ 0 $ 0 $ 1,000 $ 4,362
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Not in operation during the period.
+ Prior to May 24, 1999, sales charges fees were paid by the predecessor to this
fund pursuant to an agreement between the CrestFunds and the Distributor for the
fiscal years ended November 30, 1999, November 30, 1998, and November 30, 1997,
respectively.
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: .28% of the average daily net assets of the
Balanced Fund; .68% of the average daily net assets of the Capital Appreciation
Fund; .45% of the average daily net assets of the Core Equity Fund, .55% of the
average daily net assets of the E-Commerce Opportunity Fund, .25% of the average
daily net assets of the Growth and Income Fund, .33% of the average daily net
assets of the International Equity Fund; .38% of the average daily net assets of
the International Equity Index 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; .33% of the average daily net assets of the Value Income Stock 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;.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; .23% of the average
daily net assets of the Limited-
B-51
<PAGE>
Term Federal Mortgage Securities Fund; .23% of the average daily net assets of
the Short-Term Bond Fund; .18% of the average daily net assets of the Short-Term
U.S. Treasury Securities Fund; .38% of the average daily net assets of the U.S.
Government Securities Fund; .15% of the Virginia Intermediate Municipal Bond
Fund, .20% of the average daily net assets of the Prime Quality Money Market
Fund; .15% of the average daily net assets of the Tax-Exempt Money Market Fund;
.40% of the average daily net assets of the Tax-Free Money Market Fund and .17%
of the average daily net assets of the U.S. Government Securities Money Market
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 disinterested 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 disinterested 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',
B-52
<PAGE>
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, 1999, 1998 and 1997, the Funds paid the
following amounts pursuant to the Investor Plan:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
DISTRIBUTION FEES - AMOUNT PAID
----------------------------------------
1999 1998 1997
FUND
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Fund $ 23,800 $ 5,628 $ 2,390
- ------------------------------------------------------------------------------------------
Capital Appreciation Fund $1,788,277 $1,442,648 $1,109,436
- ------------------------------------------------------------------------------------------
Core Equity Fund * * *
- ------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund * * *
- ------------------------------------------------------------------------------------------
Growth and Income Fund $ 9,546 $ 0 $ 323,215
- ------------------------------------------------------------------------------------------
International Equity Fund $ 44,271 $ 34,499 $ 10,778
- ------------------------------------------------------------------------------------------
International Equity Index Fund $ 17,681 $ 7,582 $ 8,005
- ------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 83,377 $ 70,254 $ 56,187
- ------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 90,209 $ 91,069 $ 80,282
- ------------------------------------------------------------------------------------------
Value Income Stock Fund $ 638,471 $ 630,527 $ 437,882
- ------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 4,353 $ 0 $ 0
- ------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------
Investment Grade Bond Fund $ 106,142 $ 96,090 $ 94,495
- ------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Fund $ 103,735 $ 76,472 $ 100,819
- ------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage Securities Fund $ 4,211 $ 161 $ 0
- ------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 0 $ 33 $ 0
- ------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------
U.S. Government Securities Fund $ 9,461 $ 385 $ 1,150
- ------------------------------------------------------------------------------------------
Virginia Intermediate Municipal Bond Fund $ 0 $ 0
- ------------------------------------------------------------------------------------------
Prime Quality Money Market Fund $ 969,143 $ 465,411 $ 342,798
- ------------------------------------------------------------------------------------------
U.S. Government Securities Money Market Fund $ 55,233 $ 69,957 $ 66,016
- ------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $ 156,035 $ 125,986 $ 89,912
- ------------------------------------------------------------------------------------------
Tax-Free Money Market Fund $ 0
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
B-53
<PAGE>
For the fiscal years ended May 31, 1999, 1998 and 1997, the Funds paid the
following amounts pursuant to the Flex Plan:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
DISTRIBUTION FEES - AMOUNT PAID
----------------------------------------
1999 1998 1997
FUND
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Fund $ 427,125 $ 125,786 $ 28,723
- ------------------------------------------------------------------------------------------
Capital Appreciation Fund $1,276,420 $ 672,585 $ 201,520
- ------------------------------------------------------------------------------------------
Core Equity Fund * * *
- ------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund * * *
- ------------------------------------------------------------------------------------------
Growth and Income Fund $ 9,115 $ 52
- ------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 146,976 $ 123,932 $ 53,907
- ------------------------------------------------------------------------------------------
International Equity Fund $ 142,491 $ 148,500 $ 18,519
- ------------------------------------------------------------------------------------------
International Equity Index Fund $ 8,488 $ 2,090 $ 0
- ------------------------------------------------------------------------------------------
Small Cap Equity Fund $ 210,796 $ 155,949 *
- ------------------------------------------------------------------------------------------
Small Cap Growth Stock Fund $ 4,174 * *
- ------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 43,891 $ 50,902 $ 27,568
- ------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Fund $ 134,651 * *
- ------------------------------------------------------------------------------------------
Value Income Stock Fund $1,661,859 $1,234,587 $ 433,655
- ------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 67,973 $ 30,177 $ 5,962
- ------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $ 58,863 $ 30,028 $ 20,094
- ------------------------------------------------------------------------------------------
Investment Grade Bond Fund $ 135,936 $ 56,167 $ 29,558
- ------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Fund $ 66,139 $ 39,461 $ 36,489
- ------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage Securities Fund $ 0 $ 533 $ 0
- ------------------------------------------------------------------------------------------
Maryland Municipal Bond Fund $ 24,464 $ 17,000
- ------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 0 $ 379 $ 0
- ------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund $ 0 $ 170 $ 510
- ------------------------------------------------------------------------------------------
U.S. Government Securities Fund $ 32,173 $ 17,051 $ 15,260
- ------------------------------------------------------------------------------------------
Virginia Municipal Bond Fund $ 25,146 $ 25,000
- ------------------------------------------------------------------------------------------
</TABLE>
*Not in operation during the period.
B-54
<PAGE>
THE TRANSFER AGENT
Federated Services Company, Federated Investors Tower, Pittsburgh, PA 15222-3779
serves as the Trust's transfer agent.
THE CUSTODIAN
SunTrust Bank, Atlanta, 303 Peachtree Street N.E., 14th Floor, Atlanta, GA 30308
serves as the custodian for the all of Funds except for the Emerging Markets,
International Equity and International Equity Index Funds. The Bank of New York,
One Wall Street, New York, NY 10286 serves as custodian for the Emerging
Markets, International Equity and International Equity Index Funds.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP serves as independent public accountants for the Trust.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP serves as legal counsel to the Trust.
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees supervise the management and affairs of the Trust. The Trustees
have approved contracts with certain companies that provide the Trust with
essential management services. 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, Armada Funds, Bishop Street Funds, Boston 1784
Funds -Registered Trademark-, CNI Charter Funds, CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund,
Inc., Oak Associates Funds, The Parkstone Advantage Fund, The Pillar Funds, The
PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional International Trust,
SEI Institutional Investments Trust, SEI Institutional Managed 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
Investments Mutual Funds Services or its affiliates and 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.
B-55
<PAGE>
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 - Director, Stavros Center for
Economic Education, Florida State University, 1991-present. 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.
JONATHAN T. WALTON (3/28/30) - Trustee - Retired. Executive Vice President, NBD
Bank, N.A. and NBD Bancorp, October 1956 to March 1995. Trustee, W.K. Kellogg
Trust.
WILLIAM H. CAMMACK (11/24/29) - Trustee* - Chairman & Director, SunTrust
Equitable Securities Corporation, January, 1998-present. Chairman and CEO,
Equitable Asset Management, Inc., December 1993- present. Chairman & CEO,
Equitable Trust Company, June 1991-present. Chairman, Equitable Securities
Corporation, July 1972 - January 1998.
MARK NAGLE (10/20/59) - President, Controller, Treasurer and Chief Financial
Officer - President of the Administrator and Senior Vice President of SEI
Investments Mutual Funds Services Operations Group since 1998. Vice President of
the Administrator and Vice President of Fund Accounting and Administration of
SEI Investments Mutual Funds Services, 1996-1998. Vice President of the
Distributor since December 1997. Senior Vice President, Fund Administration,
BISYS Fund Services, September 1995-November 1996. Senior Vice President and
Site Manager, Fidelity Investments 1981- September 1995.
JAMES R. FOGGO (DOB 02/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI Investments since 1998. Vice President
and Assistant Secretary of the Administrator and the Distributor since May 1999.
Associate, Paul Weiss, Rifkind, Wharton & Garrison (law firm), 1998. Associate,
Baker & McKenzie (law firm), 1995-1998. Associate, Battle Fowler L.L.P. (law
firm), 1993-1995.
LYDIA A. GAVALIS (6/5/64) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Assistant General Counsel and Director of Arbitration, Philadelphia Stock
Exchange, 1989-1998.
B-56
<PAGE>
KATHY HEILIG (12/21/58) - Vice President and Assistant Secretary - Treasurer of
SEI Investments Company since 1997. Assistant Controller of SEI Investments
Company since 1995. Vice President of SEI Investments Company since 1991.
LYNDA J. STRIEGEL (10/30/48) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Senior Asset Management Counsel, Barnett Banks, Inc., 1997-1998. Partner,
Groom and Nordberg, Chartered, 1996-1997. Associate General Counsel, Riggs Bank,
N.A., 1991-1995.
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.
RICHARD W. GRANT (10/25/45) - Secretary - 1701 Market Street, Philadelphia,
Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to
the Trust, Administrator and Distributor, since 1989.
JOHN H. GRADY, JR. (6/1/61) - Assistant Secretary -1701 Market Street,
Philadelphia, Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law
firm), counsel to the Trust, Administrator and Distributor, since 1993.
- --------------------------
* Messrs. Looney, Goodrum, McNair, and Cammack may be deemed to be
"interested persons" 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, 1999, the Trust paid the following amounts to
Trustees and Officers of the Trust:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
ESTIMATED
PENSION OR ANNUAL TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS BENEFITS FROM FUND AND FUND
COMPENSATION ACCRUED AS PART OF UPON COMPLEX PAID TO
NAME OF PERSON, POSITION FROM FUND FUND EXPENSES RETIREMENT TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel S. Goodrum, $16,000 N/A N/A $18,000 for service on
Trustee two boards
- ----------------------------------------------------------------------------------------------------------------------------
Wilton Looney, Trustee $18,000 N/A N/A $18,000 for service on
two boards
- ----------------------------------------------------------------------------------------------------------------------------
Champney A. McNair, $16,000 N/A N/A $18,000 for service on
Trustee two boards
- ----------------------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, Trustee $16,000 N/A N/A $18,000 for service on
two boards
- ----------------------------------------------------------------------------------------------------------------------------
T. Gordy Germany, $16,000 N/A N/A $18,000 for service on
Trustee two boards
- ----------------------------------------------------------------------------------------------------------------------------
Dr. Bernard F. Sliger, Trustee $16,000 N/A N/A $18,000 for service on
two boards
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-57
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
ESTIMATED
PENSION OR ANNUAL TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS BENEFITS FROM FUND AND FUND
COMPENSATION ACCRUED AS PART OF UPON COMPLEX PAID TO
NAME OF PERSON, POSITION FROM FUND FUND EXPENSES RETIREMENT TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jonathan T. Walton, Trustee $11,500 N/A N/A $13,000 for service on
two boards
- ----------------------------------------------------------------------------------------------------------------------------
William H. Cammack, N/A N/A N/A $ 0 for service on
Trustee* two boards
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Messr. Cammack is an "interested person" of the Trust as defined in the
Investment Company Act of 1940.
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
SEVEN-DAY YIELD
The current yield of the Money Market Funds will be calculated daily based upon
the seven days ending on the date of calculation (the "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 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
B-58
<PAGE>
Period Return + 1) TO THE POWER OF 365/7] - 1. The current and the effective
yields reflect the reinvestment of net income earned daily on portfolio assets.
The Tax-Exempt Money Market Fund's "tax equivalent yield" and "tax equivalent
effective yield" are 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 E
equals the 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:
(E)
TAX EQUIVALENT YIELD = ------- + T
(1 - P)
E = the portion of the yield which is tax-exempt
P = stated income tax rate
T = the portion of the yield which is taxable
For the 7-day period ended May 31, 1999, 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 OF 7-DAY YIELD EFFECTIVE YIELD YIELD EFFECTIVE YIELD
SHARES
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prime Quality Money Trust 4.40% 4.49% N/A N/A
Market Fund -------------------------------------------------------------------------------------------------
Investor 4.23% 4.32% N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Trust 2.70% 2.74% 4.47% 4.54%
Market Fund -------------------------------------------------------------------------------------------------
Investor 2.60% 2.63% 4.30% 4.35%
- -----------------------------------------------------------------------------------------------------------------------------
Tax-Free Money Trust 2.96% 3.00% 4.90% 4.97%
Market Fund -------------------------------------------------------------------------------------------------
Investor 2.80% 2.84% 4.64% 4.70%
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Government Trust 4.20% 4.29% N/A N/A
Securities Money -------------------------------------------------------------------------------------------------
Market Fund Investor 4.06% 4.15% N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Trust 4.35% 4.44% N/A N/A
Market Fund
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</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.
B-59
<PAGE>
THIRTY-DAY YIELD
The Bond, Short-Term U.S. Treasury, Tax-Exempt Bond, Equity Funds and Life
Vision Portfolios may advertise a 30-day yield. In particular, yield will be
calculated according to the following formula:
Yield = (2 (a-b/cd + 1) TO THE POWER OF 6 - 1) where a = dividends and interest
earned during the period; b = expenses accrued for the period (net of
reimbursement); c = the average 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, 1999, yields on the Funds other than the
Money Market Funds were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
FUND CLASS OF SHARES YIELD
- ------------------------------------------------------------------------------------
<S> <C> <C>
Balanced Fund Trust Shares 2.12%
-----------------------------------------------
Investor Shares 1.75%
-----------------------------------------------
Flex Shares 1.05%
- ------------------------------------------------------------------------------------
Capital Appreciation Fund Trust Shares 0.00%
-----------------------------------------------
Investor Shares 0.00%
-----------------------------------------------
Flex Shares 0.00%
- ------------------------------------------------------------------------------------
Core Equity Fund Trust Shares *
-----------------------------------------------
Investor Shares *
-----------------------------------------------
Flex Shares *
- ------------------------------------------------------------------------------------
E-Commerce Opportunity Fund Trust Shares *
-----------------------------------------------
Investor Shares *
-----------------------------------------------
Flex Shares *
- ------------------------------------------------------------------------------------
Emerging Markets Equity Fund Trust Shares --
- ------------------------------------------------------------------------------------
Growth and Income Fund Trust Shares 0.32%
-----------------------------------------------
Investor Shares 0.32%
-----------------------------------------------
Flex Shares 0.00%
- ------------------------------------------------------------------------------------
International Equity Fund Trust Shares --
-----------------------------------------------
Investor Shares --
-----------------------------------------------
Flex Shares --
- ------------------------------------------------------------------------------------
</TABLE>
B-60
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
FUND CLASS OF SHARES YIELD
- ------------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------
International Equity Index Fund Trust Shares --
-----------------------------------------------
Investor Shares --
-----------------------------------------------
Flex Shares --
- ------------------------------------------------------------------------------------
Mid-Cap Equity Fund Trust Shares 0.00%
-----------------------------------------------
Investor Shares 0.00%
-----------------------------------------------
Flex Shares 0.00%
- ------------------------------------------------------------------------------------
Small Cap Equity Fund Trust Shares 1.10%
-----------------------------------------------
Flex Shares 0.07%
- ------------------------------------------------------------------------------------
Small Cap Growth Stock Fund Trust Shares 0.00%
-----------------------------------------------
Investor Shares *
-----------------------------------------------
Flex Shares 0.00%
- ------------------------------------------------------------------------------------
Sunbelt Equity Fund Trust Shares 0.00%
-----------------------------------------------
Investor Shares 0.00%
-----------------------------------------------
Flex Shares 0.00%
- ------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Fund Trust Shares 0.26%
-----------------------------------------------
Flex Shares 0.00%
- ------------------------------------------------------------------------------------
Value Income Stock Fund Trust Shares 1.86%
-----------------------------------------------
Investor Shares 1.43%
-----------------------------------------------
Flex Shares 0.73%
- ------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund Trust Shares 3.80%
-----------------------------------------------
Investor Shares 3.45%
-----------------------------------------------
Flex Shares 3.14%
- ------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund Trust Shares 3.74%
-----------------------------------------------
Investor Shares 3.40%
-----------------------------------------------
Flex Shares 3.05%
- ------------------------------------------------------------------------------------
</TABLE>
B-61
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
FUND CLASS OF SHARES YIELD
- ------------------------------------------------------------------------------------
<S> <C> <C>
Investment Grade Bond Fund Trust Shares 5.91%
-----------------------------------------------
Investor Shares 5.42%
-----------------------------------------------
Flex Shares 5.20%
- ------------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Trust Shares 3.61%
Fund -----------------------------------------------
Investor Shares 3.10%
-----------------------------------------------
Flex Shares 2.76%
- ------------------------------------------------------------------------------------
Limited-Term Federal Mortgage Trust Shares 5.33%
Securities Fund -----------------------------------------------
Investor Shares 4.93%
-----------------------------------------------
Flex Shares 4.73%
- ------------------------------------------------------------------------------------
Maryland Municipal Bond Fund Trust Shares 3.47%
-----------------------------------------------
Flex Shares 2.59%
- ------------------------------------------------------------------------------------
Short-Term Bond Fund Trust Shares 5.15%
-----------------------------------------------
Investor Shares 4.92%
-----------------------------------------------
Flex Shares 4.67%
- ------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Trust Shares 4.49%
Fund -----------------------------------------------
Investor Shares 4.30%
-----------------------------------------------
Flex Shares 4.14%
- ------------------------------------------------------------------------------------
U.S. Government Securities Fund Trust Shares 6.09%
-----------------------------------------------
Investor Shares 5.87%
-----------------------------------------------
Flex Shares 5.46%
- ------------------------------------------------------------------------------------
Virginia Intermediate Municipal Trust Shares 3.83%
Bond Fund -----------------------------------------------
Investor Shares 3.77%
- ------------------------------------------------------------------------------------
Virginia Municipal Bond Fund Trust Shares 4.17%
-----------------------------------------------
Flex Shares 3.27%
- ------------------------------------------------------------------------------------
</TABLE>
B-62
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
FUND CLASS OF SHARES YIELD
- ------------------------------------------------------------------------------------
<S> <C> <C>
Life Vision Balanced Portfolio Trust Shares 1.85%
- ------------------------------------------------------------------------------------
Life Vision Growth and Income Trust Shares 1.38%
Portfolio
- ------------------------------------------------------------------------------------
Life Vision Maximum Growth Trust Shares 0.02%
Portfolio
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
*Not in operation during the period.
The Tax-Exempt Bond Funds' "tax equivalent yield" and "tax equivalent effective
yield" are 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 E equals the
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:
E
TAX EQUIVALENT YIELD = ------- + T
(1 - P)
E = the portion of the yield which is tax-exempt
P = stated income tax rate
T = the portion of the yield which is taxable
Tax equivalent yields assume the payment of federal income taxes at a rate of
39.6%, for the Georgia Tax-Exempt Bond Fund, Georgia income taxes at a rate of
6.0%, for the Maryland Municipal Bond Fund, Maryland taxes at a rate of 7.9%,
and for the Virginia Intermediate Municipal and Virginia Municipal Bond Funds,
Virginia taxes at a rate of 5.75%.
For the 30-day period ended May 31, 1999, the tax-equivalent yields for the
Trust Shares were as follows: for the Florida Tax-Exempt Bond Fund - 6.29%,
Georgia Tax-Exempt Bond Fund - 6.88%, Investment Grade Tax-Exempt Bond Fund -
5.98%, Maryland Municipal Bond Fund - 6.61%, Virginia Intermediate Municipal
Bond Fund - 7.01%, and Virginia Municipal Bond Fund - 7.63%.
For the 30-day period ended May 31, 1999, the tax-equivalent yields for the
Investor Shares of the Tax-Exempt Funds were as follows: for the Florida
Tax-Exempt Bond Fund - 5.71%, Georgia Tax-Exempt Bond Fund - 6.25%, Investment
Grade Tax-Exempt Bond Fund - 5.13%, and Virginia Intermediate Municipal Bond
Fund - 6.90%.
For the 30-day period ended May 31, 1998, the tax-equivalent yields for the Flex
Shares of the Tax-Exempt Funds were as follows: for the, Florida Tax-Exempt Bond
Fund - 5.20%, Georgia Tax-Exempt Bond Fund - 5.61%, Investment Grade Tax-Exempt
Bond Fund - 4.57% Maryland Municipal Bond Fund - 4.94%, and Virginia Municipal
Bond Fund - 5.98%.
B-63
<PAGE>
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 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) to
the power of 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 Advisers 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, 1999 and for the one-year, five-year and ten-year
periods ended May 31, 1999 were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
FUND -------------------------------------------------------
CLASS OF SHARES ONE YEAR FIVE TEN SINCE
YEARS YEARS INCEPTION
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balanced Fund Trust Shares(47) 10.98% 15.05% * 13.46%
-----------------------------------------------------------------------------------------------------
Investor Shares--With Sales Load(47) 6.56% 13.80% * 12.25%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(47) 10.70% 14.67% * 13.05%
-----------------------------------------------------------------------------------------------------
Flex Share--With Sales Load(2) 7.84% * * 15.41%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(2) 9.84% * * 15.41%
- -------------------------------------------------------------------------------------------------------------------------
Capital Trust Shares(3) 17.83% 21.21% * 18.10%
Appreciation -----------------------------------------------------------------------------------------------------
Fund Investor Shares--With Sales Load(4) 12.80% 19.52% * 17.16%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(4) 17.20% 20.44% * 17.81%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(5) 14.51% * * 23.82%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(5) 16.50% * * 23.82%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-64
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
FUND --------------------------------------------------------
CLASS OF SHARES ONE YEAR FIVE TEN SINCE
YEARS YEARS INCEPTION
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Core Equity Trust Shares * * * *
Fund -----------------------------------------------------------------------------------------------------
Investor Shares-- With Load * * * *
-----------------------------------------------------------------------------------------------------
Investor Shares-- Without Load * * * *
-----------------------------------------------------------------------------------------------------
Flex Shares-- With Load * * * *
-----------------------------------------------------------------------------------------------------
Flex Shares-- Without Load * * * *
- -------------------------------------------------------------------------------------------------------------------------
E-Commerce Trust Shares * * * *
Opportunity -----------------------------------------------------------------------------------------------------
Fund Investor Shares-- With Load * * * *
-----------------------------------------------------------------------------------------------------
Investor Shares-- Without Load * * * *
-----------------------------------------------------------------------------------------------------
Flex Shares-- With Load * * * *
-----------------------------------------------------------------------------------------------------
Flex Shares-- Without Load * * * *
- -------------------------------------------------------------------------------------------------------------------------
Emerging Trust Shares(52) (6.22)% * * (6.62)%***
Markets
Equity Fund
- -------------------------------------------------------------------------------------------------------------------------
Growth and Trust Shares(6) 15.58% 20.70% * 17.68%
Income Fund -----------------------------------------------------------------------------------------------------
Investor Shares-- With Load(7) 11.30% 19.77% * 16.76%
-----------------------------------------------------------------------------------------------------
Investor Shares-- Without Load(7) 15.66% 20.69% * 17.50%
-----------------------------------------------------------------------------------------------------
Flex Shares-- With Load(8) 12.76% * * 21.65%
-----------------------------------------------------------------------------------------------------
Flex Shares-- Without Load(8) 14.76% * * 21.65%
- -------------------------------------------------------------------------------------------------------------------------
International Trust Shares(9) (7.43)% * * 14.12%***
Equity Fund -----------------------------------------------------------------------------------------------------
Investor Shares--With Sales Load(9) (11.27)% * * 11.36%***
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(49) (7.82)% * * 12.62%***
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(49) (10.19)% * * 11.89%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(49) (8.48)% * * 11.89%***
- -------------------------------------------------------------------------------------------------------------------------
International Trust Shares(50) 7.87% * * 10.39%
Equity Index -----------------------------------------------------------------------------------------------------
Fund Investor Shares--With Sales Load(50) 3.34% * * 9.08%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(50) 7.33% * * 9.92%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(11) 4.90% * * 11.28%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(11) 6.68% * * 11.28%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-65
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
FUND ----------------------------------------------------------
CLASS OF SHARES ONE YEAR FIVE TEN SINCE
YEARS YEARS INCEPTION
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mid-Cap Equity Trust Shares(12) 1.61% 14.72% * 13.46%
Fund -----------------------------------------------------------------------------------------------------
Investor Shares--With Sales Load(44) (2.61%) 13.32% * 12.10%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(44) 1.17% 14.18% * 12.90%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(13) (1.25%) * * 13.79%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(13) 0.56% * * 13.79%
- -------------------------------------------------------------------------------------------------------------------------
Small Cap Trust Shares(14) (18.72%) * * 14.77%***
Equity Fund -----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(14) (21.03%) * * 2.09***
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(14) (19.52%) * * 2.09***
- -------------------------------------------------------------------------------------------------------------------------
Small Cap Trust Shares(15) * * * *
Growth Stock -----------------------------------------------------------------------------------------------------
Fund Flex Shares--With Sales Load(15) * * * *
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(15) * * * *
- -------------------------------------------------------------------------------------------------------------------------
Sunbelt Trust Shares(16) (20.46%) 8.25% 12.49% 7.00%***
Equity Fund -----------------------------------------------------------------------------------------------------
Investor Shares--With Sales Load(16) (23.81%) 6.90% 11.92% 5.75%***
-----------------------------------------------------------------------------------------------------
Investor--Without Sales Load(16) (20.82%) 7.73% 12.35% 6.50%***
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(16) (22.80%) 7.33% 12.46% 7.82%***
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(16) (21.36%) 7.33% 12.46% 7.82%***
- -------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Trust Shares(17) 29.40% * * *
Growth Stock -----------------------------------------------------------------------------------------------------
Fund Flex Shares--With Sales Load(17) 26.86% * * *
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(17) 28.86% * * *
- -------------------------------------------------------------------------------------------------------------------------
Value Trust Shares(18) 11.13% 20.55% * 18.52%***
Income Stock -----------------------------------------------------------------------------------------------------
Fund Investor Shares--With Sales Load(18) 6.56% 19.20% * 17.62%***
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(18) 10.71% 20.11% * 18.34%***
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(18) 8.06% 19.50% * 19.67%***
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(18) 9.91% 19.50% * 19.67%***
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-66
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Florida Trust Shares(19) 3.72% 6.54% * 5.87%
Tax-Exempt Bond ----------------------------------------------------------------------------------------------------
Fund Investor Shares--With Sales Load(20) (0.29%) 5.54% * 4.91%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(20) 3.62% 6.35% * 5.66%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(5) 1.16% * * 5.23%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(5) 3.13% * * 5.23%
- -------------------------------------------------------------------------------------------------------------------------
Georgia Trust Shares(20) 3.33% 5.85% * 4.55%
Tax-Exempt Bond -----------------------------------------------------------------------------------------------------
Fund Investor Shares--With Sales Load(21) (0.69%) 4.82% * 3.64%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(21) 3.13% 5.63% * 4.38%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(22) 0.64% * * 4.67%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(22) 2.63% * * 4.69%
- -------------------------------------------------------------------------------------------------------------------------
Investment Grade Trust Shares(23) 4.25% 7.28% * 6.63%
Bond Fund -----------------------------------------------------------------------------------------------------
Investor Shares--With Sales Load(24) 0.01% 6.05% * 5.73%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(24) 3.86% 6.87% * 6.31%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(25) 1.41% * * 5.49%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(25) 3.35% * * 5.49%
- -------------------------------------------------------------------------------------------------------------------------
Investment Grade Trust Shares(26) 4.67% 7.26% * 6.23%
Tax-Exempt Bond -----------------------------------------------------------------------------------------------------
Fund Investor Shares--With Sales Load(27) 0.48% 6.04% * 6.74%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(27) 4.35% 6.86% * 7.33%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(5) 1.85% * * 5.60%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(5) 3.78% * * 5.60%
- -------------------------------------------------------------------------------------------------------------------------
Limited-Term Trust Shares(48) 4.75% * * 6.14%
Federal Mortgage -----------------------------------------------------------------------------------------------------
Securities Fund Investor Shares--With Sales Load(28) 1.85% * * 5.52%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(28) 4.47% * * 6.08%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(25) 2.18% * * 5.14%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(25) 4.14% * * 5.14%
- -------------------------------------------------------------------------------------------------------------------------
Maryland Trust Shares(29) 4.19% * * 4.52%
Municipal Bond -----------------------------------------------------------------------------------------------------
Fund Flex Shares-- With Sales Load(30) 1.25% * * 5.28%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(30) 3.25% * * 5.28%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-67
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Short-Term Bond Trust Shares(31) 4.06% 5.93% * 5.24%
Fund -----------------------------------------------------------------------------------------------------
Investor Shares--With Sales Load(32) 1.76% 5.31% * 4.61%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(32) 3.88% 5.73% * 4.94%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(33) 1.53% * * 4.94%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(33) 3.50% * * 4.93%
- -------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Trust Shares(31) 4.59% 5.50% * 4.84%
Treasury -----------------------------------------------------------------------------------------------------
Securities Fund Investor Shares--With Sales Load(34) 3.50% 5.13% * 4.51%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(34) 4.54% 5.34% * 4.68%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(33) 2.32% * * 4.81%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(33) 4.32% * * 4.81%
- -------------------------------------------------------------------------------------------------------------------------
U.S. Government Trust Shares(35) 3.90% * * 6.92%
Securities Fund -----------------------------------------------------------------------------------------------------
Investor Shares--With Sales Load(10) (0.35%) * * 5.58%
-----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(10) 3.56% * * 6.39%
-----------------------------------------------------------------------------------------------------
Flex Shares--With Sales Load(25) 1.02% * * 5.17%
-----------------------------------------------------------------------------------------------------
Flex Shares--Without Sales Load(25) 2.99% * * 5.17%
- -------------------------------------------------------------------------------------------------------------------------
Virginia Trust Shares(36) 3.47% 5.65% * 4.95%
Intermediate -----------------------------------------------------------------------------------------------------
Municipal Bond Investor Shares--With Sales Load(37) (0.35%) 4.84% * 3.92%
Fund -----------------------------------------------------------------------------------------------------
Investor Shares--Without Sales Load(37) 3.50% 5.65% * 4.58%
- -------------------------------------------------------------------------------------------------------------------------
Virginia Trust Shares(38) 3.75% * * 6.03%
Municipal Bond -----------------------------------------------------------------------------------------------------
Fund Flex Shares-- With Sales Load(39) (0.92%) * * 5.02%
-----------------------------------------------------------------------------------------------------
Flex Shares-- Without Sales Load(39) 2.90% * * 5.02%
- -------------------------------------------------------------------------------------------------------------------------
Prime Quality Trust Shares(45) 4.83% 5.02% * 4.42%
Money Market Fund -----------------------------------------------------------------------------------------------------
Investor Shares(45) 4.66% 4.85% * 4.24%
- -------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Trust Shares(45) 2.81% 3.10% * 2.81%
Market Fund -----------------------------------------------------------------------------------------------------
Investor Shares(45) 2.69% 2.98% * 2.69%
- -------------------------------------------------------------------------------------------------------------------------
Tax-Free Money Trust Shares(40) 2.73% 2.97% * 3.41%
Market Fund -----------------------------------------------------------------------------------------------------
Investor Shares(37) 2.72% 2.96% * 2.72%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-68
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. -----------------------------------------------------------------------------------------------------
Government Trust Shares(45) 4.57% 4.85% * 4.26%
Securities -----------------------------------------------------------------------------------------------------
Money Investor Shares(45) 4.41% 4.70% * 4.11%
Market Fund
- -------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Trust Shares(42) 4.49% 4.78% 4.95% 5.34%
Money Market
Fund
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PORTFOLIO 1 YEAR SINCE PORTFOLIO
INCEPTION
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Life Vision Balanced Portfolio(46) 6.47% 10.59%
- -------------------------------------------------------------------------------------------------------------------------
Life Vision Growth and Income Portfolio(46) 6.64% 11.07%
- -------------------------------------------------------------------------------------------------------------------------
Life Vision Maximum Growth Portfolio(46) 7.22% 12.95%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
(1) Commenced operations 1/3/94 (16) Commenced operations 12/11/98 (31) Commenced operations 3/15/93
(2) Commenced operations 6/14/95 (17) Commenced operations 12/15/95 (32) Commenced operations 3/22/93
(3) Commenced operations 7/1/92 (18) Commenced operations 2/17/93 (33) Commenced operations 6/20/95
(4) Commenced operations 6/9/92 (19) Commenced operations 1/25/94 (34) Commenced operations 3/18/93
(5) Commenced operations 6/1/95 (20) Commenced operations 1/18/94 (35) Commenced operations 7/31/94
(6) Commenced operations 9/28/92 (21) Commenced operations 1/19/94 (36) Commenced operations 1/11/93
(7) Commenced operations 5/7/93 (22) Commenced operations 6/6/95 (37) Commenced operations 5/5/93
(8) Commenced operations 4/19/95 (23) Commenced operations 7/16/92 (38) Commenced operations 4/5/95
(9) Commenced operations 12/1/95 (24) Commenced operations 6/11/92 (39) Commenced operations 4/17/95
(10) Commenced operations 6/9/94 (25) Commenced operations 6/7/95 (40) Commenced operations 6/15/89
(11) Commenced operations 6/8/95 (26) Commenced operations 10/21/93 (41) Commenced operations 2/12/93
(12) Commenced operations 2/2/94 (27) Commenced operations 6/9/92 (42) Commenced operations 2/18/87
(13) Commenced operations 6/5/95 (28) Commenced operations 7/17/94 (43) Commenced operations 1/31/97
(14) Commenced operations 6/5/97 (29) Commenced operations 3/1/96 (44) Commenced operations 2/1/94
(15) Commenced operations 10/8/98 (30) Commenced operations 4/25/96 (45) Commenced operations 6/8/92
(46) Commenced operations 6/30/97
(47) Commenced operations 1/4/94
(48) Commenced operations 6/7/94
(49) Commenced operations 6/6/94
(50) Commenced operations 6/22/95
</TABLE>
* Fund not in operation for entire period.
*** The performance for the periods prior to November 1997 for the Emerging
Markets Equity Fund, December 1995 for the International Equity Fund, January
1994 for the Sunbelt Equity Fund, and February 1993 for the Value Income
Stock Fund represent the performance of a common trust fund managed by the
Adviser.
B-69
<PAGE>
PURCHASING 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: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
REDEEMING SHARES
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 Adviser, the Administrator and/or,
the Custodian are not open for business.
A number of Fund shareholders are institutions with significant share holdings
that may be redeemed at any time. If a substantial number or amount of
redemptions should occur within a relatively short period of time, a Fund may
have to sell portfolio securities it would otherwise hold and incur the
additional transaction costs. The sale of portfolio securities may result in the
recognition of capital gains, which will be distributed annually and generally
will be taxable to shareholders as ordinary income or capital gains.
Shareholders are notified annually regarding the federal tax status of
distributions they receive (see "Taxes").
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
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<PAGE>
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 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
investment 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
B-71
<PAGE>
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) 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 (iii) 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.
In addition, each Fund will 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.
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 Tax-Free
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. imposed by Section 59A of the Code. The Alternative
Minimum Tax is imposed at 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 Alternative
Minimum 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. 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.
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
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<PAGE>
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 Advisers 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.
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, 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.
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 Emerging Markets, International Equity Index and International
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
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<PAGE>
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 Emerging Markets, International Equity Index and International 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.
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 Adviser 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
Adviser 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 Adviser
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
B-74
<PAGE>
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 Adviser, 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 Adviser 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 Adviser 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 Adviser 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 Adviser, 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 Adviser is permitted to receive and retain
compensation for effecting portfolio transactions for the Trust on an
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<PAGE>
exchange if a written contract is in effect between the Distributor and the
Trust expressly permitting the Distributor or an affiliate of an Adviser 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, 1999, the Funds paid the following brokerage
commissions with respect to portfolio transactions:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
TOTAL $ AMOUNT OF TOTAL $ AMOUNT OF % OF TOTAL BROKERAGE % OF TOTAL BROKERED
BROKERAGE BROKERAGE COMMISSIONS PAID TO TRANSACTIONS EFFECTED
COMMISSIONS PAID IN COMMISSIONS PAID AFFILIATED BROKERS IN THROUGH AFFILIATED
FYE TO AFFILIATES IN FYE 5/31/99(2) BROKERS FYE
5/31/99 FYE 5/31/99(1) 5/31/99(3)
FUND
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 489,552 $ 24,180 5.94% 61.2%
- ------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $ 5,657,513 $ 223,859 3.96% 25.2%
- ------------------------------------------------------------------------------------------------------------------------
Core Equity Fund * * * *
- ------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity * * * *
Fund
- ------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity $ 110,951 $ 0 0% 0%
Fund
- ------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund + $ 1,026,236 $ 659 0.06% 34.8%
- ------------------------------------------------------------------------------------------------------------------------
International Equity $ 98,874 $ 0 0% 0%
Index Fund
- ------------------------------------------------------------------------------------------------------------------------
International Equity Fund $ 4,698,091 $ 0 0% 0%
- ------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 612,170 $ 7,281 1.19% 19.8%
- ------------------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund $ 986,430 $ 3,666 0.37% 23.8%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-76
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
TOTAL $ AMOUNT OF TOTAL $ AMOUNT OF % OF TOTAL BROKERAGE % OF TOTAL BROKERED
BROKERAGE BROKERAGE COMMISSIONS PAID TO TRANSACTIONS EFFECTED
COMMISSIONS PAID IN COMMISSIONS PAID AFFILIATED BROKERS IN THROUGH AFFILIATED
FYE TO AFFILIATES IN FYE 5/31/99(2) BROKERS FYE
5/31/99 FYE 5/31/99(1) 5/31/99(3)
FUND
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small Cap Growth $ 141,859 $ 907 0.64% 33.2%
Stock Fund
- ------------------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 952,393 $ 1,964 0.21% 38.3%
- ------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth $ 203,872 $ 3,859 1.89% 52.4%
Stock Fund
- ------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $ 3,804,109 $ 58,623 1.54% 37.3%
- ------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond $ 27 $ 27 100% 100%
Fund
- ------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond $ 205 $ 205 100% 100%
Fund
- ------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond $ 28,802 $ 28,802 100% 100%
Fund
- ------------------------------------------------------------------------------------------------------------------------
Investment Grade $ 3,108 $ 3,108 100% 100%
Tax-Exempt Bond
Fund
- ------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal $ 3,151 $ 3,151 100% 100%
Mortgage Securities
Fund
- ------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond N/A N/A N/A N/A
Fund +
- ------------------------------------------------------------------------------------------------------------------------
Short-Term Bond $ 205 $ 205 100% 100%
Fund
- ------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury N/A N/A N/A N/A
Securities Fund
- ------------------------------------------------------------------------------------------------------------------------
U.S. Government N/A N/A N/A N/A
Securities Fund
- ------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate N/A N/A N/A N/A
Municipal Bond Fund +
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-77
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
TOTAL $ AMOUNT OF TOTAL $ AMOUNT OF % OF TOTAL BROKERAGE % OF TOTAL BROKERED
BROKERAGE BROKERAGE COMMISSIONS PAID TO TRANSACTIONS EFFECTED
COMMISSIONS PAID IN COMMISSIONS PAID AFFILIATED BROKERS IN THROUGH AFFILIATED
FYE TO AFFILIATES IN FYE 5/31/99(2) BROKERS FYE
5/31/99 FYE 5/31/99(1) 5/31/99(3)
FUND
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Virginia Municipal Bond N/A N/A N/A N/A
Fund +
- ------------------------------------------------------------------------------------------------------------------------
Prime Quality Money $ 151,369 $ 151,369 100% 100%
Market Fund
- ------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market
Fund
- ------------------------------------------------------------------------------------------------------------------------
Tax-Free Money Market
Fund +
- ------------------------------------------------------------------------------------------------------------------------
U.S. Government $ 193,216 $ 193,216 100% 100%
Securities Money Market
Fund
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money $ 25,484 $ 25,484 100% 100%
Market
Fund +
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. These amounts refer to brokerage commissions paid to, or brokered
transactions effected through, SEI Investments Distribution Co., the
Trust's principal underwriter.
+ Prior to May 24, 1999, brokerage fees were paid by the predecessor to this
fund pursuant to an agreement between the CrestFunds and the Adviser for the
fiscal years ended November 30, 1999.
For the fiscal years ended May 31, 1998 and 1997, 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 -------------------------------------------------------------------------------------
1998 1997 1998 1997
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 169,222 $ 195,918 $ 4,280 $ 195,918
- -------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $ 3,339,393 $ 3,228,364 $ 34,827 $ 3,228,364
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-78
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $ AMOUNT OF BROKERAGE TOTAL $ AMOUNT OF BROKERED
COMMISSIONS PAID COMMISSIONS PAID TO AFFILIATES
FUND -------------------------------------------------------------------------------------
1998 1997 1998 1997
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Core Equity Fund * * * *
- -------------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund * * * *
- -------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity Fund $ 241,272 $ 144,635
- -------------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund $ 1,031,949 $ 1,248,896 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------------
International Equity Index Fund $ 21,888 $ 94,672 $ 71 $ 0
- -------------------------------------------------------------------------------------------------------------------------------
International Equity Fund $ 3,098,063 $ 2,875,911 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 191,298 $ 1,090,559 $ 18,224 $ 1,090,559
- --------------------------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund * $ 229,856 * $ 229,856
- --------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Fund * * * *
- --------------------------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 904,698 $ 903,669 $ 5,202 $ 903,669
- --------------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Fund * * * *
- --------------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $ 4,325,977 $ 4,600,079 $ 37,379 $ 4,600,079
- -------------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 0 $ 169 $ 200 $ 169
- -------------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $ 0 $ 201 $ 135 $ 201
- -------------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Fund $ 0 $ 17,502 $ 0 $ 17,502
- -------------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Fund $ 0 $ 3,552 $ 0 $ 3,552
- -------------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage $ 0 $ 2,053 $ 73 $ 2,053
Securities Fund
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond Fund N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 0 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund $ 0 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund $ 0 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate Municipal Bond N/A N/A N/A N/A
Fund +
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Fund N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Prime Quality Money Market Fund $ 0 $ 122,053 $ 0 $ 122,053
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-79
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL $ AMOUNT OF BROKERAGE TOTAL $ AMOUNT OF BROKERED
COMMISSIONS PAID COMMISSIONS PAID TO AFFILIATES
FUND -------------------------------------------------------------------------------------
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Securities Money Market $ 0 $ 141,850 $ 0 $ 141,850
Fund
- -------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $ 0 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------------
Tax-Free Money Market Fund N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market Fund + N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Not in operation during the period.
+ Prior to May 24, 1999, brokerage fees were paid by the predecessor to this
fund pursuant to an agreement between the CrestFunds and the Adviser for the
fiscal years ended November 30, 1998 and November 30, 1997, respectively.
For the fiscal years ended May 31, 1999 and 1997, the portfolio turnover rate
for each of the non-money market Funds was as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
TURNOVER RATE
--------------------------------------------
FUND 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Fund 179% 154% 197%
- -----------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund 147% 194% 141%
- -----------------------------------------------------------------------------------------------------------------------
Core Equity Fund * * *
- -----------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund * * *
- -----------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity Fund 67% 74% 72%
- -----------------------------------------------------------------------------------------------------------------------
Growth and Income Fund 71% 100% 82%
- -----------------------------------------------------------------------------------------------------------------------
International Equity Fund 161% 108% 139%
- -----------------------------------------------------------------------------------------------------------------------
International Equity Index Fund 32% 1% 2%
- -----------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund 76% 129% 152%
- -----------------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund 63% 55% 27%
- -----------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Fund * * *
- -----------------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund 84% 70% 72%
- -----------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Fund * * *
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
B-80
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
TURNOVER RATE
FUND --------------------------------------
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value Income Stock Fund 69% 99% 105%
- ----------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund 72% 69% 135%
- ----------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund 12% 7% 15%
- ----------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Fund 221% 109% 298%
- ----------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Fund 224% 378% 489%
- ----------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage Securities Fund 379% 163% 133%
- ----------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond Fund 19% 12% 5%
- ----------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund 108% 87% 118%
- ----------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund 57% 39% 93%
- ----------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund 19% 14% 21%
- ----------------------------------------------------------------------------------------------------------------------
Virginia Intermediate Municipal Bond Fund 19% 30% 25%
- ----------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Fund 28% 39% 24%
- ----------------------------------------------------------------------------------------------------------------------
</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 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.
B-81
<PAGE>
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 advisers, 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.
YEAR 2000
The Trust depends on the smooth functioning of computer systems in almost every
aspect of its business. Like other mutual funds, businesses and individuals
around the world, the Trust could be adversely affected if the computer systems
used by its mission critical service providers do not properly process dates on
and after January 1, 2000 and distinguish between the year 2000 and the year
1900. The Trust has asked its service providers whether they expect to have
their computer systems adjusted for the year 2000 transition, and has sought and
received assurances from each from each that its system is expected to
accommodate the year 2000 without material adverse consequences to the Trust.
While such assurances have been received, the Trust and its shareholders may
experience losses if these assurances prove to be incorrect or as a result of
year 2000 computer difficulties experienced by issuers of portfolio securities
or third parties, such as custodians, banks, broker-dealers or others with which
the Trust does business.
5% AND 25% SHAREHOLDERS
As of September 1, 1999, 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>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Balanced Fund Trustman - 400450-7 4,370,451.0500 23.51%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-82
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
SunTrust Bank Atlanta Trustee 930,002.9290 5.00%
FBO Genuine Partnership Plan
C/O Fascorp
8515 E Orchard Rd #2T2
Englewood, CO 80111-5002
Capital Appreciation Fund Trustman -400450-7 42,753,336.0910 39.52%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman -400452-3 20,490,770.8700 18.94%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman -400453-6 10,740,012.0310 9.93%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
SunTrust Bank Central Florida 6,717,110.4390 6.21%
FBO Florida Rock Industries Inc.
P/S & Deferred Earnings Plan
C/O Fascorp
8515 E. Orchard Rd. #2T2
Englewood, CO 80111-5002
</TABLE>
B-83
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Trustman -400451-0 6,309,850.0130 5.83%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Emerging Markets Equity Fund Trustman - 400450-7 2,304,207.6580 76.73%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400452-3 342,881.4230 11.42%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
International Equity Fund Trustman - 400450-7 25,545,283.2270 58.59%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400452-3 12,531,603.6870 28.74%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400451-0 3,165,647.8090 7.26%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
International Equity Index Fund Trustman - 400450-7 5,285,827.2620 74.52%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-84
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Trustman - 40052-3 551,387.3980 7.77%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400451-0 439,979.5740 6.20%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Mid-Cap Equity Fund Trustman - 400450-7 9,852,150.6920 49.01%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400452-3 6,874,574.3360 34.20%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400451-0 1,592,306.6360 7.92%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Small Cap Equity Fund Trustman - 400450-7 23,008,174.8530 67.05%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-85
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Trustman - 400452-3 6,666,101.2740 19.43%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Small Cap Growth Stock Fund Trustman - 400450-7 5,815,085.9200 48.26%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400452-3 2,406,227.5720 19.97%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400451-3 1,533,451.5800 12.73%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400453-6 4,484.782.7850 12.32%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Sunbelt Equity Fund Trustman - 400450-7 6,174,205.0670 49.26%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-86
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Trustman - 400452-3 1,643,573.2380 13.11%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400451-0 838,804.1000 6.69%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Tax Sensitive Growth Stock Fund Trustman - 400452-3 3,249,894.4640 38.18%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400450-7 2,765,742.8090 32.49%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400451-0 2,494,015.4860 29.30%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Value Income Stock Fund Trustman - 400450-7 84,435,886.3800 58.94%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-87
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Trustman - 400452-3 27,374,584.3090 19.11%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Florida Tax-Exempt Bond Fund Trustman - 400452-3 6,881,985.7110 66.40%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400451-0 2,260,863.4580 21.81%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400450-7 1,221,370.2230 11.78%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Investment Grade Bond Fund Trustman - 400450-7 46,474,618.8200 43.24%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400452-3 34,438,046.0270 30.72%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-88
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Trustman - 400451-0 15,692,781.5260 14.24%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Georgia Tax-Exempt Bond Fund Trustman - 400451-0 4,531,481.6710 50.91%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400450-7 3,174,483.7900 35.66%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400452-3 1,195,693.5090 13.43%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Investment Grade Tax-Exempt Bond Fund Trustman - 400452-3 6,821,583.7490 51.86%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400450-7 3,252,868.1700 24.77%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-89
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Trustman - 400451-0 3,069,472.8510 23.77%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Limited-Term Federal Mortgage Trustman - 400450-7 7,375,225.0770 54.23%
Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400452-3 4,526,381.9400 33.28%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400451-0 2,294,629.2980 9.52%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Short-Term Bond Fund Trustman - 400452-3 5,966,017.3340 29.00%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-90
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Trustman - 400451-0 5,706,381.9520 27.74%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400450-7 5,632,669.6180 27.38%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400453-6 1,259,377.9700 6.12%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Short-Term U.S. Treasury Trustman - 400450-7 2,466,823.7630 43.28%
Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>
B-91
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Trustman - 400452-3 1,969,162.7700 34.55%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400451-0 891,603.8630 15.64%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
U.S. Government Securities Fund Trustman - 400451-0 3,184,943.1860 34.18%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400452-3 3,096,357.4090 33.22%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Trustman - 400450-7 1,598,603.5840 17.15%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
Hamac & Co. - 500001-8 1,061,832.6820 11.39%
Attn: Barbara Holloway
P.O. Box 26665 HDQ 5706
Richmond, VA 23261-6665
Prime Quality Money Market Fund SunTrust Bank 3,300,149,241.2900 91.37%
Attn: Susan Grider
Mail Center 3133
P.O. Box 105504
Atlanta, GA 30348-5504
</TABLE>
B-92
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Tax-Exempt Money Market Fund SunTrust Bank 651,526,589.2800 100.00%
Attn: Susan Grider
Mail Center 3133
P.O. Box 105504
Atlanta, GA 30348-5504
U.S. Government Securities Money SunTrust Bank 324,930,712.1800 91.10%
Market Fund Attn: Susan Grider
Mail Center 3133
P.O. Box 105504
Atlanta, GA 30348-5504
SunTrust Bank Atlanta NA 27,462,899.1700 7.70%
Trustee
FBO Anderson Companies
Profit Sharing 401(k) Plan
c/o Fascorp
8515 E. Orchard Road 2T2
Englewood, CO 80111-5002
</TABLE>
INVESTOR SHARES
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Mid-Cap Equity Fund Anthony R. Gray 85,643.6620 5.84%
460 Virginia Drive
Winter Park, FL 32789-5805
Florida Tax-Exempt Bond Fund Mildred Meinhard Rast 32,904.8560 10.37%
821 Lake Port Blvd.
Apt. #A404
Leesburg, FL 34746-7698
NFSC FEBO # 1FR-027120 17,581.9140 5.54%
Arline A. Wollenhaupt
Gary Wollenhaupt
2313 Runyon Court
Orlando, FL 32837-5216
Georgia Tax-Exempt Bond Fund NFSC FEBO # G1R-162566 86,093.9560 23.36%
M C Tatro
5360 Deer Run Dr.
Conyers, GA 30094-4706
Patrick J. Doran & 31,983.8270 8.68%
Norma R. Doran
Jtten
2024 Fisher Trail NE
Atlanta, GA 30345-3429
</TABLE>
B-93
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
NFSC FEBO # G1R-159913 18,740.8400 5.09%
Jean D. Brooks
3774 Wedgewood Chase
Norcross, GA 30092-4528
Limited-Term Federal Mortgage SunTrust Bank Central Florida NA 10,730.7570 5.10%
Securities Fund Collateral Account
Greater Orlando Assoc. Of Realtors
621 E. Central Blvd.
Orlando, FL 32801-2916
Short-Term Bond Fund NFSC FEBO # G1R-184632 26,052.6840 13.50%
NFSC/FMTC IRA Rollover
FBO Dewey L. Haggard
549 Hollydale Ct NW
Atlanta, GA 30342-3633
Bartow Memorial Hospital 13,537.7910 7.29%
Foundation Inc.
P.O. Box 877
Bartow, FL 33831-0877
Short-Term U.S. Treasury Clarence A. Rittenhouse 67,657.0380 23.51%
Securities Fund Margaret S. Rittehnouse JT Wros
12993 Lampadaire Drive
Creve Couer, MO 63141-7361
NFSC FEBO # G2R-002933 34,932.3700 12.14%
Hans Ernst TTEE
Graphic Art Svc Inc 401K
550 Commerce Park Drive
Marietta, GA 30060-2763
NFSC FEBO #P1R-047546 21,963.0380 7.62%
NFSC/FMTC IRA
FBO Douglas E. Phillips
2070 Goldwater court
Maitland, FL 32751-3914
U.S. Government Securities Fund NFSC FEBO #1F1R-055778 20,805.4070 9.02%
NFSC/FMTC IRA
FBO Dona M. Bray
22 Little John Lane
Rockledge, FL 23955-2411
</TABLE>
B-94
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Tax-Exempt Money Market Fund National Financial Services Corp. 116,878,679.3000 86.57%
For the Exclusive Benefit of Our
Customers
Attn: Mutual Funds Dept.
One World Financial Center
200 Liberty St. Floor 5
New York, NY 10281-5500
Prime Quality Money Market Fund National Financial Services Corp. 860,484,803.6700 88.81%
For the Exclusive Benefit of Our
Customers
Attn: Mutual Funds Dept.
One World Financial Center
200 Liberty St. Floor 5
New York, NY 10281-5500
U.S. Government Securities Money National Financial Services Corp. 28,031,008.8000 44.53%
Market Fund For the Exclusive Benefit of Our
Customers
Attn: Mutual Funds Dept.
One World Financial Center
200 Liberty St. Floor 5
New York, NY 10281-5500
Albecca Inc. 9,377,661.5800 14.90%
Attn: Cheryl George
3900 Steve Reynolds Blvd.
Norcross, GA 30093-3061
Akerman, Senterfitt & Eidson 5,829,844.9900 9.26%
Attorney Account
P.O. Box 231
Orlando, FL 32802-0231
</TABLE>
FLEX SHARES
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
International Equity Index Fund NFSC FEBO # G2R-003018 8,807.0360 5.82%
Rex Miller TTEE
Nale Inc. 401K
P.O. Box 2410
Kennesaw, GA 30144-9106
</TABLE>
B-95
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
FUND NAME AND ADDRESS SHARES % OF CLASS
- ---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Sunbelt Equity Fund NFSC FEBO # G2R-003018 29,570.4010 8.47%
Rex Miller TTEE
Nale Inc. 401K
P.O. Box 2410
Kennesaw, GA 30144-9106
Georgia Tax-Exempt Bond Fund NFSC FEBO # G1R-103721 72,931.9080 5.39%
Bruce Philip Vineyard
1460 Iris Dr.
Conyers, GA 30094-5142
Short-Term Bond Fund NFSC FEBO # G2R-003018 20,415.0890 8.77%
Rex Miller TTEE
Nale Inc. 401K
P.O. Box 2410
Kennesaw, GA 30144-9106
Short-Term U.S. Treasury NFSC FEBO # 1GR-094986 44,000.4620 7.17%
Securities Fund L B Roane
Doris S. Roane
673 Sugar Creek Trail SE
Conyers, GA 30094-3812
</TABLE>
EXPERTS
Following are the audited financial statements for the fiscal year ended May
31, 1999 and the Reports of Arthur Andersen, LLP, independent public
accountant, dated July 23, 1999, relating to the financial statements and
financial highlights. Deloitte & Touche LLP served as independent public
accountants to the STI Classic U.S. Treasury Money Market Fund, STI Classic
Tax-Free Money Market Fund, STI Classic Growth and Income Fund, STI Classic
Life Vision Balanced Portfolio, STI Classic Life Vision Growth and Income
Portfolio and STI Classic Life Vision Maximum Growth Portfolio, STI Classic
Maryland Municipal Bond, STI Classic Virginia Intermediate Municipal Bond,
STI Classic Virginia Municipal Bond (each formerly a series of the
CrestFunds) for the fiscal periods ended prior to May 31, 1999.
APPENDIX A: FINANCIAL STATEMENTS
B-96
<PAGE>
STATEMENT OF NET ASSETS
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
FLORIDA TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
MUNICIPAL BONDS (92.9%)
FLORIDA (85.2%)
<S> <C> <C>
Brevard County, School Board,
Ser A, COP (AMBAC)
5.400%, 07/01/12 $1,500 $1,573
Brevard County, State Health
Facilities Authority, Holmes
Regional Medical Center Project,
RB, Callable 10/01/03 @ 102 (MBIA)
5.700%, 10/01/08 3,000 3,239
Brevard County, State Health
Facilities Authority, Wuesthoff
Memorial Hospital Project, Ser A,
RB (MBIA)
6.250%, 04/01/06 930 1,033
Broward County, School District, Ser B,
COP, Callable 07/01/07 @ 101
(AMBAC)
5.100%, 07/01/09 1,465 1,527
Citrus County, Pollution Control,
Florida Power, Crystal River Project,
RB, Callable 08/01/02 @ 102
6.350%, 02/01/22 335 360
Dade County, Aviation Revenue,
Miami International Airport,
Ser B, RB, AMT, Callable
10/01/07 @ 101.50 (FSA)
5.125%, 10/01/13 2,255 2,256
Dade County, Aviation Revenue,
RB, AMT, Callable 10/01/02
@ 102 (MBIA)
6.600%, 10/01/22 825 898
Dade County, Aviation Revenue,
Ser A, RB, Callable 10/01/05 @
102 (AMBAC)
6.000%, 10/01/09 500 550
Dade County, Educational Facility,
University of Miami,
Ser A, RB (MBIA)
5.500%, 04/01/01 2,465 2,544
Dade County, School Board,
Ser B, COP (AMBAC)
5.750%, 08/01/03 250 267
Dade County, Seaport, RB (MBIA)
6.200%, 10/01/08 750 846
6.500%, 10/01/09 1,000 1,158
6.200%, 10/01/10 1,000 1,132
Dade County, State Educational
Facilities Authority, University
of Miami, RB, Callable
04/01/06 @ 102 (MBIA)
5.750%, 04/01/20 2,000 2,108
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
FLORIDA--CONTINUED
<S> <C> <C>
Dade County, State Educational
Facilities Authority, University
of Miami, Ser A, RB (MBIA)
6.000%, 04/01/08 $ 755 $ 836
Dade County, Water & Sewer,
RB (FGIC)
6.250%, 10/01/07 1,000 1,124
Daytona Beach, Water & Sewer,
ETM, RB, Callable
11/15/1999 @ 102 (F)
6.750%, 11/15/07 1,000 1,106
Deerfield Beach, Water & Sewer,
RB (FGIC)
6.125%, 10/01/06 250 274
Gainesville, Utility Systems,
Ser A, RB
5.750%, 10/01/04 1,300 1,404
5.750%, 10/01/09 750 826
Gulf Breeze, Local Government
Lien, Ser B, RB, Mandatory
Tender 12/01/08 (FGIC)
5.650%, 12/01/15 460 491
Gulf Breeze, Local Government
Lien, Ser B, RB, Mandatory
Tender 12/01/09 (FGIC)
5.750%, 12/01/15 410 440
Hillsborough County,
Capital Improvement Program,
ETM, RB (FGIC) (F)
5.900%, 08/01/04 300 325
Hillsborough County,
School Board Revenue, COP,
Callable 07/01/06 @ 100 (MBIA)
5.875%, 07/01/08 1,000 1,098
Hillsborough County,
University Community Hospital,
RB (MBIA)
6.500%, 08/15/19 145 170
Indian Trace Community,
Water Management Split Benefit,
Ser A-1, RB, Callable
05/01/05 @ 102 (MBIA)
5.500%, 05/01/07 455 487
Jacksonville, Electric Authority,
Bulk Power Supply, RB,
Prerefunded 10/01/00 @ 101.5 (F)
6.750%, 10/01/16 250 265
Jacksonville, Excise Tax, Ser B,
RB, AMT, Callable
10/01/03 @ 100 (FGIC)
5.200%, 10/01/04 1,500 1,546
24
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
FLORIDA--CONTINUED
<S> <C> <C>
Jacksonville, River City
Renaissance Project, RB (FGIC)
6.000%, 10/01/04 $2,430 $2,653
Jacksonville, State Health
Facilities Authority,
Charity Obligation Group,
Ser A, RB , Callable
08/15/07 @ 101 (MBIA)
5.250%, 08/15/15 1,465 1,481
Jacksonville, Water & Sewer,
RB, Prerefunded 09/30/08 @ 101
(MBIA) (G)
5.000%, 10/01/20 610 637
Lakeland, Electric & Water, Ser A,
RB, Callable 10/01/09 @ 101
(MBIA)
5.000%, 10/01/36 3,000 2,868
Lakeland, Electric & Water, Ser B,
RB (FSA)
6.550%, 10/01/05 2,590 2,926
Lakeland, Electric & Water, Ser C,
RB (FSA)
6.050%, 10/01/07 1,000 1,116
Lee County, Industrial
Development Authority,
Bonita Springs Utilities Project, RB,
Callable 11/01/06 @ 101 (MBIA)
5.750%, 11/01/10 1,480 1,576
Lee County, Water & Sewer, Ser A, RB,
Callable 10/01/09 @ 101 (AMBAC)
4.750%, 10/01/19 3,720 3,507
Manatee County, Community
Redevelopment Administration,
Center Project, RB, Callable
04/01/00 @ 102 (MBIA)
7.000%, 04/01/08 1,000 1,049
Martin County, State Health Facilities
Authority, Martin Memorial
Medical Center, Ser B, RB,
Callable 11/15/07 @ 102 (MBIA)
5.150%, 11/15/11 1,070 1,097
Miami, Packaging Facility, RB (MBIA)
5.250%, 10/01/15 1,000 1,033
Miami-Dade County, School District,
GO (FSA)
5.375%, 08/01/12 5,000 5,283
Miami-Dade County, School District,
Ser C, COP, Callable
08/01/08 @ 101 (FSA)
5.250%, 08/01/13 1,910 1,957
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
FLORIDA--CONTINUED
<S> <C> <C>
Miami-Dade County, Special
Obligation, RB, Callable
04/01/08 @ 86.60 (MBIA) (A)
0.000% 10/01/11 $1,635 $ 881
Miami-Dade County,
USMA Public Improvements, RB,
Callable 10/01/09 @ 101 (FSA)
5.125%, 10/01/13 2,515 2,565
North Broward, Hospital District,
ETM, RB (MBIA) (G)
5.950%, 01/01/01 1,000 1,034
Orange County, Public Facilities,
Ser A, RB, Callable
10/01/04 @ 102 (AMBAC)
5.650%, 10/01/07 200 215
Orange County, State Housing
Finance Authority, Single
Family Mortgage, Ser B, RB,
Callable 9/01/07 @ 102
5.800%, 09/01/17 655 676
Orlando, Aviation Authority,
Airport Facilities, RB,
AMT (FGIC)
5.250%, 10/01/13 1,725 1,770
5.500%, 10/01/17 1,810 1,882
Orlando, Aviation Authority,
Airport Facilities, Ser A, RB,
AMT, Callable 10/01/03 @
102 (AMBAC)
5.400%, 10/01/06 1,340 1,409
Orlando, Electric & Water, Ser D, RB
6.750%, 10/01/17 5,385 6,430
Osceola County, COP (AMBAC)
6.250%, 06/01/01 1,080 1,133
Palm Beach County, Apartment
System, RB, Callable
10/01/01 @ 102 (MBIA)
7.625%, 10/01/04 1,410 1,550
Palm Beach County, Criminal
Justice Facilities, RB (FGIC)
5.375%, 06/01/09 1,500 1,600
5.750%, 06/01/12 2,000 2,184
Palm Beach County,
Solid Waste Authority, Ser A,
ETM, RB (AMBAC) (F)
6.000%, 10/01/09 300 338
</TABLE>
25
<PAGE>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
FLORIDA TAX-EXEMPT BOND FUND--CONCLUDED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
FLORIDA--CONTINUED
<S> <C> <C>
Palm Beach County,
Solid Waste Authority,
Ser A, RB (AMBAC)
6.000%, 10/01/09 $2,225 $2,471
Pensacola, Airport, Ser A, RB, AMT,
Callable 10/01/08 @ 102 (MBIA)
6.250%, 10/01/09 505 565
6.000%, 10/01/12 1,075 1,170
Pinellas County, Morton Plant
Health Systems Project, RB,
Callable 11/15/03 @ 102 (MBIA)
5.500%, 11/15/08 1,500 1,580
Pinellas County, State Housing
Finance Authority,
Single Family Mortgage, Ser C,
RB, Callable 03/01/07 @ 102
5.050%, 09/01/07 215 221
5.100%, 09/01/08 230 236
Plant City, Utility System, RB (MBIA)
6.000%, 10/01/15 400 448
Polk County, Utility System, ETM,
RB (FGIC) (G)
6.000%, 10/01/08 2,250 2,468
Reedy Creek, Utility System,
Ser 1991-1, RB, Prerefunded
10/01/01 @ 101 (MBIA) (F)
6.250%, 10/01/11 405 432
South Broward, Hospital District, RB,
Callable 05/01/03 @ 102 (AMBAC)
7.500%, 05/01/08 1,000 1,137
St. Lucie County, School District, GO,
Callable 07/01/02 @ 102 (AMBAC)
6.000%, 07/01/04 500 537
State, Aqueduct Authority,
RB, Prerefunded 09/01/01 @ 101
(AMBAC)
6.750%, 09/01/21 170 183
State, Board of Education,
Capital Outlay, GO
6.100%, 06/01/00 125 127
State, Board of Education,
Capital Outlay, Ser A, GO,
Callable 06/01/00 @ 102
7.250%, 06/01/23 355 374
State, Board of Education,
Capital Outlay, Ser A, GO,
Callable 01/01/08 @ 101
5.250%, 01/01/12 2,495 2,571
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------------------------------------
FLORIDA--CONTINUED
<S> <C> <C>
State, Board of Education,
Capital Outlay, Ser A, GO,
Callable 01/01/09 @ 101
4.750%, 01/01/19 $2,000 $1,885
State, Board of Education,
Capital Outlay, Ser B, GO (F)
6.000%, 06/01/02 1,000 1,054
State, Board of Education,
Capital Outlay, Ser B, GO,
Callable 06/01/02 @ 101
5.900%, 06/01/12 450 480
6.000%, 06/01/15 170 182
State, Board of Education, Ser B,
GO, Callable 06/01/01 @ 101
6.000%, 06/01/22 500 535
State, Board of Education, Ser C,
ETM, GO (F)
7.100%, 06/01/07 190 192
State, Department of General Services,
Preservation 2000, Ser A , RB,
Callable 07/01/09 @ 101 (FGIC)
5.250%, 07/01/12 2,000 2,066
State, Finance Department,
Department of Natural Resources,
Preservation 2000, Ser A, RB,
Prerefunded 07/01/01 @ 102
(AMBAC) (F)
6.750%, 07/01/06 80 86
State, Finance Department, General
Services, Environmental Protection,
Preservation 2000, Ser B, RB,Callable
07/01/08 @ 101 (FSA)
5.250%, 07/01/12 3,000 3,092
State, Municipal Power Agency,
Saint Lucie Project, ETM, RB (F)
5.000%, 10/01/17 500 496
Sunrise, Utility System, RB,
Callable 10/01/18 @ 100
(AMBAC)
5.200%, 10/01/22 2,000 2,010
5.000%, 10/01/28 1,500 1,457
Sunrise, Utility System, Ser A,
RB (AMBAC) (A)
0.000%, 10/01/09 1,000 617
Tallahassee, Utility System,
Ser B, RB, Prerefunded
10/01/99 @ 102 (F)
6.900%, 10/01/14 240 248
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
FLORIDA--CONTINUED
<S> <C> <C>
Tampa, Health System,
Catholic Health, Ser A-1, RB,
Callable 11/15/08 @ 102 (MBIA)
5.250%, 11/15/11 $2,300 $2,362
Tampa, Health System,
Catholic Health, Ser A-2, RB,
Callable 11/15/08 @ 102 (AMBAC)
5.250%, 11/15/10 2,030 2,074
Tampa, Refunding Bond, RB,
Callable 10/1/01 @ 102 (AMBAC)
7.050%, 10/01/07 1,000 1,089
Tampa, Special Tax Allocation,
Callable 10/01/01 @ 102 (AMBAC)
6.900%, 10/01/09 1,500 1,626
-------
116,804
-------
PUERTO RICO (7.7%)
Commonwealth, Aqueduct & Sewer
Authority, RB (MBIA)
6.250%, 07/01/12 1,000 1,147
Commonwealth, GO (MBIA)
5.650%, 07/01/15 1,000 1,084
Commonwealth, Electric Power
Authority, Ser S, RB
5.500%, 07/01/00 200 205
Commonwealth,
Highway & Transportation
Authority, Ser X, RB (MBIA)
5.500%, 07/01/15 1,690 1,804
Commonwealth,
Highway & Transportation
Authority, Ser Z, RB (MBIA)
6.250%, 07/01/14 3,000 3,460
Commonwealth, Housing Finance,
Homeowner Mortgage, Ser A, AMT,
Callable 12/01/08 @ 101 (GNMA)
5.100%, 12/01/18 2,000 2,002
Commonwealth, Public Buildings
Authority, Guaranteed Government
Facilities, Ser A, RB (AMBAC)
6.250%, 07/01/14 750 865
------
10,567
------
Total Municipal Bonds
(Cost $126,082) 127,371
------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
CASH EQUIVALENTS (7.7%)
<S> <C>
Fund shares of the Flex Class (unlimited
authorization -- no par value) based on
1,390,405 outstanding shares of
beneficial interest 14,763
Overdistributed net investment income (5)
Accumulated net realized gain
on investments 432
Net unrealized appreciation on investments 1,289
------------
Total Net Assets (100.0%) $137,170
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 10.59
------------
------------
Net Asset Value and Redemption Price
Per Share-- Investor Shares $ 10.60
------------
------------
Maximum Offering Price Per Share --
Investor Shares ($10.60 / 96.25%) $ 11.01
------------
------------
Net Asset Value, Offering and Redemption
Price Per Shares-- Flex Shares (1) $ 10.62
------------
------------
</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 ACOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 56.
27
<PAGE>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
GEORGIA TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
FACE AMOUNT
(000) VALUE (000)
FACE AMOUNT
(000) VALUE (000)
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
MUNICIPAL BONDS (94.3%)
GEORGIA (94.3%)
<S> <C> <C>
Albany-Dougherty County,
State Hospital Authority,
Ser B, Prerefunded 09/01/00 @
102 (AMBAC) (F)
7.500%, 09/01/20 $ 255 $ 273
Alpharetta, GO
5.000%, 05/01/07 1,650 1,718
Athens, Water & Sewer,
ETM, RB (F)
5.700%, 07/01/00 165 169
Atlanta, Airport Facility,
RB (AMBAC)
6.000%, 01/01/03 1,000 1,066
6.000%, 01/01/04 500 539
6.500%, 01/01/06 1,000 1,122
Augusta, Water & Sewer,
RB, Prerefunded 05/01/02 @ 102 (F)
6.200%, 05/01/03 130 140
Bibb County, GO
7.000%, 01/01/04 985 1,099
Carroll County, Water and Sewer, RB,
Callable 07/01/09 @ 102 (AMBAC)
5.000%, 07/01/10 720 739
5.000%, 07/01/11 805 819
Cartersville, Water & Sewer,
RB, Callable 07/01/08 @102 (FSA)
5.000%, 07/01/12 1,255 1,259
Cherokee County, School District, GO
5.000%, 02/01/12 1,690 1,717
5.000%, 02/01/13 1,370 1,389
Clarke County, Athens Regional
Medical Center Project, RB
5.375%, 01/01/07 1,425 1,508
Clayton County, GO
5.000%, 08/01/02 1,000 1,034
Clayton County, Water & Sewer
Authority, RB (MBIA)
5.000%, 05/01/11 600 611
Clayton County, Water Authority,
RB, Callable 05/01/06 @
102 (AMBAC)
5.350%, 05/01/09 1,500 1,586
Cobb County, GO
5.000%, 02/01/03 1,025 1,063
Cobb County & Marietta,
Coliseum & Exhibit Hall Authority,
RB (MBIA)
5.500%, 10/01/12 940 1,004
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
GEORGIA--CONTINUED
<S> <C> <C>
Cobb County & Marietta,
Water Authority, RB
5.000%, 11/01/03 $1,255 $1,306
5.100%, 11/01/04 1,000 1,049
Columbia County, Courthouse/
Detention Center Projects, GO,
Callable 02/01/08 @ 102
5.000%, 02/01/10 920 931
Dalton, Utilities Revenue,
RB (MBIA)
6.000%, 01/01/08 3,240 3,581
Dalton-Whitfield County,
Hospital Authority, RB,
Prerefunded 07/01/00 @ 102 (F)
7.000%, 07/01/03 355 375
DeKalb County, Development
Authority, Emory University
Project, Ser A, RB
5.375%, 11/01/05 1,650 1,762
DeKalb County, Development
Authority, Emory University Project,
Ser A, RB, Callable 11/01/05 @ 101
5.200%, 11/01/08 500 524
DeKalb County, School District,
Ser A, GO
6.250%, 07/01/11 1,500 1,708
Douglasville - Douglas County,
Water & Sewer Authority,
RB (AMBAC)
5.625%, 06/01/15 1,370 1,467
East Point, Building Authority,
RB, Callable 02/01/06 @
102 (AMBAC)
4.800%, 02/01/07 535 548
Fayette County, School District, GO
6.250%, 03/01/07 450 498
Fayette County, School District, GO,
Callable 03/01/09 @ 102
4.625%, 03/01/12 1,000 977
4.625%, 03/01/13 1,000 969
Fayette County, Water Authority,
ETM, RB (MBIA) (F)
8.550%, 10/01/01 300 332
Forsyth County, School District, GO
6.400%, 07/01/05 750 835
6.500%, 07/01/06 1,000 1,128
Forsyth County, School District,
GO (MBIA)
5.350%, 07/01/10 780 839
Forsyth County, Water & Sewer
Authority, RB
5.000%, 04/01/04 1,000 1,040
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
GEORGIA--CONTINUED
<S> <C> <C>
Forsyth County, Water & Sewer
Authority, RB,
Callable 04/01/08 @ 101
5.000%, 04/01/09 $1,120 $1,160
5.000%, 04/01/10 460 472
Fulco, Hospital Authority,
Catholic Health East, Ser A, RB,
Callable 11/15/08 @ 102 (MBIA)
5.250%, 11/15/12 1,000 1,022
Fulton County, Hospital Authority,
Northside Hospital Project,
Ser B, RB, Prerefunded 10/01/02
@ 102 (MBIA) (F)
6.600%, 10/01/11 2,000 2,203
Fulton County, School District, GO
5.250%, 01/01/12 1,000 1,044
Gwinnett County, Recreation
Authority, RB
5.800%, 02/01/06 785 851
5.875%, 02/01/07 1,390 1,520
Gwinnett County, School District, GO
6.400%, 02/01/06 500 560
Gwinnett County, School District,
Ser B, GO
6.400%, 02/01/07 1,500 1,691
Gwinnett County, Water & Sewer
Authority, RB, Callable
08/01/08 @ 102
5.000%, 08/01/13 800 810
Hall County, School District,
Ser B, GO
6.300%, 12/01/ 675 753
Henry County, GO
6.300%, 08/01/08 300 340
Henry County, Henry Medical
Center Project, RB,
Callable 07/01/07 @ 102 (AMBAC)
5.500%, 07/01/08 2,460 2,629
Henry County, School District,
Ser A, GO
6.150%, 08/01/06 150 166
6.450%, 08/01/11 500 575
Henry County, School District,
Ser B, GO (MBIA)
5.500%, 08/01/01 350 363
Henry County, Water & Sewer
Authority, RB (AMBAC)
6.150%, 02/01/20 1,750 1,983
</TABLE>
<TABLE>
<CAPTION>
FACE AMOUNT
(000) VALUE (000)
GEORGIA--CONTINUED
<S> <C> <C>
Houston County, School District,
Intergovernmental Contract,
COP, Prerefunded 03/01/04
@ 102 (MBIA)
6.000%, 03/01/14 $2,000 $2,197
Jackson County, School District,
GO, Callable 07/01/08 @ 101
5.000%, 07/01/10 1,020 1,046
Medical Center Hospital Authority,
Columbus Regional Healthcare
System, RB, Callable 08/01/05
@ 102, (MBIA)
6.000%, 08/01/06 1,340 1,471
Meriwether County, School District,
GO (FSA)
7.000%, 02/01/06 740 850
Metro Atlanta, Rapid Transportation
Authority, Ser N, RB
6.000%, 07/01/07 1,000 1,097
Metro Atlanta, Rapid Transportation
Authority, Ser P, RB (AMBAC)
6.250%, 07/01/08 1,000 1,131
Milledgeville, Water & Sewer,
RB (FSA)
6.000%, 12/01/16 1,000 1,117
6.000%, 12/01/21 1,000 1,118
Paulding County, School District,
GO (MBIA)
6.000%, 02/01/10 1,000 1,110
Paulding County, School District,
Ser A, GO
6.625%, 02/01/07 1,000 1,139
6.625%, 02/01/08 500 574
Private Colleges & Universities,
Agnes Scott College Project, RB,
Callable 06/01/09 @ 101 (MBIA)
5.250%, 06/01/10 1,360 1,423
Private Colleges & Universities,
Emory University Project, Ser A, RB
5.500%, 11/01/06 525 563
Private Colleges & Universities,
Emory University Project, Ser A,
RB, Callable 11/01/07 @ 100
5.000%, 11/01/10 1,000 1,021
Private Colleges & Universities,
Emory University Project, Ser C,
RB, Callable 10/01/02 @ 102
5.900%, 10/01/04 305 328
</TABLE>
29
<PAGE>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
GEORGIA TAX-EXEMPT BOND FUND--CONCLUDED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
GEORGIA--CONTINUED
<S> <C> <C>
Private Colleges & Universities,
Mercer University Project,
RB (MBIA)
6.400%, 10/01/11 $ 500 $ 580
Private Colleges & Universities,
Mercer University Project, Ser A,
RB, Callable 10/01/09 @ 101
5.250%, 10/01/13 1,000 1,016
Private Colleges & Universities,
Spelman College Project, RB (FGIC)
6.000%, 06/01/09 475 520
Putnam County, School District,
GO, Callable 2/01/08 @ 102
4.500%, 02/01/12 930 916
Savannah, Hospital Authority,
St. Josephs/Candler Health System,
Ser B, RB, Callable 01/01/09 @ 101
5.250%, 07/01/12 1,040 1,063
Savannah, Water & Sewer,
ETM, RB (F)
6.450%, 12/01/04 1,000 1,115
Smyrna, Development Authority, RB
5.600%, 02/01/20 735 774
State, Fulco Hospital, Health System,
Catholic Health East, Ser A, RB,
Callable 11/15/08 @ 102 (MBIA)
5.250%, 11/15/13 2,000 2,034
State, GO
6.250%, 08/01/13 650 748
State, Housing & Financial Authority,
Single Family Mortgage, Ser B,
RB, Callable 06/01/05 @ 102
5.550%, 12/01/07 550 579
State, Housing & Financial Authority,
Single Family Mortgage, Ser B,
RB, Callable 06/01/06
@ 102 (FHA)
5.550%, 12/01/10 325 339
5.600%, 12/01/11 450 469
State, Housing & Financial Authority,
Single Family Mortgage, Ser C,
RB, Callable 12/01/07 @ 101.50
5.550%, 12/01/16 500 518
State, Municipal Electric Authority,
ETM, RB, Callable 01/12/98 @
101 (F)
8.000%, 01/01/15 1,900 2,509
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
GEORGIA--CONTINUED
<S> <C> <C>
State, Ser A, GO
6.250%, 04/01/11 $1,000 $1,141
State, Ser C, GO
6.500%, 04/01/08 1,000 1,148
6.250%, 08/01/08 1,360 1,544
State, Ser D, GO
6.700%, 08/01/10 2,250 2,661
5.250%, 10/01/14 780 816
State, Tollway Authority,
Georgia 400 Project, RB
5.000%, 07/01/09 1,280 1,334
Upper Oconee Basin, Water Authority,
RB, Callable 07/01/08 @ 102 (FGIC)
5.000%, 07/01/12 500 503
Vidalia, Water & Sewer, ETM, RB (F)
6.000%, 07/01/07 605 671
Walker County, School District, GO
5.000%, 02/01/03 1,000 1,035
Walker, Dade & Catoosa Counties,
Hutchinson Medical Center
Project, Ser A, RB,
Callable 10/01/07 @ 102 (FSA)
5.500%, 10/01/08 1,370 1,453
------
Total Municipal Bonds
(Cost $97,514) 98,537
------
CASH EQUIVALENTS (6 8%)
AIM Management Institutional
Tax-Free Portfolio 2,297 2,297
SEI Tax-Exempt Trust Institutional
Tax-Free Portfolio 4,812 4,812
------
Total Cash Equivalents
(Cost $7,109) 7,109
------
Total Investments (101.1% )
(Cost $104,623) 105,646
------
OTHER ASSETS AND LIABILITIES, NET (-1.1%) (1,160)
------
NET ASSETS:
Fund shares of the Trust Class (unlimited
authorization -- no par value) based
on
8,715,572 outstanding shares of
beneficial interest 86,243
Fund shares of the Investor Class (unlimited
authorization -- no par value) based on
365,831 outstanding shares of
beneficial interest 3,562
</TABLE>
30
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
VALUE (000)
- -------------------------------------------------------------------------------
<S> <C>
Fund shares of the Flex Class (unlimited
authorization -- no par value) based on
1,330,702 outstanding shares of
beneficial interest $ 13,302
Undistributed net investment income 2
Accumulated net realized gain on investments 354
Net unrealized appreciation on investments 1,023
------------
Total Net Assets (100.0%) $104,486
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 10.03
------------
------------
Net Asset Value and Redemption Price
Per Share-- Investor Shares $ 10.05
------------
------------
Maximum Offering Price Per Share --
Investor Shares ($10.05 / 96.25%) $ 10.44
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 10.04
------------
------------
</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 56.
31
<PAGE>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
INVESTMENT GRADE BOND FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (40.4%)
<S> <C> <C>
U.S. Treasury Bonds
7.500%, 11/15/16 $80,000 $91,592
8.125%, 08/15/19 75,750 93,066
6.125%, 11/15/27 35,000 35,378
5.250%, 11/15/28 3,150 2,851
5.250%, 02/15/29 14,550 13,354
U.S. Treasury Notes
4.625%, 12/31/00 9,000 8,901
5.000%, 04/30/01 103,000 102,255
6.250%, 04/30/01 12,300 12,485
6.500%, 05/31/01 15,435 15,746
6.625%, 06/30/01 3,480 3,559
6.250%, 06/30/02 1,000 1,018
5.750%, 10/31/02 7,215 7,239
4.750%, 02/15/04 15,000 14,475
6.125%, 08/15/07 65,350 66,630
4.750%, 11/15/08 22,000 20,459
------
Total U.S. Treasury Obligations
(Cost $484,065) 489,008
------
CORPORATE OBLIGATIONS (39.2%)
FINANCE (24.0%)
Americal Financial Group
7.125%, 12/15/07 7,000 6,956
Central Fidelity
8.150%, 11/15/02 3,000 3,180
Conseco
6.800%, 06/15/05 16,000 14,960
6.400%, 06/15/11 11,500 11,270
Countrywide Home Loan,
Ser F, MTN
6.510%, 02/11/05 23,300 22,572
Donaldson Lufkin Jenrette
5.875%, 04/01/02 16,500 16,232
Donaldson Lufkin Jenrette, MTN
6.150%, 05/04/04 8,400 8,148
Finova Capital
6.250%, 11/01/02 11,625 11,509
6.110%, 02/18/03 18,750 18,445
6.750%, 03/09/09 6,100 5,963
Ford Motor Credit
6.500%, 02/28/02 14,600 14,691
Goldman Sachs
6.650%, 05/15/09 9,400 9,259
Great Western Financial
8.600%, 02/01/02 9,800 10,167
Household Finance
6.250%, 08/15/03 5,825 5,738
5.875%, 02/01/09 18,750 17,414
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
FINANCE--CONTINUED
<S> <C> <C>
Merrill Lynch, Ser B, MTN
5.710%, 01/15/02 $12,750 $12,591
Paine Webber Group, Ser C, MTN
6.020%, 04/22/02 20,250 19,794
Provident
7.000%, 07/15/18 30,600 29,797
Reliastar Financial
6.500%, 11/15/08 16,750 15,996
Salomon
7.300%, 05/15/02 16,000 16,400
6.250%, 01/15/05 20,000 19,100
-------
290,182
-------
</TABLE>
<TABLE>
INDUSTRIAL (15.2%)
<S> <C> <C>
AT&T
6.000%, 03/15/09 17,275 16,476
6.500%, 03/15/29 10,200 9,473
AT&T Capital, MTN
6.890%, 01/25/02 23,325 23,354
Bausch & Lomb
6.750%, 12/15/04 11,800 11,549
Bausch & Lomb (C)
6.150%, 08/01/99 12,000 11,940
Corning
6.300%, 03/01/09 4,000 3,874
Dillards
6.430%, 08/01/04 27,000 26,123
Ford Motor
6.625%, 10/01/28 2,085 1,931
Ikon Capital, MTN
6.730%, 06/15/01 13,000 12,838
Philip Morris
7.250%, 09/15/01 13,500 13,770
7.500%, 04/01/04 14,500 14,953
Sprint Capital
5.875%, 05/01/04 11,500 11,141
6.125%, 11/15/08 2,705 2,543
6.375%, 05/01/09 10,270 9,808
6.900%, 05/01/19 14,850 14,200
-------
183,973
-------
Total Corporate Obligations
(Cost $484,858) 474,155
-------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (15.3%)
<S> <C> <C>
FHLMC
7.000%, 01/01/11 $1,430 $1,452
7.000%, 02/01/12 8,192 8,318
FNMA
4.750%, 11/14/03 3,500 3,330
6.500%, 01/01/13 1,702 1,695
6.500%, 02/01/13 6,262 6,236
6.500%, 03/01/13 4,304 4,285
7.500%, 12/01/26 139 143
7.000%, 01/01/27 6,902 6,906
7.500%, 03/01/27 48 50
7.500%, 05/01/27 386 395
7.500%, 06/01/27 65 67
7.500%, 07/01/27 451 461
7.500%, 08/01/27 138 142
7.500%, 09/01/27 366 375
7.500%, 10/01/27 1,099 1,124
7.500%, 11/01/27 121 124
7.500%, 12/01/27 623 637
7.500%, 01/01/28 1,152 1,179
7.500%, 02/01/28 236 242
7.500%, 04/01/28 1,466 1,500
7.500%, 05/01/28 693 710
7.500%, 06/01/28 103 106
FNMA REMIC, Ser 1997-63, Cl PC
6.500%, 03/18/26 9,160 9,024
GNMA
8.000%, 11/15/09 5,825 6,064
7.000%, 12/15/22 208 209
8.000%, 12/15/22 83,154 86,453
7.000%, 09/15/23 215 216
6.500%, 12/15/23 6,166 6,018
7.000%, 09/15/25 472 474
7.000%, 03/15/26 282 283
7.000%, 04/15/26 1,047 1,049
7.000%, 11/15/26 485 486
7.000%, 01/15/27 744 746
7.000%, 02/15/27 970 972
7.000%, 03/15/27 1,872 1,878
7.000%, 04/15/27 409 411
7.000%, 08/15/27 548 549
7.000%, 10/15/27 1,134 1,138
7.000%, 11/15/27 2,107 2,111
7.000%, 12/15/27 6,084 6,095
7.000%, 01/15/28 170 170
6.500%, 02/15/28 1,477 1,442
6.500%, 03/15/28 8,061 7,870
7.000%, 03/15/28 511 513
6.500%, 04/15/28 395 386
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS--CONTINUED
<S> <C> <C>
7.000%, 04/15/28 $ 626 $ 627
6.500%, 05/15/28 451 441
7.000%, 06/15/28 37 37
6.500%, 08/15/28 193 189
7.000%, 08/15/28 46 47
6.500%, 09/15/28 1,502 1,468
6.500%, 10/15/28 249 243
6.500%, 11/15/28 1,041 1,017
6.500%, 12/15/28 5,823 5,685
6.500%, 02/15/29 984 961
-------
Total U.S. Agency Mortgage-Backed Obligations
(Cost $185,683) 184,749
-------
ASSET-BACKED SECURITIES (1.5%)
American Express Master Trust,
Ser 1992-2, Cl A
6.600%, 05/15/00 6,350 6,361
Chase Commercial Mortgage
Securities, Ser 1998-1,
Cl A2, CMO
6.560%, 05/18/08 3,495 3,460
Discover Card Master Trust I,
Ser 1998-4, Cl A
5.750%, 10/16/03 8,190 8,077
EQCC Home Equity Loan Trust,
Ser 1994-1, Cl A
5.800%, 03/15/09 457 449
Merrill Lynch Mortgage Investors,
Ser 1998-C1 A1, CMO
6.310%, 11/15/26 394 392
Olympic Automobile Receivables Trust,
Ser 1995-D, Cl A4
6.050%, 11/15/00 62 62
-------
Total Asset-Backed Securities
(Cost $18,986) 18,801
-------
CASH EQUIVALENT (1.0%)
AIM Liquid Assets Portfolio 12,160 12,160
-------
Total Cash Equivalent
(Cost $12,160) 12,160
-------
REPURCHASE AGREEMENTS (3.0%)
Deutsche Bank
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$19,945,118 (collateralized
by various U.S. Treasury
obligations: total market
value $20,333,418) (H) 19,935 19,935
</TABLE>
33
<PAGE>
STATEMENT OF NET ASSETS/SCHEDULE OF INVESTMENTS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
<TABLE>
<CAPTION>
INVESTMENT GRADE BOND FUND--CONCLUDED
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--CONTINUED
<S> <C> <C>
SBC Warburg
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$15,991,506 (collateralized by
U.S. Treasury Bond: total market
value $16,307,771) (H) $15,983 $15,983
-------
Total Repurchase Agreements
(Cost $35,918) 35,918
-------
Total Investments (100.4% )
(Cost $1,221,671) 1,214,791
-------
OTHER ASSETS AND LIABILITIES, NET (-0.4%) (4,790)
-------
NET ASSETS:
Fund shares of the Trust Class (unlimited
authorization -- no par value) based
on 110,931,510 outstanding shares of
beneficial interest 1,160,025
Fund shares of the Investor Class (unlimited
authorization -- no par value) based on
3,371,284 outstanding shares of
beneficial interest 35,499
Fund shares of the Flex Class (unlimited
authorization -- no par value) based on
2,510,327 outstanding shares of
beneficial interest 26,536
Overdistributed net investment income (145)
Accumulated net realized loss
on investments (5,034)
Net unrealized depreciation on investments (6,880)
-------
Total Net Assets (100.0%) $1,210,001
-------
-------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $10.36
------
------
Net Asset Value and Redemption
Price Per Share-- Investor Shares $10.36
------
------
Maximum Offering Price Per Share --
Investor Shares ($10.36 / 96.25%) $10.76
------
------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $10.37
------
------
</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 56.
34
<PAGE>
- -------------------------------------------------------------------------------
INVESTMENT GRADE TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------------
MUNICIPAL BONDS (88.5%)
ALABAMA (2.1%)
<S> <C> <C>
Huntsville, Ser B, GO
4.000%, 11/01/01 $1,660 $1,671
Montgomery,
Baptist Methodist Church,
Special Care Facilities Financing
Authority, Baptist Health, Ser B, RB,
Callable 11/15/08 @ 101 (MBIA)
5.250%, 11/15/12 1,450 1,470
State Docks Authority, Docks
Facility, RB (MBIA)
5.250%, 10/01/00 1,000 1,024
------
4,165
------
ARIZONA (4.3%)
Maricopa County,
Community College Project,
Ser C, GO,
5.250%, 07/01/01 5,000 5,158
Maricopa County, School District
No. 80, Chandler, GO, Partially
Prerefunded 07/01/01 @
101 (FGIC) (F)
6.400%, 07/01/10 3,050 3,224
------
8,382
------
CALIFORNIA (1.8%)
Orange County, Loma Ridge
Data Center Project, COP,
Prerefunded 06/01/19
@ 100 (AMBAC) (F)
6.000%, 06/01/21 2,075 2,299
State, GO (FGIC)
5.750%, 02/01/11 1,000 1,098
------
3,397
------
CONNECTICUT (0.4%)
State, Special Tax Obligation,
Transportation Infrastructure,
Ser A, RB (FGIC)
5.500%, 10/01/12 800 854
------
DISTRICT OF COLUMBIA (1.1%)
District of Columbia, American
College Obstetricians, RB,
Prerefunded 8/15/01 @ 102
(AMBAC) (F)
6.500%, 08/15/18 1,930 2,078
------
FLORIDA (7.3%)
Miami-Dade County, School District,
GO (FSA)
5.375%, 08/01/12 5,000 5,283
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Palm Beach County, Criminal Justice
Facilities, RB (FGIC)
5.750%, 06/01/12 $5,000 $5,461
State, Finance Department,
General Services, Environmental
Protection, Preservation 2000, Ser B,
RB, Callable 07/01/08 @ 101 (FSA)
5.250%, 07/01/12 3,500 3,608
------
14,352
------
GEORGIA (4.1%)
Atlanta, Water & Sewer, RB,
Prerefunded 01/01/04
@ 100 (FGIC-TCRS) (F)
4.500%, 01/01/18 2,500 2,543
State, Electric Authority, Ser X,
RB (MBIA)
6.500%, 01/01/12 4,700 5,419
------
7,962
------
HAWAII (0.5%)
State, Ser CR, GO,
Callable 04/01/08 @ 101 (MBIA)
5.250%, 04/01/13 1,000 1,020
------
ILLINOIS (13.3%)
Chicago, School Finance Authority, GO,
Callable 6/01/02 @ 102 (FGIC)
6.250%, 06/01/09 6,000 6,454
Chicago, Midway Airport,
Ser C, RB (MBIA)
5.500%, 01/01/13 2,380 2,515
5.500%, 01/01/14 2,520 2,660
State, Financial Authority,
Provena Health, Ser A, RB,
Callable 05/15/08 @ 101 (MBIA)
5.500%, 05/15/11 2,500 2,607
State, Health Facilities Authority,
Trinity Medical Center Project,
RB, Callable 07/01/02 @
102 (FSA)
7.000%, 07/01/12 5,000 5,506
State, Regional Transportation
Authority, RB (FGIC)
6.000%, 06/01/15 2,000 2,216
State, Regional Transportation
Authority, Ser A, RB,
Callable 06/01/02 @
102 (AMBAC)
6.500%, 06/01/15 3,830 4,151
------
26,109
------
</TABLE>
<PAGE>
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
INVESTMENT GRADE TAX-EXEMPT BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ------------------------------------------------------------------------------
INDIANA (1.1%)
<S> <C> <C>
State, Transportation Finance
Authority, Ser A, RB,
Callable 12/01/08 @ 101 (MBIA)
5.250%, 12/01/12 $2,000 $2,050
------
MARYLAND (1.5%)
Baltimore, Water Project, Ser A, RB,
Callable 07/01/06 @ 101 (FGIC)
5.800%, 07/01/15 2,800 2,985
------
MASSACHUSETTS (0.7%)
Boston, City Hospital Project, RB,
Partially Prerefunded 08/15/99
@ 100 (FHA) (F)
7.650%, 02/15/10 1,260 1,347
------
MICHIGAN (1.6%)
State, Building Authority, Ser II, RB,
Callable 10/01/01 @ 102
6.750%, 10/01/11 2,950 3,182
------
MISSOURI (1.5%)
St. Louis, Water Utility Improvements,
RB, Callable 07/01/04 @ 102 (FGIC)
5.950%, 07/01/06 1,170 1,287
State, Health & Educational Facilities
Authority, Healthcare Project,
Ser B, ETM, RB,
Callable 06/01/00
@ 102 (MBIA) (F)
7.000%, 06/01/05 1,500 1,581
------
2,868
------
NEBRASKA (4.3%)
American Public Energy Agency,
Public Gas Agency Project, Ser A,
RB (AMBAC)
5.000%, 06/01/05 1,000 1,034
5.250%, 06/01/09 2,250 2,339
5.250%, 06/01/11 2,800 2,898
State, Public Power District, Power
Supply System, Ser C, RB,
Prerefunded 07/01/04 @ 101 (F)
4.750%, 01/01/07 2,000 2,078
------
8,349
------
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------- -----------------------
NEVADA (3.7%)
<S> <C> <C>
Clark County, School District, GO,
Callable 06/01/03 @ 101 (FGIC)
5.250%, 06/01/07 $7,000 $7,260
------
NEW JERSEY (1.5%)
State, Transportation System, Ser A,
RB, Callable 6/15/08 @ 100
5.000%, 06/15/12 3,000 3,024
------
NEW YORK (6.2%)
Oneida-Herkimer, Solid Waste
Management Authority, RB (FSA)
5.500%, 04/01/14 1,285 1,356
State, Dormitory Authority, RB,
Callable 07/01/14 @ 100 (FSA)
5.750%, 07/01/18 1,800 1,951
State, Dormitory Authority, Ser A,
RB (AMBAC)
6.000%, 07/01/10 1,550 1,724
State, Environmental Facilities,
Corporate Pollution Control,
Ser E, RB (MBIA)
6.000%, 06/15/12 3,050 3,408
Triborough Bridge & Tunnel
Authority, Ser V, RB,
Callable 01/01/01
@ 102 (FGIC-TCRS)
6.875%, 01/01/05 3,500 3,728
------
12,167
------
NORTH CAROLINA (2.2%)
State, Eastern Municipal Power
Agency, Ser A, RB, Prerefunded
01/01/22 @ 100 (F)
6.000%, 01/01/26 1,550 1,735
State, Medical Care Community
Hospital, Mercy Hospital Project,
RB, ETM, Callable 08/01/02
@ 102 (F)
6.500%, 08/01/15 1,000 1,096
State, Medical Care Community
Hospital, Rex Hospital Project, RB
5.100%, 06/01/00 1,500 1,525
------
4,356
------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
OHIO (0.9%)
<S> <C> <C>
Cleveland, City School District,
Ser A, GO, Callable 12/01/02
@ 102 (FGIC)
5.875%, 12/01/11 $1,650 $1,769
------
OREGON (1.1%)
Clackamas County,
School District No. 12, RB,
Callable 06/01/09 @ 100 (FGIC)
5.250%, 06/01/13 2,000 2,052
------
PENNSYLVANIA (2.1%)
Allegheny County, Hospital
Development Authority,
Ohio Valley General, RB,
Callable 04/01/03 @ 100 (MBIA)
5.875%, 04/01/11 1,500 1,577
State, University of Pennsylvania,
Health Services, Ser A, RB,
Callable 07/01/08 @ 100 (MBIA)
5.250%, 01/01/12 2,450 2,503
------
4,080
------
PUERTO RICO (0.2%)
Commonwealth, Telecom Authority,
RB, Prerefunded 01/01/03
@ 101.5 (MBIA) (F)
5.250%, 01/01/05 300 317
------
SOUTH DAKOTA (3.6%)
State, Health & Educational Facility
Authority, St Lukes Midland
Regional Medical Center, RB,
Callable 07/01/01 @ 102 (MBIA)
6.625%, 07/01/11 6,675 7,132
------
TENNESSEE (3.2%)
Metropolitan Nashville Airport,
Ser C, RB, Callable 07/01/01
@ 102 (FGIC)
6.600%, 07/01/15 3,900 4,176
Shelby County, GO, Prerefunded
12/01/00 @ 102 (G)
6.250%, 12/01/09 2,000 2,121
------
6,297
------
TEXAS (8.5%)
Amarillo, Health Facilities
Corporation, Baptist Saint Anthonys
Hospital, RB (FSA)
5.500%, 01/01/13 $1,000 $1,049
Austin, Independent School District,
GO, Prerefunded 08/01/06
@ 100 (F)
5.750%, 08/01/14 2,100 2,287
Corpus Christi, Utility Systems, RB,
Callable 7/15/09 @ 100 (FSA)
5.250%, 07/15/12 2,780 2,852
5.250%, 07/15/13 2,200 2,247
Harris County, Memorial Hermann
Hospital System Project, RB (FSA)
5.500%, 06/01/13 6,280 6,594
University, Ser B, RB,
Callable 08/15/01 @ 102
6.750%, 08/15/13 1,475 1,589
16,618
------
VERMONT (1.1%)
Burlington, Ser A,
Callable 07/01/02 @102 (MBIA)
6.250%, 07/01/14 2,000 2,156
------
WASHINGTON (8.1%)
Snohomish County,
School District No. 015 Edmonds,
GO, Callable 6/01/09 @100 (FGIC)
5.250%, 12/01/15 2,000 2,017
Spokane County,
School District No. 356, Ser A, GO,
Callable 06/01/08 @ 100 (FGIC)
5.250%, 12/01/12 1,740 1,781
State, Ser B, GO,
Callable 05/01/04 @ 100
5.750%, 05/01/14 5,600 5,921
Whatcom County,
School District No. 501,
Bellingham, GO (FSA)
5.250%, 12/01/13 3,110 3,229
Yakima & Benton Countys,
School District, GO,
Callable 06/01/09 @ 100 (AMBAC)
5.250%, 12/01/13 1,315 1,339
5.250%, 12/01/15 1,530 1,543
------
15,830
------
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS/STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
INVESTMENT GRADE TAX-EXEMPT BOND FUND--CONCLUDED
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
WEST VIRGINIA (0.5%)
<S> <C> <C>
West Virginia University, University
Projects, Ser A, RB (MBIA)
5.500%, 04/01/14 $1,000 $1,059
------
Total Municipal Bonds
(Cost $173,797) 173,217
------
REPURCHASE AGREEMENT (0.6%)
Deutsche Bank
4.78%, dated 05/28/99, matures
06/01/99, repurchase price
$1,209,350 (collateralized by
U.S. Treasury Bond: total market
value $1,233,463) (H) 1,209 1,209
------
Total Repurchase Agreement
(Cost $1,209) 1,209
------
CASH EQUIVALENTS (9 8%)
AIM Management Institutional
Tax-Free Portfolio 9,630 9,630
SEI Tax-Exempt Trust Institutional
Tax-Free Portfolio 9,643 9,643
------
Total Cash Equivalents
(Cost $19,273) 19,273
------
Total Investments (98.9% )
(Cost $194,279) 193,699
------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 56.
38
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (27.7%)
<S> <C> <C>
U.S. Treasury Notes
5.750%, 11/30/02 $26,000 $26,065
5.250%, 05/15/04 12,800 12,611
-------
Total U.S. Treasury Obligations
(Cost $38,963) 38,676
-------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (69.5%)
FHLMC
8.000%, 12/01/02 1,198 1,228
7.000%, 03/01/04 6,383 6,471
6.500%, 06/01/13 9,325 9,282
FHLMC REMIC, Ser 1614-H
6.000%, 06/15/20 4,550 4,537
FHLMC REMIC, Ser 1624-KC
6.000%, 06/15/08 11,084 10,949
FHLMC REMIC, Ser 1666-E
6.000%, 12/15/19 5,000 4,973
FHLMC REMIC, Ser 29-Q
7.500%, 06/25/20 15,000 15,345
FNMA
7.000%, 03/01/04 7,313 7,411
8.500%, 04/01/17 543 570
7.000%, 03/01/29 2,977 2,978
FNMA REMIC, Ser 1993-206G
6.000%, 04/25/19 11,000 10,962
FNMA REMIC, Ser 1993-223PH
6.050%, 10/25/22 5,375 5,270
GNMA
9.000%, 11/15/17 741 800
8.000%, 12/15/22 15,542 16,160
-------
Total U.S. Agency Mortgage-Backed Obligations
(Cost $96,801) 96,936
-------
REPURCHASE AGREEMENT (2.1%)
Morgan Stanley
4.80%, dated 05/28/99, matures
06/01/99, repurchase price
$2,967,059 (collateralized by
FNMA obligation: total market
value $3,058,818) (H) 2,965 2,965
-------
Total Repurchase Agreement
(Cost $2,965) 2,965
-------
Total Investments (99.3% )
(Cost $138,729) 138,577
-------
OTHER ASSETS AND LIABILITIES, NET (0.7%) 1,012
-------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
VALUE (000)
- -------------------------------------------------------------------------------
NET ASSETS:
Fund shares of the Trust Class (unlimited
<S> <C>
authorization -- no par value) based
on 13,606,488 outstanding shares of
beneficial interest $136,690
Fund shares of the Investor Class (unlimited
authorization -- no par value) based on
223,041 outstanding shares of
beneficial interest 2,240
Fund shares of the Flex Class (unlimited
authorization -- no par value) based on
213,079 outstanding shares of
beneficial interest 2,155
Overdistributed net investment income (40)
Accumulated net realized loss
on investments (1,304)
Net unrealized depreciation on investments (152)
------------
Total Net Assets (100.0%) $139,589
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 9.94
------------
------------
Net Asset Value and Redemption Price
Per Share-- Investor Shares $ 9.93
------------
------------
Maximum Offering Price Per Share --
Investor Shares ($9.93 / 97.50%) $ 10.18
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 9.94
------------
------------
</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 56.
39
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
MARYLAND MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (95.3%)
MARYLAND (72.5%)
<S> <C> <C>
Anne Arundel County, Water Utility
Improvements, GO,
Callable 02/01/08 @ 101
5.125%, 02/01/24 $ 750 $ 743
Baltimore County, Construction &
Public Improvements, GO,
Callable 06/01/06 @ 101
5.500%, 06/01/16 250 260
Baltimore County, Oak Crest
Village Project, Retirement
Facilities, RB (C) (E)
3.250%, 06/02/99 1,000 1,000
Baltimore County, Pension Funding,
GO, Callable 08/01/08 @ 101
5.125%, 08/01/15 500 507
Baltimore County, Public
Improvements, GO,
Callable 07/01/08 @ 101
4.750%, 07/01/09 500 510
Baltimore County, Revenue
Authority, RB,
Prerefunded 07/01/99 @ 102 (F)
7.200%, 07/01/19 200 205
Baltimore, Emergency
Telecommunication Facilities, Ser A,
COP, Callable 10/01/07 @ 102
(AMBAC)
5.000%, 10/01/17 400 399
Baltimore, Parking Authority, City
Parking System Facilities,
RB (FGIC)
4.350%, 07/01/02 200 203
Baltimore, Pollution Control, General
Motors Corporate Project, RB
5.350%, 04/01/08 250 265
Calvert County, Economic
Development Authority, Asbury-
Solomons Project, RB,
Callable 01/01/08 @ 102 (MBIA)
5.000%, 01/01/17 250 246
5.000%, 01/01/27 250 243
Calvert County, Pollution Control,
Baltimore Gas & Electric Company
Project, RB, Callable 07/15/04 @ 102
5.550%, 07/15/14 250 257
Carroll County, Public Improvements,
GO, Callable 12/01/06 @ 101
5.125%, 12/01/14 500 507
Elkton, Highway Service Ventures,
RB (C) (E)
3.300%, 06/02/99 705 705
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
Howard County, Metropolitan District,
<S> <C> <C>
Public Improvements, Ser A, GO,
Prerefunded 02/15/05 @ 101 (G)
5.650%, 02/15/16 $ 100 $ 108
Montgomery County, Economic
Development, Genomic Research
Facility, RB (C) (E)
3.250%, 06/03/99 700 700
Montgomery County, Housing
Authority, Kensington Park,
RB (MBIA) (C)
3.400%, 06/02/99 1,600 1,600
Montgomery County, Human
Services Headquarters Project, RB
5.400%, 08/01/06 200 214
Montgomery County, Pollution
Control, Potomac Electric Power
Company Project, RB,
Callable 02/15/04 @ 102
5.375%, 02/15/24 100 101
Montgomery County, Ser A, GO
5.800%, 07/01/07 500 549
Northeast Maryland, Waste Disposal
Authority, Montgomery County
Resource Recovery Project, RB,
Callable 07/01/03 @ 102
6.200%, 07/01/10 275 294
Prince Georges County, Public
Improvements, Ser A, GO,
Callable 03/01/02 @ 102 (MBIA)
5.625%, 09/01/04 250 265
Queen Annes County,
Public Facilities, GO (FGIC)
5.125%, 11/15/06 350 369
Saint Mary's County, Public Facilities,
GO, Callable 11/01/03 @ 102 (AMBAC)
5.500%, 11/01/07 150 160
Saint Mary's County, Public
Improvements, GO (MBIA)
4.500%, 09/01/00 500 507
State, Aviation Administration
Facilities, COP, AMT,
Callable 05/01/09 @101
4.750%, 05/01/13 1,500 1,469
State, Community Development,
RB, AMT, Callable 03/01/09 @ 101
5.250%, 09/01/19 1,000 1,000
State, Economic Development,
Chesapeake Bay Foundation,
RB (C) (E)
3.250%, 06/03/99 1,000 1,000
State, Economic Development,
Dietz & Watson Project, RB (C) (E)
3.400%, 06/02/99 1,000 1,000
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
State, GO (C)
<S> <C> <C>
3.320%, 06/03/99 $ 700 $ 700
State, Health & Higher Educational
Facilities Authority, Anne Arundel
Medical Center Project, RB,
Callable 7/01/08 @ 101 (FSA)
5.125%, 07/01/28 1,500 1,472
State, Health & Higher Educational
Facilities Authority, Broadmead
Project, RB, Callable 07/01/07 @ 102
5.500%, 07/01/17 300 300
State, Health & Higher Educational
Facilities Authority, Calvert
Memorial Hospital Project, RB,
Callable 07/01/08 @ 102
5.000%, 07/01/13 400 396
State, Health & Higher Educational
Facilities Authority, Johns Hopkins
Health System Project, RB,
Callable 07/01/07 @ 102 (AMBAC)
5.250%, 07/01/17 350 351
State, Health & Higher Educational
Facilities Authority, Loyola College
Project, Ser A, RB,
Callable 10/01/06 @ 102 (MBIA)
5.500%, 10/01/16 250 259
State, Health & Higher Educational
Facilities Authority, Pickersgill
Project, Ser A, RB,
Callable 01/01/07 @ 102
6.000%, 01/01/15 350 365
State, Health & Higher Educational
Facilities Authority, Pooled Loan
Project, Ser D, RB (C) (E)
3.200%, 06/03/99 500 500
State, Health & Higher Educational
Facilities Authority, University
of Maryland Medical
Systems Project, Ser A, RB,
Prerefunded 07/01/01 @ 100 (FGIC) (F)
6.500%, 07/01/21 200 211
State, Health & Higher Educational
Facilities Authority, Upper
Chesapeake Hospital Project,
RB, Callable 01/01/08 @ 101 (FSA)
5.125%, 01/01/33 1,500 1,461
State, Housing & Community
Development, RB (C)
3.320%, 06/03/99 675 675
State, Housing & Community
Development, Ser B, RB, AMT,
Callable 03/01/07 @ 101.50 (E)
5.875%, 09/01/25 500 518
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ---------------------------------------------------------------------------------
State, Housing & Community
<S> <C> <C>
Development, Single Family
Housing, First Ser, RB,
Callable 04/01/07 @ 101.50 (E)
5.600%, 04/01/18 $ 430 $ 441
State, Housing & Community
Development, Single Family
Program, Second Series, RB,
Callable 04/01/09 @ 101
5.000%, 04/01/17 1,000 990
State, Industrial Development
Authority, Holy Cross Health
System, RB, Callable 12/01/03 @ 102
5.500%, 12/01/15 100 101
State, Public Improvements,
First Ser, GO,
Callable 02/15/06 @ 101.50
4.700%, 02/15/10 300 302
State, Public Improvements,
Third Ser, GO
5.500%, 10/15/04 500 536
State, Stadium Authority, Sports
Facility Project, RB,
Callable 03/01/06 @ 101 (AMBAC)
5.800%, 03/01/26 250 265
State, Transportation Authority,
Transportation Facilities
Project, ETM, RB
6.800%, 07/01/16 120 141
University of Maryland, System
Auxiliary Facility & Tuition
Revenue, Ser A, RB,
Callable 04/01/08 @ 100
5.000%, 04/01/19 500 491
University of Maryland, University &
College Improvements, Ser A, RB
5.000%, 04/01/05 400 417
University of Maryland, University &
College Improvements, Ser A, RB,
Callable 04/01/05 @ 102
5.400%, 04/01/09 100 106
University of Maryland, University &
College Improvements, Ser A, RB,
Callable 04/01/06 @ 101
5.500%, 04/01/08 100 107
University of Maryland, University &
College Improvements, Ser C, RB
4.350%, 10/01/03 250 254
Washington County, Public
Improvements, GO,
Callable 01/01/03 @ 102 (FGIC)
5.250%, 01/01/07 100 104
</TABLE>
41
<PAGE>
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
MARYLAND MUNICIPAL BOND FUND--CONCLUDED
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
Washington County, Suburban
<S> <C> <C>
Sanitation District, GO,
Callable 06/01/06 @ 100
5.600%, 06/01/19 $ 250 $ 260
-------
27,109
-------
PUERTO RICO (22.2%)
Commonwealth, Electric Power
Authority, RB (C)
3.390%, 06/03/99 1,600 1,600
Commonwealth, Government
Development, RB (MBIA) (C)
3.000%, 06/02/99 1,600 1,600
Commonwealth, Highway &
Transportation Authority, RB (C)
3.120%, 06/03/99 1,600 1,600
Commonwealth, Highway &
Transportation Authority, Ser Y, RB,
Callable 07/01/06 @ 101.50
5.500%, 07/01/26 300 306
Commonwealth, Public Finance, RB (C)
3.120%, 06/03/99 1,600 1,600
Commonwealth, RB (C)
3.120%, 06/03/99 1,600 1,600
-------
8,306
-------
TEXAS (0.6%)
Grapevine, Industrial Development
Authority, American Airlines
Project, Ser A2, RB (C) (D) (E)
3.250%, 06/01/99 200 200
-------
Total Municipal Bonds
(Cost $35,360) 35,615
-------
CASH EQUIVALENTS (4.0%)
AIM Tax Free Institutional
Cash Reserve 763 763
Federated Maryland Municipal
Cash Trust 731 731
-------
Total Cash Equivalents
(Cost $1,494) 1,494
-------
Total Investments (99.3% )
(Cost $36,854) 37,109
-------
OTHER ASSETS AND LIABILITIES, NET (0.7%) 272
-------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Trust Class
<S> <C>
($.001 par value -- .9 billion shares
authorized) based on 2,948,238
outstanding shares $ 29,388
Portfolio Shares of Flex Class
($.001 par value -- 50 million shares
authorized)based on 766,159
outstanding shares 7,759
Overdistributed net investment income (2)
Accumulated net realized loss
on investments (19)
Net unrealized appreciation on investments 255
---------
Total Net Assets (100.0%) $ 37,381
---------
---------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 10.06
---------
---------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 10.08
---------
---------
(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 56.
42
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (34.1%)
<S> <C> <C>
U.S. Treasury Notes
5.625%, 10/31/99 $ 3,000 $ 3,009
5.000%, 04/30/01 15,000 14,892
6.500%, 08/31/01 7,000 7,150
6.375%, 09/30/01 8,000 8,152
6.250%, 10/31/01 4,750 4,830
7.500%, 11/15/01 9,000 9,405
6.250%, 02/28/02 3,250 3,304
6.250%, 06/30/02 2,000 2,036
6.000%, 07/31/02 8,000 8,089
6.250%, 08/31/02 6,000 6,107
5.750%, 10/31/02 1,280 1,284
5.250%, 08/15/03 1,000 984
4.750%, 02/15/04 2,850 2,750
U.S. Treasury STRIPS
0.000%, 08/15/03 1,250 988
-------
Total U.S. Treasury Obligations
(Cost $73,499) 72,980
------
CORPORATE OBLIGATIONS (40.8%)
FINANCE (15.4%)
American Express
6.750%, 06/23/04 3,000 3,019
American General
5.900%, 01/15/03 2,000 1,962
6.250%, 03/15/03 1,100 1,089
Associates Corporation
5.750%, 11/01/03 2,000 1,942
Associates Corporation, MTN
7.080%, 04/15/03 1,500 1,532
Bank One Arizona
6.000%, 09/15/05 2,270 2,185
Chrysler Financial
9.500%, 12/15/99 1,000 1,023
CIT Group Holdings
6.375%, 08/01/02 1,345 1,345
Commercial Credit
6.375%, 09/15/02 2,500 2,503
Conoco
5.900%, 04/15/04 1,150 1,121
Ford Motor Credit
6.500%, 02/28/02 725 730
General Motors Acceptance
5.950%, 03/14/03 1,000 984
Household Finance, MTN
7.080%, 06/03/02 2,500 2,547
International Lease, MTN
5.500%, 09/29/03 2,000 1,925
Merrill Lynch, Ser B, MTN
5.640%, 01/27/03 3,750 3,656
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
FINANCE--CONTINUED
<S> <C> <C>
Morgan Stanley Dean Witter, Ser C
5.625%, 04/12/02 $ 1,750 $ 1,719
Salomon Brothers
7.125%, 08/01/99 1,300 1,304
Sears Roebuck Acceptance, MTN
6.920%, 06/17/04 2,250 2,267
-------
32,853
-------
INDUSTRIAL (15.7%)
American Home Products
7.900%, 02/15/05 2,000 2,132
Clark Equipment
9.750%, 03/01/01 1,750 1,844
Computer Associates
6.375%, 04/15/05 2,300 2,194
Dayton Hudson
6.800%, 10/01/01 1,500 1,524
5.950%, 06/15/10 500 501
General Foods
6.000%, 06/15/01 500 494
IBM, MTN
5.800%, 05/15/01 1,250 1,247
Norfolk Southern
7.875%, 02/15/04 1,500 1,577
Philip Morris
7.250%, 09/15/01 1,000 1,020
7.500%, 01/15/02 500 512
Raytheon
6.450%, 08/15/02 2,900 2,904
RJR Nabisco
6.800%, 09/01/01 1,500 1,509
Tenneco
10.075%, 02/01/01 3,000 3,180
TRW (B)
6.500%, 06/01/02 3,000 2,996
TRW, MTN
9.000%, 02/09/01 1,000 1,041
Union Pacific
7.060%, 05/15/03 1,500 1,519
USAA, Cl B, MTN (B)
8.880%, 09/21/99 2,000 2,019
Walt Disney, MTN
5.600%, 01/13/00 2,500 2,497
Waste Management
6.500%, 12/15/02 3,000 2,992
-------
33,702
-------
UTILITIES (9.7%)
Baltimore Gas and Electric
6.125%, 07/01/03 1,750 1,730
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
SHORT-TERM BOND FUND--CONCLUDED
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
UTILITIES--CONTINUED
<S> <C> <C>
Bellsouth Savings
9.125%, 07/01/03 $1,506 $1,582
Indiana & Michigan Power, MTN
6.400%, 03/01/00 2,250 2,258
Northern States Power
6.125%, 12/01/05 5,000 4,875
NYNEX Credit, MTN
6.900%, 06/15/99 2,000 2,001
Pacific Gas and Electric
5.875%, 10/01/05 3,500 3,373
Philadelphia Electric
7.125%, 09/01/02 2,000 2,040
Southern New England Telephone,
Ser C, MTN
6.125%, 12/15/03 3,000 2,974
------
20,833
------
Total Corporate Obligations
(Cost $88,238) 87,388
------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (12.2%)
FHLB
5.510%, 02/06/01 2,750 2,745
FHLMC
8.000%, 01/01/00 241 243
6.500%, 12/01/00 1,271 1,277
FNMA
8.500%, 11/01/01 8 9
6.500%, 06/01/13 4,534 4,517
6.500%, 09/01/13 2,902 2,893
7.500%, 09/01/26 657 672
7.000%, 01/01/27 1,733 1,735
7.500%, 09/01/27 709 725
7.500%, 10/01/27 673 687
7.500%, 11/01/27 604 617
7.500%, 12/01/27 1,862 1,903
7.500%, 01/01/28 765 782
7.500%, 03/01/28 780 796
7.500%, 06/01/28 304 311
FNMA REMIC, Ser 1996-30, Cl PC
7.000%, 11/25/20 2,600 2,641
GNMA
8.000%, 11/15/09 1,358 1,414
7.500%, 01/15/24 49 51
7.500%, 04/15/24 53 55
7.500%, 10/15/25 273 280
7.500%, 11/15/25 335 343
7.500%, 07/15/26 247 253
------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS--CONTINUED
<S> <C> <C>
7.500%, 10/15/26 $ 385 $ 395
7.500%, 02/15/27 453 464
7.500%, 07/15/27 297 304
-------
Total U.S. Agency Mortgage-Backed Obligations
(Cost $26,173) 26,112
-------
U.S. GOVERNMENT AGENCY OBLIGATION (0.5%)
FFCB
7.125%, 06/01/01 1,000 1,028
-------
Total U.S. Government Agency Obligation
(Cost $1,002) 1,028
-------
ASSET-BACKED SECURITIES (7.4%)
American Express Master Trust,
Ser 1992-2, Cl A
6.600%, 05/15/00 2,000 2,003
Arcadia Automobile Receivables
Trust, Ser 1998-E, Cl A1
5.429%, 07/15/02 2,526 2,527
Chase Manhattan Grantor Trust,
Ser 1995-B, Cl A
5.900%, 11/15/01 138 139
CoreStates Home Equity Trust,
Ser 1994-1, Cl A
6.650%, 05/15/09 629 636
Discover Card Master Trust I,
Ser 1998-4, Cl A
5.750%, 10/16/03 1,990 1,962
Discover Card Master Trust I,
Ser 1999-2, Cl A
5.900%, 10/15/04 3,000 2,961
EQCC Home Equity Loan Trust,
Ser 1994-1, Cl A
5.800%, 03/15/09 553 545
Equivantage Home Equity Loan
Trust, Ser 1996-1, Cl A
6.550%, 10/25/25 667 666
Fleet Credit Card Master Trust
Ser 1995-F, Cl A1
6.050%, 08/01/03 1,000 994
Metris Master Trust,
Ser 1997-1, Cl A
6.870%, 10/20/05 2,000 2,026
Money Store Home Equity
Trust, Cl B
6.290%, 01/15/06 375 375
</TABLE>
<TABLE>
<CAPTION>
44
<PAGE>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--CONTINUED
Spiegel Master Trust,
<S> <C> <C>
Ser 1995-A, Cl A
7.500%, 09/15/04 $ 1,000 $ 1,018
--------
Total Asset-Backed Securities
(Cost $15,911) 15,852
--------
CASH EQUIVALENT (3.9%)
AIM Liquid Assets Portfolio 8,298 8,298
--------
Total Cash Equivalent
(Cost $8,298) 8,298
--------
Total Investments (98.9% )
(Cost $213,121) 211,658
--------
OTHER ASSETS AND LIABILITIES, NET (1.1%) 2,412
--------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS:
Fund shares of the Trust Class
<S> <C>
unlimited authorization -- no par value)
based on 21,170,603 outstanding shares of
beneficial interest 213,955
Fund shares of the Investor Class
(unlimited authorization -- no par value)
based on 183,767 outstanding shares of
beneficial interest 1,837
Fund shares of the Flex Class
(unlimited authorization -- no par value)
based on 235,594 outstanding shares
of beneficial interest 2,374
Undistributed net investment income (2
Accumulated net realized loss on investments (2,631)
Net unrealized depreciation on investments (1,463)
---------
Total Net Assets (100.0%) $ 214,070
---------
---------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 9.91
---------
---------
Net Asset Value and Redemption
Price Per Share-- Investor Shares $ 9.93
---------
---------
Maximum Offering Price Per Share --
Investor Shares ($9.93 / 98.00%) $ 10.13
---------
---------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 9.93
---------
---------
</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 56.
45
<PAGE>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
SHORT-TERM U.S. TREASURY SECURITIES FUND--CONCLUDED
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS (92.2%)
<S> <C> <C>
U.S. Treasury Notes
5.875%, 11/15/99 $ 2,000 $ 2,009
5.625%, 12/31/99 11,500 11,544
5.875%, 02/15/00 2,250 2,264
6.875%, 03/31/00 1,250 1,268
5.500%, 04/15/00 2,500 2,508
6.125%, 07/31/00 2,250 2,273
6.125%, 09/30/00 2,000 2,020
5.750%, 10/31/00 2,000 2,012
5.375%, 02/15/01 12,800 12,796
6.250%, 10/31/01 3,000 3,051
7.500%, 11/15/01 7,500 7,838
6.250%, 01/31/02 4,500 4,576
6.625%, 03/31/02 4,500 4,620
-------
Total U.S. Treasury Obligations
(Cost $58,986) 58,779
-------
CASH EQUIVALENT (3.4%)
SEI Daily Income Trust
Treasury II Portfolio 2,150 2,150
-------
Total Cash Equivalent
(Cost $2,150) 2,150
-------
Total Investments (95.6% )
(Cost $61,136) 60,929
-------
OTHER ASSETS AND LIABILITIES, NET (4.4%) 2,828
-------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
VALUE (000)
- --------------------------------------------------------------------------------
NET ASSETS:
<S> <C>
Fund shares of the Trust Class
(unlimited authorization -- no par value)
based on 5,631,770 outstanding shares
of beneficial interest $ 56,173
Fund shares of the Investor Class
(unlimited authorization -- no par value)
based on 281,282 outstanding shares of
beneficial interest 2,843
Fund shares of the Flex Class
(unlimited authorization -- no par value)
based on 496,670 outstanding shares of
beneficial interest 4,969
Overdistributed net investment income (53)
Accumulated net realized gain on investments 32
Net unrealized depreciation on investments (207)
--------
Total Net Assets (100.0%) $ 63,757
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 9.95
--------
--------
Net Asset Value and Redemption Price
Per Share-- Investor Shares $ 9.95
--------
--------
Maximum Offering Price Per Share --
Investor Shares ($9.95 / 99.00%) $ 10.05
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 9.93
--------
--------
</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 56.
46
<PAGE>
- -------------------------------------------------------------------------------
U.S GOVERNMENT SECURITIES FUND
- ------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS (42.0%)
- -------------------------------------------------------------------------------
U.S. Treasury Bonds
<S> <C> <C>
7.250%, 05/15/16 $ 1,000 $ 1,118
7.625%, 02/15/25 400 480
6.875%, 08/15/25 1,000 1,104
6.000%, 02/15/26 2,000 1,985
6.625%, 02/15/27 1,000 1,075
6.125%, 11/15/27 8,545 8,637
5.250%, 11/15/28 2,350 2,127
5.250%, 02/15/29 1,000 918
U.S. Treasury Notes
8.500%, 11/15/00 950 992
4.625%, 12/31/00 1,260 1,246
6.250%, 04/30/01 6,700 6,801
8.000%, 05/15/01 200 209
6.625%, 06/30/01 580 593
7.500%, 05/15/02 750 788
6.250%, 06/30/02 550 560
5.750%, 10/31/02 845 848
4.750%, 02/15/04 6,700 6,466
7.250%, 05/15/04 500 532
7.875%, 11/15/04 275 302
7.500%, 02/15/05 500 541
6.500%, 10/15/06 8,500 8,836
6.625%, 05/15/07 1,050 1,103
4.750%, 11/15/08 1,700 1,581
-------
Total U.S. Treasury Obligations
(Cost $49,415) 48,842
-------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (52.7%)
FHLMC
6.000%, 02/01/01 59 59
7.000%, 01/01/09 72 73
7.000%, 04/01/09 228 233
7.000%, 08/01/10 476 484
7.000%, 01/01/11 282 287
7.000%, 02/01/12 974 990
6.500%, 03/01/12 2,707 2,699
7.000%, 05/01/12 722 733
6.500%, 12/01/12 1,361 1,357
FHLMC REMIC, Ser 2039, Cl PC
6.000%, 05/15/09 1,000 984
FNMA
6.000%, 11/25/07 741 738
7.500%, 06/01/11 385 396
7.000%, 09/17/11 580 589
7.000%, 05/01/12 627 636
7.000%, 06/01/12 522 530
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS--CONTINUED
<S> <C> <C>
7.000%, 07/01/12 $ 616 $ 625
6.500%, 06/01/13 1,619 1,614
6.500%, 09/01/13 194 193
7.000%, 10/25/16 566 567
6.500%, 07/01/18 1,015 998
6.290%, 08/01/18 1,477 1,440
6.500%, 08/01/18 933 913
6.000%, 12/01/18 1,963 1,868
7.000%, 01/01/27 866 867
7.500%, 04/01/27 496 507
6.000%, 03/01/28 998 950
6.500%, 03/02/28 790 773
6.500%, 03/01/29 3,992 3,903
FNMA REMIC, Ser 1990-143, Cl J
8.750%, 12/25/20 64 67
FNMA REMIC, Ser 1993-156, Cl B
6.500%, 04/25/18 100 99
FNMA REMIC, Ser 1996-30, Cl PC
7.000%, 11/25/20 2,000 2,032
FNMA REMIC, Ser 1996-68, Cl C
6.500%, 08/18/18 1,000 999
FNMA REMIC, Ser 1996-9, Cl H
6.500%, 11/25/13 1,337 1,313
FNMA REMIC, Ser 1997-34, Cl VC
7.500%, 05/01/12 1,000 1,025
FNMA REMIC, Ser 1997-6, Cl H
7.000%, 08/18/08 1,058 1,066
FNMA REMIC, Ser 1997-63, Cl PC
6.500%, 03/18/26 1,140 1,123
FNMA REMIC, Ser G93-40, Cl VC
6.500%, 08/25/10 261 258
GNMA
7.500%, 10/20/09 38 40
8.000%, 11/15/09 878 915
8.250%, 01/15/12 64 68
6.000%, 07/15/13 975 952
6.000%, 01/15/14 1,947 1,902
9.000%, 04/15/17 205 220
8.500%, 05/15/17 633 669
10.000%, 06/15/19 1 2
7.500%, 05/15/22 314 322
7.000%, 11/15/22 348 349
8.000%, 02/15/23 17 18
8.500%, 03/15/23 33 36
7.500%, 04/15/23 104 107
7.500%, 09/15/23 663 678
6.500%, 10/15/23 845 826
6.500%, 11/15/23 1,122 1,096
</TABLE>
47
<PAGE>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
U.S GOVERNMENT SECURITIES FUND--CONCLUDED
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
<TABLE>
<CAPTION>
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------
<S> <C> <C>
7.000%, 01/15/24 $ 110 $ 111
7.500%, 04/15/24 586 600
7.000%, 06/15/24 650 652
8.000%, 08/15/24 58 60
8.000%, 09/15/24 13 14
8.000%, 10/15/24 19 21
8.000%, 11/15/24 15 16
8.500%, 12/15/24 44 47
8.500%, 02/15/25 10 11
7.000%, 12/15/25 367 368
7.500%, 01/15/26 400 410
7.500%, 09/15/26 598 612
7.000%, 03/15/27 236 236
7.000%, 04/15/27 762 764
7.500%, 07/15/27 333 341
7.000%, 09/15/27 63 63
7.000%, 10/15/27 769 772
7.500%, 10/15/27 43 45
7.000%, 11/15/27 1,047 1,049
7.000%, 12/15/27 844 846
7.000%, 01/15/28 1,212 1,215
7.500%, 01/15/28 334 342
6.500%, 02/15/28 949 927
6.500%, 03/15/28 137 134
6.500%, 04/15/28 85 83
6.500%, 05/20/28 1,899 1,843
6.500%, 06/15/28 40 40
6.500%, 09/15/28 2,968 2,898
6.250%, 10/15/28 1,985 1,910
6.500%, 02/15/29 704 687
GNMA REMIC, Ser 1995-6A, Cl E
7.500%, 05/20/23 1,000 1,022
GNMA REMIC, Ser 1998-9, Cl D
6.500%, 08/20/24 1,000 972
-------
Total U.S. Agency Mortgage-Backed Obligations
(Cost $61,794) 61,299
-------
ASSET-BACKED SECURITIES (0.1%)
EQCC Home Equity Loan Trust,
Ser 1994-1, Cl A
5.800%, 03/15/09 57 56
Olympic Auto Receivables Trust,
Ser 1995-D, Cl A4
6.050%, 11/15/00 12 12
--
Total Asset-Backed Securities
(Cost $69) 68
--
</TABLE>
<TABLE>
<CAPTION>
FACE AMOUNT
(000) VALUE (000)
CASH EQUIVALENTS (4.7%)
<S> <C> <C>
AIM Liquid Assets Portfolio $ 3 $ 3
SEI Daily Income Trust
Government II Portfolio 4,224 4,224
SEI Daily Income Trust Treasury II
Portfolio 1,240 1,240
---------
Total Cash Equivalents
(Cost $5,467) 5,467
---------
Total Investments (99.5%)
(Cost $116,744) 115,676
---------
OTHER ASSETS AND LIABILITIES, NET (0.5%) 545
---------
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par value)
based on 9,935,496 outstanding shares
of beneficial interest 104,017
Fund shares of the Investor Class
(unlimited authorization -- no par value)
based on 246,587 outstanding shares of
beneficial interest 2,490
Fund shares of the Flex Class
(unlimited authorization -- no par value)
based on 1,120,289 outstanding shares of
beneficial interest 11,737
Undistributed net investment income 4
Accumulated net realized
loss on investments (959)
Net unrealized depreciation
on investments (1,068)
---------
Total Net Assets (100.0%) $ 116,221
---------
---------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 10.28
---------
---------
Net Asset Value and Redemption
Price Per Share-- Investor Shares $ 10.28
---------
---------
Maximum Offering Price Per Share --
Investor Shares ($10.28 / 96.25%) $ 10.68
---------
---------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 10.28
---------
---------
</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 56.
48
<PAGE>
<TABLE>
<CAPTION>
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
MUNICIPAL BONDS (98.4%)
VIRGINIA (98.4%)
<S> <C> <C>
Abingdon, Industrial Development
Authority, Johnston Memorial
Hospital Project, RB,
Callable 07/01/08 @102
5.250%, 07/01/16 $2,000 $1,956
Alexandria, Public Improvement,
GO
4.500%, 01/01/15 2,000 1,915
Arlington County, Industrial
Development, Resource Recovery,
Alexandria/Arlington Waste,
Ogden Martin, Ser A, RB (FSA)
5.250%, 01/15/05 4,000 4,177
Arlington County, Industrial
Development, Resource Recovery,
Alexandria/Arlington Waste,
Ogden Martin, Ser B, RB, AMT,
Callable 07/01/08 @ 101 (FSA)
5.375%, 01/01/11 3,000 3,082
Arlington County, Public
Improvements, GO,
Callable 10/01/08 @ 101
5.000%, 10/01/11 3,220 3,298
Chesapeake Bay, Bridge & Tunnel
Authority, RB,
Prerefunded 07/01/01 @ 102
(MBIA)
6.375%, 07/01/22 7,000 7,504
Chesapeake, GO
5.400%, 12/01/08 2,500 2,664
Chesapeake, Hospital Authority,
General Hospital Project, RB,
Callable 07/01/00 @ 102
8.200%, 07/01/05 1,000 1,064
Chesterfield County, Health Center
Community Project, Lucy Corr
Nursing Home Project, RB,
Callable 12/01/06 @ 102 (E)
5.875%, 12/01/21 500 527
Chesterfield County, Public
Improvements, Ser A, GO,
Callable 01/01/08 @ 100
(E)
4.700%, 01/01/12 3,215 3,193
Danville, Industrial Development
Authority, Danville Regional
Medical Center Project, RB
(AMBAC)
5.250%, 10/01/28 4,250 4,256
Fairfax County, Industrial
Development, Inova Health System
Project, RB, Callable 08/15/06 @ 102
5.300%, 08/15/07 1,500 1,574
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ------------------------------------------------------------------------------------
Fairfax County, Industrial
<S> <C> <C>
Development, Inova Health System
Project, Ser A, RB,
Callable 02/15/08 @ 101
5.000%, 08/15/10 $2,890 $2,923
Fairfax County, Public Improvement,
Ser A, GO, Callable 06/01/07 @ 102
4.500%, 06/01/10 3,000 2,967
Fairfax County, School & Transit
Improvements, Ser B, GO,
Callable 06/01/01 @
102 (E)
5.200%, 06/01/13 5,000 5,238
Fairfax County, Sewer Authority, RB,
Callable 11/15/03 @ 102 (AMBAC)
5.500%, 11/15/09 3,000 3,146
Fairfax County, Water Authority, RB,
Callable 04/01/07 @ 102 (AMBAC)
6.000%, 04/01/22 5,000 5,433
Fluvanna County, Industrial
Development, Elementary School
Project, RB, Callable 07/26/99 @ 100
4.150%, 01/15/01 3,465 3,466
Fredericksburg, Industrial
Development, Hospital Facilities,
Medicorp Health System, RB,
Callable 06/15/07 @ 102 (AMBAC)
5.250%, 06/15/16 5,000 4,980
Harrisonburg, Industrial
Development, Rockingham
Memorial Hospital Project, RB,
Callable 12/01/02 @ 102 (MBIA)
5.750%, 12/01/13 3,000 3,200
Henrico County, Industrial
Development, Educational
Facilities, Collegiate Schools, RB,
Callable 10/15/08 @ 102
5.000%, 10/15/19 2,250 2,158
Henrico County, Industrial
Development, Government Projects,
RB, Callable 06/01/06 @ 102
5.150%, 06/01/07 2,500 2,619
Henrico County, Industrial
Development, Residential &
Healthcare Facility, Our Lady
of Hope Project, RB,
Callable 07/01/03 @ 102 (E)
6.150%, 07/01/26 2,000 2,011
Henrico County, Industrial
Development, Residential Care
Facility, Westminister-
Canterbury Project, RB,
Callable 08/16/99 @ 100.5
7.300%, 10/01/99 1,060 1,067
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND--CONTINUED
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
Henrico County, Industrial
Development, Solid Waste Facility,
Browning Ferris Project, RB,
<S> <C> <C>
Mandatory Put 12/01/05 @ 100 (C)
5.300%, 06/01/99 $1,000 $ 996
Henry County, Public Improvements,
GO, Callable 07/15/04 @ 102
6.000%, 07/15/14 1,000 1,079
Henrico County, Water & Sewer, RB,
Callable 05/01/09 @ 102
4.625%, 05/01/17 1,900 1,777
Loudoun County, Sanitation
Authority, Water & Sewer,
RB (FGIC)
5.900%, 01/01/02 1,000 1,049
Loudoun County, Sanitation
Authority, Water & Sewer, RB,
Callable 01/01/03 @ 102 (FGIC)
6.100%, 01/01/04 1,250 1,352
Loudoun County, Sanitation
Authority, Water & Sewer, RB,
Callable 01/01/09 @ 102 (MBIA)
4.750%, 01/01/30 4,450 4,069
Loudoun County, School & Public
Improvement, Ser A, GO,
Callable 08/01/07 @ 102 (E)
5.000%, 08/01/17 2,000 1,965
Lynchburg, GO,
Callable 04/01/03 @ 102
5.250%, 04/01/08 2,000 2,075
Lynchburg, Industrial Development,
Healthcare Facility, Central Health
Project, RB,
Callable 01/01/08 @ 101
5.200%, 01/01/23 3,000 2,909
Martinsville, GO
3.600%, 01/15/01 1,500 1,499
Newport News, Recreational Facility
Improvements, Ser A, GO,
Callable 07/01/05 @ 102 (MBIA)
5.500%, 07/01/12 2,500 2,606
Newport News, Ser A, GO
4.000%, 07/01/07 2,000 1,943
Newport News, Water, Utility &
Public Improvements, GO,
Callable 01/15/07 @ 102
5.250%, 01/15/14 3,530 3,597
Norfolk, Industrial Development,
Bon Secours Health Project, RB,
Callable 08/15/07 @ 102 (MBIA)
5.250%, 08/15/26 4,200 4,128
Norfolk, Industrial Development,
Children's Hospital Project,
RB (AMBAC)
6.900%, 06/01/06 1,000 1,140
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
Norfolk, Industrial Development,
Children's Hospital Project, RB,
Callable 06/01/04 @ 102 (AMBAC)
<S> <C> <C>
5.100%, 06/01/07 $1,000 $1,034
Norfolk, Industrial Development,
Public Health Center Project, RB,
Callable 09/15/06 @ 102
5.625%, 09/15/17 1,600 1,655
Norfolk, Industrial Development,
Sentara Hospital Project, Ser A, B,
Callable 11/01/04 @ 102
4.900%, 11/01/07 2,500 2,551
5.000%, 11/01/08 2,500 2,551
Norfolk, Redevelopment & Housing
Authority, Educational Facilities
Revenue, Tidewater Community
College Campus Project, RB,
Callable 11/01/05 @ 102
5.800%, 11/01/08 700 753
Peninsula Ports, Hospital Authority,
Mary Immaculate Project, ETM, RB,
8.000%, 08/01/99 245 247
Peumansend Creek, Regional Jail
Authority, Grant Anticipation Note,
RB, Callable 09/01/99 @ 100
4.550%, 04/01/00 5,000 5,004
Portsmouth, GO,
Callable 08/01/03 @ 102
5.450%, 08/01/07 2,000 2,095
Portsmouth, Public Improvements,
GO, Prerefunded 08/01/00 @ 102
6.750%, 08/01/04 1,500 1,587
Prince William County, Park
Authority, Recreational Facility
Improvement, RB
5.500%, 10/15/99 500 504
5.800%, 10/15/01 500 522
Prince William County, Park
Authority, Recreational Facility
Improvement, RB,
Callable 10/15/04 @ 102
6.200%, 10/15/05 500 550
Prince William County, Ser C, RB,
Callable 08/01/03 @ 102 (E)
5.000%, 08/01/07 5,000 5,158
Prince William County, Water &
Sewer Improvements, RB,
Prerefunded 07/01/01 @ 102 (FGIC)
6.500%, 07/01/21 1,000 1,075
Richmond, Metropolitan Expressway
Authority, Ser A, RB,
Callable 07/15/02 @
102 (FGIC)
5.900%, 07/15/03 1,500 1,609
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
Richmond, Public Improvements,
<S> <C> <C>
Ser A, GO,
Callable 01/15/05 @ 102
5.300%, 01/15/09 $1,500 $1,563
Richmond, Redevelopment &
Housing Authority, Richmeade
Project, RB, AMT (C)
4.000%, 06/24/99 500 500
Roanoke, Industrial Development,
Roanoke Memorial Hospital Project,
Ser B, RB, Callable 07/01/02 @ 102
5.900%, 07/01/06 2,500 2,641
Roanoke, Public Improvements, GO
4.900%, 02/01/06 1,000 1,033
Roanoke, Public Improvements, GO,
Callable 02/01/06 @ 102
5.000%, 02/01/12 3,165 3,187
Roanoke Valley, Solid Waste System
Authority, Resource Recovery
Improvements, RB
5.400%, 09/01/02 1,450 1,504
Southeastern Public Service
Authority, Ser A, RB (MBIA)
5.150%, 07/01/09 5,000 5,179
State, College Building Authority,
Public Higher Education Financing,
Ser A, RB, Callable 09/01/08 @ 100
4.625%, 09/01/15 3,080 2,926
4.800%, 09/01/17 1,500 1,435
State, College Building Authority,
University of Richmond Project,
RB, Callable 11/01/02 @ 102
6.250%, 11/01/12 2,000 2,168
State, College Building Authority,
University of Richmond Project,
RB, Optional Put 11/01/04 @ 100
5.550%, 11/01/19 6,500 6,896
State, Commonwealth University,
Ser A, RB, Callable 05/01/06 @ 102
5.625%, 05/01/16 2,500 2,620
State, Education Loan Authority,
Ser B, RB, AMT, Prerefunded to
Various Call Dates @ 100 (E)
5.550%, 09/01/10 1,800 1,905
State, Education Loan Authority,
Student Loan Program,
Ser B, ETM, RB, AMT
4.850%, 09/01/01 520 532
State, Education Loan Authority,
Student Loan Program, Ser D,
ETM, RB, AMT
5.600%, 03/01/03 2,500 2,619
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
State, GO
<S> <C> <C>
5.600%, 06/01/02 $4,750 $4,995
State, Housing Development
Authority, Commonwealth
Mortgage, Ser B, RB,
Callable 01/01/06 @ 102
6.350%, 01/01/15 3,000 3,217
State, Housing Development
Authority, Commonwealth
Mortgage, Ser E, RB,
Callable 07/01/08 @ 101
4.950%, 01/01/11 1,250 1,249
State, Housing Development
Authority, Multi Family Housing,
RB, Callable 01/01/2008 @ 102
5.350%, 11/01/11 1,250 1,306
State, Housing Development
Authority, Multi Family Housing,
Ser B, RB, Callable 05/01/00 @ 102
7.375%, 05/01/05 1,000 1,039
State, Housing Development
Authority, Multi Family Housing,
Ser I, RB, AMT,
Callable 01/01/09 @ 101
4.875%, 11/01/12 1,950 1,936
State, Housing Development
Authority, Multi Family Housing,
Ser I, RB, Callable 01/01/08 @ 102
5.450%, 05/01/18 2,000 2,040
State, Housing Development
Authority, Ser C, RB,
Callable 01/01/02 @ 102
6.000%, 07/01/06 2,000 2,051
State, Housing Development
Authority, Ser C, RB,
Callable 01/01/08 @ 102
4.850%, 07/01/09 1,600 1,619
State, Housing Development
Authority, Single Family Housing,
Ser C, RB, Callable 01/01/02 @ 102
5.550%, 01/01/11 3,000 3,050
State, Polytechnic Institute &
University, Ser A, RB,
Callable 06/01/06 @ 102
5.450%, 06/01/13 2,500 2,591
5.500%, 06/01/16 5,435 5,610
State, Polytechnic Institute &
University, University & College
Improvements, Ser A, RB,
Callable 06/01/06 @ 102
5.350%, 06/01/09 2,000 2,107
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND--CONCLUDED
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
State, Public Building Authority, RB,
<S> > <C> <C>
Callable 08/01/05 @ 101
5.200%, 08/01/15 $1,500 $1,511
State, Public Building Authority, RB,
Callable 08/01/08 @ 100
4.375%, 08/01/10 1,000 972
State, Public Building Authority,
Ser A, RB
6.000%, 08/01/06 6,000 6,600
State, Public Building Authority,
Ser B, RB
5.600%, 08/01/01 4,000 4,155
State, Public School Authority, RB
4.375%, 08/01/10 1,000 969
State, Public School Authority, RB,
Callable 01/01/02 @ 102
6.250%, 01/01/08 2,000 2,143
State, Public School Authority, School
Financing, Ser B, RB,
Callable 01/01/03 @ 102 (E)
5.600%, 01/01/05 1,600 1,701
State, Public School Authority, School
Improvements, Ser B, RB,
Callable 01/01/00 @ 102
5.850%, 01/01/02 1,500 1,546
Suffolk, GO
5.200%, 08/01/02 1,500 1,558
Suffolk, GO, Callable 08/01/03 @ 102
5.600%, 08/01/06 2,000 2,125
5.700%, 08/01/07 2,000 2,141
Tazewell County, Industrial
Development, Courthouse
Project, RB,
Callable 01/01/07 @ 102 (MBIA)
5.300%, 01/01/27 1,000 1,003
University of Virginia, Hospital
Authority, Ser E, RB,
Prerefunded 06/01/99 @ 102 (F)
6.900%, 06/01/04 1,815 1,852
Virginia Beach, Development
Authority, Residential &
Healthcare Facility Project,
1st Mortgage, Our Lady of Perpetual
Hope Project, RB,
Callable 07/01/07 @102
6.050%, 07/01/20 1,500 1,506
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- -------------------------------------------------------------------------------
Virginia Beach, Development
Authority, Sentara Bayside
Hospital Project, RB,
Callable 11/01/01 @ 102
<S> > <C> <C>
6.300%, 11/01/21 1,750 1,883
Virginia Beach, Refunding Bond, GO
5.300%, 07/15/07 $ 2,000 $ 2,130
5.250%, 08/01/08 2,000 2,112
5.450%, 07/15/11 1,000 1,061
Virginia Beach, Refunding Bond, GO,
Prerefunded 11/01/04 @ 102 (E)
5.750%, 11/01/10 3,500 3,829
--------
243,812
--------
Total Municipal Bonds
(Cost $238,743) 243,812
--------
CASH EQUIVALENT (0.9%)
AIM Tax Free Institutional
Cash Reserve 2,120 2,120
--------
Total Cash Equivalent
(Cost $2,120) 2,120
--------
Total Investments (99.3% )
(Cost $240,863) 245,932
--------
OTHER ASSETS AND LIABILITIES, NET (0.7%) 1,857
--------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- .75 billion shares
authorized) based on 23,543,767
outstanding shares 233,739
Portfolio Shares of Investor Class
($.001 par value -- .25 billion shares
authorized) based on 755,319
outstanding shares 7,754
Undistributed net investment income 51
Accumulated net realized gain
on investments 1,176
Net unrealized appreciation on investments 5,069
--------
Total Net Assets (100.0%) $247,789
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 10.20
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Investor Shares $ 10.20
--------
--------
Maximum Offering Price Per Share --
Investor Shares ($10.20 / 96.25%) $ 10.60
--------
--------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 56.
52
<PAGE>
VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (90.1%)
VIRGINIA (90.1%)
Albemarle County, Industrial
<S> <C> <C>
Development Authority, Martha
Jefferson Hospital Project, RB,
Callable 10/01/03 @ 102
5.800%, 10/01/09 $ 500 $ 524
Albemarle County, Industrial
Development Authority, Our Lady
of Peace Project, Ser A, RB,
Callable 07/01/05 @102
5.800%, 07/01/25 500 488
Alexandria, Industrial Development
Authority, Episcopal High School
Project, RB, Callable 01/01/06 @ 102
5.300%, 01/01/11 500 516
Alexandria, Industrial Development
Authority, Potomac Electric
Project, Ser A, RB,
Callable 02/15/04 @ 102 (MBIA)
5.375%, 02/15/24 400 403
Alexandria, Redevelopment &
Housing Authority, Buckingham
Village Apartments Project, RB,
Callable 01/01/06 @ 102
6.050%, 07/01/16 250 260
Alexandria, Redevelopment &
Housing Authority, Essex House
Project, Ser A, RB, AMT,
Callable 01/01/08 @ 102
5.550%, 07/01/28 1,000 1,017
Arlington County, Industrial
Development Authority,
Headquarters Facility Project,
Ser A, RB, Callable 07/01/07 @ 102
5.250%, 07/01/12 300 307
Arlington County, Public
Improvements, GO,
Callable 06/01/05 @ 101.50
5.400%, 06/01/12 250 260
Brunswick County, Industrial
Development Authority,
Correctional Facility Lease, RB,
Callable 07/01/06 @ 102 (MBIA)
5.500%, 07/01/17 400 411
Chesapeake, Refunding Bond, GO
5.250%, 12/01/06 500 530
Chesapeake, Water & Sewer, Ser A,
GO, Callable 12/01/05 @ 102
5.000%, 12/01/25 475 458
Chesapeake Bay, Bridge & Tunnel
Commission, RB, Callable 07/01/05
@ 102 (MBIA)
5.000%, 07/01/22 1,000 964
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Dinwiddie County, Industrial
Development Authority,
County School Completion
Project, Ser A, RB,
Callable 02/01/08 @ 102 (MBIA)
5.000%, 02/01/19 $1,500 $1,445
Fairfax County, Industrial
Development Authority, Fairfax
Hospital, Ser A, RB (C)
3.300%, 06/02/99 100 100
Fairfax County, Industrial
Development Authority,
Inova Health System
Project, RB (FSA)
5.250%, 08/15/19 500 507
Fairfax County, Public
Improvements, Ser A, GO,
Callable 06/01/03 @ 102
5.000%, 06/01/07 500 517
Fairfax County, Redevelopment &
Housing Authority, Mott & Gum
Springs Community Centers, RB,
Callable 06/01/06 @ 102
5.500%, 06/01/12 425 441
Fairfax County, Redevelopment &
Housing Authority, Paul Spring
Center Project, Ser A, RB,
Callable 12/01/06 @ 103 (C)
5.900%, 06/15/17 250 264
Fairfax County, Water Authority,
Refunding Bond, RB,
Callable 04/01/07 @ 102 (AMBAC)
6.000%, 04/01/22 315 342
Fredericksburg, Industrial
Development Authority, Hospital
Facilities Project, Medicorp
Health System Obligation, RB,
Callable 06/15/07 @ 102 (AMBAC)
5.300%, 06/15/10 500 516
5.250%, 06/15/23 300 295
Giles County, Industrial Development
Authority, Hoechst Celanese,
RB, AMT, Callable 05/01/06 @ 102
6.450%, 05/01/26 500 542
Hampton Roads, Regional Jail
Facilities, Ser B, RB (C) (E)
3.300%, 06/02/99 100 100
Henrico County, Industrial
Development Authority,
Collegiate Schools, RB,
Callable 10/15/08 @ 102
5.000%, 10/15/19 1,000 959
Henrico County, Industrial
Development Authority, Our
Lady of Hope Project, RB,
Callable 07/01/03 @102
6.100%, 07/01/20 1,000 1,006
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
VIRGINIA MUNICIPAL BOND FUND--CONCLUDED
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
Henry County, Industrial
Development Authority, Martinsville
& Henry Hospital Project, RB,
Callable 01/01/07 @ 101
<S> <C> <C> <C> <C>
6.000%, 01/01/17 $ 500 $ 525
James City County, Public
Improvements, GO,
Callable 12/15/05 @ 102 (FGIC)
5.250%, 12/15/14 250 255
King George County, Industrial
Development Authority, Birchwood
Power Partners, Ser A,
RB, AMT (C) (E)
3.500%, 06/01/99 1,500 1,500
Leesburg, Public Improvements,
GO, Callable 06/01/05 @ 102
(AMBAC)
5.400%, 06/01/10 250 261
Leesburg, Utility Systems, RB,
Callable 07/01/07 @ 102 (MBIA)
5.000%, 07/01/10 750 766
Loudoun County, Sanitation
Authority, Water & Sewer Project,
RB, Callable 01/01/07 @ 102 (FGIC)
5.125%, 01/01/26 750 736
Loudoun County, School
Improvements, Ser A, GO,
Callable 06/01/06 @ 102 (C)
5.600%, 06/01/10 250 266
Lynchburg, Industrial Development
Authority, Healthcare Facility,
Centra Health Project, RB,
Callable 01/01/08 @ 101
5.200%, 01/01/23 500 485
5.200%, 01/01/28 1,000 960
Lynchburg, Public Improvements,
GO, Callable 05/01/06 @ 102
5.100%, 05/01/11 500 510
Manassas, Water Utility
Improvements, Ser A, GO,
Callable 01/01/08 @ 102
5.000%, 01/01/18 500 491
Manassas Park, GO,
Callable 04/01/09 @ 101 (FSA)
5.100%, 04/01/22 500 491
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Newport News, Redevelopment &
Housing Authority, Mortgage
Financing, Ser A, RB,
Callable 08/20/07 @102
(GNMA) (C)
5.850%, 12/20/30 500 525
Norfork, GO
</TABLE>
<TABLE>
<S> <C> <C>
5.500%, 02/01/13 475 496
Norfolk, Industrial Development
Authority, Bon Secours
Healthcare Project, RB,
Callable 08/15/07 @ 102 (MBIA)
5.250%, 08/15/17 $ 750 $ 744
Norfolk, Public Improvements, GO,
Callable 06/01/06 @ 101
5.250%, 06/01/09 500 522
Portsmouth, Public Improvements,
GO, Callable 08/01/06 @ 101 (FGIC)
5.250%, 08/01/21 500 500
Prince William County, Industrial
Development Authority,
Residential Care Facilities, A,
RB, Callable 01/01/07 @ 102
6.625%, 01/01/26 200 212
Roanoke County, Industrial
Development Authority, Roanoke
Memorial Hospital Project,
Ser C, RB (C) (E)
3.200%, 06/01/99 1,000 1,000
Roanoke, Public Improvements, GO,
Callable 08/01/04 @ 102
5.150%, 08/01/12 250 254
Spotsylvania County, GO (FSA)
5.000%, 07/15/14 1,000 1,013
Spotsylvania County, Water &
Sewer System, RB,
Callable 06/01/07 @ 102 (MBIA)
5.250%, 06/01/12 500 513
State, Biotechnology Research Park
Authority, Biotech Two Project,
RB, Callable 09/01/06 @ 101
5.250%, 09/01/18 500 502
State, College Building Authority,
Educational Facilites, Marymount
University Project, RB,
Callable 07/01/08 (C)
5.100%, 07/01/18 1,000 976
State, Housing Development
Authority, Commonwealth
Mortgage Project, Ser E, GO
5.125%, 07/01/17 2,000 1,989
State, Housing Development
Authority, Commonwealth
Mortgage Project, Ser A, RB,
Callable 01/01/03 @ 102
6.400%, 07/01/17 985 1,036
State, Housing Development
Authority, Commonwealth
Mortgage Project, Ser A, RB, AMT,
Callable 01/01/06 @ 102 (MBIA)
6.350%, 07/01/18 150 160
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
State, Polytechnic Institute &
State University, University
Service Systems, RB,
Callable 06/01/06 @ 102
<S> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENTS (8.3%)
AIM Tax Free Institutional
<S> <C> <C>
Cash Reserve $ 1,588 $ 1,588
Federated Virginia Municipal
Cash Trust 1,637 1,637
-------
Total Cash Equivalents
(Cost $3,225) 3,225
-------
Total Investments (98.4% )
(Cost $37,902) 38,262
-------
OTHER ASSETS AND LIABILITIES, NET (1.6%) 616
-------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- .75 billion shares
authorized) based on 3,061,763
outstanding shares 31,515
Portfolio Shares of Investor Class B
($.001 par value -- .125 billion shares
authorized) based on 662,147
outstanding shares 6,972
Accumulated net realized gain
on investments 31
Net unrealized appreciation on investments 360
-------
Total Net Assets (100.0%) $38,878
-------
-------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 10.43
-------
-------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 10.48
-------
-------
</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 56.
55
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
KEY TO ABBREVIATIONS USED IN
THE STATEMENT OF NET ASSETS
AMBAC Security insured by the American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
Cl Class
CMO Collateralized Mortgage Obligation
COP Certificate of Participation
ETM Escrowed to Maturity
FFCB Federal Farm Credit Bank
FGIC Security insured by the Financial Guaranty Insurance Company
FHA Federal Housing Authority
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Security insured by Financial Security Assurance
GNMA Government National Mortgage Association
GO General Obligation
MBIA Security insured by the Municipal Bond Insurance Association
MTN Medium Term Note
RB Revenue Bond
REMIC Real Estate Mortgage Investment Conduit
Ser Series
STRIPS Separately Traded Registered Interest and Principal Security
TCRS Transferrable Custodial Receipts
(A) Zero Coupon Bond
(B) Private Placement Security
(C) Adjustable rate security. The rate reported on
the Statement of Net Assets is the rate in effect
on May 31, 1999. The date shown is the next
scheduled reset date.
(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) Collateralized by State and Local Government
Securities
(H) Tri-Party Repurchase Agreement
56
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
<S> <C>
INVESTMENT
GRADE
TAX-EXEMPT
BOND FUND
-----------
ASSETS:
Investments at value (Cost $194,279) $193,699
Cash 104
Accrued income 3,615
Receivable for investment securities sold 6,559
Receivable for portfolio shares purchased 21
Other Assets 16
-----------
Total Assets 204,014
-----------
</TABLE>
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
<TABLE>
<CAPTION>
INVESTMENT
GRADE
TAX-EXEMPT
BOND FUND
---------------
<S> <C>
ASSETS:
Investments at value (Cost $194,279) $ 193,699
Cash 104
Accrued income 3,615
Receivable for investment securities sold 6,559
Receivable for portfolio shares purchased 21
Other Assets 16
---------
Total Assets 204,014
---------
LIABILITIES:
Payable for investment securities purchased 7,095
Accrued expenses 225
Payable for portfolio shares redeemed 271
Distributions payable 587
---------
Total liabilities 8,178
---------
Net Assets $ 195,836
---------
---------
NET ASSETS:
Fund shares of the Trust Class (unlimited authorization -- no par value)
based on 13,880,127 outstanding shares of beneficial interest 153,346
Fund shares of the Investor Class (unlimited authorization -- no par value)
based on 2,266,151 outstanding shares of beneficial interest 23,958
Fund shares of the Flex Class (unlimited authorization -- no par value)
based on 1,487,506 outstanding shares of beneficial interest 16,800
Undistributed net investment income 4
Accumulated net realized gain on investments 2,308
Net unrealized depreciation on investments (580)
---------
Total Net Assets $ 195,836
---------
---------
Net Asset Value, Offering and Redemption Price Per Share-- Trust Shares $ 11.10
---------
---------
Net Asset Value and Redemption Price Per Share-- Investor Shares $ 11.12
---------
---------
Maximum Offering Price Per Share-- Investor Shares ($11.12 / 96.25%) $ 11.55
---------
---------
Net Asset Value, Offering and Redemption Price Per Share-- Flex Shares (1) $ 11.10
---------
---------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
57
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT
GRADE
TAX-EXEMPT
BOND FUND
-------------
<S> <C>
ASSETS:
Investments at value (Cost $194,279) $ 193,699
Cash 104
Accrued income 3,615
Receivable for investment securities sold 6,559
Receivable for portfolio shares purchased 21
Other Assets 16
---------
Total Assets 204,014
---------
LIABILITIES:
Payable for investment securities purchased 7,095
Accrued expenses 225
Payable for portfolio shares redeemed 271
Distributions payable 587
---------
Total liabilities 8,178
---------
Net Assets $ 195,836
---------
---------
NET ASSETS:
Fund shares of the Trust Class (unlimited authorization -- no par value)
based on 13,880,127 outstanding shares of beneficial interest 153,346
Fund shares of the Investor Class (unlimited authorization -- no par value)
based on 2,266,151 outstanding shares of beneficial interest 23,958
Fund shares of the Flex Class (unlimited authorization -- no par value)
based on 1,487,506 outstanding shares of beneficial interest 16,800
Undistributed net investment income 4
Accumulated net realized gain on investments 2,308
Net unrealized depreciation on investments (580)
---------
Total Net Assets $ 195,836
---------
---------
Net Asset Value, Offering and Redemption Price Per Share-- Trust Shares $ 11.10
---------
---------
Net Asset Value and Redemption Price Per Share-- Investor Shares $ 11.12
---------
---------
Maximum Offering Price Per Share-- Investor Shares ($11.12 / 96.25%) $ 11.55
---------
---------
Net Asset Value, Offering and Redemption Price Per Share-- Flex Shares (1) $ 11.10
---------
---------
</TABLE>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
INVESTMENT
FLORIDA GEORGIA INVESTMENT GRADE
TAX-EXEMPT TAX-EXEMPT GRADE BOND TAX-EXEMPT
BOND FUND BOND FUND FUND BOND FUND
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
06/01/98- 06/01/98- 06/01/98- 06/01/98-
05/31/99 05/31/99 05/31/99 05/31/99
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income $ 5,658 $ 4,015 $ 52,830 $ 8,431
-------- -------- -------- --------
Expenses:
Investment Advisory Fees 804 575 6,499 1,381
Less: Investment Advisory Fees Waived/Reimbursed (133) (96) (743) (191)
Administrator Fees 96 69 683 146
Less: Administrative Fees Waived -- -- -- --
Transfer Agent Fees-- Trust Shares 13 15 20 13
Transfer Agent Fees-- Investor Shares 13 11 28 6
Transfer Agent Fees-- Flex Shares 14 13 27 18
Transfer Agent Out of Pocket Fees 11 8 98 21
Printing Expenses 6 4 46 23
Custody Fees 2 1 30 9
Professional Fees 5 4 38 15
Trustee Fees 2 1 9 5
Registration Fees 12 8 43 8
Distribution Fees-- Trust Shares -- -- -- --
Less: Distribution Fees Waived-- Trust Shares -- -- -- --
Distribution Fees-- Investor Shares 7 6 142 115
Less: Distribution Fees Waived-- Investor Shares (2) (6) (36) (12)
Distribution Fees-- Flex Shares 115 100 183 107
Less: Distribution Fees Waived-- Flex Shares (48) (42) (47) (30)
Insurance and Other Fees 3 -- 29 4
Amortization of Deferred Organization Costs 1 -- -- --
-------- -------- -------- --------
Total Expenses 921 671 7,049 1,638
-------- -------- -------- --------
Net Investment Income 4,737 3,344 45,781 6,793
-------- -------- -------- --------
Net Realized and Unrealized Gain (Loss) on Investments:
Net Realized Gain (Loss) on Securities Sold 1,160 414 15,248 4,833
Net Change in Unrealized Appreciation
(Depreciation) on Investments (1,845) (1,241) (27,720) (3,278)
-------- -------- -------- --------
Total Net Realized and Unrealized Gain (Loss)
on Investments (685) (827) (12,472) 1,555
-------- -------- -------- --------
Net Increase (Decrease) in Net Assets from Operations $ 4,052 $ 2,517 $ 33,309 $ 8,348
-------- -------- -------- --------
-------- -------- -------- --------
Amounts designated as "--" are either $0 or round to $0
</TABLE>
<TABLE>
<CAPTION>
LIMITED-
TERM FEDERAL SHORT-TERM
MORTGAGE MARYLAND U.S. TREASURY U.S.
SECURITIES MUNICIPAL SHORT-TERM SECURITIES GOVERNMENT
FUND BOND FUND BOND FUND FUND SECURITIES FUND
06/01/98- 12/01/98- 12/01/97- 06/01/98- 06/01/98- 06/01/98-
05/31/99 05/31/99 11/30/98 05/31/99 05/31/99 05/31/99
<S> <C> <C> <C> <C> <C> <C>
Interest Income $ 8,743 $ 616 $ 826 $ 7,921 $ 2,903 $ 3,247
-------- -------- -------- -------- -------- --------
Expenses:
Investment Advisory Fees 955 84 105 890 352 380
Less: Investment Advisory Fees Waived/Reimbursed (153) (49) (61) (139) (62) (57)
Administrator Fees 115 33 26 106 42 40
Less: Administrative Fees Waived -- -- -- -- -- --
Transfer Agent Fees-- Trust Shares 15 5 9 14 17 14
Transfer Agent Fees-- Investor Shares 13 -- -- 11 12 11
Transfer Agent Fees-- Flex Shares 11 2 -- 12 13 13
Transfer Agent Out of Pocket Fees 12 -- -- 13 4 5
Printing Expenses 4 1 1 3 -- 2
Custody Fees 2 3 5 5 -- 1
Professional Fees 8 6 2 7 -- 3
Trustee Fees 2 -- -- -- -- 1
Registration Fees 9 1 4 9 -- --
Distribution Fees-- Trust Shares -- 41 30 -- -- --
Less: Distribution Fees Waived-- Trust Shares -- (35) (29) -- -- --
Distribution Fees-- Investor Shares 6 -- -- 4 5 11
Less: Distribution Fees Waived-- Investor Shares (1) -- -- (4) (5) (2)
Distribution Fees-- Flex Shares 18 24 18 21 27 54
Less: Distribution Fees Waived-- Flex Shares (18) -- (1) (21) (27) (22)
Insurance and Other Fees 1 1 16 -- -- --
Amortization of Deferred Organization Costs 3 -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Expenses 1,002 119 125 931 378 454
-------- -------- -------- -------- -------- --------
Net Investment Income 7,741 497 701 6,990 2,525 2,793
-------- -------- -------- -------- -------- --------
Net Realized and Unrealized Gain (Loss) on Investments:
Net Realized Gain (Loss) on Securities Sold 88 (19) 58 414 243 15
Net Change in Unrealized Appreciation
(Depreciation) on Investments (1,037) (437) 406 (2,357) (388) (1,299)
-------- -------- -------- -------- -------- --------
Total Net Realized and Unrealized Gain (Loss)
on Investments (949) (456) 464 (1,943) (145) 1,509
-------- -------- -------- -------- -------- --------
Net Increase (Decrease) in Net Assets from Operations $ 6,792 $ 41 $ 1,165 $ 5,047 $ 2,380 $ (1,284)
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
Amounts designated as "--" are either $0 or round to $0
<TABLE>
<CAPTION>
VIRGINIA
INTERMEDIATE VIRGINIA
MUNICIPAL MUNICIPAL
BOND FUND BOND FUND
12/01/98- 12/01/97- 12/01/98- 12/01/97-
05/31/99 11/30/98 05/31/99 11/30/98
<S> <C> <C> <C> <C>
Interest Income $ 6,288 $ 12,776 $ 895 $ 1,419
-------- -------- -------- --------
Expenses:
Investment Advisory Fees 641 1,248 110 167
Less: Investment Advisory Fees Waived/Reimbursed -- -- (20) (28)
Administrator Fees 185 375 27 42
Less: Administrative Fees Waived -- -- (20) (36)
Transfer Agent Fees-- Trust Shares 84 125 8 13
Transfer Agent Fees-- Investor Shares 3 1 -- --
Transfer Agent Fees-- Flex Shares -- -- 2 1
Transfer Agent Out of Pocket Fees -- -- -- --
Printing Expenses 5 24 2 1
Custody Fees 47 92 6 10
Professional Fees 25 29 5 5
Trustee Fees 2 6 -- --
Registration Fees 2 11 2 5
Distribution Fees-- Trust Shares 469 464 59 48
Less: Distribution Fees Waived-- Trust Shares (410) (445) (52) (46)
Distribution Fees-- Investor Shares 6 13 -- --
Less: Distribution Fees Waived-- Investor Shares (6) (13) -- --
Distribution Fees-- Flex Shares -- -- 25 26
Less: Distribution Fees Waived-- Flex Shares -- -- -- (1)
Insurance and Other Fees 13 37 7 9
Amortization of Deferred Organization Costs -- -- -- --
-------- -------- -------- --------
Total Expenses 1,066 1,967 161 216
-------- -------- -------- --------
Net Investment Income 5,222 10,809 734 1,203
-------- -------- -------- --------
Net Realized and Unrealized Gain (Loss) on Investments:
Net Realized Gain (Loss) on Securities Sold 1,177 1,725 31 175
Net Change in Unrealized Appreciation
(Depreciation) on Investments (5,509) 2,380 (722) 507
-------- -------- -------- --------
Total Net Realized and Unrealized Gain (Loss)
on Investments (4,332) 4,105 (691) 682
-------- -------- -------- --------
Net Increase (Decrease) in Net Assets from Operations $ 890 $ 14,914 $ 43 $ 1,885
-------- -------- -------- --------
-------- -------- -------- --------
Amounts designated as "--" are either $0 or round to $0
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
58 & 59
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS FOR THE PERIODS ENDED MAY 31, AND NOVEMBER 30,
<TABLE>
<CAPTION>
FLORIDA TAX-EXEMPT GEORGIA TAX-EXEMPT
BOND FUND BOND FUND
--------------------------- --------------------------
06/01/98- 06/01/97- 06/01/98- 06/01/97-
05/31/99 05/31/98 05/31/99 05/31/98
---------- --------- --------- -------
<S> <C> <C> <C> <C>
Operations:
Net Investment Income $ 4,737 $ 3,410 $ 3,344 $ 2,430
Net Realized Gain (Loss) on Investments 1,160 720 414 195
Net Change in Unrealized Appreciation (Depreciation)
on Investments (1,845) 2,334 (1,241) 1,962
--------- ------- ------- -------
Increase in Net Assets from Operations 4,052 6,464 2,517 4,587
--------- ------- ------- -------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (4,235) (3,070) (2,897) (2,075)
Investor Shares (134) (128) (128) (147)
Flex Shares (369) (211) (318) (207)
Capital Gains:
Trust Shares (1,037) (42) (162) (61)
Investor Shares (37) (2) (8) (4)
Flex Shares (122) (3) (20) (7)
--------- ------- ------- -------
Total Distributions (5,934) (3,456) (3,533) (2,501)
--------- ------- ------- -------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 51,929 59,209 36,255 34,479
Shares Issued in Connection with Crestar Merger -- -- -- --
Reinvestment of Cash Distributions 1,663 420 1,180 924
Cost of Shares Repurchased (27,307) (18,838) (11,514) (14,516)
--------- ------- ------- -------
Increase in Net Assets From Trust Share Transactions 26,285 40,791 25,921 20,887
--------- ------- ------- -------
Investor Shares:
Proceeds from Shares Issued 1,105 870 1,195 1,508
Shares Issued in Connection with Crestar Merger -- -- -- --
Reinvestment of Cash Distributions 143 101 118 131
Cost of Shares Repurchased (780) (955) (1,586) (1,314)
--------- ------- ------- -------
Increase (Decrease) in Net Assets From Investor Share
Transactions 468 16 (273) 325
--------- ------- ------- -------
Flex Shares:
Proceeds from Shares Issued 11,906 6,969 5,982 4,983
Shares Issued in Connection with Crestar Merger -- -- -- --
Reinvestment of Cash Distributions 433 172 304 186
Cost of Shares Repurchased (5,520) (2,189) (1,034) (1,770)
--------- ------- ------- -------
Increase in Net Assets From Flex Share Transactions 6,819 4,952 5,252 3,399
--------- ------- ------- -------
Increase in Net Assets From Share Transactions 33,572 45,759 30,900 24,611
--------- ------- ------- -------
Total Increase (Decrease) in Net Assets 31,690 48,767 29,884 26,697
--------- ------- ------- -------
Net Assets:
Beginning of Period 105,480 56,713 74,602 47,905
--------- ------- ------- -------
End of Period $137,170 $105,480 $104,486 $74,602
--------- ------- ------- -------
--------- ------- ------- -------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 4,807 5,591 3,562 3,445
Shares Issued in Connection with Crestar Merger -- -- -- --
Shares Issued in Lieu of Cash Distributions 154 40 116 92
Shares Redeemed (2,530) (1,777) (1,128) (1,456)
--------- ------- ------- -------
Net Trust Share Transactions 2,431 3,854 2.550 2,081
--------- ------- ------- -------
Investor Shares:
Shares Issued 102 82 117 149
Shares Issued in Connection with Crestar Merger -- -- -- --
Shares Issued in Lieu of Cash Distributions 13 10 12 13
Shares Redeemed (72) (90) (155) (131)
--------- ------- ------- -------
Net Investor Share Transactions 43 2 (26) 31
--------- ------- ------- -------
Flex Shares:
Shares Issued 1,102 658 586 495
Shares Issued in Connection with Crestar Merger -- -- -- --
Shares Issued in Lieu of Cash Distributions 40 16 30 19
Shares Redeemed (512) (205) (102) (176)
--------- ------- ------- -------
Net Flex Share Transactions 630 469 514 338
--------- ------- ------- -------
--------- ------- ------- -------
Net Change in Capital Shares 3,104 4,325 3,038 2,450
--------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT GRADE INVESTMENT GRADE TAX-
BOND FUND EXEMPT BOND FUND
------------------------- -------------------------
06/01/98- 06/01/97- 06/01/98- 06/01/97-
05/31/99 05/31/98 05/31/99 05/31/98
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Operations:
Net Investment Income $ 45,781 $ 43,082 $ 6,793 $ 6,699
--------- -------- ------- -------
Net Realized Gain (Loss) on Investments 15,248 10,888 4,833 6,478
Net Change in Unrealized Appreciation (Depreciation)
on Investments (27,720) 24,005 (3,278) 1,225
--------- -------- ------- -------
Increase in Net Assets from Operations 33,309 77,975 8,348 14,402
--------- -------- ------- -------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (43,474) (40,937) (5,587) (5,523)
Investor Shares (1,621) (1,729) (901) (1,002)
Flex Shares (807) (416) (305) (173)
Capital Gains:
Trust Shares (13,468) -- (4,790) (3,989)
Investor Shares (547) -- (914) (799)
Flex Shares (306) -- (323) (152)
--------- -------- ------- -------
Total Distributions (60,223) (43,082) (12,820) (11,638)
--------- -------- ------- -------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 310,338 258,775 58,516 39,596
Shares Issued in Connection with Crestar Merger 314,362 -- -- --
Reinvestment of Cash Distributions 42,773 30,522 5,421 4,599
Cost of Shares Repurchased (286,648) (162,448) (52,929) (38,924)
--------- -------- ------- -------
Increase in Net Assets From Trust Share Transactions 380,825 126,849 11,008 5,271
--------- -------- ------- -------
Investor Shares:
Proceeds from Shares Issued 8,100 5,860 2,158 2,484
Shares Issued in Connection with Crestar Merger 2,385 -- -- --
Reinvestment of Cash Distributions 2,052 1,609 1,627 1,614
Cost of Shares Repurchased (9,990) (8,920) (6,100) (8,284)
--------- -------- ------- -------
Increase (Decrease) in Net Assets From Investor Share
Transactions 2,547 (1,451) (2,315) (4,186)
--------- -------- ------- -------
Flex Shares:
Proceeds from Shares Issued 19,438 9,584 10,543 6,179
Shares Issued in Connection with Crestar Merger -- -- -- --
Reinvestment of Cash Distributions 1,002 351 551 296
Cost of Shares Repurchased (6,765) (2,932) (2,643) (2,842)
--------- -------- ------- -------
Increase in Net Assets From Flex Share Transactions 13,675 7,003 8,451 3,633
--------- -------- ------- -------
Increase in Net Assets From Share Transactions 397,047 132,401 17,144 4,718
--------- -------- ------- -------
Total Increase (Decrease) in Net Assets 370,133 167,294 12,672 7,482
--------- -------- ------- -------
Net Assets:
Beginning of Period 839,868 672,574 183,164 175,682
--------- -------- ------- -------
End of Period $1,210,001 $839,868 $195,836 $183,164
--------- -------- ------- -------
--------- -------- ------- -------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 28,937 24,713 5,150 3,486
Shares Issued in Connection with Crestar Merger 30,233 -- -- --
Shares Issued in Lieu of Cash Distributions 3,979 2,915 479 407
Shares Redeemed (26,711) (15,497) (4,614) (3,425)
--------- -------- ------- -------
Net Trust Share Transactions 36,438 12,131 1,015 468
--------- -------- ------- -------
Investor Shares:
Shares Issued 758 557 190 218
Shares Issued in Connection with Crestar Merger 229 -- -- --
Shares Issued in Lieu of Cash Distributions 191 154 143 142
Shares Redeemed (931) (852) (535) (727)
--------- -------- ------- -------
Net Investor Share Transactions 247 (141) (202) (367)
--------- -------- ------- -------
Flex Shares:
Shares Issued 1,821 908 936 544
Shares Issued in Connection with Crestar Merger -- -- -- --
Shares Issued in Lieu of Cash Distributions 93 33 49 26
Shares Redeemed (634) (278) (234) (250)
--------- -------- ------- -------
Net Flex Share Transactions 1,280 663 751 320
--------- -------- ------- -------
--------- -------- ------- -------
Net Change in Capital Shares 37,965 12,653 1,564 421
--------- -------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
LIMITED-TERM FEDERAL MARYLAND MUNICIPAL
MORTGAGE SECURITIES FUND BOND FUND
------------------------ ----------------------------------
06/01/98- 06/01/97- 12/01/98- 12/01/97- 12/01/96-
05/31/99 05/31/98 05/31/99 11/30/98 11/30/97
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Operations:
Net Investment Income $ 7,741 $ 7,936 $ 497 $ 701 $ 374
--------- ------- ------- --------- --------
Net Realized Gain (Loss) on Investments 88 502 (19) 58 (5)
Net Change in Unrealized Appreciation (Depreciation)
on Investments (1,037) 1,031 (437) 406 241
--------- ------- ------- --------- --------
Increase in Net Assets from Operations 6,792 9,469 41 1,165 610
--------- ------- ------- --------- --------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (7,568) (7,721) (425) (645) (363)
Investor Shares (125) (135) -- -- --
Flex Shares (83) (78) (77) (56) (11)
Capital Gains:
Trust Shares (1,611) (194) (24) -- --
Investor Shares (28) (3) -- -- --
Flex Shares (19) (2) (4) -- --
--------- ------- ------- --------- --------
Total Distributions (9,434) (8,133) (530) (701) (374)
--------- ------- ------- --------- --------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 54,404 43,610 15,770 13,041 6,495
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Reinvestment of Cash Distributions 6,287 5,346 14 11 2
Cost of Shares Repurchased (60,354) (36,666) (4,854) (5,813) (1,067)
--------- ------- ------- --------- --------
Increase in Net Assets From Trust Share Transactions 337 12,290 10,930 7,239 5,430
--------- ------- ------- --------- --------
Investor Shares:
Proceeds from Shares Issued 853 1,128 -- -- --
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Reinvestment of Cash Distributions 151 131 -- -- --
Cost of Shares Repurchased (1,458) (1,006) -- -- --
--------- ------- ------- --------- --------
Increase (Decrease) in Net Assets From Investor Share
Transactions (454) 253 -- -- --
--------- ------- ------- --------- --------
Flex Shares:
Proceeds from Shares Issued 1,082 691 4,739 2,772 518
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Reinvestment of Cash Distributions 96 75 66 41 9
Cost of Shares Repurchased (566) (647) (226) (177) (92)
--------- ------- ------- --------- --------
Increase in Net Assets From Flex Share Transactions 612 119 4,579 2,636 435
--------- ------- ------- --------- --------
Increase in Net Assets From Share Transactions 495 12,662 15,509 9,875 5,865
--------- ------- ------- --------- --------
Total Increase (Decrease) in Net Assets (2,147) 13,998 15,020 10,339 6,101
--------- ------- ------- --------- --------
Net Assets:
Beginning of Period 141,736 127,738 22,361 12,022 5,921
--------- ------- ------- --------- --------
End of Period $139,589 $141,736 $37,381 $22,361 $12,022
--------- ------- ------- --------- --------
--------- ------- ------- --------- --------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 5,379 4,313 1,556 1,292 667
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Shares Issued in Lieu of Cash Distributions 620 529 2 1 --
Shares Redeemed (5,979) (3,626) (479) (575) (110)
--------- ------- ------- --------- --------
Net Trust Share Transactions 20 1,216 1,079 718 557
--------- ------- ------- --------- --------
Investor Shares:
Shares Issued 84 112 -- -- --
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Shares Issued in Lieu of Cash Distributions 15 13 -- -- --
Shares Redeemed (144) (100) -- -- --
--------- ------- ------- --------- --------
Net Investor Share Transactions (45) 25 -- -- --
--------- ------- ------- --------- --------
Flex Shares:
Shares Issued 107 68 464 274 53
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Shares Issued in Lieu of Cash Distributions 10 7 7 4 1
Shares Redeemed (56) (64) (22) (17) (9)
--------- ------- ------- --------- --------
Net Flex Share Transactions 61 11 449 261 45
--------- ------- ------- --------- --------
--------- ------- ------- --------- --------
Net Change in Capital Shares 36 1,252 1,528 979 602
--------- ------- ------- --------- --------
Amounts designated as "--" are either $0 or round to $0.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
60 & 61
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS FOR THE PERIODS ENDED MAY 31 AND NOVEMBER 30.
<TABLE>
<CAPTION>
SHORT-TERM SHORT-TERM U.S. TREASURY U. S. GOVERNMENT
BOND FUND SECURITIES FUND SECURITIES FUND
------------------------ ----------------------- ---------------------
06/01/98- 06/01/97- 06/01/98- 06/01/97- 06/01/98- 06/01/97-
05/31/99 05/31/98 05/31/99 05/31/98 05/31/99 05/31/98
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net Investment Income $ 6,990 $ 6,036 $ 2,525 $ 1,816 $ 2,793 $ 1,894
Net Realized Gain on Investments 414 502 243 47 15 55
Net Change in Unrealized Appreciation (Depreciation)
on Investments (2,357) 1,163 (388) 211 (1,299) 1,207
--------- --------- --------- --------- --------- ---------
Increase in Net Assets from Operations 5,047 7,701 2,380 2,074 1,509 3,156
--------- --------- --------- --------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (6,805) (5,864) (2,281) (1,575) (2,385) (1,585)
Investor Shares (92) (106) (133) (178) (153) (141)
Flex Shares (95) (67) (111) (63) (252) (168)
Capital Gains:
Trust Shares (356) (100) -- -- -- --
Investor Shares (4) (2) -- -- -- --
Flex Shares (5) (1) -- -- -- --
--------- --------- --------- --------- --------- ---------
Total Distributions (7,357) (6,140) (2,525) (1,816) (2,790) (1,894)
--------- --------- --------- --------- --------- ---------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 57,981 59,682 17,499 33,653 23,161 20,160
Shares Issued in Connection with Crestar Merger 72,757 -- -- -- 56,128 --
Reinvestment of Cash Distributions 3,614 3,238 951 661 520 380
Cost of Shares Repurchased (42,626) (33,705) (9,243) (9,594) (11,462) (6,142)
--------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets From Trust Share
Transactions 91,726 29,215 9,207 24,720 68,347 14,398
--------- --------- --------- --------- --------- ---------
Investor Shares:
Proceeds from Shares Issued 589 190 1,382 479 956 1,625
Shares Issued in Connection with Crestar Merger -- -- -- -- -- --
Reinvestment of Cash Distributions 94 103 133 180 152 134
Cost of Shares Repurchased (781) (560) (1,983) (1,338) (1,762) (880)
--------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets From Investor
Share Transactions (98) (267) (468) (679) (654) 879
--------- --------- --------- --------- --------- ---------
Flex Shares:
Proceeds from Shares Issued 2,540 1,392 5,314 1,012 5,920 2,695
Shares Issued in Connection with Crestar Merger -- -- -- -- 3,174 --
Reinvestment of Cash Distributions 96 65 94 56 206 145
Cost of Shares Repurchased (2,365) (441) (1,855) (757) (1,637) (1,748)
--------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets From Flex Share
Transactions 271 1,016 3,553 311 7,663 1,092
--------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets From Share
Transactions 91,899 29,964 12,292 24,352 75,356 16,369
--------- --------- --------- --------- --------- ---------
Total Increase (Decrease) in Net Assets 89,589 31,525 12,147 24,610 74,075 17,631
--------- --------- --------- --------- --------- ---------
Net Assets:
Beginning of Period 124,481 92,956 51,610 27,000 42,146 24,515
--------- --------- --------- --------- --------- ---------
End of Period $ 214,070 $ 124,481 $ 63,757 $ 51,610 $ 116,221 $ 42,146
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 5,746 5,955 1,750 3,381 2,197 1,949
Shares Issued in Connection with Crestar Merger 7,308 -- -- -- 5,439 --
Shares Issued in Lieu of Cash Distributions 357 323 95 66 49 37
Shares Redeemed (4,219) (3,364) (921) (965) (1,087) (592)
--------- --------- --------- --------- --------- ---------
Net Trust Share Transactions 9,192 2,914 924 2,482 6,598 1,394
--------- --------- --------- --------- --------- ---------
Investor Shares:
Shares Issued 58 19 138 48 91 157
Shares Issued in Connection with Crestar Merger -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions 9 10 13 18 15 13
Shares Redeemed (77) (56) (198) (134) (167) (85)
--------- --------- --------- --------- --------- ---------
Net Investor Share Transactions (10) (27) (47) (68) (61) 85
--------- --------- --------- --------- --------- ---------
Flex Shares:
Shares Issued 251 139 531 102 564 260
Shares Issued in Connection with Crestar Merger -- -- -- -- 308 --
Shares Issued in Lieu of Cash Distributions 10 6 9 6 19 14
Shares Redeemed (235) (44) (185) (76) (156) (169)
--------- --------- --------- --------- --------- ---------
Net Flex Share Transactions 26 101 355 32 735 105
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Net Change in Capital Shares 9,208 2,988 1,232 2,446 7,272 1,584
--------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
12/01/98- 12/01/97- 12/01/96-
05/31/99 11/30/98 11/30/97
<S> <C> <C> <C>
Operations:
Net Investment Income $ 5,222 $ 10,809 $ 11,260
Net Realized Gain on Investments 1,177 1,725 1,641
Net Change in Unrealized Appreciation (Depreciation)
on Investments (5,509) 2,380 490
--------- --------- ---------
Increase in Net Assets from Operations 890 14,914 13,391
--------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (5,069) (10,471) (10,835)
Investor Shares (166) (364) (353)
Flex Shares -- -- --
Capital Gains:
Trust Shares (1,670) (793) --
Investor Shares (56) (28) --
Flex Shares -- -- --
--------- --------- ---------
Total Distributions (6,961) (11,656) (11,188)
--------- --------- ---------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 26,357 36,891 35,373
Shares Issued in Connection with Crestar Merger -- -- --
Reinvestment of Cash Distributions 43 629 22
Cost of Shares Repurchased (24,041) (34,155) (43,571)
--------- --------- ---------
Increase (Decrease) in Net Assets From Trust Share
Transactions 2,359 3,365 (8,176)
--------- --------- ---------
Investor Shares:
Proceeds from Shares Issued 653 2,174 938
Shares Issued in Connection with Crestar Merger -- -- --
Reinvestment of Cash Distributions 164 289 274
Cost of Shares Repurchased (821) (2,503) (1,639)
--------- --------- ---------
Increase (Decrease) in Net Assets From Investor
Share Transactions (4) (40) (427)
--------- --------- ---------
Flex Shares:
Proceeds from Shares Issued -- -- --
Shares Issued in Connection with Crestar Merger -- -- --
Reinvestment of Cash Distributions -- -- --
Cost of Shares Repurchased -- -- --
--------- --------- ---------
Increase (Decrease) in Net Assets From Flex Share
Transactions -- -- --
--------- --------- ---------
Increase (Decrease) in Net Assets From Share
Transactions 2,355 3,325 (8,603)
--------- --------- ---------
Total Increase (Decrease) in Net Assets (3,716) 6,583 (6,400)
--------- --------- ---------
Net Assets:
Beginning of Period 251,505 244,922 251,322
--------- --------- ---------
End of Period $ 247,789 $ 251,505 $ 244,922
--------- --------- ---------
--------- --------- ---------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 2,543 3,557 3,476
Shares Issued in Connection with Crestar Merger -- -- --
Shares Issued in Lieu of Cash Distributions 4 61 2
Shares Redeemed (2,327) (3,293) (4,278)
--------- --------- ---------
Net Trust Share Transactions 220 325 (800)
--------- --------- ---------
Investor Shares:
Shares Issued 62 210 92
Shares Issued in Connection with Crestar Merger -- -- --
Shares Issued in Lieu of Cash Distributions 16 28 27
Shares Redeemed (79) (241) (161)
--------- --------- ---------
Net Investor Share Transactions (1) (3) (42)
--------- --------- ---------
Flex Shares:
Shares Issued -- -- --
Shares Issued in Connection with Crestar Merger -- -- --
Shares Issued in Lieu of Cash Distributions -- -- --
Shares Redeemed -- -- --
--------- --------- ---------
Net Flex Share Transactions -- -- --
--------- --------- ---------
--------- --------- ---------
Net Change in Capital Shares 219 322 (842)
--------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL BOND FUND
12/01/98- 12/01/97- 12/01/96-
05/31/99 11/30/98 11/30/97
<S> <C> <C> <C>
Operations:
Net Investment Income $ 734 $ 1,203 $ 832
Net Realized Gain on Investments 31 175 67
Net Change in Unrealized Appreciation (Depreciation)
on Investments (722) 507 278
--------- --------- ---------
Increase in Net Assets from Operations 43 1,885 1,177
--------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (650) (1,116) (792)
Investor Shares -- -- --
Flex Shares (88) (87) (40)
Capital Gains:
Trust Shares (155) (50) (12)
Investor Shares -- -- --
Flex Shares (20) (4) (1)
--------- --------- ---------
Total Distributions (913) (1,257) (845)
--------- --------- ---------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 7,281 13,751 9,497
Shares Issued in Connection with Crestar Merger -- -- --
Reinvestment of Cash Distributions 29 60 26
Cost of Shares Repurchased (3,890) (5,172) (5,693)
--------- --------- ---------
Increase (Decrease) in Net Assets From Trust Share
Transactions 3,420 8,639 3,830
--------- --------- ---------
Investor Shares:
Proceeds from Shares Issued -- --
Shares Issued in Connection with Crestar Merger -- --
Reinvestment of Cash Distributions -- -- --
Cost of Shares Repurchased -- -- --
--------- --------- ---------
Increase (Decrease) in Net Assets From Investor
Share Transactions -- -- --
--------- --------- ---------
Flex Shares:
Proceeds from Shares Issued 3,816 2,474 743
Shares Issued in Connection with Crestar Merger -- -- --
Reinvestment of Cash Distributions 77 64 31
Cost of Shares Repurchased (514) (376) (115)
--------- --------- ---------
Increase (Decrease) in Net Assets From Flex Share
Transactions 3,379 2,162
659
--------- --------- ---------
Increase (Decrease) in Net Assets From Share
Transactions 6,799 10,801
4,489
--------- --------- ---------
Total Increase (Decrease) in Net Assets 5,929 11,429 4,821
--------- --------- ---------
Net Assets:
Beginning of Period 32,949 21,520 16,699
--------- --------- ---------
End of Period $ 38,878 $ 32,949 $ 21,520
--------- --------- ---------
--------- --------- ---------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 688 1,302 928
Shares Issued in Connection with Crestar Merger -- -- --
Shares Issued in Lieu of Cash Distributions 3 6 2
Shares Redeemed (368) (488) (559)
--------- --------- ---------
Net Trust Share Transactions 323 820 371
--------- --------- ---------
Investor Shares:
Shares Issued -- -- --
Shares Issued in Connection with Crestar Merger -- -- --
Shares Issued in Lieu of Cash Distributions -- -- --
Shares Redeemed -- -- --
--------- --------- ---------
Net Investor Share Transactions -- -- --
--------- --------- ---------
Flex Shares:
Shares Issued 359 233 73
Shares Issued in Connection with Crestar Merger -- -- --
Shares Issued in Lieu of Cash Distributions 7 6 3
Shares Redeemed (49) (35) (11)
--------- --------- ---------
Net Flex Share Transactions 317 204 65
--------- --------- ---------
--------- --------- ---------
Net Change in Capital Shares 640 1,024 436
--------- --------- ---------
Amounts designated as "--" are either $0 or round to $0
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
62 & 63
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS FOR THE PERIODS ENDED MAY 31, UNLESS OTHERWISE
INDICATED.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
--------- ------------- ---------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
FLORIDA TAX-EXEMPT BOND FUND
Trust Shares
1999 $10.72 $ 0.42 $(0.02) $(0.42) $(0.11) $10.59
1998 10.28 0.44 0.45 (0.44) (0.01) 10.72
1997 10.06 0.46 0.25 (0.46) (0.03) 10.28
1996 10.18 0.46 (0.07) (0.46) (0.05) 10.06
1995 9.75 0.44 0.43 (0.44) -- 10.18
Investor Shares
1999 $10.72 $ 0.40 $(0.01) $(0.40) $(0.11) $10.60
1998 10.29 0.42 0.44 (0.42) (0.01) 10.72
1997 10.07 0.44 0.25 (0.44) (0.03) 10.29
1996 10.18 0.44 (0.06) (0.44) (0.05) 10.07
1995 9.75 0.42 0.43 (0.42) -- 10.18
Flex Shares
1999 $10.74 $ 0.35 $(0.01) $(0.35) $(0.11) $10.62
1998 10.30 0.37 0.45 (0.37) (0.01) 10.74
1997 10.08 0.39 0.25 (0.39) (0.03) 10.30
1996(1) 10.19 0.39 (0.06) (0.39) (0.05) 10.08
GEORGIA TAX-EXEMPT BOND FUND
Trust Shares
1999 $10.11 $ 0.39 $(0.06) $(0.39) $(0.02) $10.03
1998 9.73 0.41 0.39 (0.41) (0.01) 10.11
1997 9.56 0.42 0.22 (0.42) (0.05) 9.73
1996 9.63 0.43 (0.05) (0.43) (0.02) 9.56
1995 9.42 0.42 0.21 (0.42) -- 9.63
Investor Shares
1999 $10.13 $ 0.37 $(0.06) $(0.37) $(0.02) $10.05
1998 9.74 0.39 0.40 (0.39) (0.01) 10.13
1997 9.58 0.40 0.21 (0.40) (0.05) 9.74
1996 9.65 0.41 (0.05) (0.41) (0.02) 9.58
1995 9.44 0.40 0.21 (0.40) -- 9.65
Flex Shares
1999 $10.12 $ 0.32 $(0.06) $(0.32) $(0.02) $10.04
1998 9.73 0.34 0.40 (0.34) (0.01) 10.12
1997 9.56 0.35 0.22 (0.35) (0.05) 9.73
1996(2) 9.72 0.36 (0.14) (0.36) (0.02) 9.56
INVESTMENT GRADE BOND FUND
Trust Shares
1999 $10.65 $ 0.56 $(0.11) $(0.56) $(0.18) $10.36
1998 10.16 0.60 0.49 (0.60) -- 10.65
1997 10.07 0.60 0.09 (0.60) -- 10.16
1996 10.26 0.60 (0.19) (0.60) -- 10.07
1995 9.89 0.61 0.37 (0.61) -- 10.26
Investor Shares
1999 $10.65 $ 0.52 $(0.11) $(0.52) $(0.18) $10.36
1998 10.16 0.55 0.49 (0.55) -- 10.65
1997 10.06 0.56 0.10 (0.56) -- 10.16
1996 10.26 0.56 (0.20) (0.56) -- 10.06
1995 9.89 0.57 0.38 (0.58) -- 10.26
Flex Shares
1999 $10.66 $ 0.47 $(0.11) $(0.47) $(0.18) $10.37
1998 10.17 0.51 0.49 (0.51) -- 10.66
1997 10.07 0.51 0.10 (0.51) -- 10.17
1996 (3) 10.33 0.52 (0.26) (0.52) -- 10.07
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
NET ASSETS RATIO OF NET INVESTMENT
TOTAL END OF EXPENSES TO INCOME (LOSS) TO
RETURN (+) PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS
---------- ------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C>
FLORIDA TAX-EXEMPT BOND FUND
Trust Shares
1999 3.72% $ 118,609 0.67% 3.90%
1998 8.77 93,939 0.66 4.16
1997 7.22 50,487 0.65 4.48
1996 3.87 30,790 0.65 4.49
1995 9.26 10,118 0.65 4.63
Investor Shares
1999 3.62% $ 3,799 0.87% 3.71%
1998 8.46 3,381 0.86 3.98
1997 7.00 3,226 0.85 4.28
1996 3.76 4,025 0.85 4.28
1995 9.04 3,320 0.85 4.36
Flex Shares
1999 3.13% $ 14,762 1.37% 3.21%
1998 8.04 8,160 1.36 3.45
1997 6.48 3,000 1.35 3.78
1996(1) 3.27 2,692 1.35 3.79
GEORGIA TAX-EXEMPT BOND FUND
Trust Shares
1999 3.33% $ 87,452 0.67% 3.87%
1998 8.37 62,363 0.66 4.09
1997 6.79 39,732 0.65 4.31
1996 3.89 22,950 0.65 4.36
1995 6.94 13,187 0.65 4.56
Investor Shares
1999 3.13% $ 3,676 0.87% 3.67%
1998 8.26 3,975 0.86 3.89
1997 6.47 3,511 0.85 4.10
1996 3.69 3,418 0.85 4.17
1995 6.70 3,268 0.85 4.31
Flex Shares
1999 2.63% $ 13,358 1.37% 3.19%
1998 7.74 8,264 1.36 3.39
1997 6.06 4,662 1.35 3.60
1996(2) 2.25* 4,207 1.35 3.66
INVESTMENT GRADE BOND FUND
Trust Shares
1999 4.25% $1,149,068 0.77% 5.25%
1998 10.92 793,488 0.76 5.67
1997 6.99 633,646 0.75 5.89
1996 4.02 599,514 0.75 5.81
1995 10.39 543,308 0.75 6.22
Investor Shares
1999 3.86% $ 34,913 1.17% 4.87%
1998 10.49 33,269 1.14 5.29
1997 6.66 33,165 1.15 5.48
1996 3.50 36,155 1.15 5.40
1995 10.04 33,772 1.15 5.79
Flex Shares
1999 3.35% $ 26,020 1.66% 4.40%
1998 9.99 13,111 1.65 4.76
1997 6.16 5,763 1.64 5.00
1996 (3) 2.50 4,621 1.64 4.84
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET INVESTMENT
EXPENSES TO INCOME (LOSS) TO
AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
(EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
------------------- ------------------- ---------
<S> <C> <C> <C> <C>
FLORIDA TAX-EXEMPT BOND FUND
Trust Shares
1999 0.77% 3.80% 72%
1998 0.80 4.02 69
1997 0.80 4.33 135
1996 0.88 4.26 63
1995 1.13 4.15 105
Investor Shares
1999 1.31% 3.27% 72%
1998 1.34 3.50 69
1997 1.31 3.82 135
1996 1.36 3.77 63
1995 1.50 3.71 105
Flex Shares
1999 1.88% 2.70% 72%
1998 2.01 2.80 69
1997 2.28 2.85 135
1996(1) 2.54 2.60 63
GEORGIA TAX-EXEMPT BOND FUND
Trust Shares
1999 0.78% 3.76% 12%
1998 0.81 3.94 7
1997 0.81 4.15 15
1996 0.89 4.12 60
1995 0.98 4.23 25
Investor Shares
1999 1.25% 3.29% 12%
1998 1.30 3.45 7
1997 1.33 3.62 15
1996 1.41 3.61 60
1995 1.43 3.73 25
Flex Shares
1999 1.89% 2.67% 12%
1998 2.02 2.73 7
1997 2.07 2.88 15
1996(2) 2.35 2.66 60
INVESTMENT GRADE BOND FUND
Trust Shares
1999 0.85% 5.17% 221%
1998 0.86 5.57 109
1997 0.85 5.79 298
1996 0.87 5.69 184
1995 0.88 6.09 238
Investor Shares
1999 1.36% 4.68% 221%
1998 1.38 5.05 109
1997 1.41 5.22 298
1996 1.44 5.11 184
1995 1.49 5.45 238
Flex Shares
1999 2.00% 4.06% 221%
1998 2.11 4.30 109
1997 2.20 4.44 298
1996 (3) 2.49 3.99 184
</TABLE>
Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(1) Commenced operations on June 1, 1995. All ratios for the period have been
annualized.
(2) Commenced operations on June 6, 1995. All ratios for the period have been
annualized.
(3) Commenced operations on June 7, 1995. All ratios for the period have been
annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
64 & 65
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE
INDICATED) FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
----------- --------------- ----------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE TAX-EXEMPT BOND FUND
Trust Shares
1999 $11.40 $ 0.43 $ 0.10 $(0.43) $(0.40) $11.10
1998 11.22 0.44 0.50 (0.44) (0.32) 11.40
1997 11.10 0.44 0.33 (0.44) (0.21) 11.22
1996 11.28 0.45 0.19 (0.45) (0.37) 11.10
1995 10.68 0.46 0.60 (0.46) -- 11.28
Investor Shares
1999 $11.41 $ 0.38 $ 0.11 $(0.38) $(0.40) $11.12
1998 11.24 0.39 0.49 (0.39) (0.32) 11.41
1997 11.12 0.40 0.33 (0.40) (0.21) 11.24
1996 11.30 0.41 0.19 (0.41) (0.37) 11.12
1995 10.69 0.42 0.61 (0.42) -- 11.30
Flex Shares
1999 $11.40 $ 0.33 $ 0.10 $(0.33) $(0.40) $11.10
1998 11.23 0.33 0.49 (0.33) (0.32) 11.40
1997 11.11 0.35 0.33 (0.35) (0.21) 11.23
1996(1) 11.30 0.37 0.18 (0.37) (0.37) 11.11
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
Trust Shares
1999 $10.12 $ 0.54 $(0.06) $(0.54) $(0.12) $ 9.94
1998 10.02 0.58 0.11 (0.58) (0.01) 10.12
1997 9.99 0.58 0.04 (0.58) (0.01) 10.02
1996 10.11 0.62 (0.14) (0.60) -- 9.99
1995(2) 10.00 0.58 0.13 (0.60) -- 10.11
Investor Shares
1999 $10.11 $ 0.51 $(0.06) $(0.51) $(0.12) $ 9.93
1998 10.00 0.56 0.12 (0.56) (0.01) 10.11
1997 9.97 0.56 0.04 (0.56) (0.01) 10.00
1996 10.11 0.60 (0.14) (0.60) -- 9.97
1995(3) 9.98 0.58 0.13 (0.58) -- 10.11
Flex Shares
1999 $10.12 $ 0.48 $(0.06) $(0.48) $(0.12) $ 9.94
1998 10.02 0.52 0.11 (0.52) (0.01) 10.12
1997 9.99 0.52 0.04 (0.52) (0.01) 10.02
1996(4) 10.14 0.55 (0.15) (0.55) -- 9.99
MARYLAND MUNICIPAL BOND FUND (A)
Trust Shares
1999(5) $10.22 $ 0.20 $(0.15) $(0.20) $(0.01) $10.06
For the years ended November 30:
1998 9.95 0.42 0.27 (0.42) -- 10.22
1997 9.76 0.43 0.19 (0.43) -- 9.95
1996(6) 10.00 0.31 (0.24) (0.31) -- 9.76
Flex Shares
1999 $10.24 $ 0.15 $(0.15) $(0.15) $(0.01) $10.08
For the years ended November 30:
1998 9.96 0.33 0.28 (0.33) -- 10.24
1997 9.76 0.34 0.20 (0.34) -- 9.96
1996(7) 9.53 0.20 0.23 (0.20) -- 9.76
SHORT-TERM BOND FUND
Trust Shares
1999 $10.05 $ 0.51 $(0.10) $(0.52) $(0.03) $ 9.91
1998 9.90 0.55 0.16 (0.55) (0.01) 10.05
1997 9.86 0.53 0.07 (0.53) (0.03) 9.90
1996 9.98 0.54 (0.10) (0.54) (0.02) 9.86
1995 9.79 0.53 0.19 (0.53) -- 9.98
Investor Shares
1999 $10.07 $ 0.49 $(0.10) $(0.50) $(0.03) $ 9.93
1998 9.91 0.53 0.17 (0.53) (0.01) 10.07
1997 9.88 0.51 0.06 (0.51) (0.03) 9.91
1996 10.01 0.52 (0.10) (0.53) (0.02) 9.88
1995 9.81 0.51 0.19 (0.50) -- 10.01
Flex Shares
1999 $10.07 $ 0.47 $(0.11) $(0.47) $(0.03) $ 9.93
1998 9.91 0.50 0.17 (0.50) (0.01) 10.07
1997 9.88 0.48 0.06 (0.48) (0.03) 9.91
1996(8) 10.02 0.47 (0.12) (0.47) (0.02) 9.88
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
NET ASSETS RATIO OF NET INVESTMENT
TOTAL END OF EXPENSES TO INCOME (LOSS) TO
RETURN (+) PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS
---------- ------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT GRADE TAX-EXEMPT BOND FUND
Trust Shares
1999 4.67% $ 154,123 0.77% 3.75%
1998 8.57 146,606 0.76 3.83
1997 7.13 139,144 0.75 3.96
1996 5.82 124,507 0.75 4.01
1995 10.21 78,208 0.75 4.34
Investor Shares
1999 4.35% $ 25,195 1.17% 3.36%
1998 8.05 28,159 1.16 3.43
1997 6.69 31,857 1.15 3.56
1996 5.40 37,427 1.15 3.61
1995 9.91 41,693 1.15 3.88
Flex Shares
1999 3.78% $ 16,518 1.65% 2.86%
1998 7.50 8,399 1.64 2.95
1997 6.19 4,681 1.63 3.08
1996(1) 4.91 5,536 1.63 3.12
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
Trust Shares
1999 4.75% $ 135,256 0.67% 5.28%
1998 7.12 137,488 0.66 5.75
1997 6.43 123,903 0.65 5.81
1996 4.84 73,370 0.65 6.04
1995(2) 7.50 41,823 0.65 6.43
Investor Shares
1999 4.47% $ 2,214 0.92% 5.03%
1998 6.95 2,705 0.91 5.50
1997 6.17 2,426 0.90 5.55
1996 4.59 2,512 0.90 5.75
1995(3) 7.45 623 0.90 6.27
Flex Shares
1999 4.14% $ 2,119 1.27% 4.69%
1998 6.49 1,543 1.26 5.16
1997 5.80 1,409 1.25 5.20
1996(4) 4.10 1,349 1.25 5.38
MARYLAND MUNICIPAL BOND FUND (A)
Trust Shares
1999(5) 0.48% $ 29,658 0.70% 3.83%
For the years ended November 30:
1998 7.03 19,115 0.62 4.11
1997 6.50 11,461 0.63 4.38
1996(6) 1.07 5,808 0.71 4.30
Flex Shares
1999 0.05% $ 7,723 1.59% 2.94%
For the years ended November 30:
1998 6.17 3,246 1.57 3.16
1997 5.64 561 1.54 3.43
1996(7) 7.67 113 1.55 3.42
SHORT-TERM BOND FUND
Trust Shares
1999 4.06% $ 209,904 0.67% 5.12%
1998 7.31 120,422 0.66 5.47
1997 6.30 89,701 0.65 5.37
1996 4.45 91,156 0.65 5.39
1995 7.60 60,952 0.65 5.49
Investor Shares
1999 3.88% $ 1,825 0.87% 4.92%
1998 7.19 1,949 0.86 5.27
1997 5.97 2,182 0.85 5.16
1996 4.23 2,700 0.85 5.20
1995 7.44 2,609 0.85 5.24
Flex Shares
1999 3.50% $ 2,341 1.22% 4.55%
1998 6.84 2,110 1.21 4.93
1997 5.62 1,073 1.20 4.82
1996(8) 3.73 966 1.20 4.77
</TABLE>
<TABLE>
<CAPTION>
EXPENSES TO INCOME (LOSS) TO
AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
(EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
------------------- ------------------- ---------
<S> <C> <C> <C> <C>
INVESTMENT GRADE TAX-EXEMPT BOND FUND
Trust Shares
1999 0.87% 3.65% 224%
1998 0.88 3.71 378
1997 0.86 3.85 489
1996 0.89 3.87 514
1995 0.91 4.18 592
Investor Shares
1999 1.32% 3.21% 224%
1998 1.43 3.16 378
1997 1.38 3.33 489
1996 1.42 3.34 514
1995 1.43 3.60 592
Flex Shares
1999 2.03% 2.48% 224%
1998 2.10 2.49 378
1997 2.15 2.56 489
1996(1) 2.25 2.50 514
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
Trust Shares
1999 0.77% 5.18% 379%
1998 0.77 5.64 163
1997 0.78 5.68 133
1996 0.84 5.85 83
1995(2) 0.93 6.15 68
Investor Shares
1999 1.52% 4.43% 379%
1998 1.51 4.90 163
1997 1.48 4.97 133
1996 2.25 4.40 83
1995(3) 7.74 (0.57) 68
Flex Shares
1999 2.42% 3.54% 379%
1998 2.72 3.70 163
1997 2.66 3.79 133
1996(4) 3.59 3.04 83
MARYLAND MUNICIPAL BOND FUND (A)
Trust Shares
1999(5) 1.37% 3.16% 19%
For the years ended November 30:
1998 1.15 3.58 12
1997 1.16 3.85 5
1996(6) 1.36 3.65 9
Flex Shares
1999 1.98% 2.55% 19%
For the years ended November 30:
1998 1.96 2.77 12
1997 2.00 2.97 5
1996(7) 2.20 2.77 9
SHORT-TERM BOND FUND
Trust Shares
1999 0.77% 5.02% 108%
1998 0.79 5.34 87
1997 0.78 5.24 118
1996 0.81 5.23 163
1995 0.85 5.29 200
Investor Shares
1999 1.59% 4.20% 108%
1998 1.71 4.42 87
1997 1.58 4.43 118
1996 1.72 4.33 163
1995 1.56 4.53 200
Flex Shares
1999 2.33% 3.44% 108%
1998 2.85 3.29 87
1997 3.02 3.00 118
1996(8) 4.06 1.91 163
</TABLE>
Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(1) Commenced operations on June 1, 1995. All ratios for the period have been
annualized.
(2) Commenced operations on June 7, 1994. All ratios for the period have been
annualized.
(3) Commended operations on July 17, 1994. All ratios for the period have been
annualized.
(4) Commended operations on June 7, 1995. All ratios for the period have been
annualized.
(5) For the six month period ended May 31, 1999. All ratios for the period have
been annualized.
(6) Commenced operations on March 1, 1996. All ratios for the period have been
annualized.
(7) Commenced operations on April 25, 1996. All ratios for the period have been
annualized.
(8) Commenced operations on June 20, 1995. All ratios for the period have been
annualized.
(A) On May 24, 1999, the Crestar Maryland Municipal Bond Fund exchanged all of
its assets and certain liabilities for shares of the Maryland Municipal Bond
Fund. The Crestar Maryland Municipal Bond Fund is the accounting survivor in
this transaction, and as a result, its basis of accounting for assets and
liabilities and its operating results for the periods prior to May 24, 1999 have
been carried forward in these financial highlights.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
66 & 67
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE
INDICATED) FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
----------- -------------- ---------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
SHORT-TERM U.S. TREASURY SECURITIES FUND
Trust Shares
1999 $ 9.97 $ 0.47 $(0.02) $(0.47) $ -- $ 9.95
1998 9.88 0.51 0.10 (0.52) -- 9.97
1997 9.84 0.51 0.04 (0.51) -- 9.88
1996 9.93 0.55 (0.09) (0.55) -- 9.84
1995 9.82 0.47 0.11 (0.47) -- 9.93
Investor Shares
1999 $ 9.96 $ 0.46 $(0.01) $(0.46) $ -- $ 9.95
1998 9.88 0.49 0.09 (0.50) -- 9.96
1997 9.84 0.50 0.04 (0.50) -- 9.88
1996 9.94 0.54 (0.10) (0.54) -- 9.84
1995 9.83 0.46 0.11 (0.46) -- 9.94
Flex Shares
1999 $ 9.94 $ 0.44 $(0.02) $(0.43) $ -- $ 9.93
1998 9.85 0.47 0.10 (0.48) -- 9.94
1997 9.82 0.47 0.03 (0.47) -- 9.85
1996(1) 9.96 0.48 (0.14) (0.48) -- 9.82
U.S. GOVERNMENT SECURITIES FUND
Trust Shares
1999 $10.46 $ 0.59 $(0.18) $(0.59) $ -- $10.28
1998 10.02 0.61 0.44 (0.61) -- 10.46
1997 9.91 0.62 0.11 (0.62) -- 10.02
1996 10.27 0.62 (0.33) (0.62) (0.03) 9.91
1995(2) 9.98 0.53 0.29 (0.53) -- 10.27
Investor Shares
1999 $10.45 $ 0.54 $(0.17) $(0.54) $ -- $10.28
1998 10.02 0.57 0.43 (0.57) -- 10.45
1997 9.90 0.58 0.12 (0.58) -- 10.02
1996 10.26 0.59 (0.33) (0.59) (0.03) 9.90
1995(3) 10.00 0.56 0.26 (0.56) -- 10.26
Flex Shares
1999 $10.46 $ 0.49 $(0.18) $(0.49) $ -- $10.28
1998 10.02 0.52 0.44 (0.52) -- 10.46
1997 9.91 0.53 0.11 (0.53) -- 10.02
1996(4) 10.31 0.52 (0.37) (0.52) (0.03) 9.91
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (A)
Trust Shares
1999(5) $10.44 $ 0.21 $(0.17) $(0.21) $(0.07) $10.20
For years ended November 30:
1998 10.31 0.45 0.17 (0.45) (0.04) 10.44
1997 10.22 0.46 0.09 (0.46) -- 10.31
1996 10.24 0.42 (0.02) (0.42) -- 10.22
1995 9.21 0.43 1.03 (0.43) -- 10.24
1994 10.33 0.44 (1.10) (0.44) (0.02) 9.21
Investor Shares
1999(5) $10.45 $ 0.22 $(0.18) $(0.22) $(0.07) $10.20
For years ended November 30:
1998 10.31 0.46 0.17 (0.45) (0.04) 10.45
1997 10.21 0.47 0.09 (0.46) -- 10.31
1996 10.23 0.42 (0.02) (0.42) -- 10.21
1995 9.20 0.43 1.03 (0.43) -- 10.23
1994 10.32 0.44 (1.10) (0.44) (0.02) 9.20
VIRGINIA MUNICIPAL BOND FUND (A)
Trust Shares
1999(5) $10.68 $ 0.22 $(0.19) $(0.22) $(0.06) $10.43
For years ended November 30:
1998 10.44 0.47 0.27 (0.47) (0.03) 10.68
1997 10.28 0.48 0.17 (0.48) (0.01) 10.44
1996 10.40 0.47 (0.12) (0.47) -- 10.28
1995(6) 10.00 0.31 0.44 (0.31) (0.04) 10.40
Flex Shares
1999(5) $10.73 $ 0.17 $(0.18) $(0.18) $(0.06) $10.48
For years ended November 30:
1998 10.48 0.37 0.28 (0.37) (0.03) 10.73
1997 10.31 0.39 0.18 (0.39) (0.01) 10.48
1996 10.43 0.38 (0.12) (0.38) -- 10.31
1995(7) 10.06 0.24 0.41 (0.24) (0.04) 10.43
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
NET ASSETS RATIO OF NET INVESTMENT
TOTAL END OF EXPENSES TO INCOME (LOSS) TO
TURN (+) PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS
-------- ------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM U.S. TREASURY SECURITIES FUND
Trust Shares
1999 4.59% $ 56,027 0.67% 4.69%
1998 6.30 46,920 0.66 5.19
1997 5.76 21,988 0.65 5.23
1996 4.73 10,149 0.65 5.56
1995 6.11 9,599 0.65 4.91
Investor Shares
1999 4.54% $ 2,799 0.82% 4.54%
1998 6.04 3,277 0.81 5.07
1997 5.59 3,921 0.80 5.05
1996 4.52 4,192 0.80 5.43
1995 6.03 7,144 0.80 4.74
Flex Shares
1999 4.32% $ 4,931 1.07% 4.22%
1998 5.90 1,413 1.06 4.81
1997 5.19 1,091 1.05 4.75
1996(1) 3.72 2,423 1.05 5.03
U.S. GOVERNMENT SECURITIES FUND
Trust Shares
1999 3.90% $ 102,167 0.77% 5.58%
1998 10.76 34,899 0.76 5.93
1997 7.54 19,471 0.75 6.19
1996 2.77 10,277 0.75 6.05
1995(2) 8.64 3,291 0.75 6.67
Investor Shares
1999 3.56% $ 2,534 1.17% 5.17%
1998 10.23 3,225 1.16 5.53
1997 7.21 2,243 1.15 5.76
1996 2.47 2,396 1.15 5.68
1995(3) 8.61 589 1.15 6.08
Flex Shares
1999 2.99% $ 11,520 1.68% 4.66%
1998 9.78 4,022 1.67 5.02
1997 6.57 2,801 1.66 5.26
1996(4) 1.42 2,826 1.66 5.18
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (A)
Trust Shares
1999(5) 0.42% $ 240,083 0.84% 4.12%
For years ended November
1998 6.10 243,606 0.79 4.33
1997 5.55 237,096 0.78 4.57
1996 4.01 243,137 0.78 4.35
1995 16.09 43,373 0.72 4.34
1994 (6.53) 41,365 0.65 4.48
Investor Shares
1999(5) 0.35% $ 7,706 0.79% 4.17%
For years ended November
1998 6.19 7,899 0.79 4.33
1997 5.65 7,826 0.79 4.56
1996 4.01 8,185 0.79 4.12
1995 16.10 8,649 0.73 4.33
1994 (6.56) 7,481 0.66 4.47
VIRGINIA MUNICIPAL BOND FUND (A)
Trust Shares
1999(5) 0.27% $ 31,939 0.76% 4.20%
For years ended November
1998 7.19 29,252 0.69 4.41
1997 6.46 20,044 0.69 4.65
1996 3.48 15,911 0.71 4.61
1995(6) 7.67 6,247 0.71 4.61
Flex Shares
1999(5) (0.16)% $ 6,939 1.65% 3.32%
For years ended November
1998 6.24 3,697 1.64 3.46
1997 5.58 1,476 1.60 3.73
1996 2.58 787 1.57 3.73
1995(7) 6.51 628 1.57 3.76
</TABLE>
<TABLE>
<CAPTION>
EXPENSES TO INCOME (LOSS) TO
AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
(EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
------------------- ------------------- ---------
<S> <C> <C> <C> <C>
SHORT-TERM U.S. TREASURY SECURITIES FUND
Trust Shares
1999 0.78% 4.58% 57%
1998 0.84 5.01 39
1997 0.92 4.96 93
1996 1.00 5.21 94
1995 1.08 4.48 88
Investor Shares
1999 1.34% 4.02% 57%
1998 1.33 4.55 39
1997 1.35 4.50 93
1996 1.32 4.91 94
1995 1.33 4.21 88
Flex Shares
1999 2.25% 3.04% 57%
1998 2.87 3.00 39
1997 2.51 3.29 93
1996(1) 2.97 3.11 94
U.S. GOVERNMENT SECURITIES FUND
Trust Shares
1999 0.88% 5.47% 19%
1998 0.92 5.77 14
1997 1.02 5.92 21
1996 1.25 5.55 83
1995(2) 3.33 4.09 30
Investor Shares
1999 1.60% 4.74% 19%
1998 1.76 4.93 14
1997 1.79 5.12 21
1996 2.50 4.33 83
1995(3) 6.84 0.39 30
Flex Shares
1999 2.08% 4.26% 19%
1998 2.32 4.37 14
1997 2.42 4.50 21
1996(4) 2.86 3.98 83
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (A)
Trust Shares
1999(5) 1.18% 3.78% 19%
For years ended Nove
1998 0.97 4.15 24
1997 0.93 4.42 30
1996 0.93 4.20 25
1995 0.94 4.12 28
1994 0.77 4.36 24
Investor Shares
1999(5) 0.93% 4.03% 19%
For years ended November
1998 0.94 4.18 24
1997 0.94 4.41 30
1996 0.94 3.97 25
1995 0.95 4.11 28
1994 0.80 4.33 24
VIRGINIA MUNICIPAL BOND FUND (A)
Trust Shares
1999(5) 1.30% 3.66% 7%
For years ended November
1998 1.10 4.00 28
1997 1.09 4.25 39
1996 1.11 4.21 24
1995(6) 1.11 4.21 35
Flex Shares
1999(5) 1.91% 3.06% 7%
For years ended November
1998 1.92 3.18 28
1997 2.00 3.33 39
1996 1.97 3.33 24
1995(7) 1.97 3.36 35
</TABLE>
Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(1) Commenced operations on June 22, 1995. All ratios for the period have been
annualized.
(2) Commenced operations on July 31, 1994. All ratios for the period have been
annualized.
(3) Commenced operations on June 9, 1994. All ratios for the period have been
annualized.
(4) Commenced operations on June 7, 1995. All ratios for the period have been
annualized.
(5) For the six month period ended May 31, 1999. All ratios for the period have
been annualized.
(6) Commenced operations on April 5, 1995. All ratios for the period have been
annualized.
(7) Commenced operations on April 17, 1995. All ratios for the period have been
annualized.
(A) On May 24, 1999, the Crestar Virginia Intermediate Bond and the Crestar
Virginia Municipal Bond Funds exchanged all of their assets and certain
liabilities for shares of the Virginia Intermediate Bond and the Virginia
Municipal Bond Funds, respectively. The Crestar Virginia Intermediate Bond and
the Crestar Virginia Municipal Bond Funds are the accounting survivors in this
transaction, and as a result, their basis of accounting for assets and
liabilities and their operating results for the periods prior to May 24, 1999
have been carried forward in these financial highlights.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
68 & 69
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
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 thirty-four portfolios as of May 31, 1999:
the Balanced Fund, the Capital Appreciation Fund (formerly Capital Growth Fund),
the Emerging Markets Equity Fund, the Growth and Income Fund, the International
Equity Fund, the International Equity Index Fund, the Life Vision Balanced
Portfolio, the Life Vision Growth and Income Portfolio, the Life Vision Maximum
Growth Portfolio, the Mid-Cap Equity Fund, the Small Cap Equity Fund, the Small
Cap Growth Stock Fund, the Sunbelt Equity Fund, the Tax Sensitive Growth Stock
Fund, the Value Income Stock Fund, (collectively the "Equity Funds"), the
Florida Tax-Exempt Bond Fund, the Georgia Tax-Exempt Bond Fund, Investment Grade
Bond Fund, the Investment Grade Tax-Exempt Bond Fund, the Limited-Term Federal
Mortgage Securities Fund, the Maryland Municipal Bond Fund, the Short-Term Bond
Fund, the Short-Term U.S. Treasury Securities Fund, and the U.S. Government
Securities Fund, the Virginia Intermediate Municipal Bond Fund, the Virginia
Municipal Bond Fund, (collectively the "Fixed Income Funds" or the "Funds"), the
Prime Quality Money Market Fund, the Tax-Exempt Money Market Fund, the Tax-Free
Money Market Fund, the U.S. Government Securities, the U.S. Treasury Money
Market Fund (collectively the "Retail Money Market Funds"), the Classic
Institutional Cash Management Money Market Fund, the Classic Institutional U.S.
Government Securities Money Market Fund and the Classic Institutional U.S.
Treasury Securities Money Market Fund, (collectively the "Institutional 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. The financial statements presented herein are those of the Fixed
Income Funds. The financial statements of the Equity Funds, the Retail Money
Market Funds and the Institutional Money Market Funds are not presented herein,
but are presented separately.
On February 17, 1999 and February 22, 1999, respectively, the Board of
Trustees of the STI Classic Funds Inc. and Board of Directors of the
CrestFunds Inc. ("CrestFunds") approved an Agreement and Plan of
Reorganization (the "Reorganization Agreement") providing for the transfer of
all assets and liabilities of the CrestFunds in exchange for the issuance of
shares in the Funds in a tax-free reorganization (see Note 8).
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the
Trust:
BASIS OF PRESENTATION OF STATEMENTS -- As more fully described in Note 8,
the STI Classic Funds acquired certain Crestar Funds in a tax-free business
combination. While each Fund now exists as a STI Classic Fund, a number of
the surviving funds for accounting purposes are Crestar Funds. In
accordance with generally accepted accounting principles, the financial
statements presented herein represent those of accounting survivors.
Accordingly, the Statements of Operations, Statements of Changes in Net
Assets and Financial Highlights presented reflect periods beginning on the
first day of the accounting survivor's fiscal year.
SECURITY VALUATION -- Investment securities held by the 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. 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).
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 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 coun
70
<PAGE>
- --------------------------------------------------------------------------------
terparty 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 Florida Tax-Exempt
Bond, the Georgia Tax-Exempt Bond, the Investment Grade Bond, the
Investment Grade Tax-Exempt Bond, the U.S. Government Securities, and the
Virginia Intermediate Municipal Bond 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.
TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (To Be
Announced) purchase commitments to purchase securities for a fixed price at
a future date beyond customary settlement time. TBA purchase commitments
may be considered securities in themselves, and involve a risk of loss if
the value of the security to be purchased declines prior to settlement
date, which risk is in addition to the risk of decline in the value of the
funds' other assets. Unsettled TBA purchase commitments are valued at the
current market value of the underlying securities, generally according to
the procedures described under "Security Valuation."
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 for each of the Fixed Income Funds are
declared daily and paid monthly. 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 the classification of short-term capital gains and ordinary
income for tax purposes related to the other funds, has been reclassified
to/from the following accounts:
<TABLE>
<CAPTION>
ACCUMULATED UNDISTRIBUTED
PAID-IN REALIZED NET INVESTMENT
CAPITAL GAIN (LOSS) INCOME (LOSS)
(000) (000) (000)
<S> <C> <C> <C>
Florida Tax-Exempt Bond Fund $-- $ 5 $ (5)
Investment Grade Bond Fund 236 (162) (74)
Investment Grade Tax-Exempt
Bond Fund -- (3) 3
Limited-Term Federal Mortgage
Securities Fund -- 3 (3)
Maryland Municipal Bond Fund (3) -- 3
Short-Term Bond Fund (25) 144 (119)
U.S. Government Securities Fund (9) (2) 11
Virginia Intermediate Municipal
Bond Fund (20) -- 20
Virginia Municipal Bond Fund (3) -- 3
</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.
71
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
3. Organization Costs and Transactions with Affiliates:
In April 1998, the AICPA issued Statement of Position (SOP) No. 98-5, "Reporting
on the Costs of Start-Up Activities." This SOP provides guidance on the
financial reporting of start-up costs and organization costs and requires costs
of start-up activities and organization costs to be expensed as incurred.
Investment companies that began operations prior to June 30, 1998 can adopt the
SOP prospectively. Therefore, previously capitalized organization costs will
continue to be amortized over a period of 60 months. Any future start-up or
organization costs will be expensed as incurred.
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, as amended November 19, 1997 and March 1, 1999, 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 Trust) of: .12% up to $1 billion, .09% on the next $4 billion, .07% on
the next $3 billion, .065% on the next $2 billion and .06% for over $10 billion.
Prior to May 23, 1999, administrative and accounting services were provided to
the CrestFunds by SEI Investments Mutual Funds Services who was entitled to
receive a fee at an annual rate of .15% of the average daily net assets of the
CrestFunds. The Administrator had voluntarily agreed to waive a portion of its
fee for Government Bond Fund and Virginia Municipal Bond Fund in order to limit
operating expenses.
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".
Prior to May 23, 1999, the Distributor, a wholly owned subsidiary of SEI
Investments Co., served as distributor of each of the CrestFunds shares pursuant
to an agreement with the CrestFunds. The Trust Class and Investors Class A
shares of the CrestFunds had a separate distribution plan (the 12b-1 Plan)
pursuant to Rule 12b-1 under the 1940 Act. As provided in the 12b-1 Plan, the
Trust Class and Investors Class A shares of the CrestFunds paid the Distributor
as compensation for its services .15% of the aggregate average daily net assets
of such classes of the CrestFunds. The Distributor had voluntarily agreed to
waive any fees payable pursuant to the 12b-1 Plan. Additionally, the Investors
Class B Shares of the CrestFunds had a distribution plan (the B Shares Plan)
pursuant to Rule 12b-1 under the 1940 Act. As provided in the B Shares Plan, the
Investors Class B Shares of the CrestFunds paid the Distributor as compensation
for its services .75% of the aggregate average daily net assets of such class of
the CrestFunds. In addition, pursuant to the B Shares Plan, the Distributor was
compensated at an annual rate of .25% of the B shares' average net assets for
providing ongoing shareholder support services to investors in B shares. The
Distributor had agreed to waive the portion of its fees pursuant to the B Shares
Plan in order to limit distribution fees to .95% for each of the CrestFunds.
Prior to May 23, 1999, the CrestFunds had adopted a shareholder service plan
(the "Plan") for Trust Class Shares of the Limited Term Bond Fund, Intermediate
Bond Fund, Government Bond Fund, Maryland Municipal Bond Fund, Virginia
Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund. Under the
Plan, the CrestFunds paid the Distributor a negotiated fee at a rate of up to
.25% annually of the average daily net assets of such Fund attributable to the
shares that are subject to the arrangement in return for provision of a broad
range of shareholder and administrative services. The Distributor had agreed to
waive a portion of its shareholder service plan for trust class shares in order
to limit shareholder service fees to .05%.
5. Investment Advisory and Custodian Agreements:
The Trust and STI Capital Management, N.A., ("STI Capital Management, N.A."),
Trusco Capital Management ("Trusco") and the SunTrust Bank, Atlanta have entered
into advisory agreements dated May 29, 1992, June 15, 1993, and December 20,
1993 respectively.
Under terms of the respective agreements, the Funds are charged the following
annual fees based upon average daily net assets:
72
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAXIMUM
FLEX
SHARE
MAXIMUM DISTRI-
MAXIMUM TRUST INVESTOR INVESTOR BUTION FLEX
ANNUAL SHARE SHARE SHARE AND SHARE
ADVISORY MAXIMUM DISTRI- MAXIMUM SERVICE MAXIMUM
FEE EXPENSE BUTION FEE EXPENSE FEE EXPENSE
-------- ------- ---------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
TRUSCO:
Maryland
Municipal Bond
Fund .65% .68% -- -- 1.00% 1.59%
Short-Term Bond
Fund .65% .67% .23% .87% 1.00% 1.22%
Short-Term U.S.
Treasury
Securities
Fund .65% .67% .18% .82% 1.00% 1.07%
U.S. Government
Securities
Fund .74% .77% .38% 1.17% 1.00% 1.68%
Virginia
Intermediate
Municipal
Bond Fund .65% .76% .15% .79% -- --
Virginia
Municipal
Bond Fund . .65% .74% -- -- 1.00% 1.65%
STI CAPITAL MANAGEMENT, N.A.:
Florida
Tax-Exempt
Bond Fund .65% .67% .18% .87% 1.00% 1.37%
Investment
Grade Bond
Fund .74% .77% .43% 1.17% 1.00% 1.66%
Investment
Grade
Tax-Exempt
Bond Fund .74% .77% .43% 1.17% 1.00% 1.65%
Limited-Term
Federal Mortgage
Securities
Fund .65% .67% .23% .92% 1.00% 1.27%
SUNTRUST BANK, ATLANTA:
Georgia
Tax-Exempt
Bond Fund .65% .67% .18% .87% 1.00% 1.37%
</TABLE>
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.
Prior to May 24, 1999 Crestar Asset Management Company ("CAMCO") provided
Investment Advisory services to the CrestFunds. CAMCO was paid for advisory
services at an annual rate of .50% of average daily net assets for the Limited
Term Bond Fund and Virginia Intermediate Municipal Bond Fund, and .60% of
average daily net assets for the Intermediate Bond Fund, Government Bond Fund,
Maryland Municipal Bond Fund and Virginia Municipal Bond Fund.
SunTrust Bank, Atlanta, formerly Trust Company Bank, acts as custodian for all
of the funds. Fees of the Custodian are paid on the basis of net assets of the
Funds. The Custodian plays no role in determining the investment policies of the
Trust or which securities are to be purchased or sold in the funds.
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, 1999, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
--------------------
<S> <C> <C>
Florida Tax-Exempt Bond Fund $109,044 $ 84,195
Georgia Tax-Exempt Bond Fund 41,881 9,957
Investment Grade Bond Fund 790,041 501,981
Investment Grade Tax-Exempt Bond Fund 384,981 392,218
Limited-Term Federal Mortgage
Securities Fund -- --
Maryland Municipal Bond Fund 4,476 3,679
Short-Term Bond Fund 78,478 58,853
Short-Term U.S. Treasury Securities Fund -- --
U.S. Government Securities Fund -- --
Virginia Intermediate Municipal Bond Fund 50,485 46,578
Virginia Municipal Bond Fund 4,270 2,217
</TABLE>
The cost of purchases and proceeds from sales of U.S. Government Securities
were:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
---------------------
<S> <C> <C>
Florida Tax-Exempt Bond Fund $ -- $ --
Georgia Tax-Exempt Bond Fund -- --
Investment Grade Bond Fund 1,453,066 1,342,296
Investment Grade Tax-Exempt Bond Fund -- --
Limited-Term Federal Mortgage
Securities Fund 537,297 532,443
Maryland Municipal Bond Fund -- --
Short-Term Bond Fund 81,928 74,867
Short-Term U.S. Treasury Securities Fund 38,693 29,515
U.S. Government Securities Fund 25,478 9,512
Virginia Intermediate Municipal Bond Fund -- --
Virginia Municipal Bond Fund -- --
</TABLE>
The Investment Grade Bond and U.S. Government Securities Funds had cumulative
wash sales for the fiscal year ended May 31, 1999 amounting to $1,727,191 and
169,083, respectively. These wash sales cannot be used in the current year for
federal income tax purposes, therefore they are deferred.
73
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
At May 31, 1999, 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 anddepreciation for securities held by the funds
at May 31, 1999, were as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
APPRECIATION DEPRECIATION DEPRECIATION
<S> <C> <C> <C>
Florida Tax-Exempt Bond Fund $2,225 (936) $ 1,289
Georgia Tax-Exempt Bond Fund 1,675 (652) 1,023
Investment Grade Bond Fund 9,705 (16,585) (6,880)
Investment Grade Tax-Exempt
Bond Fund 957 (1,537) (580)
Limited-Term Federal Mortgage
Securities Fund 357 (508) (152)
Maryland Municipal Bond Fund 327 (72) (255)
Short-Term Bond Fund 316 (1,779) (1,463)
Short-Term U.S. Treasury
Securities Fund 111 (318) (207)
U.S. Government Securities Fund 618 (1,686) (1,068)
Virginia Intermediate Municipal
Bond Fund 6,524 (1,455) 5,069
Virginia Municipal Bond Fund 615 (255) 360
</TABLE>
Subsequent to October 31, 1998, the Funds recognized net capital losses for tax
purposes that have been deferred to 1999 and can be used to offset future
capital gains at May 31, 1999. The Funds also had capital loss carryforwards at
May 31, 1999 as follows:
<TABLE>
<CAPTION>
POST
CARRYOVER EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES 10/31
5/31/99 2002 2003 2004 2005 2006 2007 DEFERRED
(000) (000) (000) (000) (000) (000) (000) LOSS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Grade Bond
Fund $3,656 $ -- $ -- $ -- $ -- $3,029 $ -- $7,178
Maryland
Municipal
Bond
Fund -- -- -- -- -- -- 19 --
Short-Term
Bond
Fund 2,899 528 254 555 284 1,134 -- --
U.S.
Government
Securities
Fund 797 -- -- -- -- 792 -- --
</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 Investment Grade Bond Fund and the Short-Term Bond 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 investment 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, the Maryland Municipal Bond Fund, the Virginia Intermediate Municipal Bond
Fund, and the Virginia Municipal 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 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. CrestFunds Merger
The Board of Directors and shareholders of the CrestFunds approved a
reorganization of the CrestFunds into STI Classic Funds which took place at the
close of business on May 17, 1999 (May 24, 1999 for Maryland Municipal Bond
Fund, Virginia Intermediate Municipal Bond Fund, and Virginia Municipal Bond
Fund)
74
<PAGE>
- -------------------------------------------------------------------------------
The following table summarizes certain relevant information of the Funds prior
to and immediately after the business combinations on May 17, 1999 and May 24,
1999 and is unaudited:
<TABLE>
<CAPTION>
OUTSTANDING UNREALIZED
ON MERGER APPRECIATION
CRESTFUNDS DATE (DEPRECIATION)
<S> <C> <C>
Intermediate Bond
Trust Shares $32,817,534 $(3,403,150)
Investor Class A 248,950 (67,865)
Investor Class B -- --
Limited Term Bond
Trust Shares 7,494,047 31,650
Investor Class A -- --
Investor Class B -- --
Government Bond
Trust Shares 5,608,897 (698,071)
Investor Class A -- --
Investor Class B -- --
Maryland Municipal Bond (1)
Trust Shares 2,941,190 305,068
Investor Class A 764,740 (31,446)
Virginia Intermediate Municipal Bond (1)
Trust Shares 23,538,137 5,880,351
Investor Class B 753,539 76,972
Virginia Municipal Bond (1)
Trust Shares 3,019,996 511,586
Investor Class B 647,089 (13,152)
</TABLE>
<TABLE>
<CAPTION>
SHARES ISSUED NET ASSETS NAV
IN BUSINESS AFTER PER
STI CLASSIC FUND COMBINATION COMBINATION SHARE
<S> <C> <C> <C>
Investment Grade Bond (1)
Trust Shares $30,232,924 $1,152,435,532 $10.40
Investor Shares 229,458 35,442,645 10.40
Flex Shares -- 25,684,095 10.41
Short-Term Bond (1)
Trust Shares 7,307,720 209,577,527 9.96
Investor Shares -- 1,817,569 9.97
Flex Shares -- 2,447,180 9.98
U.S. Government Securities (1)
Trust Shares 5,438,788 101,799,419 10.32
Investor Shares -- 2,563,370 10.31
Flex Shares -- 11,288,553 10.32
Maryland Municipal Bond
Trust Shares 2,941,190 29,603,005 10.06
Flex Shares 764,740 7,712,932 10.09
Virginia Intermediate Municipal Bond
Trust Shares 23,538,137 240,886,726 10.23
Investor Shares 753,539 7,715,363 10.24
Virginia Municipal Bond
Trust Shares 3,019,996 31,617,660 10.47
Flex Shares 647,089 6,805,221 10.52
</TABLE>
(1) Represents the accounting survivor in this business combination.
75
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999
To the Shareholders and Board of Trustees of
STI Classic Funds:
We have audited the accompanying statements of net assets of the Florida
Tax-Exempt Bond, Georgia Tax-Exempt Bond, Investment Grade Bond, Limited-Term
Federal Mortgage Securities, Maryland Municipal Bond, Short-Term Bond,
Short-Term U.S. Treasury Securities, U.S. Government Securities, Virginia
Intermediate Municipal Bond, and Virginia Municipal Bond Funds and the statement
of assets and liabilities, including the schedule of investments, of the
Investment Grade Tax-Exempt Bond Fund of STI Classic Funds (the "Trust") as of
May 31, 1999, 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. The statements of operations for the
year ended November 30, 1998, statements of changes for the years ended November
30, 1998 and November 30, 1997, and financial highlights for the periods prior
to May 31, 1999, for the Maryland Municipal Bond, Virginia Intermediate
Municipal Bond, and Virginia Municipal Bond Funds were audited by other auditors
whose report dated January 15, 1999, expressed an unqualified opinion on this
information.
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 and financial highlights. Our procedures included confirmation of
securities owned as of May 31, 1999, 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
Florida Tax-Exempt Bond, Georgia Tax-Exempt Bond, Investment Grade Bond,
Investment Grade Tax-Exempt Bond, Limited-Term Federal Mortgage Securities,
Maryland Municipal Bond, Short-Term Bond, Short-Term U.S. Treasury Securities,
U.S. Government Securities, Virginia Intermediate Municipal Bond, and Virginia
Municipal Bond Funds, of STI Classic Funds as of May 31, 1999, the results of
their operations, changes in their net assets, and financial highlights for each
of the periods described in the first paragraph above, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
July 23, 1999
76
<PAGE>
NOTICE TO SHAREHOLDERS
- --------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 1999 UNAUDITED
For shareholders that do not have a May 31, 1999 tax year end, this notice is
for informational purposes only. For shareholders with a May 31, 1999 tax year
end, please consult your tax advisor as to the pertinence of this notice. For
the fiscal year ended May 31, 1999, each portfolio is designating the following
items with regard to distributions paid during the year:
<TABLE>
<CAPTION>
LONG TERM
(20% RATE) ORDINARY
CAPITAL GAINS INCOME TAX-EXEMPT TOTAL
FUND DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
<S> <C> <C> <C> <C>
Investment Grade Tax-Exempt Bond 5.16% 43.80% 51.04% 100.00%
Investment Grade Bond 10.72% 89.28% 0.00% 100.00%
Florida Tax-Exempt Bond 5.35% 15.18% 79.47% 100.00%
Georgia Tax-Exempt Bond 4.38% 1.65% 93.97% 100.00%
Short-Term Bond 3.62% 96.38% 0.00% 100.00%
Short-Term U.S. Treasury Securities 0.00% 100.00% 0.00% 100.00%
Limited-Term Federal Mortgage Securities 1.66% 98.34% 0.00% 100.00%
U.S. Government Securities 0.00% 100.00% 0.00% 100.00%
Virginia Intermediate Municipal Bond 24.00% 2.00% 74.00% 100.00%
Virginia Municipal Bond 16.00% 4.00% 80.00% 100.00%
Maryland Municipal Bond 6.00% 2.00% 92.00% 100.00%
</TABLE>
77
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
<PAGE>
INVESTMENT ADVISORS
STI Capital Management, N.A.
Trusco Capital Management, Inc.
SunTrust Bank, Atlanta
STI Classic Funds are not deposits,
are not insured or guaranteed by the
FDIC or any other government agency,
and are not endorsed by and do not
constitute obligations of SunTrust
Banks, Inc. or any other of its
affiliates. Investment in the Funds
involves risk, including the possible
loss of principal. There is no
guarantee that any STI Classic Fund
will achieve its investment objective.
The STI Classic Funds are advised by
affiliates of SunTrust Banks, Inc.
DISTRIBUTOR
SEI Investments Distribution Co.
This information must be preceded or accompanied by
a current prospectus for each Fund described.
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
BALANCED FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (56.1%)
BASIC MATERIALS (1.2%)
Air Products & Chemicals 75,200 $ 3,083
Morton International 22,200 866
----------
3,949
----------
CAPITAL GOODS (6.8%)
Allied Waste Industries* 36,100 672
Browning Ferris Industries 3,000 124
General Electric 75,500 7,677
Honeywell 20,800 1,968
Lockheed Martin 14,700 594
Maytag 6,200 437
Raytheon , Cl B 4,100 279
Republic Services, Cl A* 39,800 935
Tenneco 3,000 70
Textron 7,300 650
Tyco International 51,659 4,514
United Technologies 34,000 2,110
Waste Management* 62,161 3,287
----------
23,317
----------
COMMUNICATION SERVICES (2.4%)
Airtouch Communications* 4,900 492
AT&T 26,284 1,459
Centurytel 43,100 1,651
Fox Entertainment Group, Cl A* 16,900 431
GTE 24,600 1,551
MCI WorldCom* 19,543 1,688
Nextel Communications, Cl A* 500 18
Nokia, Cl A ADR 12,200 866
----------
8,156
----------
CONSUMER CYCLICALS (11.9%)
Bed Bath & Beyond* 500 17
Carnival 60,600 2,485
Cendant* 88,358 1,629
Comcast* 5,400 477
Costco* 45,700 3,313
CVS 63,400 2,916
Dayton Hudson 19,900 1,254
Dollar General 1,625 43
Federated Department Stores* 8,900 485
Gannett 20,800 1,503
Hasbro 47,200 1,351
Home Depot 7,800 444
Interpublic Group 12,500 947
Kroger* 53,800 3,151
Lear* 27,900 1,372
Lowe's Companies 83,500 4,337
Masco 106,300 3,036
Mattel 51,900 1,372
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--CONTINUED
New York Times, Cl A 22,200 $ 758
Office Depot* 141,350 2,951
Promus Hotel* 11,700 292
Royal Caribbean Cruises 2,700 106
Saks* 43,300 1,196
SPX* 9,100 706
Starwood Hotels and Resorts* 17,655 578
Tandy 35,000 2,887
United Rentals* 25,400 762
Young & Rubicam* 4,300 162
----------
40,530
----------
CONSUMER STAPLES (5.6%)
American Stores 15,200 502
Anheuser Busch 6,500 475
Avon Products 25,600 1,266
Clorox 12,500 1,262
Coca Cola 11,200 406
ConAgra 16,600 433
Flowers Industries 18,500 412
Fort James 19,200 703
Gillette 1,200 61
McDonald's 13,900 535
Newell Rubbermaid 3,200 130
Pepsi Bottling Group* 25,700 596
PepsiCo 42,800 1,533
Philip Morris 12,600 486
Procter & Gamble 10,200 952
Ralston Purina 45,500 1,240
Rite Aid 77,700 1,942
Safeway* 29,500 1,372
Sara Lee 75,400 1,810
Seagram 4,400 229
Unilever NV* 4,721 308
US Foodservice* 31,380 1,396
Viacom, Cl B* 23,200 893
----------
18,942
----------
ENERGY (1.9%)
Anadarko Petroleum 13,400 502
Atlantic Richfield 8,700 728
Halliburton 20,900 865
Mobil 6,400 648
Niagara Mohawk Holdings* 17,700 263
Texaco 31,400 2,057
Union Pacific Resources Group 20,822 290
Unocal 25,100 998
----------
6,351
----------
</TABLE>
32
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FINANCIALS (8.0%)
Ace Ltd 21,700 $ 662
Allstate 11,800 430
American International Group 17,883 2,044
Associates First Capital 25,500 1,046
Bank of America 28,831 1,865
Bank of New York 11,900 425
Bank One 26,789 1,515
Bank United, Cl A 11,300 468
BankBoston 27,600 1,308
Citigroup 5,200 345
CMAC Investment 4,000 202
Compass Bancshares 18,550 549
Conseco 46,000 1,406
Cullen/Frost Bankers 1,400 79
Fannie Mae 1,500 102
First Security 27,600 523
Freddie Mac 14,300 834
Hartford Life, Cl A 2,900 138
Household International 41,699 1,809
Mellon Bank 74,900 2,673
Merchantile Bancorp 3,200 187
Merrill Lynch 10,000 840
North Fork Bancorporation 20,300 433
PNC Bank 29,100 1,666
Providian Financial 3,900 374
Torchmark 42,700 1,425
U.S. Bancorp 22,500 731
UnionBanCal 14,900 551
Unum 18,400 990
Washington Mutual 39,676 1,515
----------
27,135
----------
HEALTH CARE (7.2%)
Abbott Laboratories 52,900 2,390
Alza, Cl A* 24,900 889
American Home Products 24,700 1,423
Baxter International 30,400 1,963
Becton Dickinson 25,000 969
Bristol-Myers Squibb 41,900 2,875
Cardinal Health 26,265 1,586
Eli Lilly 20,000 1,429
Forest Laboratories* 13,100 624
Health Management Associates,
Cl A* 20,100 261
Healthsouth* 47,528 636
Johnson & Johnson 3,400 315
Medtronic 11,294 802
Merck 56,000 3,780
Schering Plough 13,300 599
Tenet Healthcare* 37,000 907
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE--CONTINUED
Warner Lambert 47,700 $ 2,957
Watson Pharmaceuticals* 7,100 272
----------
24,677
----------
TECHNOLOGY (10.5%)
3Com* 9,400 257
Analog Devices* 21,500 826
Ascend Communications* 19,800 1,835
BMC Software* 4,200 208
Ceridian* 70,600 2,330
Cisco Systems* 37,300 4,066
Compaq Computer 20,900 495
Computer Sciences* 13,000 841
EMC* 21,900 2,182
Hewlett Packard 21,700 2,047
IBM 58,200 6,769
Intel 26,900 1,454
Lucent Technologies 6,916 393
Microsoft* 63,100 5,091
Networks Associates* 36,386 534
Nortel Networks 17,700 1,328
Sun Microsystems* 29,100 1,739
Texas Instruments 12,800 1,400
Xerox 37,200 2,090
----------
35,885
----------
TRANSPORTATION (0.6%)
AMR* 4,300 280
Burlington Northern Santa Fe 23,700 735
Delta Air Lines 13,100 752
Trans World Air* 4,100 146
----------
1,913
----------
Total Common Stocks
(Cost $152,557) 190,855
----------
PREFERRED STOCK (0.1%)
FINANCE (0.1%)
Conseco Financial Trust, CV to
0.9363 Shares* 10,000 409
----------
Total Preferred Stock
(Cost $500) 409
----------
</TABLE>
33
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
BALANCED FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE OBLIGATIONS (15.6%)
FINANCE (9.6%)
Conseco
6.800%, 06/15/05 $ 1,800 $ 1,683
6.400%, 06/15/11 1,350 1,323
Countrywide Home Loan,
Ser F, MTN
6.510%, 02/11/05 2,300 2,228
Donaldson Lufkin
5.875%, 04/01/02 2,000 1,968
Donaldson Lufkin, MTN
6.150%, 05/04/04 1,250 1,213
Finova Capital
6.250%, 11/01/02 1,200 1,187
6.110%, 02/18/03 2,250 2,213
6.750%, 03/09/09 850 831
Ford Motor Credit
6.500%, 02/28/02 2,100 2,113
Goldman Sachs
6.650%, 05/15/09 1,250 1,231
Great Western Financial
8.600%, 02/01/02 800 830
Household Finance
5.875%, 02/01/09 2,300 2,136
Merrill Lynch, MTN
5.710%, 01/15/02 3,000 2,963
Paine Webber Group, MTN
6.020%, 04/22/02 3,000 2,933
Provident
7.000%, 07/15/18 2,550 2,483
Reliastar Financial
6.500%, 11/15/08 2,000 1,910
Salomon
7.300%, 05/15/02 1,750 1,794
Salomon Smith Barney
6.250%, 01/15/05 1,750 1,671
----------
32,710
----------
INDUSTRIAL (6.0%)
AT&T
6.000%, 03/15/09 2,250 2,146
6.500%, 03/15/29 1,250 1,161
AT&T Capital, MTN
6.890%, 01/25/02 2,750 2,753
Bausch & Lomb
6.150%, 08/01/01 1,200 1,194
6.750%, 12/15/04 1,000 979
Dillards
6.430%, 08/01/04 2,700 2,612
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL--CONTINUED
Ikon Capital, MTN
6.730%, 06/15/01 $ 1,000 $ 988
Philip Morris
7.250%, 09/15/01 2,100 2,142
7.500%, 04/01/04 1,000 1,031
Sprint Capital
5.875%, 05/01/04 2,200 2,131
6.375%, 05/01/09 1,350 1,289
6.900%, 05/01/19 2,000 1,913
----------
20,339
----------
Total Corporate Obligations
(Cost $54,249) 53,049
----------
CONVERTIBLE BONDS (0.3%)
Network Associates, CV to
8.5380 Shares,
Callable 02/13/03 @ 49.45 (A)
0.000%, 02/13/18 1,000 305
WMX Technologies, CV to
18.9065 Shares,
Callable 03/15/00 @ 84.30
2.000%, 01/24/05 700 751
----------
Total Convertible Bonds
(Cost $1,188) 1,056
----------
U.S. AGENCY MORTGAGE-BACKED
OBLIGATION (2.7%)
GNMA
8.000%, 12/15/22 8,704 9,049
----------
Total U.S. Agency Mortgage-Backed
Obligation (Cost $9,047) 9,049
----------
U.S. TREASURY OBLIGATIONS (14.4%)
U.S. Treasury Bonds
7.500%, 11/15/16 8,000 9,159
8.125%, 08/15/19 16,175 19,872
U.S. Treasury Notes
5.750%, 10/31/00 8,250 8,298
5.000%, 04/30/01 2,250 2,234
6.125%, 08/15/07 9,100 9,278
----------
Total U.S. Treasury Obligations
(Cost $48,155) 48,841
----------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (10.7%)
Greenwich
4.83%, dated 05/28/99,
matures 06/01/99, repurchase
price $36,557,959 (collateralized by
various FNMA obligations: total
market value $37,269,725) (D) $36,538 $ 36,538
----------
Total Repurchase Agreement
(Cost $36,538) 36,538
----------
Total Investments (99.9% )
(Cost $302,234) 339,797
----------
OTHER ASSETS AND LIABILITIES, NET (0.1%) 443
----------
NET ASSETS:
Fund shares of the Trust Class (unlimited authorization -- no par value) based
on 18,984,001 outstanding shares of
beneficial interest 212,913
Fund shares of the Investor Class (unlimited
authorization -- no par value) based
on 1,123,159 outstanding shares of
beneficial interest 13,301
Fund shares of the Flex Class (unlimited
authorization -- no par value) based
on 5,582,438 outstanding shares of
beneficial interest 71,393
Undistributed net investment income 1,009
Accumulated net realized gain on investments 4,061
Net unrealized appreciation on investments 37,563
----------
Total Net Assets 100.0% $340,240
----------
----------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE (000)
- --------------------------------------------------------------------------------
<C> <S>
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 13.26
--------
--------
Net Asset Value and Redemption Price
Per Share-- Investor Shares $ 13.32
--------
--------
Maximum Offering Price Per Share ---
Investor Shares ($13.32 / 96.25%) $ 13.84
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 13.17
--------
--------
</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 67.
35
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (92.8%)
BASIC MATERIALS (1.8%)
Air Products & Chemicals 859,900 $ 35,256
Morton International 246,200 9,602
--------
44,858
--------
CAPITAL GOODS (10.8%)
Allied Waste Industries* 438,000 8,158
Browning Ferris Industries 32,700 1,357
General Electric 868,900 88,356
Honeywell 242,300 22,928
Illinois Tool Works 50,000 3,837
Koninklijke Philips El 50,000 4,300
Republic Services, Cl A* 455,200 10,697
Tenneco 34,300 800
Textron 83,400 7,428
Tyco International 631,652 55,191
United Technologies 340,800 21,151
Waste Management 727,079 38,444
--------
262,647
--------
COMMUNICATION SERVICES (5.0%)
Airtouch Communications* 56,800 5,708
AT&T 308,032 17,096
Centurytel 506,750 19,415
Fox Entertainment Group, Cl A* 195,100 4,975
GTE 287,300 18,118
MCI WorldCom* 542,169 46,830
Nextel Communications, Cl A* 5,100 188
Nokia, Cl A ADR 93,600 6,646
SBC Communications 33,000 1,687
--------
120,663
--------
CONSUMER CYCLICALS (18.2%)
Abercrombie & Fitch, Cl A* 10,000 841
Bed Bath & Beyond* 6,300 215
Carnival 712,700 29,221
Costco* 533,700 38,693
CVS 704,700 32,416
Dayton Hudson 227,500 14,332
Dollar General 20,000 531
Federated Department Stores* 102,700 5,597
Gannett 267,300 19,312
Hasbro 548,700 15,707
Home Depot 91,600 5,210
Interpublic Group 144,900 10,976
Lear* 323,400 15,907
Lowe's Companies 997,900 51,828
Masco 1,244,500 35,546
Mattel 580,100 15,336
Maytag 69,000 4,869
New York Times, Cl A 243,800 8,320
Newell Rubbermaid 36,600 1,482
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--CONTINUED
Office Depot* 1,643,350 $ 34,305
Promus Hotel* 130,300 3,257
Rite Aid 857,500 21,437
Royal Caribbean Cruises 31,600 1,236
Saks* 410,800 11,348
SPX* 105,400 8,182
Starwood Hotels and Resorts 168,134 5,506
Tandy 399,700 32,975
Viacom, Cl B* 253,800 9,771
Wal-Mart Stores 60,000 2,557
Walgreen 130,000 3,022
Walt Disney 90,000 2,621
Young & Rubicam 49,800 1,905
--------
444,461
--------
CONSUMER STAPLES (10.1%)
American Stores 173,500 5,725
Anheuser Busch 75,800 5,538
Avon Products 245,500 12,137
Cendant* 1,002,823 18,490
Clorox 135,200 13,647
Coca Cola Enterprises 130,300 4,723
Coca-Cola 30,000 2,049
ConAgra 181,300 4,725
Flowers Industries 206,100 4,586
Fort James 224,600 8,226
Gillette 13,400 683
Kroger* 629,100 36,842
McDonald's 107,200 4,127
Paychex 57,000 1,689
Pepsi Bottling Group* 285,600 6,622
PepsiCo 488,900 17,509
Philip Morris 168,950 6,515
Procter & Gamble 119,100 11,121
Ralston Purina 532,500 14,511
Safeway* 327,100 15,210
Sara Lee 861,700 20,681
Seagram 51,700 2,685
Sysco 60,000 1,781
Unilever NV 54,664 3,570
United Rentals* 243,400 7,302
US Foodservice* 359,650 16,004
--------
246,698
--------
ENERGY (3.1%)
Anadarko Petroleum 149,700 5,614
Atlantic Richfield 100,000 8,369
Halliburton 245,500 10,158
Mobil 70,200 7,108
Niagara Mohawk Holdings* 204,900 3,048
Schlumberger 40,000 2,407
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ENERGY--CONTINUED
Texaco 368,500 $ 24,137
Union Pacific Resources Group 243,759 3,397
Unocal 293,100 11,651
--------
75,889
--------
FINANCIALS (13.1%)
Ace Ltd 252,100 7,689
Allstate 134,600 4,904
American International Group 213,096 24,360
Associates First Capital 293,200 12,021
Bank of America 329,438 21,311
Bank of New York 139,200 4,976
Bank One 313,536 17,734
Bank United, Cl A 131,800 5,453
BankBoston 335,100 15,875
Citigroup 60,400 4,001
CMAC Investment 46,300 2,341
Compass Bancshares 215,650 6,382
Conseco 526,400 16,088
Cullen/Frost Bankers 63,100 3,549
Fannie Mae 38,100 2,591
Fifth Third Bancorp 39,000 2,659
First Security 202,600 3,837
Freddie Mac 158,000 9,213
Hartford Life, Cl A 33,900 1,610
Household International 483,322 20,964
Jefferson-Pilot 29,000 1,963
Mellon Bank 835,800 29,828
Merchantile Bancorp 37,200 2,174
Merrill Lynch 87,700 7,367
North Fork Bancorporation 235,900 5,028
PNC Bank 340,800 19,511
Providian Financial 44,900 4,308
State Street 35,000 2,669
Torchmark 500,200 16,694
U.S. Bancorp 212,800 6,916
UnionBanCal 171,200 6,329
Unum 210,600 11,333
Waddell & Reed Financial, Cl A 17 --
Washington Mutual 441,924 16,876
Wells Fargo 40,000 1,600
--------
320,154
--------
HEALTH CARE (11.4%)
Abbott Laboratories 496,100 22,418
Alza, Cl A* 271,200 9,678
American Home Products 289,000 16,654
Baxter International 354,800 22,907
Becton Dickinson 285,400 11,059
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE--CONTINUED
Bristol-Myers Squibb 479,400 $ 32,899
Cardinal Health 307,353 18,556
Eli Lilly 211,200 15,088
Forest Laboratories* 153,700 7,320
Health Management Associates,
Cl A* 235,200 3,058
Healthsouth* 707,119 9,458
Johnson & Johnson 39,200 3,631
Medtronic 132,210 9,387
Merck 642,164 43,346
Pfizer 13,000 1,391
Schering Plough 154,700 6,971
Tenet Healthcare* 409,500 10,033
Warner Lambert 500,700 31,043
Watson Pharmaceuticals* 87,200 3,341
---------
278,238
---------
TECHNOLOGY (18.5%)
3Com* 115,900 3,166
Analog Devices* 246,100 9,459
Amgen* 50,000 3,162
Ascend Communications* 248,200 23,005
BMC Software* 119,700 5,918
Ceridian* 803,500 26,516
Cisco Systems* 472,100 51,459
Compaq Computer 239,100 5,664
Computer Sciences* 148,800 9,626
EMC* 245,600 24,468
Hewlett Packard 253,600 23,918
IBM 681,000 79,209
Intel 358,000 19,354
Lockheed Martin 171,100 6,919
Lucent Technologies 102,728 5,843
Microsoft* 761,800 61,468
Networks Associates* 442,853 6,504
Nortel Networks 205,600 15,420
Raytheon , Cl B 46,700 3,179
Sun Microsystems* 385,600 23,040
Tellabs* 56,000 3,276
Texas Instruments 149,200 16,319
Xerox 427,400 24,015
---------
450,907
---------
TRANSPORTATION (0.8%)
AMR* 48,400 3,149
Burlington Northern Santa Fe 263,000 8,153
Delta Air Lines 128,200 7,355
Trans World Air* 14,400 511
---------
19,168
---------
Total Common Stocks
(Cost $1,713,451) 2,263,683
---------
</TABLE>
37
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
CAPITAL APPRECIATION FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS (0.2%)
FINANCE (0.0%)
Conseco Financial Trust, CV to
0.9363 Shares* 5,500 $ 225
------
TECHNOLOGY (0.2%)
Qwest Trends Trust, CV to
1.6394 Shares (B)* 65,000 4,656
------
Total Preferred Stocks
(Cost $2,931) 4,881
------
CONVERTIBLE BONDS (1.1%)
Comcast,
CV to 1.425 Shares, Callable
07/09/99 @ 86.28 59,800 5,285
3.350% 5/15/29
Elan Finance,
CV to 6.875 Shares, Callable
12/14/03 @ 61.66 (A) (B)
0.000%, 12/14/18 9,000 4,568
Healthsouth,
CV to 27.3 Shares, Callable
04/05/01 @ 101.300
3.250%, 04/01/03 2,500 2,106
Molten Metal Technology,
CV to 25.8065 Shares, Callable
05/01/99 @ 102.750 (B) (I)
5.500%, 05/01/06 10,000 50
Network Associates,*
CV to 8.5380 Shares, Callable
02/13/03 @ 49.45 (A)
0.000%, 02/13/18 1,500 458
Network Associates,*
CV to 8.5380 Shares, Callable
02/13/03 @ 49.452 (A) (B)
0.000%, 02/13/18 10,000 3,050
Potomac Electric Power,
CV to 29.5 Shares, Callable
08/16/99 @ 94.37
5.000%, 09/01/02 4,740 4,550
Waste Mangement,
CV to 22.959 Shares, Callable
02/01/00 @ 101.60
4.000%, 02/01/02 3,000 3,889
WMX Technologies,
CV to 18.9065 Shares,
Callable 03/15/00 @ 84.303
2.000%, 01/24/05 2,800 3,003
------
Total Convertible Bonds
(Cost $33,448) 26,959
------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CASH EQUIVALENT
Aim Liquid Assets Portfolio (C) $ 7,942 $ 7,942
------------
Total Cash Equivalent
(Cost $7,942) 7,942
------------
REPURCHASE AGREEMENTS (5.3%)
Deutsche Bank
4.83%, dated 05/28/99, matures
06/01/99, repurchase price
$65,793,297 (collateralized by
FHLMC obligation: total market
value $67,073,168) (D) 65,758 65,758
Greenwich
4.83%, dated 05/28/99, matures
06/01/99, repurchase price
$63,423,296 (collateralized by
various FNMA obligations: total
market value $64,661,178) (D) 63,389 63,389
------------
Total Repurchase Agreements
(Cost $129,147) 129,147
------------
Total Investments (99.7%)
(Cost $1,886,919) 2,432,612
-----------
OTHER ASSETS AND LIABILITIES, NET (0.3%) 7,450
------------
NET ASSETS:
Fund shares of the Trust Class (unlimited
authorization -- no par value) based
on 118,328,583 outstanding shares of
beneficial interest 1,485,183
Fund shares of the Investor Class (unlimited
authorization -- no par value) based
on 18,826,950 outstanding shares of
beneficial interest 227,945
Fund shares of the Flex Class (unlimited
authorization -- no par value) based
on 10,016,114 outstanding shares of
beneficial interest 153,453
Undistributed net investment income 1,207
Accumulated net realized gain on investments 26,581
Net unrealized appreciation on investments 545,693
------------
Total Net Assets 100.0% $2,440,062
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $ 16.62
------------
------------
Net Asset Value and Redemption Price
Per Share -- Investor Shares $ 16.53
------------
------------
Maximum Offering Price Per Share --
Investor Shares ($16.53 / 96.25%) $ 17.17
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 16.18
------------
------------
</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 67.
38
<PAGE>
- --------------------------------------------------------------------------------
EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN COMMON STOCKS (86.6%)
ARGENTINA (2.5%)
Capex, Cl A* 33,700 $ 169
Metrogas ADR 32,204 252
Quilmes Industrial 22,000 249
--------
670
--------
BRAZIL (6.7%)
Petrobras ADR 13,500 190
Souza Cruz 63,500 388
Tele Centro Sul
Participacoes ADR 5,200 281
Tele Norte Leste
Participacoes ADR 25,600 419
Telec De Sao Paulo 4,434,000 313
Unibanco 9,100 205
--------
1,796
--------
CHILE (5.2%)
Administradora de Fondos de
Pensiones Provida ADR 29,500 601
Banco De A. Edwards 17,000 242
Quinenco ADR 25,000 263
Quimica Y Minera Chile ADR 8,300 289
--------
1,395
--------
CZECH REPUBLIC (2.1%)
SPT Telecom* 33,000 548
--------
GREECE (5.1%)
Alpha Credit Bank 900 61
Alpha Credit Bank Rights* 900 3
Hellenic Telecommunication
Organization 21,583 468
Panafon Hellenic Telecom* 33,310 830
--------
1,362
--------
HONG KONG (4.1%)
China Hong Kong Photo 790,000 110
Guangdong Kelon Electric
Holding 188,000 144
Li & Fung 104,000 245
Seoul Horizon Trust 17,000 157
Techtronic Industries 1,290,000 233
VTech Holdings 72,000 210
--------
1,099
--------
HUNGARY (3.1%)
Egis 3,925 80
Matav 60,000 336
North American Business
Industries* 17,500 252
Pick Szeged Rt GDR 144A 28,000 165
--------
833
--------
INDIA (3.9%)
Hindalco Industries GDR 10,500 135
Mahanagar Telephone Nigam GDR 36,500 333
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
INDIA--CONTINUED
Mahanagar Telephone Nigam ADR 6,500 $ 52
Videsh Sanchar Nigam GDR 45,000 512
--------
1,032
--------
INDONESIA (3.1%)
Citra Marga Nusaphala, F 944,000 52
Indonesian Satellite ADR* 10,500 208
Modern Photo Film, F* 356,000 76
PT Indosat, F 96,000 196
PT Jaya Real Property, F* 754,000 81
PT Timbang Timah 200,000 220
--------
833
--------
ISRAEL (5.4%)
Bank Leumi Le-Israel 152,000 287
Blue Square Stores* 13,100 210
ECI Telecommunications 14,900 516
Israel Chemicals 274,000 327
Nice Systems ADR* 4,000 102
--------
1,442
--------
MALAYSIA (0.7%) (1)
Aluminium Company of Malaysia 154,000 66
Petronas Dagangan 114,000 117
--------
183
--------
MEXICO (11.9%)
Cemex, ADR 23,300 207
Grupo Carso, Cl A* 78,000 319
Grupo Continental 335,500 544
Grupo Financiero Banorte, Cl B* 216,935 277
Grupo Industrial Maseca ADR 17,000 161
Grupo Mexico, Cl B 65,000 228
Grupo Televisa GDR* 10,800 452
Herdez, Cl B* 518,000 155
Panamerican Beverages 12,500 290
Telefonos de Mexico ADR 6,800 544
--------
3,177
--------
PANAMA (0.3%)
Banco Latinamericano de
Exportaciones 2,800 80
--------
PHILIPPINES (3.2%)
Bacnotan Consolidated 160,000 81
First Philippine Holdings, Cl B 134,250 170
La Tondena Distillers 160,000 186
Manila Electric, Cl B 72,000 249
Queenbee Resourses Jollibee
Warrant, F* 310,000 176
--------
862
--------
POLAND (1.1%)
Bank Handlowy 25,000 294
--------
</TABLE>
39
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
EMERGING MARKETS EQUITY FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PORTUGAL (7.2%)
Banco Pinto & Sotto Mayor 34,200 $ 678
Cimpor-Cimentos de Portugal 15,720 419
Electricidade de Portugal 12,500 450
Portugal Telecom ADR 8,200 371
--------
1,918
--------
SINGAPORE (0.7%)
Amtek Engineering 246,000 201
--------
SOUTH AFRICA (6.9%)
ABSA Group 56,235 257
Amalgamated Beverage 13,855 91
Kersaf Investments 73,516 294
Liberty Life Association of Africa 23,983 322
Nedcor 15,273 305
South African Breweries 73,616 590
--------
1,859
--------
SOUTH KOREA (13.4%)
Dae Duck Electronics Rights* 11,865 39
Dae Duck Electronics 49,440 475
Hite Brewery* 11,000 273
Hite Brewery Rights* 1,508 15
Korea Electric Power ADR 10,000 171
Korea Telecom ADR* 4,000 127
Pohang Iron & Steel 5,000 390
Samsung* 27,000 421
Samsung Electronics 3,400 237
Samsung Electronics Rights* 272 3
Shinhan Bank 25,000 244
Sk Telecom 513 563
Sk Telecom ADR 43,560 621
--------
3,579
--------
Total Foreign Common Stocks
(Cost $24,910) 23,163
--------
FOREIGN PREFERRED STOCKS (7.6%)
BRAZIL (7.6%)
Banco do Estada de Sao Paulo 5,540,000 238
Banco Itau 900,000 456
Brahma 600,000 306
Cemig 22,483,067 474
Fertilizantes Fosfatados 70,700,000 230
Gerdau 21,700,000 328
--------
Total Foreign Preferred Stocks
(Cost $2,387) 2,032
--------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
TIME DEPOSITS (3.7%)
Cayman Time Deposit
4.375%, 06/01/99 $ 1,000 $ 1,000
--------
Total Time Deposits
(Cost $1,000) 1,000
--------
Total Investments (97.9% )
(Cost $28,297) 26,195
--------
OTHER ASSETS AND LIABILITIES, NET (2.1%) 556
--------
NET ASSETS:
Fund shares of the Trust Class (unlimited
authorization -- no par value) based
on 3,293,687 outstanding shares of
beneficial interest 36,352
Undistributed net investment income 52
Accumulated net realized loss
on investments (7,538)
Net unrealized depreciation on investments (2,102)
Net unrealized depreciation on foreign
currency and translation of other
assets and liabilities in foreign
currency investments (13)
--------
Total Net Assets 100.0% $26,751
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 8.12
--------
--------
</TABLE>
(1) THE REPATRIATION OF PROCEEDS RECEIVED FROM THE SALE OF THESE SECURITIES
ARE SUBJECT TO A LEVY DEPENDING UPON THE LENGTH OF TIME THE POSITION HAS BEEN
HELD. THIS LEVY IS APPLICABLE TO SECURITIES PURCHASED BEFORE FEBRUARY 15, 1999.
THE LEVY RANGES FROM 30% TO 0% AND IS BASED ON THE DATE THE PROCEEDS ARE
REPATRIATED. AS A RESULT, THESE SECURITIES ARE BEING TREATED AS ILLIQUID UNTIL
SEPTEMBER 1, 1999, WHEN THE LEVY IS NO LONGER IN EFFECT.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 67.
40
<PAGE>
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (95.1%)
BASIC MATERIALS (4.5%)
Great Lakes Chemical 200,000 $ 9,037
International Paper 450,000 22,500
---------
31,537
---------
CAPITAL GOODS (8.6%)
Deere 300,000 11,419
Ingersoll-Rand 200,000 12,737
General Electric 125,000 12,711
Koninklijke Philips El 200,000 17,200
Textron 75,000 6,680
---------
60,747
---------
COMMUNICATION SERVICES (3.9%)
AT&T 262,500 14,569
SBC Communications 250,000 12,781
---------
27,350
---------
CONSUMER CYCLICALS (9.5%)
Dayton Hudson 175,000 11,025
Federated Department Stores* 250,000 13,625
Ford Motor 50,000 2,853
Lowes 100,000 5,194
UAL* 100,000 6,725
Warnaco Group, Cl A 550,000 16,225
Walt Disney 400,000 11,650
---------
67,297
---------
CONSUMER STAPLES (13.1%)
Coca-Cola 125,000 8,539
Kellogg 500,000 17,344
Modis Professional Services* 574,000 8,467
PepsiCo 325,000 11,639
Philip Morris 400,000 15,425
Quaker Oats 200,000 13,212
Sara Lee 750,000 18,000
---------
92,626
---------
ENERGY (7.8%)
Exxon 200,000 15,975
Mobil 130,000 13,163
Texaco 150,000 9,825
Schlumberger 275,000 16,552
---------
55,515
---------
FINANCIALS (16.0%)
American International Group 115,000 13,146
Bank of America 200,000 12,937
BankBoston 225,000 10,659
Berkshire Hathaway Cl B* 7 16,632
Fannie Mae 200,000 13,600
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FINANCIALS--CONTINUED
Morgan Stanley, Dean Witter,
Discover 75,000 $ 7,238
KeyCorp 500,000 17,375
Washington Mutual 300,000 11,456
Wells Fargo 250,000 10,000
----------
113,043
----------
HEALTH CARE (7.9%)
Aetna 200,000 18,163
Johnson & Johnson 200,000 18,525
Merck 100,000 6,750
Schering Plough 275,000 12,392
----------
55,830
----------
TECHNOLOGY (18.2%)
Adaptec* 650,000 20,070
Amgen* 250,000 15,813
Boeing 225,000 9,506
Cisco Systems* 100,000 10,900
Hewlett Packard 175,000 16,505
IBM 120,000 13,957
Intel 200,000 10,812
Microsoft* 150,000 12,103
Quantum* 500,000 9,906
Sun Microsystems* 150,000 8,962
----------
128,534
----------
TRANSPORTATION (1.3%)
Canadian Pacific Limited 400,000 9,150
----------
UTILITIES (4.3%)
Duke Power 131,800 7,949
Midamerican Energy Holdings 241,500 8,151
Southern 500,000 14,187
----------
30,287
----------
Total Common Stocks
(Cost $494,745) 671,916
----------
PREFERRED STOCK (0.5%)
Calenergy Cap Trust III,
CV to 1.0471 Shares* 75,000 3,478
----------
Total Preferred Stock
(Cost $3,253) 3,478
----------
CASH EQUIVALENT (0.0%)
Aim Liquid Assets Portfolio (C) $ 39 39
----------
Total Cash Equivalent
(Cost $39) 39
----------
</TABLE>
41
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
GROWTH AND INCOME FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (3.3%)
JP Morgan
4.82%, dated 05/28/99, matures
06/01/99, repurchase price
$23,414,976 (collateralized by
various GNMA obligations: total
market value $23,870,492) (H) 23,595 $ 23,595
--------
Total Repurchase Agreement
(Cost $23,595) 23,595
--------
Total Investments (98.9%)
(Cost $521,631) 699,028
--------
OTHER ASSETS AND LIABILITIES, NET (1.1%) 7,372
--------
NET ASSETS:
Fund Shares of Trust Class
(unlimited authorization --
no par value) based on
39,415,860 outstanding shares 420,958
Fund Shares of Investor Class
(unlimited authorization --
no par value) based on 2,279,338
outstanding shares 28,578
Fund Shares of Flex Class
(unlimited authorization --
no par value) based on 2,183,767
outstanding shares 31,216
Undistributed net investment income 614
Accumulated net realized gain
on investments 47,637
Net unrealized appreciation on investments 177,397
--------
Total Net Assets 100.0% $706,400
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 16.09
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Investor Shares $ 16.21
--------
--------
Maximum Offer Price Per Share -- Investor
Shares ($16.22 / 96.25%) $ 16.84
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 16.10
--------
--------
</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 THEFINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 67.
42
<PAGE>
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN COMMON STOCKS (96.2%)
AUSTRALIA (4.0%)
AMP 767,600 $ 8,349
Broken Hill Proprietary 344,300 3,531
Leighton Holdings 1,031,813 3,936
National Australia Bank 382,100 6,182
QBE Insurance 502,267 1,965
---------
23,963
---------
AUSTRIA (1.0%)
Erste Bank* 107,400 5,949
---------
BRAZIL (0.6%)
Tele Norte Leste Participacoes ADR 231,400 3,789
---------
CANADA (3.2%)
Nortel Networks 152,250 11,427
Royal Bank of Canada 55,200 2,530
Teleglobe 168,300 5,070
---------
19,027
---------
DENMARK (0.7%)
Novo-Nordisk, Cl B 42,280 4,311
---------
FINLAND (2.8%)
Merita 1,283,700 7,606
Nokia ADR, Cl A 51,400 3,649
Sonera Group Oyj 303,100 5,929
---------
17,184
---------
FRANCE (13.4%)
Accor 22,500 5,521
Assurances Generales de France 102,800 5,098
Axa 73,985 8,529
Dexia France 53,380 7,417
Elf Aquitane 42,600 6,168
Equant* 58,400 4,813
Lafarge 60,750 5,476
Michelin, Cl B 96,450 4,254
SEITA 86,847 5,268
Societe Generale D'Entreprises 86,009 4,103
STMicroelectonics* 25,400 2,941
Suez Lyonnaise des Eaux 36,030 5,973
Technip 51,300 5,566
Vivendi 131,010 9,704
Vivendi Rights* 131,010 135
---------
80,966
---------
GERMANY (8.4%)
Allianz 10,210 2,791
Bayerische Vereinsbank 89,200 4,820
Mannesmann 71,670 9,794
Metallgesellschaft 340,150 6,121
MobilCom 8,220 647
Preussag 162,859 8,410
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
GERMANY--CONTINUED
RWE 275,550 $ 12,317
Veba 102,300 5,838
--------
50,738
--------
GREECE (2.9%)
Hellenic Telecom Organization 383,502 8,320
Panafon Hellenic Telecom* 358,490 8,929
--------
17,249
--------
INDONESIA (0.1%)
Modern Photo Film, F* 1,440,000 307
--------
IRELAND (3.0%)
Allied Irish Bank 326,600 4,321
Bank of Ireland 746,718 13,848
--------
18,169
--------
ISRAEL (1.1%)
ECI Telecommunications 197,180 6,827
--------
ITALY (5.7%)
Banca Intesa 688,000 3,503
Banca Intesa Rights* 688,000 15
Banca Nazionale del Lavoro* 1,361,150 4,189
ENI 1,028,800 6,429
Mediaset 321,250 2,604
San Paolo-IMI 596,100 8,053
Telecom Italia 920,000 9,482
--------
34,275
--------
JAPAN (9.6%)
Bank of Tokyo Mitsubishi 363,000 4,836
Canon 134,000 3,361
Eisai 148,300 2,750
FamilyMart 64,700 2,687
Honda Motor 149,000 6,078
Nippon Telegraph & Telephone 276 2,679
NTT Mobile Communication
Network 201 10,927
Olympus Optical 413,000 5,095
Sumitomo Bank 337,000 4,055
Takefuji 74,700 6,543
TDK 78,400 6,693
Terumo 106,000 2,485
--------
58,189
--------
NETHERLANDS (9.1%)
Ahold 150,500 5,252
ASM Lithography Holding* 81,000 3,570
ING Groep 158,203 8,458
KPN 259,310 12,525
Philips Electronics 90,850 8,151
TNT Post Group 291,700 7,334
</TABLE>
43
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
INTERNATIONAL EQUITY FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
NETHERLANDS--CONTINUED
Unique International 264,710 $ 6,048
Wolters Kluwer 95,200 3,829
--------
55,167
--------
NEW ZEALAND (1.6%)
Fletcher Challenge Building 1,877,298 2,915
Telecom of New Zealand 1,530,000 6,602
--------
9,517
--------
NORWAY (1.1%)
Petroleum Geo Services* 367,390 5,934
Petroleum Geo Services ADR* 45,900 740
--------
6,674
--------
PANAMA (0.7%)
Banco Latinamericano
de Exportaciones 150,400 4,277
--------
PORTUGAL (1.9%)
Banco Espirito Santo 144,480 3,542
Banco Pinto & Sotto Mayor 127,244 2,522
BPI-SGPS 91,466 1,956
BPI-SGPS Rights* 68,600 46
Portugal Telecom ADR 72,760 3,292
--------
11,358
--------
SPAIN (2.5%)
Argentaria 390,000 8,743
Telefonica Bonus Rights* 133,100 129
Telefonica de Espana 133,100 6,384
--------
15,256
--------
SWEDEN (2.2%)
Castellum 406,600 3,643
Drott, Cl B 136,100 1,164
Electrolux 243,800 4,723
Swedish Match 1,107,700 4,034
--------
13,564
--------
UNITED KINGDOM (19.1%)
Allied Zurich 711,650 9,084
AstraZeneca Group 130,950 5,210
Bass 247,982 3,663
BP Amoco 395,300 7,081
British Energy 879,400 7,862
British Steel 2,855,000 6,066
Diageo 632,800 6,662
Gallaher Group 1,063,500 6,728
Glaxo Wellcome 137,000 3,849
Granada Group 231,400 4,742
Imperial Tobacco Group 624,700 7,032
J Sainsbury 1,040,900 6,335
Lloyds TSB Group 465,449 6,158
National Westminster Bank 270,013 6,200
Railtrack Group 310,300 6,364
Reckitt & Colman 436,300 4,873
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM--CONTINUED
Securicor 775,600 $ 6,965
Smithkline Beecham 463,058 6,044
South African Breweries* 548,630 4,408
-------
115,326
-------
UNITED STATES (1.5%)
Global TeleSystems Group* 121,251 9,215
-------
Total Foreign Common Stocks
(Cost $544,016) 581,297
-------
TIME DEPOSITS (3.6%)
Cayman Time Deposit
4.375%, 06/01/99 $22,000 22,000
-------
Total Time Deposits
(Cost $22,000) 22,000
-------
Total Investments (99.8% )
(Cost $566,016) 603,297
-------
OTHER ASSETS AND LIABILITIES, (NET 0.2%) 1,206
-------
NET ASSETS:
Fund shares of the Trust Class (
unlimited authorization -- no par value)
based on 44,211,314 outstanding shares of
beneficial interest 513,228
Fund shares of the Investor Class
(unlimited authorization -- no par value)
based on 1,094,862 outstanding shares
of beneficial interest 13,578
Fund shares of the Flex Class (unlimited
authorization -- no par value) based on
1,356,567 outstanding shares of
beneficial interest 18,315
Undistributed net investment income 1,810
Accumulated net realized gain on investments 20,388
Net unrealized appreciation on investments 37,281
Net unrealized depreciation on foreign currency
and translation of other assets and liabilities
in foreign currency investments (97)
--------
Total Net Assets 100.0% $604,503
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 12.97
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Investor Shares $ 12.89
--------
--------
Maximum Offering Per Share --
Investor Shares ($12.89 / 96.25%) $ 13.39
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 12.58
--------
--------
</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 67.
44
<PAGE>
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN COMMON STOCKS (98.0%)
AUSTRALIA (3.0%)
Amcor 18,995 $ 101
AMP 12,551 137
Brambles Industries 3,313 88
Broken Hill Proprietary 21,354 219
Coles Myer 30,235 158
CSR 43,040 115
Lend Lease 10,599 134
Mount Isa Mines Holdings 70,425 38
National Australia Bank 16,622 269
Newscorp 33,881 280
Pacific Dunlop 48,287 86
Rio Tinto 8,449 118
Telstra 61,083 302
Westpac Banking 36,880 252
WMC 33,829 125
---------
2,422
---------
AUSTRIA (1.2%)
Bank Austria 5,449 279
Generali Holding Vienna 519 96
Oest Elektrizatswirts, Cl A 2,027 265
OMV 1,907 159
Universale Bau 165 5
Wienerberger Baustoff 731 128
---------
932
---------
BELGIUM (1.5%)
Bekaert 162 68
Cie Maritime Belge 224 10
Delhaize Freres 1,000 86
Electrabel 660 203
Fortis CVG* 861 5
Fortis, Cl B 6,768 217
Groupe Bruxelles Lambert 673 117
KBC Bancassurance Holding 2,900 176
Petrofina 292 157
Solvay, Cl A 1,496 100
Tractebel 165 22
Union Miniere 952 35
---------
1,196
---------
DENMARK (1.0%)
Carlsberg, Cl B 1,127 52
D/S 1912, Cl B 25 210
D/S Svendborg, Cl B 8 96
Danisco 1,610 77
Den Danske Bank 600 64
Novo-Nordisk, Cl B 1,270 130
Tele Danmark, Cl B 1,408 144
---------
773
---------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FINLAND (1.5%)
Merita 12,800 $ 76
Nokia Oyj, Cl A 12,800 911
Outokumpu Oy Akt, Cl A 3,100 32
Sonera Group Oyj 2,600 51
UPM-Kymmene 3,500 103
--------
1,173
--------
FRANCE (9.9%)
Accor 508 125
Air Liquide 1,221 184
Alcatel Alsthom 2,122 252
Axa 3,588 414
Banque National Paris, Cl A 2,161 182
Bouygues 403 107
Canal Plus 343 99
Cap Gemini 788 114
Carrefour 2,569 337
Casino Guichard-Perrachon 806 77
Cie de Saint Gobain 1,143 179
Compagnie Financiere de Paribas 2,411 262
Elf Aquitane 2,882 417
Eridania Beghin-Say 775 113
France Telecom 10,924 838
Groupe Danone 839 231
L'Oreal 771 464
Lafarge 1,032 93
Legrand 370 77
Louis Vuitton-Moet Hennessy 984 274
Michelin, Cl B 2,803 124
Pernod-Ricard 1,228 82
Peugeot 565 84
Pinault-Printemps-Redoute 1,744 297
Promodes 231 151
Rhone Poulenc, Cl A 4,070 193
Sanofi-Synthelabo* 12,962 546
Schneider 1,765 105
SEITA 1,128 68
Skis Rossignol 2,648 39
Societe Generale 1,075 195
Suez Lyonnaise des Eaux 1,740 288
Total, Cl B 2,637 320
Unibail 798 108
Valeo 1,330 109
Vivendi 6,348 470
Vivendi Rights* 6,348 7
--------
8,025
--------
GERMANY (12.8%)
Aachener & Munchener Bete 810 87
Allianz 3,380 924
BASF 9,800 381
</TABLE>
45
<PAGE>
SCHEDULEOFINVESTMENTS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
INTERNATIONAL EQUITY INDEX FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
GERMANY--CONTINUED
Bayer 11,360 $ 442
Bayerische Vereinsbank 6,072 328
Beiersdorf 1,140 74
DaimlerChrysler 14,066 1,214
Degussa* 990 39
Deutsche Bank 8,670 452
Deutsche Telekom 32,100 1,281
Dresdner Bank Frankfurt 7,500 279
Heidelberger Zement 1,274 103
Hochtief 1,060 47
Karstadt 175 72
Linde 291 170
Lufthansa 7,330 158
Man Muenchen 2,960 87
Mannesmann 5,380 735
Merck KGaA 2,900 100
Metro 3,951 249
Muenchener Rueckvers* 1,110 188
Muenchener Rueckvers, Registered 2,510 429
Preussag 2,810 145
RWE 6,190 277
SAP 900 313
Schering 1,810 194
Siemens 8,340 561
Thyssen* 8,210 162
Veba 6,610 377
Viag 533 243
Volkswagen 4,610 286
---------
10,397
---------
HONG KONG (1.8%)
Cathay Pacific Airways 39,000 59
Cheung Kong Holdings 21,000 171
CLP Holdings 18,500 89
Hang Seng Bank 14,900 159
Hong Kong & China Gas 44,000 62
Hong Kong Telecommunications 100,800 233
Hutchison Whampoa 28,800 240
Johnson Electric Holdings 13,000 48
New World Development 22,000 54
Shangri-La Asia 46,000 49
Sun Hung Kai Properties 28,600 229
Swire Pacific 15,000 72
---------
1,465
---------
IRELAND (0.7%)
Allied Irish Banks 23,400 309
CRH 16,100 275
---------
584
---------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ITALY (8.2%)
Alitalia* 37,439 $ 110
Assicurazioni Generali 19,000 676
Banca Commerciale Italiana 34,000 244
Banca Intesa 49,603 253
Benetton Group 67,500 132
Edison 11,000 96
ENI 155,500 972
Fiat 82,000 264
Fiat RNC 47,000 77
INA 78,000 182
Italgas 15,000 64
Mediaset 24,500 199
Mediobanca 10,500 119
Mondadori Editore 3,734 65
Montedison 132,500 118
Olivetti* 60,000 187
Parmalat Finanziaria 60,000 81
Pirelli 61,000 171
Riunione Adriatica di Sicurta 10,385 101
San Paolo-IMI 26,236 354
Sirti 16,000 80
Telecom Italia 67,500 696
Telecom Italia 16,000 87
Telecom Italia Mobile 30,000 101
Telecom Italia Mobile 128,500 756
Unicredito Italiano 93,000 438
Unione Immobiliare 109,000 51
------------
6,674
------------
JAPAN (34.3%)
Acom 2,100 149
Advantest 1,600 126
Ajinomoto 10,000 106
Aoki* 11,000 7
Aoyamma Trading 1,200 36
Asahi Bank 39,000 184
Asahi Breweries 10,000 126
Asahi Chemical Industry 24,000 129
Asahi Glass 24,000 155
Autobacs Seven 900 35
Bank of Tokyo - Mitsubishi 70,000 933
Bank of Yokohama 17,000 45
Bridgestone 12,000 313
Canon 15,000 376
Chiba Bank 17,000 67
Chiyoda* 5,000 10
Citizen Watch 11,000 81
Cosmo Oil 24,000 43
Chugai Pharmaceutical 2,000 22
Daiichi Pharmaceutical 4,000 64
Dai Nippon Printing 10,000 149
</TABLE>
46
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
JAPAN--CONTINUED
Daicel Chemical Industries 8,000 $ 26
Daiei* 25,000 72
Daikyo* 4,000 11
Daimaru 4,000 16
Daito Trust Construction 2,000 22
Daiwa House Industry 6,000 64
Daiwa Kosho Lease 17,000 65
Daiwa Securities 23,000 121
Denso 14,000 257
East Japan Railway 58 334
Ebara 11,000 123
Eisai 4,000 74
Fanuc 5,000 214
Fuji Bank 52,000 327
Fuji Photo Film 9,000 320
Fujita* 17,000 12
Fujita Kanko 9,000 90
Fujitsu 33,000 548
Furukawa Electric 24,000 94
Gakken* 5,000 7
Gunze 15,000 36
Hankyu 31,000 127
Hankyu Department Stores 6,000 40
Haseko* 15,000 12
Hazama* 20,000 16
Hitachi 63,000 461
Hokuriko Bank* 17,000 32
Honda Motor 15,000 612
Hoya 2,000 102
Industrial Bank of Japan 43,000 302
Isetan 4,000 36
Ito Yokado 6,000 356
Itochu* 55,000 124
Itoham Foods 16,000 67
Japan Airlines 39,000 121
Japan Energy 37,000 43
Japan Metals & Chemicals* 4,000 6
Japan Steel Works* 3,000 4
Joyo Bank 25,300 102
Jusco 7,000 132
Kajima 10,000 30
Kaken Pharmaceutical 4,000 24
Kamigumi 9,000 42
Kandenko 4,000 25
Kanebo* 10,000 16
Kansai Electric Power 18,200 372
Kao 9,000 246
Kawasaki Heavy Industries 22,000 49
Kawasaki Kisen Kaisha 10,000 22
Kawasaki Steel 48,000 85
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
JAPAN--CONTINUED
Kinki Nippon Railway 42,000 $ 209
Kirin Brewery 19,000 217
Kissei Pharmacutical 1,000 21
Komatsu 22,000 130
Konami 600 20
Koyo Seiko 5,000 31
Kubota 33,000 96
Kumagai Gumi* 18,000 19
Kurabo Industries 7,000 8
Kyocera 4,000 209
Kyudenko 3,000 19
Maeda Road Contruction 4,000 27
Marubeni 16,000 33
Maruha 8,000 9
Marui 6,000 90
Matsushita Electric 30,000 540
Minebea 9,000 89
Misawa Homes 7,000 25
Mitsubishi 26,000 157
Mitsubishi Chemical 50,000 141
Mitsubishi Electric 42,000 133
Mitsubishi Estate 22,000 208
Mitsubishi Heavy Industries 49,000 190
Mitsubishi Materials 44,000 87
Mitsubishi Trust & Banking 19,000 171
Mitsui 35,000 223
Mitsui Fudosan 10,000 83
Mitsui O.S.K. Lines 19,000 43
Mitsui Trust & Banking 37,000 56
Mitsui 1,000 3
Mitsukoshi 17,000 59
Murata Manufacturing 4,000 219
Mycal 9,000 50
Namco 2,300 56
NEC 26,000 287
New Oji Paper 17,000 98
NGK Spark Plug 7,000 74
Nichido Fire & Marine Insurance 15,000 76
Niigata Engineering* 2,000 2
Nikon 6,000 78
Nippon Beet Sugar Manufacturing 6,000 11
Nippon Express 13,000 74
Nippon Oil 54,000 215
Nippon Paper Industries 20,000 98
Nippon Sharyo 5,000 14
Nippon Sheet Glass 13,000 43
Nippon Shinpan 6,000 19
Nippon Steel 102,000 213
Nippon Suisan Kaisha 6,000 9
Nippon Telegraph & Telephone 194 1,883
</TABLE>
47
<PAGE>
SCHEDULEOFINVESTMENTS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
INTERNATIONAL EQUITY INDEX FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
JAPAN--CONTINUED
Nippon Yusen 45,000 $ 181
Nishimatsu Construction 3,000 16
Nissan Motor 42,000 184
NKK* 125,000 97
Nomura Securities 26,000 258
Noritake 11,000 53
NSK 10,000 48
NTN 13,000 40
Obayashi 27,000 127
Odakyu Electric Railway 24,000 81
Okumura 5,000 20
Olympus Optical 10,000 123
Orient 9,000 25
Orix 1,000 79
Osaka Gas 38,000 123
Oyo 2,200 41
Penta-Ocean Construction* 12,000 20
Renown* 8,000 11
Rohm 2,000 260
Sakura Bank 58,000 196
Sanden 7,000 53
Sankyo 7,000 164
Sanrio 2,000 45
Sanyo Electric 47,000 168
Sato Kogyo* 20,000 17
Secom 1,000 95
Sega Enterprises 3,600 59
Seino Transportation 9,000 55
Seiyu* 6,000 36
Sekisui Chemical 9,000 55
Sekisui House 14,000 151
Sharp 20,000 221
Shimachu 1,000 23
Shimano 3,000 74
Shimizu 29,000 102
Shin-Etsu Chemical 12,000 370
Shiseido 5,000 74
Shizuoka Bank 12,000 125
Skylark 3,000 56
SMC 1,100 100
Snow Brand Milk Products 8,000 39
Sony 6,400 598
Sumitomo 7,000 48
Sumitomo Bank 46,000 553
Sumitomo Chemical 29,000 122
Sumitomo Electric 14,000 156
Sumitomo Marine & Fire Insurance 6,000 39
Sumitomo Metal* 76,000 99
Taisei 35,000 79
Taisho Pharmaceutical 4,000 127
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
JAPAN--CONTINUED
Takara Shuzo 4,000 $ 27
Takashimaya 4,000 36
Takeda Chemical 20,000 883
Toa 10,000 17
Tobu Railway 26,000 74
Toei 10,000 42
Tohoku Electric Power 8,500 131
Tokai Bank 29,000 168
Tokio Marine & Fire Insurance 23,000 250
Tokyo Dome* 9,000 49
Tokyo Electric Power 21,000 455
Tokyo Electronics 3,000 165
Tokyo Gas 55,000 139
Tokyo Tatemono 7,000 15
Tokyotokeiba 21,000 34
Tokyu 23,000 59
Toppan Printing 14,000 156
Toray 32,000 155
Tostem 5,000 96
Toto 12,700 97
Toyo Engineering* 6,000 7
Trans Cosmos 300 14
Toyo Seikan Kaisha 6,300 119
Toyoda Automatic Loom 5,000 89
Toyota Motor 58,000 1,573
Ube Industries 31,000 58
Uny 4,000 60
Yamaha 6,000 61
Yamaichi Securities* 15,000 --
Yamanouchi Pharmaceutical 8,000 274
Yamato Transport 5,000 82
Yasuda Trust & Banking* 56,000 67
---------
27,798
---------
MALAYSIA (0.8%) (1)
Rothmans of Pall Mall 13,000 96
Telekom Malaysia 80,000 274
Tenaga Nasional 134,000 305
---------
675
---------
NETHERLANDS (2.4%)
ABN Amro Holding 6,040 134
Aegon 1,947 157
Ahold 905 32
Akzo Nobel 1,180 49
Buhrmann 768 13
Heineken 1,599 89
ING Groep 4,204 225
KPN 2,386 115
Philips Electronics 2,517 226
</TABLE>
48
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- ------------------------------------------------------------------------------------
<S> <C> <C>
NETHERLANDS--CONTINUED
Royal Dutch Petroleum 9,620 $ 536
TNT Post Group 2,086 52
Unilever 2,844 189
Wolters Kluwer 2,288 92
------
1,909
------
NEW ZEALAND (0.4%)
Carter Holt Harvey 101,800 117
Telecom of New Zealand 46,100 199
------
316
------
NORWAY (1.0%)
Bergesen, Cl A 4,850 73
Christiana Bank 30,500 123
Den Norske Bank, Cl B 34,600 120
Hafslund Nycomed, Cl B 2,200 9
Kvaerner* 2,500 41
Kvaerner Rights* 1,400 1
Norsk Hydro 6,525 257
Orkla, Cl A 8,600 136
Uni Storebrand* 9,987 67
------
827
------
PORTUGAL (0.5%)
Banco Comercial Portugues 4,463 122
Electricidade de Portugal 7,440 135
Portugal Telecom 4,072 184
Soares Da Costa* 2,528 8
------
449
------
SINGAPORE (0.8%)
Development Bank of Singapore `F' 2,000 21
Overseas Chinese Bank 27,000 211
Singapore International Airlines, `F' 28,000 250
Singapore Telecommunications 105,000 177
------
659
------
SPAIN (3.7%)
Argentaria 6,500 146
Autopistas CESA 9,104 116
Banco Bilbao Vizcaya 24,311 351
Banco Santander Central Hispano 28,592 597
Dragados Construccion 5,100 59
Endesa 10,000 213
Formento de Construcciones y
Contratas 900 52
Gas Natural 1,650 128
Iberdrola 11,159 160
Mapfre 3,800 79
Repsol 14,543 263
Sociedad General Aguas de
Barcelona 1,474 78
Tabacalera, Cl A 4,150 81
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
SPAIN--CONTINUED
Telefonica de Espana 12,088 $ 580
Union Electrica Fenosa 4,282 56
------
2,959
------
SWEDEN (1.4%)
ABB, Cl A 4,900 67
AstraZeneca 3,817 150
Diligentia 1,350 10
Drott, Cl B 1,400 12
Electrolux 3,300 64
Ericsson, Cl B 10,100 270
ForeningsSparbaken, Cl A 3,000 61
Granges 550 9
Hennes & Mauritz, Cl B 6,800 153
Skandinaviska Enskilda Banken 4,300 52
Skanska, Cl B 1,400 49
Svenska Cellulosa, Cl B 2,100 49
Svenska Handelsbanken, Cl A 1,600 58
Swedish Match 16,400 60
Volvo, Cl B 2,450 62
------
1,126
------
SWITZERLAND (1.6%)
Adecco 50 26
Credit Suisse Group 690 120
Nestle 162 291
Novartis, Registered 144 209
Roche Holdings, Bearer 5 87
Roche Holdings, Genusschein 15 159
Swiss Re 35 66
Swisscom* 210 76
UBS 759 220
Zurich Allied 110 65
------
1,319
------
UNITED KINGDOM (9.5%)
Abbey National 7,124 147
Allied Zurich 8,498 108
AstraZeneca Group 4,255 169
Associated British Foods 4,109 31
Barclays Bank 7,549 229
Bass 10,173 150
BG 18,252 100
Blue Circle Industries 12,219 76
Boots 7,687 101
BP Amoco 45,607 817
British American Tobacco 10,823 99
British Sky Broadcasting 9,683 92
British Telecommunications 30,208 504
Cable & Wireless 12,419 153
Cadbury Schweppes 22,149 150
Centrica* 20,906 42
</TABLE>
49
<PAGE>
SCHEDULEOFINVESTMENTS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
INTERNATIONAL EQUITY INDEX FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM --CONTINUED
CGU 8,305 $ 121
Diageo 18,459 194
General Electric 18,477 175
Glaxo Wellcome 15,591 438
Granada Group 7,191 147
Great Universal Stores 9,649 103
Halifax 19,993 258
Hanson 7,986 72
HSBC Holdings 8,842 296
HSBC Holdings 4,105 137
Imperial Chemical 8,890 98
Invensys 46,336 211
J Sainsbury 15,927 97
Kingfisher 6,674 84
Legal & General Group 37,656 110
Lloyds TSB Group 25,483 337
Marks & Spencer 22,886 145
National Power 8,684 68
Prudential 13,456 178
Rentokil Group 19,812 80
Reuters Group 8,867 123
Rio Tinto 10,039 147
RMC Group 4,283 57
Royal & Sun Alliance 10,696 88
Royal Bank of Scotland Group 4,518 96
Smithkline Beecham 24,544 320
Tesco 42,363 123
Unilever 14,448 127
Vodafone Group 14,771 282
------
7,680
------
Total Foreign Common Stocks
(Cost $65,129) 79,358
------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN PREFERRED STOCKS (0.7%)
AUSTRALIA (0.2%)
News Corporation 22,157 $ 169
-------
GERMANY (0.4%)
RWE 1,280 38
SAP 630 252
Volkswagen 1,970 70
-------
360
-------
ITALY (0.1%)
Fiat 50,000 77
-------
Total Foreign Preferred Stocks
(Cost $438) 606
-------
Total Investments (98.7% )
(Cost $65,567) $79,964
-------
-------
</TABLE>
(1) THE REPATRIATION OF PROCEEDS RECEIVED FROM THE SALE OF THESE SECURITIES
ARE SUBJECT TO A LEVY DEPENDING UPON THE LENGTH OF TIME THE POSITION HAS BEEN
HELD. THIS LEVY IS APPLICABLE TO SECURITIES PURCHASED BEFORE FEBRUARY 15, 1999.
THE LEVY RANGES FROM 30% TO 0% AND IS BASED ON THE DATE THE PROCEEDS ARE
REPATRIATED. AS A RESULT, THESE SECURITIES ARE BEING TREATED AS ILLIQUID UNTIL
SEPTEMBER 1, 1999, WHEN THE LEVY IS NO LONGER IN EFFECT.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 67.
50
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
EQUITY FUNDS (58.7%)
STI Classic Capital Appreciation
Fund, Trust Class 1,028,515 $17,094
STI Classic Growth & Income
Fund, Trust Class 1,606,704 25,852
STI Classic Small Cap Growth
Stock Fund, Trust Class 604,900 8,807
------------
Total Equity Funds
(Cost $45,999) 51,753
------------
FIXED INCOME FUNDS (36.8%)
STI Classic Investment Grade
Bond Fund, Trust Class 1,694,503 17,555
STI Classic Short Term Bond
Fund, Trust Class 443,271 4,393
STI Classic U.S. Government
Securities Fund, Trust Class 1,025,059 10,538
------------
Total Fixed Income Funds
(Cost $33,196) 32,486
------------
MONEY MARKET FUND (4.5%)
STI Classic Prime Quality Money
Market Fund, Trust Class 3,958,202 3,958
------------
Total Money Market Fund
(Cost $3,958) 3,958
------------
Total Investments (100.0% )
(Cost $83,153) 88,197
------------
OTHER ASSETS AND LIABILITIES, NET (0.0%) (9)
------------
NET ASSETS:
Fund Shares of Trust Class
(unlimited authorization --
no par value) based on
8,167,633 outstanding shares 81,210
Undistributed net investment income 185
Accumulated net realized gain
on investments 1,749
Net unrealized appreciation on investments 5,044
------------
Total Net Assets 100.0% $88,188
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 10.80
------------
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 67.
51
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
LIFE VISION GROWTH AND INCOME PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
EQUITY FUNDS (69.7%)
STI Classic Capital Appreciation
Fund, Trust Class 260,334 $ 4,327
STI Classic Growth & Income
Fund, Trust Class 474,419 7,633
STI Classic Small Cap Growth
Stock Fund, Trust Class 229,699 3,345
---------
Total Equity Funds
(Cost $13,847) 15,305
---------
FIXED INCOME FUNDS (27.4%)
STI Classic Investment Grade
Bond Fund, Trust Class 321,684 3,333
STI Classic Short-Term Bond
Fund, Trust Class 112,229 1,112
STI Classic U.S. Government
Securities Fund, Trust Class 151,500 1,557
---------
Total Fixed Income Funds
(Cost $6,115) 6,002
---------
MONEY MARKET FUND (3.0%)
STI Classic Prime Quality Money
Market Fund, Trust Class 655,867 656
---------
Total Money Market Fund
(Cost $656) 656
---------
Total Investments (100.1% )
(Cost $20,618) 21,963
---------
OTHER ASSETS AND LIABILITIES, NET (-0.1%) (13)
---------
NET ASSETS:
Fund Shares of Trust Class
(unlimited authorization --
no par value) based on 2,124,432
outstanding shares 20,565
Undistributed net investment income 2
Accumulated net realized gain
on investments 38
Net unrealized appreciation on investments 1,345
---------
Total Net Assets 100.0% $21,950
---------
---------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 10.33
---------
---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 67.
52
<PAGE>
- --------------------------------------------------------------------------------
LIFE VISION MAXIMUM GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
EQUITY FUNDS (90.1%)
STI Classic Capital Appreciation
Fund, Trust Class 334,348 $ 5,557
STI Classic Growth & Income
Fund, Trust Class 464,213 7,469
STI Classic Small Cap Growth
Stock Fund, Trust Class 262,172 3,817
---------
Total Equity Funds
(Cost $15,000) 16,843
---------
MONEY MARKET FUND (9.8%)
STI Classic Prime Quality Money
Market Fund, Trust Class 1,835,878 1,836
---------
Total Money Market Fund
(Cost $1,836) 1,836
---------
Total Investments (99.9% )
(Cost $16,836) 18,679
---------
OTHER ASSETS AND LIABILITIES, NET (0.1%) 20
---------
NET ASSETS:
Fund Shares of Trust Class
(unlimited authorization --
no par value) based on
1,653,936 outstanding shares 16,789
Undistributed net investment income 5
Accumulated net realized gain
on investments 62
Net unrealized appreciation on investments 1,843
---------
Total Net Assets 100.0% $18,699
---------
---------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 11.31
---------
---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 67.
53
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
MID-CAP EQUITY FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (90.2%)
BASIC MATERIALS (1.1%)
Stillwater Mining* 100,800 $ 3,219
---------
CAPITAL GOODS (6.2%)
Allied Waste Industries* 438,700 8,171
Herman Miller 226,600 4,574
Watsco 263,800 5,095
---------
17,840
---------
CONSUMER CYCLICALS (14.4%)
BJ's Wholesale Club* 211,300 5,494
Ethan Allen Interiors* 203,400 6,483
Family Dollar Stores 372,100 8,302
Just for Feet* 131,900 1,006
Men's Wearhouse* 364,850 9,315
Ralph Lauren* 212,200 4,377
Staff Leasing* 230,000 2,602
Tandy 48,600 4,009
---------
41,588
---------
CONSUMER STAPLES (17.9%)
Avis Rent A Car* 118,300 3,394
CBRL Group 96,900 1,678
Dial 64,000 2,000
Flowers Industries 247,600 5,509
Imax* 333,300 7,333
Interstate Bakeries 274,800 6,011
Keebler Foods* 76,200 2,553
McCormick 158,900 4,827
Nordstrom 53,100 1,885
Norrell 143,300 2,660
Papa John's International* 155,500 6,142
US Foodservice* 177,500 7,899
---------
51,891
---------
ENERGY (6.4%)
Anadarko Petroleum 84,800 3,180
Ensco International 115,900 2,057
Ensearch Exploration* 106,932 728
Global Marine* 144,800 2,036
Nabors Industries* 105,100 2,102
National-Oilwell* 51,300 619
Precision Drilling* 84,500 1,537
Smith International* 75,300 3,257
Tosco 35,000 895
Weatherford International* 65,000 2,145
---------
18,556
---------
FINANCE (11.4%)
Colonial Bancgroup 317,100 4,083
Dime Bancorp* 182,000 3,708
First Security 188,062 3,561
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FINANCE--CONTINUED
First Virginia Banks 73,700 $ 3,662
Hibernia, Cl A 298,500 4,254
North Fork Bancorporation 268,500 5,722
Peoples Heritage 207,700 3,894
Western Bancorp 96,700 3,934
---------
32,818
---------
HEALTH CARE (12.5%)
Acuson* 148,000 2,294
Centocor* 66,600 2,893
Forest Laboratories* 131,700 6,272
Jones Pharmaceuticals 100,300 3,567
Mylan Laboratories 218,700 5,550
Quintiles Transnational* 177,300 7,203
Renal Care* 129,700 3,599
Watson Pharmaceuticals* 121,300 4,647
---------
36,025
---------
TECHNOLOGY (19.4%)
ADC Telecommunications* 126,100 6,163
Ceridian* 167,900 5,541
Citrix Systems* 71,600 3,540
Fiserv* 158,850 5,957
Flextronics International* 69,200 3,460
Intuit* 35,900 2,921
New Era of Networks* 72,700 3,235
Nova* 127,430 2,835
Sanmina* 63,200 4,739
Sawtek* 165,800 6,570
Siebel Systems* 67,100 3,055
SkyTel Communications* 46,800 951
Teradyne* 136,800 7,225
---------
56,192
---------
TRANSPORTATION (0.9%)
CNF Transportation 65,600 2,722
---------
Total Common Stocks
(Cost $232,453) 260,851
---------
PREFERRED STOCKS (2.2%)
COMMUNICATION SERVICES (2.2%)
Adelphia Communications,
CV to 2.4555 shares* 16,700 3,673
Skytel Communications,
CV to 1.1111 shares* 83,900 2,569
---------
Total Preferred Stocks
(Cost $5,870) 6,242
---------
</TABLE>
54
<PAGE>
- --------------------------------------------------------------------------------
MID-CAP EQUITY FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS (3.4%)
Chiron,
CV to 34.59 shares, Callable
08/16/99 @ 95.08 (B)
1.900%, 11/17/00 $2,500 $ 2,422
Citrix Systems,
CV to 7.0306 shares, Callable
03/22/04 @ 45.96 (A) (B)*
0.000%, 03/22/19* 8,700 3,491
Sanmina,
CV to 11.278 shares, Callable
05/06/02 @ 101.70 (B)
4.250%, 05/01/04 1,750 1,925
Sepracor,
CV to 21.111 shares, Callable
02/18/01 @ 103.57
6.250%, 02/15/05 1,235 1,896
---------
Total Convertible Bonds
(Cost $9,406) 9,734
---------
REPURCHASE AGREEMENT (1.9%)
Deutsche Bank
4.83%, dated 05/28/99,
matures 06/01/99, repurchase price
$5,633,784 (collateralized by
U.S. Treasury Notes:
total market value
$5,743,770) (D) $5,631 5,631
---------
Total Repurchase Agreement
(Cost $5,631) 5,631
---------
Total Investments (97.7% )
(Cost $253,360) 282,458
---------
OTHER ASSETS AND LIABILITIES, NET (2.3%) 6,631
---------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE (000)
- --------------------------------------------------------------------------------
<S> <C>
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par value)
based on 20,034,481 outstanding shares of
beneficial interest $214,160
Fund shares of the Investor Class
(unlimited authorization -- no par value)
based on 1,538,670 outstanding shares of
beneficial interest 17,043
Fund shares of the Flex Class
(unlimited authorization -- no par value)
based on 1,298,359 outstanding shares of
beneficial interest 16,595
Undistributed net investment income 3
Accumulated net realized gain on investments 12,190
Net unrealized appreciation on investments 29,098
------------
Total Net Assets 100.0% $289,089
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $ 12.68
------------
------------
Net Asset Value and Redemption Price
Per Share-- Investor Shares $ 12.50
------------
------------
Maximum Offering Price Per Share --
Investor Shares ($12.50 / 96.25%) $ 12.99
------------
------------
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $ 12.17
------------
------------
</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 67.
55
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (89.4%)
BASIC MATERIALS (11.0%)
Calgon Carbon 554,300 $ 3,153
Carpenter Technology 244,300 6,963
Commonwealth Industries 138,700 1,491
HB Fuller 18,700 1,187
Lilly Industries, Cl A 362,400 6,908
Quixote 182,000 2,343
Texas Industries 246,400 8,963
Wausau-Mosinee Paper 232,700 4,189
------------
35,197
------------
CAPITAL GOODS (13.4%)
Ameron 18,100 779
American Woodmark 126,200 4,654
Belden 149,200 3,516
Furon 195,900 3,575
Gerber Scientific 208,500 4,874
Kaman 249,500 3,306
Kaydon 65,400 2,179
Lindberg 172,700 2,008
LSI Industries 182,400 4,053
Pittway, Cl A 162,200 4,562
Precision Castparts 157,700 6,387
Smith (A.O.) 137,000 3,339
------------
43,232
------------
CONSUMER CYCLICALS (19.5%)
Angelica 141,200 2,392
Bush Industries 396,300 5,870
Chemed 99,000 3,211
Harman International 220,900 9,802
Heilig-Meyers 979,600 6,796
Interface 1,168,900 9,059
K2 282,400 2,806
Midas 101,500 3,178
Oshkosh Truck 92,900 3,693
Pep Boys 173,400 3,273
Pillowtex 245,100 3,983
Sturm Ruger 177,200 1,982
Tag Heuer International ADR 349,500 3,189
Toro 102,600 3,444
------------
62,678
------------
CONSUMER STAPLES (20.3%)
Bowne & Company 298,700 5,003
Ingles Markets, Cl A 237,000 2,903
Norrell 825,800 15,329
Pittston Services Group 44,000 1,254
Polaroid 605,700 12,795
Smucker (J.M.), Cl B 58,200 1,018
Standard Register 228,300 6,792
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES--CONTINUED
Universal Foods 335,700 $ 7,700
WD-40 107,900 2,772
Wolverine World Wide 537,100 7,251
York Group 320,200 2,482
------------
65,299
------------
ENERGY (0.7%)
Fletcher Challenge Energy ADR 95,700 2,321
------------
FINANCIALS (8.3%)
Administradora de Fondos de
Pensiones Provida ADR 118,300 2,410
Banco Latinamericano
de Exportaciones 78,700 2,238
Chicago Title 107,000 3,939
Downey Financial 74,600 1,641
Klamath First Bancorp 130,100 2,065
Scottish Annuity & Life 326,500 3,183
Seacoast Banking of Florida 59,000 1,947
Stirling Cooke Brown Holdings 116,500 481
Student Loan 97,300 3,886
West Coast Bancorp 128,800 2,246
Westerfed Financial 159,200 2,657
------------
26,693
------------
HEALTH CARE (6.3%)
Block Drug, Cl A 70,502 2,626
Medeva PLC ADR 570,900 4,139
Mentor 651,600 10,385
Vital Signs 154,100 2,957
------------
20,107
------------
TECHNOLOGY (1.8%)
Innovex 222,300 2,973
Pioneer-Standard Electronics 289,000 2,836
------------
5,809
------------
TRANSPORTATION (6.0%)
Bandag 176,200 6,068
Knightsbridge Tankers Limited 176,100 3,170
Pittston Burlington 26,000 281
Sea Containers 259,600 8,761
Western Star Truck Holdings 53,600 884
------------
19,164
------------
UTILITIES (2.1%)
NUI 182,000 4,527
United Water Resources 108,400 2,358
------------
6,885
------------
Total Common Stocks
(Cost $303,154) 287,385
------------
56
<PAGE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (14.2%)
Deutsche Bank
4.83%, dated 05/28/99,
matures 06/01/99, repurchase
price $47,819,808
(collateralized by FHLMC
obligation: total market
value $46,771,137) (D) $45,795 $ 45,795
------------
Total Repurchase Agreement
(Cost $45,795) 45,795
------------
Total Investments (103.6%)
(Cost $348,949) 333,180
------------
OTHER ASSETS AND LIABILITIES, NET
(-3.6%) (11,731)
------------
NET ASSETS:
Fund shares of the Trust Class (unlimited
authorization -- no par value) based
on 31,125,084 outstanding shares of
beneficial interest 356,281
Fund shares of the Flex Class (unlimited
authorization -- no par value) based on
2,016,491 outstanding shares of
beneficial interest 28,964
Undistributed net investment income 587
Accumulated net realized loss on
investments (48,614)
Net unrealized depreciation on
investments (15,769)
------------
Total Net Assets 100.0% $321,449
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Trust Shares $ 9.70
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Flex Shares (1) $ 9.65
------------
------------
</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 67.
57
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
SMALL CAP GROWTH STOCK FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (99.6%)
BASIC MATERIALS (6.9%)
Alpha Industries* 23,000 $ 801
Astec Industries* 23,660 884
Bel Fuse, Cl A* 25,800 851
Boise Cascade 37,000 1,466
Centex Construction Products 23,020 826
Florida Rock Industries 10,000 399
Granite Construction 24,000 673
Jacobs Engineering Group* 10,300 383
LTV 45,000 276
NCI Building Systems* 47,570 1,201
Solutia 35,000 785
Stillwater Mining* 36,500 1,166
US Liquids* 20,900 376
U.S. Plastics Lumber 90,000 816
------------
10,903
------------
CAPITAL GOODS (15.1%)
AFC Cable Systems* 37,085 1,275
American Woodmark 18,000 664
Anaren Microwave* 38,400 823
Avondale Industries* 20,000 730
Borg-Warner Automotive 13,000 721
Briggs & Stratton 11,800 737
Concord Communications* 21,000 934
Corsair Communications* 20,000 91
Crane 15,000 451
DM Management* 25,000 403
Dycom Industry* 29,475 1,422
Elcor 19,130 772
Genesis Microchip* 58,100 1,053
Intervoice* 93,000 1,035
Kellstrom Industries* 14,000 254
Manitowoc 20,722 705
Miami Computer Supply* 39,550 744
Mobile Mini* 68,000 897
Motivepower Industries* 27,150 460
National R.V. Holdings* 31,470 808
Navistar International* 30,000 1,481
Simpson Manufacturing* 19,500 865
Sps Technologies* 12,070 511
Syncor International* 32,000 1,088
Transwitch* 27,500 1,272
UNIFAB International* 49,000 505
United Stationers* 33,000 619
Universal Corp. 15,000 392
USG 7,775 440
Varian Medical Associates* 15,000 282
Varlen 39,176 1,479
------------
23,913
------------
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMUNICATION SERVICES (3.1%)
Broadvision* 20,000 $ 1,040
Flashnet Communications* 11,000 217
Genesys Telecom Labs* 52,000 1,202
Gilat Communications Limited* 54,500 804
Polycom* 61,695 1,581
------------
4,844
------------
CONSUMER CYCLICALS (25.1%)
American Eagle Outfitters* 27,000 1,102
Analytical Surveys* 25,500 625
Ann Taylor Stores* 26,500 1,144
Arvin Industries 23,000 903
Brinker International* 22,985 645
Buckle* 54,865 1,519
CDW Computer Centers* 19,000 826
Centex 18,000 667
Chicos* 50,000 1,134
Claire's Stores 35,000 1,024
Consolidated Graphics* 16,310 752
Cost Plus* 25,000 934
Craftmade International 46,640 624
Cutter & Buck* 25,760 763
DR Horton 75,800 1,289
Delia's* 19,000 252
Dollar Tree Stores* 29,000 975
Empi* 12,000 294
First Years 24,010 384
Foodmaker* 20,000 540
Fossil* 32,530 1,364
Gentex* 27,000 811
Jakks Pacific* 30,000 831
K-Swiss, Cl A 46,740 2,682
La-Z-Boy 26,800 533
Labor Ready* 29,500 1,051
Liberty Property Trust 25,270 610
Mohawk Industries* 36,115 1,052
Monaco Coach* 37,510 1,125
Movado Group 9,175 221
Oshkosh B'gosh, Cl A 16,655 327
Oshkosh Truck 6,000 238
Pre Paid Legal Services* 10,000 266
Programmer's Paradise* 8,000 86
Quiksilver* 34,000 969
Racing Champions* 64,000 1,096
Rare Hospitality International* 24,000 552
Salton/Maxim Housewares* 21,500 919
Southdown 24,900 1,578
Standard Pacific 54,145 711
Steven Madden Ltd* 81,365 870
Superior Industries International 27,000 673
Tarrant Apparel Group* 33,330 1,010
58
<PAGE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--CONTINUED
Triumph Group* 23,395 $ 716
Urs* 28,325 697
Wet Seal, Cl A* 17,000 472
Winnebago Industries 54,000 891
Zale* 28,000 1,080
------------
39,827
------------
CONSUMER STAPLES (4.8%)
Canandaigua Wine, Cl A* 13,100 652
Earthgrains 20,000 469
Flowers Industries 44,600 992
Mail-Well* 65,000 963
Papa John's International* 38,900 1,537
Rent-A-Center* 35,000 903
Smithfield Foods* 43,000 1,148
Suiza Foods* 25,000 916
------------
7,580
------------
ENERGY (2.3%)
Eagle Geophysical* 1,280 4
Oceaneering International* 50,000 772
Santa Fe Snyder Corp* 80,000 680
Seacor Holdings* 3,000 149
Seitel* 40,000 632
Transocean Offshore 61,800 1,522
------------
3,759
------------
FINANCIALS (7.6%)
American Heritage 39,300 914
Amerin* 21,057 566
Annuity & Life Re Holdings 12,000 309
Bank of Commerce/San Diego 16,000 312
Corporate Executive Board* 17,000 498
Cullen/Frost Bankers 9,550 537
Dime Community Bancorp 35,200 779
Doral Financial 42,000 709
E.W. Blanch Holdings 16,900 1,082
Enhance Financial Services Group 30,000 587
Financial Security Assurance
Holdings 7,385 419
Fremont General 55,000 1,165
Investment Technology Group 16,880 748
NVR* 13,975 673
PFF Bancorp* 32,000 580
Pilgrim America Cap Corp* 19,600 390
Protective Life 38,000 1,375
Ryland Group 16,165 450
------------
12,093
------------
HEALTH CARE (8.2%)
Alpharma, Cl A 24,000 640
Barr Laboratories* 18,475 609
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Biomatrix* 28,000 $ 857
Capital Senior Living* 70,000 761
Colorado Medtech* 65,340 923
D&K Healthcare Resources* 24,400 576
Interim Services* 35,000 763
Ivax* 40,000 537
Laser Vision Centers* 15,000 855
Liposome* 78,000 1,116
Optical Coating Laboratories 3,000 195
Osteotech* 23,917 849
Rehabcare Group* 33,000 710
Resmed* 43,000 1,207
Roberts Pharmaceutical* 63,000 1,197
Steris* 25,000 414
Trigon Healthcare* 15,000 572
Varian 15,000 150
------------
12,931
------------
TECHNOLOGY (19.1%)
American Management Systems* 25,000 794
Business Objects ADR* 30,000 862
Checkpoint Software* 20,000 885
Ciber* 52,230 1,120
Commscope* 50,000 1,313
Computer Network Technology* 29,000 732
Cordant Technologies 18,000 873
Cybex Computer Products* 61,944 1,405
Electronic Arts* 16,000 783
Fair Isaac 5,000 164
Flextronics International* 7,000 350
4front Technologies* 60,000 600
Henry (Jack) & Associates 7,000 247
Herley Industries* 52,000 673
Hyperion Telecommunications,
Cl A* 60,000 1,013
Insight Enterprises* 38,557 978
Javelin Systems* 60,000 776
Kronos* 29,200 1,081
Landmark Systems* 24,000 231
Mastech* 62,900 1,207
Metamor Worldwide* 27,000 739
Micros Systems* 40,000 1,250
Overland Data* 65,000 423
Pinnacle Systems* 19,000 984
Perot Systems, Cl A* 14,800 401
Powerhouse Technologies* 15,000 278
Progress Software* 66,930 1,744
Quantum* 20,000 396
Sunquest* 44,000 578
</TABLE>
59
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
SMALL CAP GROWTH STOCK FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--CONTINUED
Sybase* 55,000 $ 533
Sykes Enterprises* 10,435 325
T-HQ* 46,290 1,091
Talk.com* 25,000 259
Technomatrix Technologies* 51,000 854
Timberline Software 54,000 918
USWeb* 25,000 634
Varian Semiconductor Equiptment* 15,000 187
Xircom* 52,000 1,313
Zomax* 41,000 1,081
------------
30,075
------------
TRANSPORTATION (6.2%)
Aeroflex* 61,000 888
Alaska Airgroup* 10,000 415
American Freightways* 82,500 1,444
Amtran Inc* 14,525 341
Atlas Air* 48,000 1,290
Eagle USA Airfreight* 9,000 424
Forward Air* 10,000 274
Frontier Airlines* 62,000 961
Landstar System* 10,000 376
Skywest 38,680 899
Swift Transportation* 45,000 823
USFreightways 43,300 1,706
------------
9,841
------------
UTILITIES (1.2%)
El Paso Electric* 80,000 685
Kinder Morgan Energy Partners 18,000 671
Public Service of North Carolina 5,000 145
Public Service of New Mexico 20,000 415
------------
1,916
------------
Total Common Stocks
(Cost $144,302) 157,682
------------
REPURCHASE AGREEMENT (2.9%)
Morgan Stanley
4.80%, dated 05/28/99,
matures 06/01/99, repurchase
price $4,658,357
(collateralized by various FNMA
obligations: total market
value $4,767,582) (D) $ 4,656 4,656
------------
Total Repurchase Agreement
(Cost $4,656) 4,656
------------
Total Investments (102.5% )
(Cost $148,958) 162,338
------------
OTHER ASSETS AND LIABILITIES, NET
(-2.5%) (3,890)
------------
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par value)
based on 10,464,063 outstanding shares of
<S> <C>
beneficial interest $137,985
Fund shares of the Flex Class
(unlimited authorization -- no par value)
based on 425,752 outstanding shares of
beneficial interest 6,037
Accumulated net realized gain on
investments 1,046
Net unrealized appreciation on
investments 13,380
------------
Total Net Assets 100.0% $158,448
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Trust Shares $ 14.55
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Flex Shares (1) $ 14.46
------------
------------
</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 67.
60
<PAGE>
- --------------------------------------------------------------------------------
SUNBELT EQUITY FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (98.0%)
CAPITAL GOODS (11.9%)
Artesyn Technologies* 122,296 $ 2,584
Blount International 133,355 3,717
Kellstrom Industries* 169,924 3,080
Maverick Tube* 175,995 2,277
Miller Industries* 435,896 2,098
National Service Industries 41,874 1,541
Palm Harbor Homes* 150,106 3,227
Sensormatic Electronics 104,358 1,396
Tristar Aerospace* 80,923 749
UNIFAB International* 331,835 3,422
Watsco 106,090 2,049
------------
26,140
------------
COMMUNICATION SERVICES (3.7%)
Alltel 40,176 2,880
MCI WorldCom* 39,356 3,399
Superior TeleCom 58,516 1,734
------------
8,013
------------
CONSUMER CYCLICALS (17.8%)
AHL Services* 118,826 3,149
Central Parking 40,931 1,330
Circuit City 58,725 4,217
Dollar General 75,487 2,005
Family Dollar Stores 124,318 2,774
Lowe's Companies 63,365 3,291
Modis Professional Services* 189,582 2,796
O'Charleys* 157,453 2,057
Pier 1 Imports 156,478 1,731
Policy Management Systems* 66,492 2,419
Quest Education* 211,639 2,381
Rare Hospitality International* 77,431 1,781
Tandy 64,310 5,306
Tractor Supply* 44,927 1,337
Trex* 48,519 1,064
V.F. 27,688 1,274
------------
38,912
------------
CONSUMER STAPLES (6.1%)
Flowers Industries 108,415 2,412
Outback Steakhouse* 113,665 4,078
Sonic* 247,259 6,807
------------
13,297
------------
ENERGY (18.4%)
Anadarko Petroleum 117,354 4,401
BJ Services* 179,297 4,942
Core Laboratories N.V.* 245,141 3,830
Diamond Offshore Drilling 128,263 3,495
Global Industries* 662,783 7,373
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ENERGY--CONTINUED
Nuevo Energy* 140,422 $ 2,141
Oceaneering International* 111,937 1,728
Stone Energy* 185,441 6,989
Transocean Offshore 124,176 3,058
World Fuel Services 174,223 2,254
------------
40,211
------------
FINANCIALS (15.9%)
Capital One Financial 26,774 4,035
CCB Financial 60,942 3,287
Cullen/Frost Bankers 26,492 1,490
Fairfield Communities* 565,607 8,979
First Tennessee National 58,712 2,418
Nova* 272,816 6,070
Profit Recovery Group
International* 146,974 5,410
Texas Regional Bancshares, Cl A 42,200 1,145
Triad Guaranty* 129,583 1,976
------------
34,810
------------
HEALTH CARE (3.1%)
Cryolife* 274,510 3,397
Orthodontic Centers of America* 66,962 808
Rexall Sundown* 145,521 2,483
------------
6,688
------------
TECHNOLOGY (17.7%)
Acxiom* 155,822 4,207
Benchmark Electronics* 214,785 6,444
Cybex Computer Products* 127,104 2,884
Datastream Systems* 188,213 2,282
Dell Computer* 65,224 2,246
National Data 48,242 2,270
National Instruments* 29,351 1,117
SCB Computer Technology* 795,788 5,123
Scientific-Atlanta 65,225 2,303
Sterling Commerce* 33,867 1,317
Sterling Software* 53,374 1,298
Sykes Enterprises* 160,921 5,009
Texas Instruments 20,939 2,290
------------
38,790
------------
TRANSPORTATION (3.4%)
Covenant Transportation, Cl A* 114,180 1,370
Hunt J B Transportation Services 93,873 1,584
Union Pacific 48,129 2,746
USA Truck* 186,915 1,706
------------
7,406
------------
Total Common Stocks
(Cost $166,276) 214,267
------------
</TABLE>
61
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
SUNBELT EQUITY FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (0.1%)
Deutsche Bank
4.78%, dated 05/28/99,
matures 06/01/99, repurchase
price $319,543 (collateralized
by various U.S. Treasury
obligations: total market value
$326,219) (D) $319 $ 319
------------
Total Repurchase Agreement
(Cost $319) 319
------------
Total Investments (98.1% )
(Cost $166,595) 214,586
------------
OTHER ASSETS AND LIABILITIES, NET
(1.9%) 3,973
------------
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par value)
based on 17,784,188 outstanding shares of
beneficial interest 166,929
Fund shares of the Investor Class
(unlimited authorization -- no par value)
based on 1,574,615 outstanding shares of
beneficial interest 14,344
Fund shares of the Flex Class
(unlimited authorization -- no par value)
based on 416,394 outstanding shares of
beneficial interest 5,998
Accumulated net realized loss on
investments (16,703)
Net unrealized appreciation on
investments 47,991
------------
Total Net Assets 100.0% $218,559
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Trust Shares $ 11.09
------------
------------
Net Asset Value and Redemption
Price Per Share-- Investor Shares $ 10.76
------------
------------
Maximum Offering Price Per Share --
Investor Shares ($10.76 / 96.25%) $ 11.18
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Flex Shares (1) $ 10.55
-----------
-----------
</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 67.
62
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TAX SENSITIVE GROWTH STOCK FUND
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (93.7%)
BASIC MATERIALS (2.5%)
Alcoa 57,773 $ 3,178
E. I. DuPont de Nemours 64,744 4,237
------------
7,415
------------
CAPITAL GOODS (8.6%)
Applied Materials* 88,967 4,893
Caterpillar 88,957 4,882
Delphi Automotive Systems 15,267 300
General Electric 80,766 8,213
Minnesota Mining & Manufacturing 42,062 3,607
United Technologies 63,618 3,948
------------
25,843
------------
COMMUNICATION SERVICES (6.2%)
AT&T 103,622 5,751
Bell Atlantic 25,476 1,395
BellSouth 31,319 1,478
GTE 43,773 2,760
MCI WorldCom* 27,295 2,358
SBC Communications 39,059 1,997
Sprint 23,376 2,636
------------
18,375
------------
CONSUMER CYCLICALS (8.6%)
Dollar General 137,467 3,651
Ford Motor 35,064 2,001
Gap 72,295 4,523
General Motors 21,844 1,507
Home Depot 58,474 3,326
Office Depot* 98,208 2,050
Service International 109,167 2,095
Wal-Mart Stores 131,383 5,600
Walt Disney 35,447 1,032
------------
25,785
------------
CONSUMER STAPLES (7.9%)
Coca-Cola 75,979 5,190
Gillette 52,774 2,692
McDonald's 42,707 1,644
Paychex 74,346 2,203
PepsiCo 69,874 2,502
Philip Morris 110,504 4,261
Procter & Gamble 53,764 5,020
------------
23,512
------------
ENERGY (6.6%)
Chevron 32,177 2,982
Exxon 71,855 5,739
Halliburton 83,077 3,437
Mobil 24,985 2,530
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ENERGY--CONTINUED
Royal Dutch Petroleum 37,010 $ 2,093
Schlumberger 50,696 3,051
------------
19,832
------------
FINANCIALS (15.8%)
American Express 30,914 3,746
American International Group 32,334 3,696
Bank of America 46,356 2,999
Bank One 68,298 3,863
Charles Schwab 52,251 5,529
Chase Manhattan Bank 41,776 3,029
Citigroup 66,640 4,415
FNMA 77,975 5,302
Household International 137,625 5,970
JP Morgan 40,206 5,601
Wells Fargo 82,150 3,286
------------
47,436
------------
HEALTH CARE (11.5%)
Abbott Laboratories 38,921 1,759
American Home Products 39,026 2,249
Bristol-Myers Squibb 52,745 3,620
Eli Lilly 28,030 2,002
Healthsouth* 164,032 2,194
Johnson & Johnson 38,481 3,564
Medtronic 56,690 4,025
Merck 83,958 5,667
Pfizer 44,537 4,765
Schering Plough 37,119 1,673
Warner Lambert 48,834 3,028
------------
34,546
------------
TECHNOLOGY (26.0%)
Allied Signal 102,274 5,938
Cisco Systems* 78,243 8,529
Computer Associates 97,902 4,632
Compuware* 221,437 6,878
Dell Computer* 136,541 4,702
EMC* 52,150 5,195
Hewlett Packard 31,302 2,952
IBM 62,790 7,303
Intel 133,336 7,209
Linear Technology 49,326 2,614
Lucent Technologies 71,226 4,051
Microsoft* 129,623 10,459
Monsanto 58,511 2,428
Oracle* 40,000 993
Texas Instruments 36,414 3,983
------------
77,866
------------
Total Common Stocks
(Cost $220,279) 280,610
------------
</TABLE>
63
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
TAX SENSITIVE GROWTH STOCK
FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (8.6%)
Morgan Stanley
4.80%, dated 05/28/99,
matures 06/01/99, repurchase
price $25,723,692
(collateralized by FNMA and
FHLMC obligations: total market
value $ 26,240,236) (D) $25,710 $ 25,710
------------
Total Repurchase Agreement
(Cost $25,710) 25,710
------------
Total Investments (102.3%)
(Cost $245,989) $306,320
------------
OTHER ASSETS AND LIABILITIES,
NET (-2.3%) (6,902)
------------
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par value)
based on 7,462,354 outstanding shares of
beneficial interest 158,983
Fund shares of the Flex Class
(unlimited authorization -- no par value)
based on 2,541,837 outstanding shares of
beneficial interest 75,210
Accumulated net realized gain on
investments 4,894
Net unrealized appreciation on
investments 60,331
------------
Total Net Assets 100.0% $299,418
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Trust Shares $ 29.96
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Flex Shares (1) $ 29.85
------------
------------
</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 67.
64
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE INCOME STOCK FUND
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (92.0%)
BASIC MATERIALS (10.7%)
Allegheny Teledyne 1,143,400 $ 23,368
B.F. Goodrich 663,400 26,868
Boise Cascade 708,000 28,054
Consolidated Papers 477,500 13,251
DuPont (EI) de Nemours 297,800 19,487
Engelhard 737,300 14,930
Hercules 532,800 18,615
Nalco Chemical 403,400 13,514
Reynolds Metals 307,000 16,329
Sonoco Products 751,030 18,776
Witco Chemical 277,800 4,861
Worthington Industries 776,800 9,953
------------
208,006
------------
CAPITAL GOODS (14.7%)
Cooper Industries 646,100 32,022
Corning 157,600 8,609
Crown Cork & Seal 616,300 19,336
Dana 385,000 19,876
Emerson Electric 430,700 27,511
Harris 427,000 16,146
Hubbell, Cl B 394,300 16,511
Minnesota Mining &
Manufacturing 258,800 22,192
National Service Industries 575,700 21,193
Northrop Grumman 491,000 33,142
Pall 855,400 17,161
Raytheon, Cl B 201,500 13,715
Tenneco 686,900 16,013
Thomas & Betts 557,900 23,885
------------
287,312
------------
COMMUNICATION SERVICES (3.3%)
Alltel 206,700 14,818
GTE 781,600 49,290
------------
64,108
------------
CONSUMER CYCLICALS (11.1%)
Albertson's 399,200 21,357
American Greetings, Cl A 516,200 14,776
Genuine Parts 607,600 20,468
H & R Block 648,900 31,269
J.C. Penney 757,300 39,143
Masco 1,070,700 30,582
Ryder 580,000 13,920
Stanley Works 656,300 21,371
TRW 459,000 22,979
------------
215,865
------------
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES (14.0%)
Bestfoods 610,800 $ 30,540
ConAgra 1,526,300 39,779
Dean Foods 508,400 19,065
Flowers Industries 230,900 5,137
Food Lion, Cl A 894,000 9,890
Fort James Corp. 388,300 14,221
Fortune Brands 526,400 21,517
H.J. Heinz 407,000 19,663
International Flavors & Fragrances 697,700 28,693
Kimberly Clark 632,200 37,102
McCormick 467,800 14,209
Newell Rubbermaid 479,400 19,416
Wallace Computer Services 578,400 13,267
------------
272,499
------------
ENERGY (6.5%)
Atlantic Richfield 281,300 23,541
Baker Hughes 488,700 15,211
Kerr-McGee 566,700 26,352
Murphy Oil 481,400 23,619
Texaco 234,800 15,379
Unocal 563,000 22,379
------------
126,481
------------
FINANCIALS (17.1%)
American Financial Group 402,300 13,578
American General 275,700 19,919
Bank of America 626,200 40,507
Bank One 669,700 37,880
BankBoston 560,600 26,558
Cigna 306,700 28,600
First American of Tennessee 369,700 15,088
Hibernia, Cl A 838,800 11,953
KeyCorp 721,900 25,086
Paine Webber Group 281,800 13,245
PNC Bank 489,600 28,030
Safeco 428,600 18,832
Summit Bancorp 553,000 22,638
Transamerica 252,900 18,557
Union Planters 330,664 13,661
------------
334,132
------------
HEALTH CARE (8.1%)
Abbott Laboratories 863,600 39,024
American Home Products 684,700 39,456
Baxter International 749,100 48,364
Bristol-Myers Squibb 286,100 19,634
Pharmacia Upjohn ADR 212,800 11,797
------------
158,275
------------
</TABLE>
65
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
VALUE INCOME STOCK FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (3.1%)
EG&G 693,500 $ 20,588
Xerox 731,000 41,073
------------
61,661
------------
UTILITIES (3.4%)
Consolidated Natural Gas 213,100 12,666
GPU 429,900 18,728
Questar 843,700 16,083
Scana 733,100 19,565
------------
67,042
------------
Total Common Stocks
(Cost $1,667,740) 1,795,381
------------
REPURCHASE AGREEMENTS (7.5%)
Deutsche Bank
4.83%, dated 05/28/99,
matures 06/01/99, repurchase
price $76,618,190
(collateralized by FHLMC
obligation: total market
value $78,108,636) (D) $ 76,577 76,577
Greenwich
4.83%, dated 05/28/99,
matures 06/01/99, repurchase
price $70,371,544 (collateralized
by various FNMA obligations:
total market value
$71,740,804) (D) 70,334 70,334
------------
Total Repurchase Agreements
(Cost $146,911) 146,911
------------
Total Investments (99.5%)
(Cost $1,814,651) 1,942,292
------------
OTHER ASSETS AND LIABILITIES, NET
(0.5%) 8,971
------------
<CAPTION>
VALUE (000)
<S> <C>
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par value)
based on 123,726,029 outstanding shares
of beneficial interest $1,337,495
Fund shares of the Investor Class
(unlimited authorization -- no par value)
based on 15,170,194 outstanding shares
of beneficial interest 171,095
Fund shares of the Flex Class
(unlimited authorization -- no par value)
based on 13,167,127 outstanding shares
of beneficial interest 173,568
Undistributed net investment income 4,654
Accumulated net realized gain
on investments 136,810
Net unrealized appreciation on
investments 127,641
------------
Total Net Assets 100.0% $1,951,263
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Trust Shares $ 12.85
------------
------------
Net Asset Value and Redemption Price
Per Share-- Investor Shares $ 12.81
------------
------------
Maximum Offering Price Per Share --
Investor Shares ($12.81/ 96.25%) $ 13.31
------------
------------
Net Asset Value, Offering and
Redemption Price Per
Share-- Flex Shares (1) $ 12.68
------------
------------
</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 67.
66
<PAGE>
- --------------------------------------------------------------------------------
KEY TO ABBREVIATIONS USED IN
THE STATEMENT OF NET ASSETS
ADR American Depository Receipt
Cl Class
CV Convertible Security
F Foreign Registry Shares
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GDR Global Depository Receipt
GNMA Government National Mortgage Association
MTN Medium Term Note
PLC Public Limited Corporation
* Non-income producing security
(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 November 30, 1998.
(D) Tri-Party Repurchase Agreement
67
<PAGE>
This page left intentionally blank
68
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (000)
- --------------------------------------------------------------------------------
STI CLASSIC INTERNATIONAL EQUITY
INDEX FUND FOR THE YEAR ENDED
MAY 31, 1999
<TABLE>
<CAPTION>
------------
INTERNATIONAL
EQUITY INDEX
FUND
------------
<S> <C>
Assets:
Investments at Market Value (Cost $65,567) $ 79,964
Cash and Foreign Currency 15,055
Receivable for Investment
Securities Sold 11
Receivable for Portfolio Shares
Purchased 42
Other Assets 396
--------
Total Assets 95,468
--------
Liabilities:
Payable for Investment Securities
Purchased 14,299
Payable for Portfolio Shares
Redeemed 21
Accrued Expenses 71
Other Liabilities 87
--------
Total Liabilities 14,478
--------
Net Assets:
Fund Shares of the Trust Class
(unlimited authorization -- no
par value) based on 6,315,153
outstanding shares of beneficial
interest 61,695
Fund Shares of the Investor Class
(unlimited authorization -- no
par value) based on 419,449
outstanding shares of beneficial
interest 3,827
Fund Shares of the Flex Class
(unlimited authorization -- no
par value) based on 124,930
outstanding shares of beneficial
interest 1,410
Distributions in excess of net
investment income (365)
Accumulated net realized gain on
investments 119
Net unrealized appreciation on
investments 14,397
Net unrealized depreciation foreign
currency and translation of other
assets and liabilities in foreign
currency investments (93)
--------
Total Net Assets $ 80,990
--------
--------
Net Asset Value, Offering and
Redemption Price Per Share -- Trust
Shares $ 11.82
--------
--------
Net Asset Value, Offering and
Redemption Price Per Share -- Investor
Shares $ 11.70
--------
--------
Maximum Offering Price Per Share --
Investor Shares ($11.70 / 96.25%) $ 12.16
--------
--------
Net Asset Value, Offering and
Redemption Price Per Share -- Flex
Shares (1) $ 11.73
--------
--------
</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.
69
<PAGE>
STATEMENT OF OPERATIONS (000)
- ---------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE
PERIODS ENDED MAY 31, AND NOVEMBER 30,
<TABLE>
<CAPTION>
CAPITAL EMERGING GROWTH AND INTERNATIONAL
BALANCED APPRECIATION MARKETS INCOME EQUITY
FUND FUND EQUITY FUND FUND FUND
--------- ------------ ----------- ---------------------- ------------
06/01/98- 06/01/98- 06/01/98- 12/01/98- 12/01/97- 06/01/98-
05/31/99 05/31/99 05/31/99 05/31/99 11/30/98 05/31/99
-------- -------- -------- -------- -------- --------
Income:
<S> <C> <C> <C> <C> <C> <C>
Interest Income $ 6,819 $ 21,689 $ 120 $ 899 $ 1,915 $ 1,783
Dividend Income 1,651 8,356 875 4,590 8,628 12,210
Less: Foreign Taxes Withheld -- -- (81) -- -- (822)
--------- --------- --------- --------- --------- ---------
Total Investment Income 8,470 30,045 914 5,489 10,543 13,171
--------- --------- --------- --------- --------- ---------
Expenses:
Investment Advisory Fees 2,546 23,291 354 2,558 4,749 7,655
Less: Investment Advisory Fees
Waived/Reimbursed (248) (1,878) (11) -- -- (308)
Administrator Fees 208 1,575 21 493 950 476
Administrator Fees Waived -- -- -- -- -- --
Transfer Agent Fees -- Trust Shares 14 16 16 165 317 14
Transfer Agent Fees -- Investor Shares 11 46 -- 2 3 15
Transfer Agent Fees -- Flex Shares 42 153 -- -- -- 65
Transfer Agent Out of Pocket Fees 26 208 2 2 2 82
Printing Expenses 15 103 -- 23 39 75
Custody Fees 6 53 42 122 233 856
Professional Fees 13 111 -- 95 70 44
Trustee Fees 3 25 -- 5 10 10
Registration Fees 7 131 -- 19 42 43
Distribution Fees -- Trust Shares -- -- -- 1,170 1,116 --
Less: Distribution Fees Waived --
Trust Shares -- -- -- (872) (1,029) --
Distribution Fees -- Investor Shares 32 1,916 -- 26 50 52
Less: Distribution Fees Waived --
Investor Shares (7) (127) -- (16) (50) (8)
Distribution Fees -- Flex Shares 441 1,276 -- 136 203 194
Less: Distribution Fees Waived --
Flex Shares (14) -- -- (21) (51) (51)
Insurance and Other Fees 6 59 11 38 30 29
Amortization of Deferred
Organization Costs -- -- (8) -- -- 5
--------- --------- --------- --------- --------- ---------
Total Expenses 3,101 26,958 427 3,942 6,684 9,248
--------- --------- --------- --------- --------- ---------
Net Investment Income 5,369 3,087 487 1,547 3,859 3,923
--------- --------- --------- --------- --------- ---------
Net Realized and Unrealized Gain
(Loss) on Investments:
Capital Gain Received from Investments -- -- -- -- -- --
Net Realized Gain (Loss) on Securities Sold 9,690 166,426 (6,188) 48,404 42,161 21,269
Net Realized Loss on Foreign
Currency Transactions -- -- (45) -- -- (811)
Net Change in Unrealized
Appreciation (Depreciation) on
Foreign Currency and
Translation of Other Assets and
Liabilities in Foreign Currency -- -- (12) -- -- (10)
Net Change in Unrealized
Appreciation (Depreciation) on
Investments 11,063 151,117 3,231 39,898 33,416 (78,440)
--------- --------- --------- --------- -------- ---------
Total Net Realized and Unrealized
Gain (Loss) on Investments 20,753 317,543 (3,014) 88,302 75,577 (57,992)
--------- --------- --------- --------- -------- ---------
Net Increase (Decrease) in Net
Assets from Operations $ 26,122 $ 320,630 $ (2,527) $ 89,849 $ 79,436 $ (54,069)
--------- --------- --------- --------- -------- ---------
--------- --------- --------- --------- -------- ---------
<CAPTION>
INTERNATIONAL LIFE VISION
EQUITY BALANCED
INDEX FUND PORTFOLIO
------------ --------- ------------
06/01/98- 12/01/98- 12/01/97-
05/31/99 05/31/99 11/30/98
-------- -------- --------
Income:
<S> <C> <C> <C>
Interest Income $ 52 $-- $ --
Dividend Income 1,132 991 2,295
Less: Foreign Taxes Withheld (85) -- --
--------- --------- ---------
Total Investment Income 1,099 991 2,295
--------- --------- ---------
Expenses:
Investment Advisory Fees 563 114 233
Less: Investment Advisory Fees
Waived/Reimbursed (70) (54) (120)
Administrator Fees 49 20 40
Administrator Fees Waived -- (13) (40)
Transfer Agent Fees -- Trust Shares 16 22 47
Transfer Agent Fees -- Investor
Shares 10 -- --
Transfer Agent Fees -- Flex Shares 10 -- --
Transfer Agent Out of Pocket Fees 7 -- --
Printing Expenses 6 4 5
Custody Fees 66 13 28
Professional Fees 4 13 10
Trustee Fees -- 1 1
Registration Fees -- 1 19
Distribution Fees -- Trust Shares -- -- --
Less: Distribution Fees Waived --
Trust Shares -- -- --
Distribution Fees -- Investor Shares 22 -- --
Less: Distribution Fees Waived --
Investor Shares (5) -- --
Distribution Fees -- Flex Shares 12 -- --
Less: Distribution Fees Waived --
Flex Shares (4) -- --
Insurance and Other Fees 18 -- 10
Amortization of Deferred
Organization Costs 3 3 --
--------- --------- ---------
Total Expenses 707 124 233
--------- --------- ---------
Net Investment Income 392 867 2,062
--------- --------- ---------
Net Realized and Unrealized Gain
(Loss) on Investments:
Capital Gain Received from Investments -- 2,204 6,921
Net Realized Gain (Loss) on
Securities Sold 7,583 317 (1,004)
Net Realized Loss on Foreign
Currency Transactions (40) -- --
Net Change in Unrealized
Appreciation (Depreciation) on
Foreign Currency and
Translation of Other Assets and
Liabilities in Foreign Currency (88) -- --
Net Change in Unrealized
Appreciation (Depreciation) on
Investments (3,971) 2,338 (1,024)
--------- --------- ---------
Total Net Realized and Unrealized
Gain (Loss) on Investments 3,484 4,859 4,893
--------- --------- ---------
Net Increase (Decrease) in Net
Assets from Operations $ 3,876 $ 5,726 $ 6,955
--------- --------- ---------
--------- --------- ---------
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
70 & 71
<PAGE>
STATEMENT OF OPERATIONS (000)
- -------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE YEAR ENDED MAY 31, AND NOVEMBER 30,
<TABLE>
<CAPTION>
LIFE VISION LIFE VISION MID-CAP
GROWTH AND INCOME MAXIMUM GROWTH EQUITY
PORTFOLIO PORTFOLIO FUND
---------------------- ---------------------- ------------
12/01/98- 12/01/97- 12/01/98- 12/01/97- 06/01/98-
05/31/99 11/30/98 05/31/99 11/30/98 05/31/99
--------- ---------- -------------------- -------------
<S> <C> <C> <C> <C> <C>
Income:
Interest Income $ -- $ -- $ -- $ -- $ 823
Dividend Income 166 410 49 76 1,454
Less: Foreign Taxes Withheld -- -- -- -- --
--------- --------- --------- --------- ---------
Total Investment Income 166 410 49 76 2,277
--------- --------- --------- --------- ---------
Expenses:
Investment Advisory Fees 25 53 22 40 3,717
Less: Investment Advisory Fees Waived/Reimbursed (15) (32) (13) (26) (355)
Administrator Fees 20 40 20 40 253
Administrator Fees Waived (18) (40) (19) (40) --
Transfer Agent Fees-- Trust Shares 5 11 5 8 14
Transfer Agent Fees-- Investor Shares -- -- -- -- 12
Transfer Agent Fees-- Flex Shares -- -- -- -- 35
Transfer Agent Out of Pocket Fees -- -- -- -- 39
Printing Expenses 1 1 1 1 39
Custody Fees 3 6 2 5 21
Professional Fees 4 2 3 -- 21
Trustee Fees -- -- -- 2 8
Registration Fees -- 5 -- -- 13
Distribution Fees-- Investor Shares -- -- -- 4 90
Less: Distribution Fees Waived-- Investor Shares -- -- -- -- (7)
Distribution Fees-- Flex Shares -- -- -- -- 172
Less: Distribution Fees Waived-- Flex Shares -- -- -- -- (25)
Insurance and Other Fees -- 7 -- 6 9
Amortization of Deferred Organization Costs 3 -- 3 -- --
--------- --------- --------- --------- ---------
Total Expenses 28 53 24 40 4,056
--------- --------- --------- --------- ---------
Net Investment Income (Loss) 138 357 25 36 (1,779)
--------- --------- --------- --------- ---------
Net Realized and Unrealized Gain (Loss) on Investments:
Capital Gain Received from Investments 490 2,121 499 1,739 --
Net Realized Gain (Loss) on Securities Sold (82) (45) (42) (463) 12,419
Net Change in Unrealized Appreciation (Depreciation) on Investments 922 (580) 1,329 (226) (10,771)
--------- --------- --------- --------- ---------
Total Net Realized and Unrealized Gain (Loss) on Investments 1,330 1,496 1,786 1,050 1,648
--------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Assets from Operations $ 1,468 $ 1,853 $ 1,811 $ 1,086 $ (131)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<CAPTION>
SMALL CAP SMALL CAP SUNBELT TAX SENSITIVE VALUE
EQUITY GROWTH STOCK EQUITY GROWTH STOCK INCOME STOCK
FUND FUND FUND FUND FUND
---------- ---------- --------- ---------- ---------
06/01/98- 10/08/98*- 06/01/98- 12/11/98- 06/01/98-
05/31/99 05/31/99 05/31/99 05/31/99 05/31/99
---------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Income:
Interest Income $ 380 $ 119 $ 187 $ 363 $ 5,715
Dividend Income 7,631 77 1,415 877 48,342
Less: Foreign Taxes Withheld -- -- -- -- --
--------- --------- --------- --------- ---------
Total Investment Income 8,011 196 1,602 1,240 54,057
--------- --------- --------- --------- ---------
Expenses:
Investment Advisory Fees 3,701 314 3,788 1,008 15,302
Less: Investment Advisory Fees Waived/Reimbursed (161) (79) (417) (124) --
Administrator Fees 251 21 258 67 1,498
Administrator Fees Waived -- -- -- -- --
Transfer Agent Fees-- Trust Shares 17 11 12 8 18
Transfer Agent Fees-- Investor Shares -- -- 12 -- 56
Transfer Agent Fees-- Flex Shares 79 9 23 14 179
Transfer Agent Out of Pocket Fees 38 15 61 10 235
Printing Expenses 13 10 61 7 131
Custody Fees 17 7 19 3 67
Professional Fees 23 8 37 8 143
Trustee Fees 4 -- 12 1 42
Registration Fees 17 16 14 62 50
Distribution Fees-- Investor Shares -- -- 97 -- 638
Less: Distribution Fees Waived-- Investor Shares -- -- (7) -- --
Distribution Fees-- Flex Shares 275 12 63 144 1,671
Less: Distribution Fees Waived-- Flex Shares (64) (8) (20) (9) (9)
Insurance and Other Fees -- 1 -- 3 94
Amortization of Deferred Organization Costs 4 -- 10 -- --
--------- --------- --------- --------- ---------
Total Expenses 4,214 337 4,023 1,202 20,115
--------- --------- --------- --------- ---------
Net Investment Income (Loss) 3,797 (141) (2,421) 38 33,942
--------- --------- --------- --------- ---------
Net Realized and Unrealized Gain (Loss) on Investments:
Capital Gain Received from Investments -- -- -- -- --
Net Realized Gain (Loss) on Securities Sold (48,614) 2,335 (16,055) 4,943 219,408
Net Change in Unrealized Appreciation (Depreciation) on Investments (39,458) 4,550 (79,885) 14,808 (71,294)
--------- --------- --------- --------- ---------
Total Net Realized and Unrealized Gain (Loss) on Investments (88,072) 6,885 (95,940) 19,751 148,114
--------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Assets from Operations $ (84,275) $ 6,744 $ (98,361) $ 19,789 $ 182,056
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
* Commenced operations
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
72 & 73
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
STI CLASSIC EQUITY FUNDS FOR THE PERIODS ENDED MAY 31, AND NOVEMBER 30,
<TABLE>
<CAPTION>
EQUITY
BALANCED FUND CAPITAL APPRECIATION FUND
------------------------------------------------------------
06/01/98- 06/01/97- 06/01/98- 06/01/97-
05/31/99 05/31/98 05/31/99 05/31/98
-------------- --------- --------- ----------
Operations:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ 5,369 $ 4,558 $ 3,087 $ 7,983
Capital Gain Received from Investments -- -- -- --
Net Realized Gain (Loss) on Investments 9,690 17,885 166,426 261,636
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 11,063 14,594 151,117 157,396
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets from Operations 26,122 37,037 320,630 427,015
----------- ----------- ----------- -----------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (4,438) (4,197) (5,572) (7,798)
Investor Shares (200) (154) (36) (28)
Flex Shares (506) (204) -- --
Capital Gains:
Trust Shares (13,593) (12,908) (240,608) (200,074)
Investor Shares (771) (536) (41,767) (36,216)
Flex Shares (2,745) (972) (19,498) (9,643)
----------- ----------- ----------- -----------
Total Distributions (22,253) (18,971) (307,481) (253,759)
----------- ----------- ----------- -----------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 146,574 53,532 673,116 466,511
Shares Issued in Connection with Crestar Merger -- -- 139,648 --
Reinvestment of Cash Distributions 17,886 16,935 234,593 197,282
Cost of Shares Repurchased (104,280) (49,610) (623,912) (358,832)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From Trust Share
Transactions 60,180 20,857 423,445 304,961
----------- ----------- ----------- -----------
Investor Shares:
Proceeds from Shares Issued 7,551 2,150 32,561 29,116
Shares Issued in Connection with Crestar Merger -- -- 12,499 --
Reinvestment of Cash Distributions 966 680 41,544 35,990
Cost of Shares Repurchased (2,023) (1,166) (49,083) (37,738)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From Investor
Share Transactions 6,494 1,664 37,521 27,368
----------- ----------- ----------- -----------
Flex Shares:
Proceeds from Shares Issued 54,572 21,409 68,098 67,377
Shares Issued in Connection with Crestar Merger -- 7,867 -- --
Reinvestment of Cash Distributions 3,206 1,164 19,257 9,528
Cost of Shares Repurchased (12,484) (2,194) (39,576) (12,730)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From
Flex Share Transactions 45,294 20,379 55,646 64,175
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From Share
Transactions 111,968 42,900 516,612 396,504
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets 115,837 60,966 529,761 569,760
----------- ----------- ----------- -----------
Net Assets:
Beginning of Period 224,403 163,437 1,910,301 1,340,541
----------- ----------- ----------- -----------
End of Period $ 340,240 $ 224,403 $ 2,440,062 $ 1,910,301
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 11,211 4,245 40,224 29,548
Shares Issued in Connection with Crestar Merger -- 8,202 -- --
Shares Issued in Lieu of Cash Distributions 1,393 1,402 14,645 13,725
Shares Redeemed (8,020) (3,922) (37,763) (22,177)
----------- ----------- ----------- -----------
Net Trust Share Transactions 4,584 1,725 25,308 21,096
----------- ----------- ----------- -----------
Investor Shares:
Shares Issued 570 167 1,967 1,812
Shares Issued in Connection with Crestar Merger -- -- 738 --
Shares Issued in Lieu of Cash Distributions 75 56 2,607 2,518
Shares Redeemed (154) (92) (2,983) (2,349)
----------- ----------- ----------- -----------
Net Investor Share Transactions 491 131 2,329 1,981
----------- ----------- ----------- -----------
Flex Shares:
Shares Issued 4,165 1,688 4,176 4,242
Shares Issued in Connection with Crestar Merger -- -- 474 --
Shares Issued in Lieu of Cash Distributions 252 97 1,228 674
Shares Redeemed (956) (173) (2,440) (795)
----------- ----------- ----------- -----------
Net Flex Share Transactions 3,461 1,612 3,438 4,121
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net Change in Capital Shares 8,536 3,468 31,075 27,198
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
EMERGING GROWTH AND
MARKETS EQUITY FUND INCOME FUND
-------------------------------------------------------------
06/01/98- 06/01/97- 12/01/98- 12/01/97-
05/31/99 05/31/98 05/31/99 11/30/98
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Operations:
Net Investment Income (Loss) $487 $468 $1,547 $3,859
Capital Gain Received from Investments -- -- -- --
Net Realized Gain (Loss) on Investments (6,188) (875) 48,404 42,161
Net Realized Loss on Foreign Currency Transactions (45) (61) -- --
Net Change in Unrealized Appreciation (Depreciation) on
Foreign Currency and Translation of Other Assets and
Liabilities in Foreign Currency (12) (1) -- --
Net Change in Unrealized Appreciation (Depreciation)
on Investments 3,231 (7,440) 39,898 33,416
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets from Operations (2,527) (7,909) 89,849 79,436
----------- ----------- ----------- -----------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (622) (314) (935) (3,768)
Investor Shares -- -- (66) (212)
Flex Shares -- -- (7) --
Capital Gains:
Trust Shares -- (544) (38,443) (110,281)
Investor Shares -- -- (2,259) (5,275)
Flex Shares -- -- (1,704) (2,562)
----------- ----------- ----------- -----------
Total Distributions (622) (858) (43,414) (122,098)
----------- ----------- ----------- -----------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 14,574 23,819 77,854 92,390
Shares Issued in Connection with Crestar Merger -- -- -- --
Reinvestment of Cash Distributions 544 805 11,972 88,294
Cost of Shares Repurchased (19,772) (20,798) (74,302) (153,783)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From Trust Share
Transactions (4,654) 3,826 15,524 26,901
----------- ----------- ----------- -----------
Investor Shares:
Proceeds from Shares Issued -- -- 2,099 11,222
Shares Issued in Connection with Crestar Merger -- -- -- --
Reinvestment of Cash Distributions -- -- 2,157 5,277
Cost of Shares Repurchased -- -- (4,209) (8,617)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From Investor
Share Transactions -- -- 47 7,882
----------- ----------- ----------- -----------
Flex Shares:
Proceeds from Shares Issued -- -- 8,350 12,797
Shares Issued in Connection with Crestar Merger -- -- -- --
Reinvestment of Cash Distributions -- -- 1,675 2,504
Cost of Shares Repurchased -- -- (2,763) (2,494)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From
Flex Share Transactions -- -- 7,262 12,807
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From Share
Transactions (4,654) 3,826 22,833 47,590
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets (7,803) (4,941) 69,268 4,928
----------- ----------- ----------- -----------
Net Assets:
Beginning of Period 34,554 39,495 637,132 632,204
----------- ----------- ----------- -----------
End of Period $ 26,751 $ 34,554 $ 706,400 $ 637,132
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 1,963 2,344 5,206 10,513
Shares Issued in Connection with Crestar Merger -- -- -- --
Shares Issued in Lieu of Cash Distributions 78 92 840 6,789
Shares Redeemed (2,644) (2,199) (4,849) (14,789)
----------- ----------- ----------- -----------
Net Trust Share Transactions (603) 237 1,197 2,513
----------- ----------- ----------- -----------
Investor Shares:
Shares Issued -- -- 137 764
Shares Issued in Connection with Crestar Merger -- -- -- --
Shares Issued in Lieu of Cash Distributions -- -- 150 402
Shares Redeemed -- -- (272) (591)
----------- ----------- ----------- -----------
Net Investor Share Transactions -- -- 15 575
----------- ----------- ----------- -----------
Flex Shares:
Shares Issued -- -- 550 874
Shares Issued in Connection with Crestar Merger -- -- -- --
Shares Issued in Lieu of Cash Distributions -- -- 117 192
Shares Redeemed -- -- (178) (171)
----------- ----------- ----------- -----------
Net Flex Share Transactions -- -- 489 895
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net Change in Capital Shares (603) 237 1,701 3,983
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
EQUITY EQUITY
FUND INDEX FUND
---------------------------------------------------------------------------
12/01/96- 06/01/98- 06/01/97- 06/01/98- 06/01/97-
11/30/97 05/31/99 05/31/98 05/31/99 05/31/98
----------- ----------- ----------- ----------- -----------
Operations:
<S> <C> <C> <C> <C> <C>
Net Investment Income (Loss) $5,276 $3,923 $3,320 $392 $498
Capital Gain Received from Investments -- -- -- -- --
Net Realized Gain (Loss) on Investments 118,138 21,269 61,173 7,583 3,349
Net Realized Loss on Foreign Currency Transactions -- (811) (1,410) (40) (46)
Net Change in Unrealized Appreciation (Depreciation) on
Foreign Currency and Translation of Other Assets and
Liabilities in Foreign Currency -- (10) (93) (88) 19
Net Change in Unrealized Appreciation (Depreciation)
on Investments 7,024 (78,440) 50,891 (3,971) 9,866
----------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets from Operations 130,438 (54,069) 113,881 3,876 13,686
----------- ----------- ----------- ----------- -----------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (5,360) (2,385) (1,649) (1,136) (489)
Investor Shares (214) (6) (5) (83) (34)
Flex Shares (24) -- -- (4) --
Capital Gains:
Trust Shares (2,857) (33,895) (49,334) (8,431) (2,914)
Investor Shares (96) (965) (1,347) (877) (343)
Flex Shares (27) (1,189) (1,526) (172) (54)
----------- ----------- ----------- ----------- -----------
Total Distributions (8,578) (38,440) (53,861) (10,703) (3,834)
----------- ----------- ----------- ----------- -----------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 86,500 172,988 292,707 34,363 8,458
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Reinvestment of Cash Distributions 2,679 33,324 47,572 8,985 3,057
Cost of Shares Repurchased (167,444) (175,047) (258,050) (18,882) (17,470)
----------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From Trust Share
Transactions (78,265) 31,265 82,229 24,466 (5,955)
----------- ----------- ----------- ----------- -----------
Investor Shares:
Proceeds from Shares Issued 9,602 2,728 7,487 1,083 2,516
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Reinvestment of Cash Distributions 303 965 1,351 959 375
Cost of Shares Repurchased (4,558) (4,566) (3,549) (3,668) (2,400)
----------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From Investor
Share Transactions 5,347 (873) 5,289 (1,626) 491
----------- ----------- ----------- ----------- -----------
Flex Shares:
Proceeds from Shares Issued 7,216 6,324 14,405 980 788
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Reinvestment of Cash Distributions 51 1,174 1,507 174 53
Cost of Shares Repurchased (782) (8,295) (4,407) (987) (427)
----------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From
Flex Share Transactions 6,485 (797) 11,505 167 414
----------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets From Share
Transactions (66,433) 29,595 99,023 23,007 (5,050)
----------- ----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets 55,427 (62,914) 159,043 16,180 4,802
----------- ----------- ----------- ----------- -----------
Net Assets:
Beginning of Period 576,777 667,417 508,374 64,810 60,008
----------- ----------- ----------- ----------- -----------
End of Period $ 632,204 $ 604,503 $ 667,417 $ 80,990 $ 64,810
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 6,467 12,883 20,687 2,851 700
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Shares Issued in Lieu of Cash Distributions 193 2,626 3,744 779 277
Shares Redeemed (12,286) (13,225) (18,402) (1,537) (1,473)
----------- ----------- ----------- ----------- -----------
Net Trust Share Transactions (5,626) 2,284 6,029 2,093 (496)
----------- ----------- ----------- ----------- -----------
Investor Shares:
Shares Issued 636 203 526 88 210
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Shares Issued in Lieu of Cash Distributions 21 77 107 84 34
Shares Redeemed (304) (350) (254) (294) (201)
----------- ----------- ----------- ----------- -----------
Net Investor Share Transactions 353 (70) 379 (122) 43
----------- ----------- ----------- ----------- -----------
Flex Shares:
Shares Issued 467 468 1,021 80 63
Shares Issued in Connection with Crestar Merger -- -- -- -- --
Shares Issued in Lieu of Cash Distributions 4 95 121 15 5
Shares Redeemed (53) (648) (322) (82) (36)
----------- ----------- ----------- ----------- -----------
Net Flex Share Transactions 418 (85) 820 13 32
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net Change in Capital Shares (4,855) 2,129 7,228 1,984 (421)
----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
LIFE VISION
BALANCED
PORTFOLIO
------------------------------------------
12/01/98- 12/01/97- 06/30/97*
05/31/99 11/30/98 11/30/97
------------ ------------- ------------
Operations:
<S> <C> <C> <C>
Net Investment Income (Loss) $867 $2,062 $933
Capital Gain Received from Investments 2,204 6,921 --
Net Realized Gain (Loss) on Investments 317 (1,004) 235
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 2,338 (1,024) 3,730
----------- ----------- -----------
Increase (Decrease) in Net Assets from Operations 5,726 6,955 4,958
----------- ----------- -----------
Distributions to Shareholders:
Net Investment Income:
Trust Shares (735) (2,072) (941)
Investor Shares -- -- --
Flex Shares -- -- --
Capital Gains:
Trust Shares (6,686) (238) --
Investor Shares -- -- --
Flex Shares -- -- --
----------- ----------- -----------
Total Distributions (7,421) (2,310) (941)
----------- ----------- -----------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued 5,124 15,849 94,371
Shares Issued in Connection with Crestar Merger -- -- --
Reinvestment of Cash Distributions 7,421 2,310 941
Cost of Shares Repurchased (15,873) (19,035) (9,887)
----------- ----------- -----------
Increase (Decrease) in Net Assets From Trust Share
Transactions (3,328) (876) 85,425
----------- ----------- -----------
Investor Shares:
Proceeds from Shares Issued -- -- --
Shares Issued in Connection with Crestar Merger -- -- --
Reinvestment of Cash Distributions -- -- --
Cost of Shares Repurchased -- -- --
----------- ----------- -----------
Increase (Decrease) in Net Assets From Investor
Share Transactions -- -- --
----------- ----------- -----------
Flex Shares:
Proceeds from Shares Issued -- -- --
Shares Issued in Connection with Crestar Merger -- -- --
Reinvestment of Cash Distributions -- -- --
Cost of Shares Repurchased -- -- --
----------- ----------- -----------
Increase (Decrease) in Net Assets From
Flex Share Transactions -- -- --
----------- ----------- -----------
Increase (Decrease) in Net Assets From Share
Transactions (3,328) (876) 85,425
----------- ----------- -----------
Total Increase (Decrease) in Net Assets (5,023) 3,769 89,442
----------- ----------- -----------
Net Assets:
Beginning of Period 93,211 89,442 --
----------- ----------- -----------
End of Period $ 88,188 $ 93,211 $ 89,442
----------- ----------- -----------
----------- ----------- -----------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued 476 1,449 9,446
Shares Issued in Connection with Crestar Merger -- -- --
Shares Issued in Lieu of Cash Distributions 712 214 90
Shares Redeemed (1,486) (1,743) (990)
----------- ----------- -----------
Net Trust Share Transactions (298) (80) 8,546
----------- ----------- -----------
Investor Shares:
Shares Issued -- -- --
Shares Issued in Connection with Crestar Merger -- -- --
Shares Issued in Lieu of Cash Distributions -- -- --
Shares Redeemed -- -- --
----------- ----------- ---------
Net Investor Share Transactions -- -- --
----------- ----------- -----------
Flex Shares:
Shares Issued -- -- --
Shares Issued in Connection with Crestar Merger -- -- --
Shares Issued in Lieu of Cash Distributions -- -- --
Shares Redeemed -- -- --
----------- ----------- -----------
Net Flex Share Transactions -- -- --
----------- ----------- -----------
----------- ----------- -----------
Net Change in Capital Shares (298) (80) 8,546
----------- ----------- -----------
</TABLE>
*Commenced operations.
Amounts designated as "--" are either $0 or have been rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
74 & 75
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- -------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE PERIODS ENDED MAY 31, AND NOVEMBER 30,
<TABLE>
<CAPTION>
LIFE VISION
LIFE VISION MAXIMUM GROWTH
GROWTH AND INCOME PORTFOLIO PORTFOLIO
.....................................................................................................................
12/01/98- 12/01/97- 06/30/97* 12/01/98- 12/01/97- 06/30/97*
05/31/99 11/30/98 11/30/97 05/31/99 11/30/98 11/30/97
------------ ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net Investment Income (Loss) ....................... $ 138 $ 357 $ 190 $ 25 $ 36 $ 39
Capital Gain Received from Investments ............. 490 2,121 -- 499 1,739 --
Net Realized Gain (Loss) on Investments ............ (82) (45) 20 (42) (463) (1)
Net Change in Unrealized Appreciation (Depreciation)
on Investments ................................... 922 (580) 1,003 1,329 (226) 740
-------- -------- -------- -------- -------- --------
Increase (Decrease) in Net Assets from Operations .. 1,468 1,853 1,213 1,811 1,086 778
-------- -------- -------- -------- -------- --------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ..................................... (114) (360) (180) (24) (35) (38)
Investor Shares .................................. -- -- -- -- -- --
Flex Shares ...................................... -- -- -- -- -- --
Capital Gains:
Trust Shares ..................................... (2,475) (22) -- (1,670) -- --
Investor Shares .................................. -- -- -- -- -- --
Flex Shares ...................................... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Distributions ................................ (2,589) (382) (180) (1,694) (35) (38)
-------- -------- -------- -------- -------- --------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ...................... 2,679 2,591 21,846 2,114 5,852 13,614
Shares Issued in Connection with Common Trust Fund
Conversion ..................................... -- -- -- -- -- --
Shares Issued in Connection with Crestar Merger .. -- -- -- -- -- --
Reinvestment of Cash Distributions ............... 2,589 382 180 1,694 36 38
Cost of Shares Repurchased ....................... (1,239) (7,923) (538) (1,456) (4,421) (680)
-------- -------- -------- -------- -------- --------
Increase (Decrease) in Net Assets From Trust Share
Transactions ..................................... 4,029 (4,950) 21,488 2,352 1,467 12,972
-------- -------- -------- -------- -------- --------
Investor Shares:
Proceeds from Shares Issued ...................... -- -- -- -- -- --
Reinvestment of Cash Distributions ............... -- -- -- -- --
Cost of Shares Repurchased ....................... -- -- -- -- --
-------- -------- -------- -------- -------- --------
Increase (Decrease) in Net Assets From Investor
Share Transactions ............................... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Flex Shares:
Proceeds from Shares Issued ...................... -- -- -- -- -- --
Shares Issued in Connection with Crestar Merger .. -- -- -- -- -- --
Reinvestment of Cash Distributions ............... -- -- -- -- -- --
Cost of Shares Repurchased ....................... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Increase (Decrease) in Net Assets From
Flex Share Transactions .......................... -- -- -- -- -- --
--------
Increase (Decrease) in Net Assets From Share
Transactions ................................... 4,029 (4,950) 21,488 2,352 1,467 12,972
-------- -------- -------- -------- -------- --------
Total Increase (Decrease) in Net Assets ........ 2,908 (3,479) 22,521 2,469 2,518 13,712
-------- -------- -------- -------- -------- --------
Net Assets:
Beginning of Period ................................ 19,042 22,521 -- 16,230 13,712 --
-------- -------- -------- -------- -------- --------
End of Period ...................................... $ 21,950 $ 19,042 $ 22,521 $ 18,699 $ 16,230 $ 13,712
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued .................................... 259 239 2,177 192 599 1,350
Shares Issued in Connection with Common Trust Fund
Conversion ..................................... -- -- -- -- -- --
Shares Issued in Connection with Crestar Merger .. -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ...... 264 35 17 161 3 4
Shares Redeemed .................................. (120) (695) (52) (133) (456) (66)
-------- -------- -------- -------- -------- --------
Net Trust Share Transactions ....................... 403 (421) 2,142 220 146 1,288
-------- -------- -------- -------- -------- --------
Investor Shares:
Shares Issued .................................... -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ...... -- -- -- -- -- --
Shares Redeemed .................................. -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net Investor Share Transactions .................... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Flex Shares:
Shares Issued .................................... -- -- -- -- -- --
Shares Issued in Connection with Crestar Merger .. -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ...... -- -- -- -- -- --
Shares Redeemed .................................. -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net Flex Share Transactions ........................ -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net Change in Capital Shares ....................... 403 (421) 2,142 220 146 1,288
-------- -------- -------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL CAP GROWTH
FUND EQUITY FUND STOCK FUND
- ------------------------------------------------------------------------------------------------------------------------
06/01/98- 06/01/97- 06/01/98- 06/01/97- 10/08/98*-
05/31/99 05/31/98 05/31/99 05/31/98 05/31/99
---------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Operations:
Net Investment Income (Loss) ....................... $ (1,779) $ (1,352) $ 3,797 $ 3,127 $ (141)
Capital Gain Received from Investments ............. -- -- -- -- --
Net Realized Gain (Loss) on Investments ............ 12,419 54,941 (48,614) 32,653 2,335
Net Change in Unrealized Appreciation (Depreciation)
on Investments ................................... (10,771) 14,034 (39,458) 16,045 4,550
------- ------ ------- ------ -----
Increase (Decrease) in Net Assets from Operations .. (131) 67,623 (84,275) 51,825 6,744
------- ------ ------- ------ -----
Distributions to Shareholders:
Net Investment Income:
Trust Shares ..................................... -- -- (3,830) (2,704) (4)
Investor Shares .................................. (3) -- -- -- --
Flex Shares ...................................... -- -- (46) (70) --
Capital Gains:
Trust Shares ..................................... (26,541) (44,446) (17,401) (14,480) (24)
Investor Shares .................................. (1,970) (3,025) -- -- --
Flex Shares ...................................... (1,677) (1,899) (1,638) (897) (1)
------- ------ ------- ------ -----
Total Distributions ................................ (30,191) (49,370) (22,915) (18,151) (29)
------- ------ ------- ------ -----
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ...................... 197,227 146,386 159,166 272,776 69,418
Shares Issued in Connection with Common Trust Fund
Conversion ..................................... -- -- -- -- --
Shares Issued in Connection with Crestar Merger .. -- -- -- -- --
Reinvestment of Cash Distributions ............... 25,335 41,347 19,237 15,603 28
Cost of Shares Repurchased ....................... (280,036) (170,356) (61,475) (12,528)
------- ------ ------- ------ -----
Increase (Decrease) in Net Assets From Trust Share
Transactions ..................................... (57,474) 33,761 8,047 226,904 145,858
------- ------ ------- ------ -----
Investor Shares:
Proceeds from Shares Issued ...................... 3,015 6,110 -- -- --
Reinvestment of Cash Distributions ............... 1,967 3,019 -- -- --
Cost of Shares Repurchased ....................... (8,523) (5,606) -- -- --
------- ------ ------- ------ -----
Increase (Decrease) in Net Assets From Investor
Share Transactions ............................... (3,541) 3,523 -- -- --
------- ------ ------- ------ -----
Flex Shares:
Proceeds from Shares Issued ...................... 4,866 10,574 2,579 42,359 3,553
Shares Issued in Connection with Crestar Merger .. -- -- -- -- 2,699
Reinvestment of Cash Distributions ............... 1,671 1,885 1,669 958 1
Cost of Shares Repurchased ....................... (7,908) (3,934) (15,110) (3,490) (378)
------- ------ ------- ------ -----
Increase (Decrease) in Net Assets From
Flex Share Transactions .......................... (1,371) 8,525 (10,862) 39,827 5,875
---------
Increase (Decrease) in Net Assets From Share
Transactions ................................... (62,386) 45,809 (2,815) 266,731 151,733
------- ------ ------- ------ -----
Total Increase (Decrease) in Net Assets ........ (92,708) 64,062 (110,005) 300,405 158,448
------- ------ ------- ------ -----
Net Assets:
Beginning of Period ................................ 381,797 317,735 431,454 131,049 --
------- ------ ------- ------ -----
End of Period ...................................... $ 289,089 $ 381,797 $ 321,449 $ 431,454 $ 158,448
------- ------ ------- ------ -----
------- ------ ------- ------ -----
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued .................................... 16,168 10,517 16,078 22,065 5,174
Shares Issued in Connection with Common Trust Fund
Conversion ..................................... -- -- -- -- --
Shares Issued in Connection with Crestar Merger .. -- -- -- -- 6,174
Shares Issued in Lieu of Cash Distributions ...... 2,230 3,378 2,040 1,294 2
Shares Redeemed .................................. (22,862) (11,149) (17,349) (4,840) (886)
------- ------ ------- ------ -----
Net Trust Share Transactions ....................... (4,464) 2,746 769 18,519 10,464
------- ------ ------- ------ -----
Investor Shares:
Shares Issued .................................... 247 445 -- -- --
Shares Issued in Lieu of Cash Distributions ...... 175 248 -- -- --
Shares Redeemed .................................. (707) (407) -- -- --
------- ------ ------- ------ -----
Net Investor Share Transactions .................... (285) 286 -- -- --
------- ------ ------- ------ -----
Flex Shares:
Shares Issued .................................... 403 777 245 3,366 266
Shares Issued in Connection with Crestar Merger .. -- -- -- -- 188
Shares Issued in Lieu of Cash Distributions ...... 152 158 179 80 --
Shares Redeemed .................................. (676) (292) (1,580) (273) (28)
------- ------ ------- ------ -----
Net Flex Share Transactions ........................ (121) 643 (1,156) 3,173 426
------- ------ ------- ------ -----
------- ------ ------- ------ -----
Net Change in Capital Shares ....................... (4,870) 3,675 (387) 21,692 10,890
------- ------ ------- ------ -----
</TABLE>
<TABLE>
<CAPTION>
SUNBELT GROWTH VALUE INCOME
EQUITY FUND STOCK FUND STOCK FUND
-----------------------------------------------------
06/01/98- 06/01/97
05/31/99 05/31/98
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations:
Net Investment Income (Loss) ....................... (2,421) $ (4,364) $ 38 $ 33,942 $ 34,555
Capital Gain Received from Investments ............. -- -- -- -- --
Net Realized Gain (Loss) on Investments ............ (16,055) 49,778 4,943 219,408 319,982
Net Change in Unrealized Appreciation (Depreciation)
on Investments ................................... (79,885) 46,313 14,808 (71,294) 44,518
------- ------ ------ ------- -------
Increase (Decrease) in Net Assets from Operations .. (98,361) 91,727 19,789 182,056 399,055
------- ------ ------ ------- -------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ..................................... -- -- (87) (30,625) (30,991)
Investor Shares .................................. -- -- -- (3,178) (2,838)
Flex Shares ...................................... -- -- -- (1,535) (1,104)
Capital Gains:
Trust Shares ..................................... (22,775) (32,274) -- (229,623) (262,191)
Investor Shares .................................. (1,729) (2,333) -- (29,331) (29,671)
Flex Shares ...................................... (508) (516) -- (25,364) (19,217)
------- ------ ------ ------- -------
Total Distributions ................................ (25,012) (35,123) (87) (319,656) (346,012)
------- ------ ------ ------- -------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ...................... 228,638 207,154 121,119 354,278 381,039
Shares Issued in Connection with Common Trust Fund
Conversion ..................................... -- -- 99,222 -- --
Shares Issued in Connection with Crestar Merger .. -- -- -- -- --
Reinvestment of Cash Distributions ............... 21,508 30,202 87 241,723 269,446
Cost of Shares Repurchased ....................... (372,294) (238,878) (15,922) (621,009) (459,701)
------- ------ ------ ------- -------
Increase (Decrease) in Net Assets From Trust Share
Transactions ..................................... (122,148) (1,522) 204,506 (25,008) 190,784
------- ------ ------ ------- -------
Investor Shares:
Proceeds from Shares Issued ...................... 2,830 5,150 -- 17,566 35,483
Reinvestment of Cash Distributions ............... 1,727 2,323 -- 32,240 32,233
Cost of Shares Repurchased ....................... (10,109) (8,619) -- (51,945) (28,503)
------- ------ ------ ------- -------
Increase (Decrease) in Net Assets From Investor
Share Transactions ............................... (5,552) (1,146) -- (2,139) 39,213
------- ------ ------ ------- -------
Flex Shares:
Proceeds from Shares Issued ...................... 1,881 3,848 77,327 38,150 106,762
Shares Issued in Connection with Crestar Merger .. -- -- -- -- --
Reinvestment of Cash Distributions ............... 504 515 -- 26,492 20,054
Cost of Shares Repurchased ....................... (3,604) (2,603) (2,117) (65,171)
------- ------ ------ ------- -------
Increase (Decrease) in Net Assets From
Flex Share Transactions .......................... (1,219) 1,760 75,210 (529) 105,972
------- ------ ------ ------- -------
Increase (Decrease) in Net Assets From Share
Transactions ................................... (128,919) (908) 279,716 (27,676) 335,969
------- ------ ------ ------- -------
Total Increase (Decrease) in Net Assets ........ (252,292) 55,696 299,418 (165,276) 389,012
------- ------ ------ ------- -------
Net Assets:
Beginning of Period ................................ 470,851 415,155 -- 2,116,539 1,727,527
------- ------ ------ ------- -------
End of Period ...................................... $ 218,559 $ 470,851 $ 299,418 $ 1,951,263 $ 2,116,539
------- ------ ------ ------- -------
------- ------ ------ ------- -------
(1)Shares Issued and Redeemed:
Trust Shares:
Shares Issued .................................... 19,064 13,707 4,133 28,099 26,871
Shares Issued in Connection with Common Trust Fund
Conversion ..................................... -- -- 3,875 -- --
Shares Issued in Connection with Crestar Merger .. -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ...... 1,997 2,213 3 20,747 21,156
Shares Redeemed .................................. (31,845) (16,065) (549) (49,236) (32,467)
------- ------- ---- ------- -------
Net Trust Share Transactions ....................... (10,784) (145) 7,462 (390) 15,560
------- ------- ---- ------- -------
Investor Shares:
Shares Issued .................................... 229 353 -- 1,391 2,518
Shares Issued in Lieu of Cash Distributions ...... 165 174 -- 2,775 2,538
Shares Redeemed .................................. (909) (590) -- (4,182) (2,003)
------- ------- ---- ------- -------
Net Investor Share Transactions .................... (515) (63) -- (16) 3,053
------- ------- ---- ------- -------
Flex Shares:
Shares Issued .................................... 148 260 2,612 3,029 7,617
Shares Issued in Connection with Crestar Merger .. -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ...... 49 39 -- 2,310 1,597
Shares Redeemed .................................. (333) (184) (70) (5,298) (1,488)
------- ------- ---- ------- -------
Net Flex Share Transactions ........................ (136) 115 2,542 41 7,726
------- ------- ---- ------- -------
------- ------- ---- ------- -------
Net Change in Capital Shares ....................... (11,435) (93) 10,005 (365) 26,339
------- ------- ---- ------- -------
</TABLE>
*Commenced Operations.
Amounts designated as "--" are either $0 or have been rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
76 & 77
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STI CLASSIC EQUITY FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE
INDICATED) FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
NET ASSET NET REALIZED DISTRIBUTIONS
VALUE NET AND UNREALIZED FROM NET DISTRIBUTIONS NET ASSET NET ASSET RATIO OF
BEGINNING INVESTMENT GAINs (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL END OF
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN+ PERIOD (000)
----------- ------------- -------------- ------------ ------------- --------- --------- ------------
BALANCED FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Trust Shares
1999 $13.09 $ 0.28 $ 1.09 $(0.28) $ (0.92) $13.26 10.98% $ 251,752
1998 11.94 0.31 2.19 (0.32) (1.03) 13.09 22.15 188,465
1997 11.55 0.33 1.47 (0.32) (1.09) 11.94 16.66 151,358
1996 10.26 0.33 1.41 (0.34) (0.11) 11.55 17.26 111,638
1995 9.76 0.33 0.49 (0.32) -- 10.26 8.72 89,051
Investor Shares
1999 $13.14 $ 0.24 $ 1.10 $(0.24) $ (0.92) $13.32 10.70% $ 14,962
1998 11.99 0.28 2.19 (0.29) (1.03) 13.14 21.72 8,313
1997 11.60 0.29 1.48 (0.29) (1.09) 11.99 16.27 6,012
1996 10.30 0.30 1.41 (0.30) (0.11) 11.60 16.88 4,896
1995 9.79 0.28 0.51 (0.28) -- 10.30 8.29 3,765
Flex Shares
1999 $13.02 $ 0.16 $ 1.07 $(0.16) $ (0.92) $13.17 9.84% $ 73,526
1998 11.90 0.20 2.16 (0.21) (1.03) 13.02 20.85 27,625
1997 11.53 0.22 1.45 (0.21) (1.09) 11.90 15.40 6,067
1996(1) 10.36 0.24 1.29 (0.25) (0.11) 11.53 15.58 3,131
CAPITAL APPRECIATION FUND
Trust Shares
1999 $16.48 $ 0.05 $ 2.70 $(0.06) $ (2.55) $16.62 17.83% $1,966,842
1998 15.09 0.09 3.96 (0.09) (2.57) 16.48 29.51 1,532,587
1997 14.90 0.12 3.13 (0.12) (2.94) 15.09 24.66 1,085,128
1996 12.18 0.12 3.32 (0.13) (0.59) 14.90 28.97 981,498
1995 11.99 0.16 0.57 (0.14) (0.40) 12.18 6.63 984,205
Investor Shares
1999 $16.43 $(0.05) $ 2.70 $ -- $ (2.55) $16.53 17.20% $ 311,120
1998 15.06 (0.01) 3.95 -- (2.57) 16.43 28.71 271,044
1997 14.89 0.03 3.10 (0.02) (2.94) 15.06 23.74 218,660
1996 12.17 0.03 3.32 (0.04) (0.59) 14.89 28.18 191,078
1995 11.98 0.09 0.57 (0.07) (0.40) 12.17 5.93 160,875
Flex Shares
1999 $16.22 $(0.09) $ 2.60 $ -- $ (2.55) $16.18 16.50% $ 162,100
1998 14.96 (0.04) 3.87 -- (2.57) 16.22 28.12 106,670
1997 14.84 (0.01) 3.07 -- (2.94) 14.96 23.24 36,753
1996(2) 12.20 0.02 3.26 (0.05) (0.59) 14.84 27.48 10,969
EMERGING MARKETS EQUITY FUND
Trust Shares
1999 $ 8.87 $ 0.14 $(0.72) $(0.17) $ -- $ 8.12 (6.22%) $ 26,751
1998 10.79 0.16 (1.86) (0.08) (0.14) 8.87 (15.74) 34,554
1997(3) 10.00 0.04 0.75 -- -- 10.79 7.90 39,495
GROWTH AND INCOME FUND (A)
Trust Shares
1999(4) $15.10 $ 0.04 $ 1.97 $(0.02) $ (1.00) $16.09 14.24% $ 634,279
For the years ended November 30:
1998 16.55 0.09 1.64 (0.09) (3.09) 15.10 13.64% 577,042
1997 13.39 0.14 3.24 (0.15) (0.07) 16.55 25.41 590,824
1996 11.60 0.17 2.38 (0.17) (0.59) 13.39 22.68 553,648
1995 10.73 0.24 2.62 (0.26) (1.73) 11.60 28.76 220,386
1994 11.38 0.20 (0.24) (0.19) (0.42) 10.73 (0.49) 166,713
Investor Shares
1999(4) $15.21 $ 0.04 $ 1.99 $(0.03) $ (1.00) $16.21 14.31% $ 36,958
For the years ended November 30:
1998 16.64 0.10 1.66 (0.10) (3.09) 15.21 13.69% 34,434
1997 13.47 0.13 3.25 (0.14) (0.07) 16.64 25.42 28,112
1996 11.66 0.17 2.39 (0.16) (0.59) 11.66 28.71 12,633
1994 11.42 0.18 (0.22) (0.18) (0.42) 10.78 (0.45) 8,115
Flex Shares
1999(4) $15.14 $(0.01) $ 1.97 $ -- $ (1.00) $16.10 13.85% $ 35,163
For the years ended November 30:
1998 16.59 (0.01) 1.64 -- (3.08) 15.14 12.78% 25,656
1997 13.44 0.04 3.23 (0.05) (0.07) 16.59 24.63 13,269
1996 11.64 0.09 2.38 (0.08) (0.59) 13.44 21.81 5,131
1995 (5) 11.11 0.12 1.62 (0.14) (1.07) 11.64 15.78 2,086
</TABLE>
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO INCOME
NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO (LOSS) TO
EXPENSES TO INCOME (LOSS) TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
------------------ ------------------ ------------------- ------------------- ---------
<S> <C> <C> <C> <C> <C>
Trust Shares
1999 0.97% 2.19% 1.06% 2.10% 179%
1998 0.96 2.51 1.08 2.39 154
1997 0.95 2.89 1.08 2.76 197
1996 0.95 3.00 1.09 2.86 155
1995 0.95 3.44 1.11 3.28 157
Investor Shares
1999 1.27% 1.89% 1.43% 1.73% 179%
1998 1.26 2.21 1.59 1.88 154
1997 1.25 2.58 1.64 2.19 197
1996 1.25 2.70 1.89 2.06 155
1995 1.25 3.17 1.80 2.62 157
Flex Shares
1999 2.03% 1.13% 2.15% 1.01% 179%
1998 2.02 1.41 2.23 1.20 154
1997 2.01 1.84 2.45 1.40 197
1996(1) 2.00 1.85 2.97 0.88 155
CAPITAL APPRECIATION FUND
Trust Shares
1999 1.17% 0.29% 1.26% 0.20% 147%
1998 1.16 0.61 1.27 0.50 194
1997 1.15 0.83 1.25 0.73 141
1996 1.15 0.90 1.27 0.78 156
1995 1.15 1.38 1.28 1.25 128
Investor Shares
1999 1.82% (0.30%) 1.96% (0.44%) 147%
1998 1.81 (0.03) 2.01 (0.23) 194
1997 1.80 0.19 2.02 (0.03) 141
1996 1.80 0.24 2.08 (0.04) 156
1995 1.80 0.73 2.10 0.43 128
Flex Shares
1999 2.29% (0.86%) 2.38% (0.95%) 147%
1998 2.26 (0.46) 2.37 (0.57) 194
1997 2.27 (0.29) 2.43 (0.45) 141
1996(2) 2.27 (0.29) 2.68 (0.70) 156
EMERGING MARKETS EQUITY FUND
Trust Shares
1999 1.57% 1.79% 1.61% 1.75% 67%
1998 1.56 1.14 1.78 0.92 74
1997(3) 1.55 1.37 2.04 0.88 24
GROWTH AND INCOME FUND (A)
Trust Shares
1999(4) 1.14% 0.49% 1.43% 0.20% 31%
For the years ended November 30:
1998 1.03% 0.63% 1.21 0.45% 71%
1997 1.02 0.92 1.17 0.77 100
1996 1.02 1.38 1.17 1.23 82
1995 1.02 2.16 1.17 2.01 175
1994 1.01 1.82 1.01 1.82 116
Investor Shares
1999(4) 1.08% 0.54% 1.17% 0.45% 31%
For the years ended November 30:
1998 1.03% 0.63% 1.18 0.48 71%
1997 1.03 0.89 1.18 0.74 100
1996 1.03 2.14 1.18 1.99 175
1994 1.02 1.81 1.04 1.79 116
Flex Shares
1999(4) 1.83% (0.21%) 1.97% (0.35%) 31%
For the years ended November 30:
1998 1.78 (0.13%) 2.03 (0.38%) 71
1997 1.73 0.15 2.09 (0.20) 100
1996 1.68 0.71 2.03 0.36 82
1995 (5) 1.68 1.13 2.03 0.78 175
</TABLE>
+ Returns are for the period indicated and have not been annualized. Total
return figures do not include applicable sales loads.
(1) Commenced operationson June 14, 1995. All ratios for the period have been
annualized.
(2) Commenced operations on June 1, 1995. All ratios for the period have been
annualized.
(3)Commenced operations on January 31, 1997. All ratios for the period have been
annualized.
(4) For the six month period ended May 31, 1999. All ratios for the period have
been annualized.
(5) Commenced operations on April 19, 1995. All ratios for the period ended
November 30, 1995 have been annualized.
(A) On May 24, 1999, the Crestar Value Fund exchanged all of its assets and
certain liabilities for shares of the Growth and Income Fund. The Crestar Value
Fund is the accounting survivor in this transaction, and as a result, its basis
of accounting for assets and liabilities and its operating results for the
periods prior to May 24, 1999 have been carried forward in these financial
highlights.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
78 & 79
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STI CLASSIC EQUITY FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE
INDICATED) FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS
-------------- ---------------- ------------------ -------------- ----------------
INTERNATIONAL EQUITY FUND
<S> <C> <C> <C> <C> <C>
Trust Shares
1999 $15.00 $ -- $(1.14) $(0.05) $(0.84)
1998 13.63 0.04 2.69 (0.04) (1.32)
1997 11.40 0.03 2.57 (0.02) (0.35)
1996(1) 10.00 0.05 1.35 -- --
Investor Shares
1999 $14.92 $ 0.04 $(1.23) $ -- $(0.84)
1998 13.58 0.02 2.64 -- (1.32)
1997 11.38 (0.01) 2.56 -- (0.35)
1996(2) 10.44 0.04 0.90 -- --
Flex Shares
1999 $14.68 $(0.29) $(0.97) $ -- $(0.84)
1998 13.47 0.07 2.46 -- (1.32)
1997 11.37 (0.04) 2.49 -- (0.35)
1996(2) 10.44 0.02 0.91 -- --
INTERNATIONAL EQUITY INDEX FUND
Trust Shares
1999 $13.31 $ 0.09 $ 0.85 $(0.24) $(2.19)
1998 11.34 0.11 2.65 (0.11) (0.68)
1997 10.96 0.10 0.69 (0.11) (0.30)
1996 10.24 0.10 0.84 (0.13) (0.09)
1995(3) 10.00 0.08 0.19 (0.02) (0.01)
Investor Shares
1999 $13.20 $(0.11) $ 0.98 $(0.18) $(2.19)
1998 11.26 0.16 2.53 (0.07) (0.68)
1997 10.88 0.03 0.72 (0.07) (0.30)
1996 10.20 0.05 0.85 (0.13) (0.09)
1995(3) 10.00 0.05 0.17 (0.01) (0.01)
Flex Shares
1999 $13.17 $(0.15) $ 0.94 $(0.04) $(2.19)
1998 11.24 0.17 2.44 -- (0.68)
1997 10.87 (0.05) 0.72 -- (0.30)
1996(4) 10.24 -- 0.82 (0.10) (0.09)
LIFE VISION BALANCED PORTFOLIO (A)
Trust Shares
1999(5) $11.01 $ 0.11 $ 0.56 $(0.09) $(0.79)
For the years ended November 30:
1998 10.46 0.24 0.58 (0.24) (0.03)
1997(6) 10.00 0.12 0.45 (0.11) --
LIFE VISION GROWTH AND INCOME PORTFOLIO (A)
Trust Shares
1999(5) $11.06 $ 0.08 $0.69 $(0.06) $ (1.44)
For the years ended November 30:
1998 10.51 0.18 0.56 (0.18) (0.01)
1997(6) 10.00 0.09 0.51 (0.09) --
LIFE VISION MAXIMUM GROWTH PORTFOLIO (A )
Trust Shares
1999(5) $11.32 $ 0.02 $1.13 $(0.01) $ (1.15)
For the years ended November 30:
1998 10.65 0.03 0.67 (0.03) --
1997(6) 10.00 0.03 0.65 (0.03) --
MID-CAP EQUITY FUND
Trust Shares
1999 $13.79 $ 0.01 $ 0.07 $ -- $ (1.19)
1998 13.21 -- 2.54 -- (1.96)
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) --
Investor Shares
1999 $13.67 $(0.06) $ 0.08 $ -- $ (1.19)
1998 13.17 (0.03) 2.49 -- (1.96)
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) --
Flex Shares
1999 $13.42 $(0.14) $ 0.08 $ -- $ (1.19)
1998 13.04 (0.04) 2.38 -- (1.96)
1997 12.69 (0.07) 1.64 -- (1.22)
1996(7) 11.13 -- 2.45 (0.02) (0.87)
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
NET ASSET NET ASSETS RATIO OF NET INVESTMENT
VALUE END TOTAL END OF EXPENSES TO INCOME (LOSS) TO
OF PERIOD RETURN+ PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS
-------------- --------- -------------- ------------------ ------------------
INTERNATIONAL EQUITY FUND
<S> <C> <C> <C> <C> <C>
Trust Shares
1999 $12.97 (7.43%) $573,255 1.47% 0.68%
1998 15.00 21.87 628,870 1.47 0.61
1997 13.63 23.29 489,325 1.46 0.51
1996(1) 11.40 14.00 213,306 1.46 1.36
Investor Shares
1999 $12.89 (7.82%) $ 14,145 1.83% 0.30%
1998 14.92 21.39 17,383 1.82 0.24
1997 13.58 22.85 10,674 1.81 0.18
1996(2) 11.38 9.00 3,448 1.81 1.73
Flex Shares
1999 $12.58 (8.48%) $ 17,103 2.53% (0.40%)
1998 14.68 20.54 21,164 2.52 (0.46)
1997 13.47 21.98 8,375 2.51 (0.27)
1996(2) 11.37 8.91 953 2.51 1.08
INTERNATIONAL EQUITY INDEX FUND
Trust Shares
1999 $11.82 7.87% $ 74,616 1.07% 0.69%
1998 13.31 25.82 56,200 1.06 0.88
1997 11.34 7.48 53,516 1.05 0.71
1996 10.96 9.29 90,980 1.05 0.84
1995(3) 10.24 2.69 89,446 1.05 1.13
Investor Shares
1999 $11.70 7.33% $ 4,909 1.47% 0.25%
1998 13.20 25.25 7,141 1.46 0.50
1997 11.26 7.12 5,592 1.45 0.28
1996 10.88 8.90 5,597 1.45 0.48
1995(3) 10.20 2.18 3,960 1.45 0.67
Flex Shares
1999 $11.73 6.68% $ 1,465 2.12% (0.30%)
1998 13.17 24.50 1,469 2.11 (0.03)
1997 11.24 6.41 900 2.10 (0.39)
1996(4) 10.87 8.32 917 2.10 (0.24)
LIFE VISION BALANCED PORTFOLIO (A)
Trust Shares
1999(5) $10.80 6.35% $ 88,188 0.27% 1.90%
For the years ended November 30:
1998 11.01 7.90 93,211 0.25 2.21
1997(6) 10.46 5.70 89,442 0.25 2.66
LIFE VISION GROWTH AND INCOME PORTFOLIO (A)
Trust Shares
1999(5) $10.33 7.75% $ 21,950 0.27% 1.38%
For the years ended November 30:
1998 11.06 7.12 19,042 0.25 1.68
1997(6) 10.51 5.97 22,521 0.25 2.11
LIFE VISION MAXIMUM GROWTH PORTFOLIO (A )
Trust Shares
1999(5) $11.31 10.99% $ 18,699 0.27% 0.28%
For the years ended November 30:
1998 11.32 6.53 16,230 0.25 0.23
1997(6) 10.65 6.82 13,712 0.25 0.72
MID-CAP EQUITY FUND
Trust Shares
1999 $12.68 1.61% $254,055 1.17% (0.47%)
1998 13.79 21.14 337,825 1.16 (0.29)
1997 13.21 14.23 287,370 1.15 0.23
1996 12.76 25.54 253,905 1.15 0.70
1995 11.00 12.56 125,562 1.15 0.88
Investor Shares
1999 $12.50 1.17% $ 19,230 1.62% (0.90%)
1998 13.67 20.56 24,930 1.61 (0.75)
1997 13.17 13.76 20,245 1.60 (0.21)
1996 12.74 24.93 17,971 1.60 0.25
1995 10.99 11.96 7,345 1.60 0.43
Flex Shares
1999 $12.17 0.56% $ 15,804 2.22% (1.52%)
1998 13.42 19.80 19,042 2.21 (1.37)
1997 13.04 13.06 10,120 2.20 (0.85)
1996(7) 12.69 23.00 5,029 2.20 (0.37)
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET INVESTMENT
EXPENSES TO INCOME (LOSS) TO RATIO OF
AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
(EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
-------------------- -------------------- ---------
INTERNATIONAL EQUITY FUND
<S> <C> <C> <C>
Trust Shares
1999 1.51% 0.64% 161%
1998 1.48 0.60 108
1997 1.51 0.46 139
1996(1) 1.65 1.17 113
Investor Shares
1999 1.93% 0.20% 161%
1998 1.91 0.15 108
1997 2.05 (0.06) 139
1996(2) 3.14 0.40 113
Flex Shares
1999 2.82% (0.69%) 161%
1998 2.58 (0.52) 108
1997 3.03 (0.79) 139
1996(2) 5.86 (2.27) 113
INTERNATIONAL EQUITY INDEX FUND
Trust Shares
1999 1.17% 0.59% 32%
1998 1.18 0.76 1
1997 1.15 0.61 2
1996 1.19 0.70 30
1995(3) 1.31 0.87 10
Investor Shares
1999 1.71% 0.01% 32%
1998 1.84 0.12 1
1997 1.88 (0.15) 2
1996 2.06 (0.13) 30
1995(3) 2.44 (0.32) 10
Flex Shares
1999 2.92% (1.10%) 32%
1998 3.52 (1.44) 1
1997 3.69 (1.98) 2
1996(4) 4.14 (2.28) 30
LIFE VISION BALANCED PORTFOLIO (A)
Trust Shares
1999(5) 0.42% 1.75% 48%
For the years ended November 30:
1998 0.42 2.04 52
1997(6) 0.42 2.49 43
LIFE VISION GROWTH AND INCOME PORTFOLIO (A)
Trust Shares
1999(5) 0.60% 1.05% 40%
For the years ended November 30:
1998 0.59 1.34 57
1997(6) 0.59 1.77 25
LIFE VISION MAXIMUM GROWTH PORTFOLIO (A )
Trust Shares
1999(5) 0.63% (0.08%) 33%
For the years ended November 30:
1998 0.66 (0.18) 75
1997(6) 0.73 0.24 34
MID-CAP EQUITY FUND
Trust Shares
1999 1.28% (0.58%) 76%
1998 1.27 (0.40) 129
1997 1.26 0.12 152
1996 1.29 0.56 116
1995 1.32 0.71 66
Investor Shares
1999 1.76% (1.04%) 76%
1998 1.84 (0.98) 129
1997 1.85 (0.46) 152
1996 1.96 (0.11) 116
1995 2.27 (0.24) 66
Flex Shares
1999 2.48% (1.78%) 76%
1998 2.47 (1.63) 129
1997 2.58 (1.23) 152
1996(7) 3.04 (1.21) 116
</TABLE>
Returns are for the period indicated and have not been annualized. Total return
figures do not include applicable sales loads.
(1) Commenced operations on December 1, 1995. All ratios for the period have
been annualized.
(2) Commenced operations on January 2, 1996. All ratios for the period have bee
annualized.
(3) Commenced operations on June 6, 1994. All ratios for the period have been
annualized.
(A) On May 24, 1999, the Crestar Life Vision Balanced, Crestar Life Vision
Growth and Income, and Crestar Life Vision Maximum Growth Portfolios exchanged
all of their assets and certain liabilities for shares of the Life Vision
Balanced, Life Vi sion Growth and Income, and Life Vision Maximum Growth
Portfolios, respectively. The Crestar Life Vision Balanced, Crestar Life Vision
Growth and Income, and Crestar Life Vision Maximum Growth Portfolios are the
accounting survivors in these transactions, and as a result, their basis of
accounting for assets and liabilities and their operating results for the
periods prior to May 24, 1999 have been carried forward in these financial
highlights.
(4) Commenced operations on June 8, 1995. All ratios for the period have been
annualized.
(5) For the six month period ended May 31, 1999. All ratios for the
period have been annualized.
(6) Commenced operations on June 30, 1997. All ratios for the period have been
annualized.
(7) Commenced operations on June 5, 1995. All ratios for the period have been
annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
80 & 81
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE PERIODS ENDED MAY 31,
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
--------- ------------- ----------------- ------------- ------------- ---------
SMALL CAP EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
Trust Shares
1999 $12.88 $ 0.13 $ (2.57) $(0.13) $(0.61) $ 9.70
1998 11.07 0.14 2.41 (0.12) (0.62) 12.88
1997(1) 10.00 0.05 1.04 (0.02) -- 11.07
Flex Shares
1999 $12.80 $ 0.01 $ (2.53) $(0.02) $(0.61) $ 9.65
1998(2) 11.28 0.03 2.17 (0.06) (0.62) 12.80
SMALL CAP GROWTH STOCK FUND
Trust Shares
1999(3) $10.00 $(0.05) $ 4.62 $ -- $(0.02) $14.55
Flex Shares
1999(3) $10.00 $(0.19) $ 4.67 $ -- $(0.02) $14.46
SUNBELT EQUITY FUND
Trust Shares
1999 $15.12 $(0.28) $ (2.84) $ -- $(0.91) $11.09
1998 13.28 0.01 3.03 -- (1.20) 15.12
1997 14.11 (0.09) 0.25 -- (0.99) 13.28
1996 10.03 (0.04) 4.32 -- (0.20) 14.11
1995 9.70 (0.01) 0.38 -- (0.04) 10.03
Investor Shares
1999 $14.77 $(0.33) $ (2.77) $ -- $(0.91) $10.76
1998 13.06 (0.07) 2.98 -- (1.20) 14.77
1997 13.95 (0.14) 0.24 -- (0.99) 13.06
1996 9.96 (0.11) 4.30 -- (0.20) 13.95
1995 9.69 (0.05) 0.36 -- (0.04) 9.96
Flex Shares
1999 $14.60 $(0.40) $ (2.74) $ -- $(0.91) $10.55
1998 13.00 (0.09) 2.89 -- (1.20) 14.60
1997 13.97 (0.14) 0.16 -- (0.99) 13.00
1996(4) 10.20 (0.07) 4.04 -- (0.20) 13.97
TAX SENSITIVE GROWTH STOCK FUND
Trust Shares
1999(5) $25.61 $ 0.02 $ 4.34 $(0.01) $ -- $29.96
Flex Shares
1999(6) $25.52 $(0.05) $ 4.38 $ -- $ -- $29.85
VALUE INCOME STOCK FUND
Trust Shares
1999 $13.90 $ 0.24 $ 1.02 $(0.24) $(2.07) $12.85
1998 13.71 0.26 2.62 (0.27) (2.42) 13.90
1997 13.15 0.30 2.32 (0.30) (1.76) 13.71
1996 11.59 0.35 2.71 (0.34) (1.16) 13.15
1995 10.54 0.32 1.
1999 $13.87 $ 0.19 $ 1.02 $(0.20) $(2.07) $12.81
1998 13.68 0.20 2.62 (0.21) (2.42) 13.87
1997 13.13 0.25 2.32 (0.26) (1.76) 13.68
1996 11.58 0.30 2.71 (0.30) (1.16) 13.13
1995 10.52 0.28 1.56 (0.27) (0.51) 11.58
Flex Shares
1999 $13.75 $ 0.10 $ 1.01 $(0.11) $(2.07) $12.68
1998 13.61 0.12 2.57 (0.13) (2.42) 13.75
1997 13.08 0.18 2.29 (0.18) (1.76) 13.61
1996(7) 11.59 0.26 2.65 (0.26) (1.16) 13.08
</TABLE>
<TABLE>
<CAPTION>
RATIO OF RATIO OF
RATIO OF EXPENSES TO NET
NET AVERAGE AVERAGE INVESTMENT
INVESTMENT NET ASSETS NET ASSETS INCOME (LOSS)
NET ASSETS RATIO OF INCOME (LOSS) (EXCLUDING (EXCLUDING TO
END OF EXPENSES TO TO WAIVERS WAIVERS PORTFOLIO
TOTAL PERIOD AVERAGE AVERAGE AND AND TURNOVER
RETURN+ (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------- ---------- ------------ ------------- --------------- --------------- ------------
SMALL CAP EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C>
Trust Shares
1999 (18.72%) $ 301,984 1.22% 1.27% 1.27% 1.22% 63%
1998 23.59 390,841 1.21 1.07 1.31 0.97 55
1997(1) 10.97 131,049 1.20 1.86 1.37 1.69 27
Flex Shares
1999 (19.52%) $ 19,465 2.27% 0.21% 2.55% (0.07%) 63%
1998(2) 22.29 40,613 2.06 0.01 2.35 (0.28) 55
SMALL CAP GROWTH
STOCK FUND
Trust Shares
1999(3) 45.70% $ 152,290 1.15% (0.47%) 1.48% (0.80%) 75%
Flex Shares
1999(3) 44.78% $ 6,158 2.25% (1.50%) 3.19% (2.44%) 75%
SUNBELT EQUITY FUND
Trust Shares
1999 (20.46%) $ 197,215 1.17% (0.68%) 1.30% (0.82%) 84%
1998 23.86 431,921 1.16 (0.90) 1.27 (1.01) 70
1997 1.48 381,371 1.15 (0.65) 1.26 (0.76) 72
1996 43.19 412,430 1.15 (0.34) 1.28 (0.47) 106
1995 3.81 258,908 1.15 (0.12) 1.30 (0.27) 80
Investor Shares
1999 (20.75%) $ 16,949 1.62% (1.12%) 1.78% (1.12%) 84%
1998 23.25 30,860 1.61 (1.35) 1.86 (1.60) 70
1997 1.05 28,095 1.60 (1.10) 1.84 (1.34) 72
1996 42.58 29,002 1.60 (0.79) 1.93 (1.12) 106
1995 3.20 22,180 1.60 (0.57) 1.98 (0.95) 80
Flex Shares
1999 (21.28%) $ 4,395 2.22% (1.74%) 2.66% (2.17%) 84%
1998 22.48 8,070 2.21 (1.96) 2.58 (2.33) 70
1997 0.46 5,689 2.20 (1.72) 2.69 (2.21) 72
1996(4) 39.86 2,705 2.20 (1.43) 3.62 (2.85) 106
TAX SENSITIVE GROWTH
STOCK FUND
Trust Shares
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1999(5) 17.04% $ 223,543 1.15% 0.21% 1.32% 0.04% 18%
Flex Shares
1999(6) 16.97% $ 75,875 2.25% (0.80%) 2.48% (1.03%) 18%
VALUE INCOME
STOCK FUND
Trust Shares
1999 11.13% $1,589,951 0.92% 1.91% 0.92% 1.91% 69%
1998 23.10 1,725,418 0.92 1.85 0.92 1.85 99
1997 22.18 1,488,062 0.91 2.40 0.91 2.40 105
1996 27.91 1,244,399 0.92 2.86 0.92 2.86 134
1995
1999 10.71% $ 194,312 1.28% 1.55% 1.28% 1.55% 69%
1998 22.71 210,591 1.27 1.47 1.27 1.47 99
1997 21.69 165,999 1.30 2.01 1.31 2.00 105
1996 27.39 130,597 1.30 2.47 1.37 2.40 134
1995 18.71 92,256 1.30 2.80 1.41 2.69 126
Flex Shares
1999 9.91% $ 167,000 2.02% 0.81% 2.03% 0.80% 69%
1998 21.76 180,530 2.01 0.78 2.01 0.78 99
1997 20.91 73,466 2.00 1.33 2.03 1.30 105
1996(7) 26.52 26,298 2.00 1.72 2.15 1.57 134
</TABLE>
Returns are for the period indicated and have not been annualized. Total return
figures do not include applicable sales loads.
(1) Commenced operations on January 31, 1997. All ratios for the period have
been annualized.
(2) Commenced operations on June 5, 1997. All ratios for the period have been
annualized.
(3) Commenced operations on October 8, 1998. All ratios for the period have been
annualized.
(4) Commenced operations on June 5, 1995. All ratios for the period have been
annualized.
(5) Commenced operations on December 11, 1998. All ratios for the period have
been annualized.
(6) Commenced operations on December 15, 1998. All ratios for the period have
been annualized.
(7) Commenced operations on June 1, 1995. All ratios for the period have been
annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
82 & 83
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
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 thirty-four portfolios as of May 31, 1999:
the Balanced Fund, the Capital Appreciation Fund (formerly Capital Growth Fund),
the Emerging Markets Equity Fund, the Growth and Income Fund, the International
Equity Fund, the International Equity Index Fund, the Life Vision Balanced
Portfolio, the Life Vision Growth and Income Portfolio, the Life Vision Maximum
Growth Portfolio, the Mid-Cap Equity Fund, the Small Cap Equity Fund, the Small
Cap Growth Stock Fund, the Sunbelt Equity Fund, the Tax Sensitive Growth Stock
Fund, the Value Income Stock Fund, (collectively the "Equity Funds"), the
Florida Tax-Exempt Bond Fund, the Georgia Tax-Exempt Bond Fund, Investment Grade
Bond Fund, the Investment Grade Tax-Exempt Bond Fund, the Limited-Term Federal
Mortgage Securities Fund, the Maryland Municipal Bond Fund, the Short-Term Bond
Fund, the Short-Term U.S. Treasury Securities Fund, and the U.S. Government
Securities Fund, the Virginia Intermediate Municipal Bond Fund, the Virginia
Municipal Bond Fund, (collectively the "Fixed Income Funds"), the Prime Quality
Money Market Fund, the Tax-Exempt Money Market Fund, the Tax-Free Money Market
Fund, the U.S. Government Securities, the U.S. Treasury Money Market Fund
(collectively the "Retail Money Market Funds"), the Classic Institutional Cash
Management Money Market Fund, the Classic Institutional U.S. Government
Securities Money Market Fund and the Classic Institutional U.S. Treasury
Securities Money Market Fund, (collectively the "Institutional 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. The financial statements presented herein are those of the Equity
Funds. The financial statements of the Fixed Income Funds, Institutional Money
Market Funds and Retail Money Market Funds are not presented herein, but
presented separately.
On February 17, 1999 and February 19, 1999, respectively, the Board of
Trustees of the STI Classic Funds and Board of Directors of the CrestFunds,
Inc. ("CrestFunds") approved an Agreement and Plan of Reorganization (the
"Reorganization Agreement") providing for the transfer of all assets and
liabilities of the CrestFunds in exchange for the issuance of shares in the
Funds in a tax-free reorganization (see Note 8).
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the
Trust.
BASIS OF PRESENTATION OF STATEMENTS -- As more fully described in Note 8, the
STI Classic Funds acquired certain Crestar Funds in a tax-free business
combination. While each Fund now exists as an STI Classic Fund, a number of the
surviving funds for accounting purposes are Crestar Funds. In accordance with
generally accepted accounting principles, the financial statements presented
herein represent those of accounting survivors. Accordingly, the Statements of
Operations, Statements of Changes in Net Assets and Financial Highlights
presented reflect periods beginning on the first day of the accounting
survivor's fiscal year.
SECURITY VALUATION -- Investment securities held by the Equity 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 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 agreementsmature.
Provisions of the repurchase agreements ensure that the market value of the
collateral,
84
<PAGE>
- -------------------------------------------------------------------------------
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 Balanced, the Capital
Appreciation, the Growth and Income, the International Equity, the
International Equity Index, the Mid-Cap Equity, the Sunbelt Equity, and the
Value Income Stock Funds is equal to the net asset value per share plus a
sales load of 3.75%.
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.
TBA PURCHASE COMMITMENTS -- The Balanced Fund may enter into "TBA" (To Be
Announced) purchase commitments to purchase securities for a fixed price at
a future date beyond customary settlement time. TBA purchase commitments
may be considered securities in themselves, and involve a risk of loss if
the value of the security to be purchased declines prior to settlement
date, which risk is in addition to the risk of decline in the value of the
funds' other assets. Unsettled TBA purchase commitments are valued at the
current market value of the underlying securities, generally according to
the procedures described under "Security Valuation."
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 are declared and paid each calendar
quarter by the Equity Funds, except for the Emerging Markets Equity, the
International Equity, and the International Equity Index Funds. These funds
distribute income annually. 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 net operating losses and the classification of short-term
capital gains and ordinary income for tax purposes, have been reclassified
to/from the following accounts:
<TABLE>
<CAPTION>
UNDISTRIBUTED
ACCUMULATEDNET INVESTMENT
PAID-IN-CAPITAL REALIZED GAIN/ INCOME/(LOSS)
(000) (LOSS) (000) (000)
------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation
Fund............. $ (175) $ -- $ 175
Emerging Markets
Equity Fund...... -- (11) 11
Growth and Income Fund (74) -- 74
Life Vision Balanced
Portfolio........ (11) -- 11
International Equity
Fund............. -- 4 (4)
International Equity
Index Fund...... -- (240) 240
Life Vision Growth and
Income Portfolio (2) 31 (29)
Life Vision Maximum
Growth Portfolio. (2) -- 2
Mid-Cap Equity Fund (1,783) (3) 1,786
Small Cap Equity
Fund............. -- 4 (4)
Small Cap Growth Stock
Fund............. (120) (146) 266
Sunbelt Equity Fund (2,424) 43 2,381
Tax Sensitive Growth
Stock Fund....... -- (48) 48
</TABLE>
85
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
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
In April 1998, the AICPA issued Statement of Position (SOP) No. 98-5, "Reporting
on the Costs of Start-Up Activities." This SOP provides guidance on the
financial reporting of start-up costs and organization costs and requires costs
of start-up activities and organization costs to be expensed as incurred.
Investment companies that began operations prior to June 30, 1998 can adopt the
SOP prospectively. Therefore, previously capitalized organization costs will
continue to be amortized over a period of sixty months. Any future start-up or
organization costs will be expensed as incurred.
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, as amended November 19, 1997 and March 1, 1999 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 Trust) of: .12% up to $1 billion, .09% on the next $4 billion, .07% on
the next $3 billion, .065% on the next $2 billion and .06% for over $10 billion.
Prior to May 24, 1999, administrative and accounting services were provided to
the CrestFunds by SEI Investments Mutual Funds Services who was entitled to
receive a fee at an annual rate of .15% of the average daily net assets of the
CrestFunds. Additionally, SEI Investments Mutual Funds Services was entitled to
receive a minimum annual fee of $40,000 for each of the Life Vision Portfolios.
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".
Prior to May 24, 1999, the Distributor, a wholly owned subsidiary of SEI
Investments Co., served as distributor of each of the CrestFunds shares pursuant
to an agreement with the Company. The Trust Class and Investors Class A shares
of the CrestFunds had a separate distribution plan (the 12b-1 Plan) pursuant to
Rule 12b-1 under the 1940 Act. As provided in the 12b-1 Plan, the Trust Class
and Investors Class A shares of the CrestFunds paid the Distributor as
compensation for its services .15% of the aggregate average daily net assets of
such classes of the CrestFunds. The Distributor had voluntarily agreed to waive
any fees payable pursuant to the 12b-1 Plan. Additionally, the Investors Class B
Shares of the CrestFunds had a distribution plan (the B Shares Plan) pursuant to
Rule 12b-1 under the 1940 Act. As provided in the B Shares Plan, the Investors
Class B Shares of the CrestFunds paid the Distributor as compensation for its
services .75% of the aggregate average daily net assets of such class of the
Funds. In addition, pursuant to the B Shares Plan, the Distributor was
compensated at an annual rate of .25% of the B shares' average net assets for
providing ongoing Shareholder support services to investors in B shares. The
Distributor had agreed to waive a portion of its fees pursuant to the B Shares
Plan in order to limit Distribution Fees to .95% for each Fund, except for the
Value Fund for which the limit was .90%. Prior to April 15, 1999, the limit was
.75% for the Value Fund.
Prior to May 24, 1999, the CrestFunds had adopted a shareholder service plan
(the "Plan") for Trust Class
Shares of the Value Fund, Capital Appreciation Fund and Special Equity Fund.
Under the Plan, these Fund's paid the Distributor a negotiated fee at a rate of
up to .25% annually of the average daily net assets of such Fund attributable to
the shares that are subject to the arrangement in return for provision of a
broad range of shareholder and administrative services. The Distributor had
agreed to waive a portion of its shareholder service plan for trust class shares
in order to limit shareholder service fees to .10%.
86
<PAGE>
- -------------------------------------------------------------------------------
5. Investment Advisory and Custodian Agreements:
The Trust and STI Capital Management, N.A., ("STI Capital Management, N.A."),
Trusco Capital Management ("Trusco") and the SunTrust Bank, Atlanta have entered
into advisory agreements dated May 29, 1992, June 15, 1993, and December 20,
1993, respectively.
Under terms of the respective agreements, the Funds are charged the following
annual fees based upon average daily net assets:
<TABLE>
<CAPTION>
MAXIMUM
FLEX
SHARE
MAXIMUM DISTRI-
MAXIMUM TRUST INVESTOR INVESTOR BUTION FLEX
ANNUAL SHARE SHARE SHARE AND SHARE
ADVISORY MAXIMUM DISTRI- MAXIMUM SERVICE MAXIMUM
FEE EXPENSE BUTION FEE EXPENSE FEE EXPENSE
--------- --------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
TRUSCO:
Growth and
Income Fund .90% 1.01% .25% 1.18% 1.00% 1.93%
Life Vision
Balanced
Portfolio .25% .25% -- -- -- --
Life Vision
Growth
and Income
Portfolio .25% .25% -- -- -- --
Life Vision
Maximum
Growth
Portfolio .25% .25% -- -- -- --
International
Equity Index
Fund .90% 1.07% .38% 1.47% 1.00% 2.12%
Small Cap Growth
Stock Fund 1.15% 1.20% -- -- 1.00% 2.25%
Sunbelt Equity
Fund 1.15% 1.17% .43% 1.62% 1.00% 2.22%
Tax Sensitive
Growth Stock
Fund 1.15% 1.20% -- -- 1.00% 2.25%
STI CAPITAL MANAGEMENT, N.A.:
Balanced
Fund .95% .97% .28% 1.27% 1.00% 2.03%
Capital
Appreciation
Fund 1.15% 1.17% .68% 1.82% 1.00% 2.29%
Emerging Markets
Equity Fund 1.30% 1.57% -- -- -- --
International
Equity Fund 1.25% 1.48% .33% 1.83% 1.00% 2.53%
Mid-Cap Equity
Fund 1.15% 1.17% .43% 1.62% 1.00% 2.22%
Small Cap
Equity Fund 1.15% 1.22% -- -- 1.00% 2.27%
Value Income
Stock Fund .80% .97% .33% 1.32% 1.00% 2.02%
</TABLE>
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.
Prior to May 24, 1999 Crestar Asset Management Company ("CAMCO") provided
investment advisory services to the CrestFunds. CAMCO was paid for advisory
services at an annual rate of .75% of average daily net assets for the Capital
Appreciation Fund, Value Fund and Special Equity Fund, and .25% of average daily
net assets for the Life Vision Balanced Fund, Life Vision Growth and Income
Fund, and Life Vision Maximum Growth Fund.
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.
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, 1999, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
----------------------
<S> <C> <C>
Balanced Fund $ 66,419 $ 56,352
Capital Appreciation Fund 83,708 115,513
Emerging Markets Equity Fund 16,762 21,044
Growth and Income Fund 196,661 202,372
International Equity Fund 931,039 926,353
International Equity Index Fund 34,263 19,833
Life Vision Balanced Portfolio 43,858 91,385
Life Vision Growth and Income Portfolio 10,263 8,165
Life Vision Maximum Growth Portfolio 7,041 5,883
Mid-Cap Equity Fund 232,823 332,718
Small Cap Equity Fund 200,349 231,019
Small Cap Growth Stock Fund 192,444 41,977
Sunbelt Equity Fund 18,876 42,696
Tax Sensitive Growth Stock Fund 195,255 33,468
</TABLE>
The cost of U.S. Government security purchases and the proceeds from the sale of
U.S. Government Securities for the Balanced Fund during the period ended May 31,
1999, were $189,416 and $165,912, respectively.
At May 31, 1999, the Emerging Markets Equity Fund, Small Cap Equity Fund and
Sunbelt Equity Fund had capital loss carryforwards for federal tax purposes of
$4,447,790, $16,347,746 and $3,453,741, respectively, resulting from security
sales. 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. The
carryforward for each of the funds expires in May 2007.
87
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
- -------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999
The following Funds had cumulative wash sales for the fiscal year ended May 31,
1999:
<TABLE>
<CAPTION>
FUND AMOUNT
<S> <C>
Balanced Fund $ 907,255
Capital Appreciation Fund 1,727,191
Growth and Income Fund 254,155
International Equity Fund 1,799,430
Life Vision Balanced Portfolio 256,794
Life Vision Growth and Income
Portfolio 230,291
Mid-Cap EquityFund 303,398
Small Cap Equity Fund 849,386
Small Cap Growth Stock Fund 382,100
Sunbelt Equity Fund 3,289,602
</TABLE>
The wash sale losses cannot be used for Federal income tax purposes and are
deferred.
At May 31, 1999, 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, 1999, were as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
APPRECIATION DEPRECIATION DEPRECIATION
-------------- ------------ ---------------
<S> <C> <C> <C>
Balanced Fund $ 43,946 $ (6,383) $ 37,563
Capital Appreciation Fund 599,156 (53,463) 545,693
Emerging Markets Equity Fund 3,887 (5,989) (2,102)
Growth and Income Fund 16,417 (9,020) 177,397
International Equity Fund 62,199 (24,918) 37,281
International Equity Index Fund 19,507 (5,110) 14,397
Life Vision Balanced Portfolio 6,479 (1,435) 5,044
Life Vision Growth and
Income Portfolio 1,601 (256) 1,345
Life Vision Maximum
Growth Portfolio 2,052 (209) 1,843
Mid-Cap Equity Fund 46,226 (17,128) 29,098
Small Cap Equity Fund 18,487 (34,256) (15,769)
Small Cap Growth Stock Fund 19,516 (6,020) 13,496
Sunbelt Equity Fund 57,241 (9,250) 47,991
Tax Sensitive Growth Stock Fund 61,975 (1,644) 60,331
Value Income Stock Fund 204,487 (76,846) 127,641
</TABLE>
7. Common Trust Fund Conversion
On December 11, 1998, the SunTrust Quality Growth Stock Fund of SunTrust was
converted into the STI Classic Tax Sensitive Growth Stock Fund. The assets,
which consisted of securities and related receivables, were converted on a tax
free basis. At the time of conversion 3,874,558 of Trust Class shares were
issued. The net assets of the Sun Trust Quality Growth Stock Fund immediately
before the conversion were $99,222,180, which included unrealized appreciation
of $45,523,361.
88
<PAGE>
- -------------------------------------------------------------------------------
8. CrestFunds Merger
The Board of Directors and shareholders of the CrestFunds approved a
reorganization of the CrestFunds into STI Classic Funds which took place at the
close of business on May 17, 1999 (May 24, 1999 for Growth and Income Fund, Life
Vision Balanced Portfolio, Life Vision Growth and Income Portfolio, Life Vision
Maximum Growth Portfolio). The following table summarizes certain relevant
information of the Funds prior to and immediately after the business
combinations on May 17, 1999 and May 24, 1999 and is unaudited:
<TABLE>
<CAPTION>
SHARES
OUTSTANDING UNREALIZED
ON MERGE RAPPRECIATION
CRESTFUNDS DATE (DEPRECIATION)
- -------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation
Trust Shares 7,017,951 $50,852,434
Investor Class A 634,910 4,570,273
Investor Class B 405,693 945,904
Special Equity
Trust Shares 6,434,126 8,484,235
Investor Class A 335,109 461,214
Investor Class B 439,353 (115,351)
Value Fund (1)
Trust Shares 39,426,216 185,105,926
Investor Class A 2,284,756 7,740,403
Investor Class B 2,164,932 4,552,822
Life Vision Balanced (1)
Trust Shares 8,168,631 6,271,120
Life Vision Growth and Income (1)
Trust Shares 2,130,709 1,682,009
Life Vision Maximum Growth (1)
Trust Shares 1,650,909 2,180,220
</TABLE>
* Investor Class A shares of CrestFund Special Equity were exchanged for Trust
Shares of STI Small Cap Growth Stock. (1) Represents the accounting survivor in
this business combination.
<TABLE>
<CAPTION>
SHARES ISSUEDNET ASSETS NAV
IN BUSINESS AFTER PER
STI CLASSIC FUND COMBINATION COMBINATION SHARE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation (1)
Trust Shares 8,202,045 $2,043,356,370 $17.02
Investor Shares 738,260 321,669,847 16.93
Flex Shares 474,357 165,340,901 16.58
Small Cap Growth Stock (1)
Trust Shares 6,174,359 153,356,352 14.40
Investor Shares -- -- --
Flex Shares 188,473 5,980,718 14.32
Growth and Income
Trust Shares 39,426,21 6 649,230,675 16.47
Investor Shares 2,284,756 37,909,335 16.59
Flex Shares 2,164,932 35,677,567 16.47
Life Vision Balanced
Trust Shares 8,168,631 89,406,305 10.95
Life Vision Growth and Income
Trust Shares 2,130,709 22,352,880 10.49
Life Vision Maximum Growth
Trust Shares 1,650,909 19,002,404 11.51
</TABLE>
89
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1998
To the Shareholders and Board of Trustees of
STI Classic Funds:
We have audited the accompanying statements of net assets of the Balanced,
Capital Appreciation, Emerging Markets Equity, Growth & Income, International
Equity, Mid-Cap Equity, Small Cap Equity, Small Cap Growth, Sunbelt Equity, Tax
Sensitive Growth, Value Income Stock Funds, Life Vision Balanced, Life Vision
Growth & Income, and Life Vision Maximum Growth Portfolios, and the statements
of assets and liabilities, including the schedule of investments, of the
International Equity Index Funds of STI Classic Funds (the "Trust") as of May
31, 1999, 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. The statements of operations for the
year ended November 30, 1998, statements of changes for the years ended November
30, 1998 and November 30, 1997, and financial highlights for the periods prior
to May 31, 1999, for the Growth & Income Fund, Life Vision Balanced, Life Vision
Growth & Income, and Life Vision Maximum Growth Portfolios were audited by other
auditors whose report dated January 15, 1999, expressed an unqualified opinion
on this information.
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 and financial highlights. Our procedures included confirmation of
securities owned as of May 31, 1999, 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
Balanced, Capital Appreciation, Emerging Markets Equity, Growth & Income,
International Equity, International Equity Index, Mid-Cap Equity, Small Cap
Equity, Small Cap Growth, Sunbelt Equity, Tax Sensitive Growth, and Value Income
Stock Funds, the Life Vision Balanced Life Vision Growth & Income, and Life
Vision Maximum Growth Portfolios, of STI Classic Funds as of May 31, 1999, the
results of their operations, changes in their net assets, and financial
highlights for each of the periods described in the first paragraph above, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
July 23, 1999
90
<PAGE>
NOTICE TO SHAREHOLDERS
- -------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 1999 UNAUDITED
<TABLE>
<CAPTION>
For shareholders that do not have a May 31, 1999 tax year end, this notice is
for informational purposes only. For shareholders with a May 31, 1999 tax year
end, please consult your tax advisor as to the pertinence of this notice. For
the fiscal year ended May 31, 1999, each portfolio is designating the following
items with regard to distributions paid during the year:
LONG TERM FOREIGN
(20% RATE) ORDINARY TAX
CAPITAL GAINS INCOME TAX-EXEMPT TOTAL QUALIFYING WITHHOLDING
FUND DISTRIBUTIONS DISTRIBUTIONS INTEREST DISTRIBUTIONS DIVIDENDS(1) PASS THROUGH(2)
----------------------------------------------------------------------------------- ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund 35.30% 64.70% 0.00% 100.00% 11.74% --%
Capital Appreciation Fund 54.78% 45.22% 0.00% 100.00% 14.67% --%
Emerging Markets Equity Fund 0.00% 100.00% 0.00% 100.00% 0.00% 11.35%
Growth and Income Fund 80.44% 19.56% 0.00% 100.00% 90.34% --%
International Equity Fund 53.89% 46.11% 0.00% 100.00% 0.00% 4.52%
International Equity Index Fund 86.80% 13.20% 0.00% 100.00% 0.00% 6.19%
Life Vision Balanced Portfolio 41.73% 58.27% 0.00% 100.00% 36.19% --%
Life Vision Growth and Income Portfolio 46.39% 53.61% 0.00% 100.00% 46.82% --%
Life Vision Maximum Growth Portfolio 50.94% 49.06% 0.00% 100.00% 76.43% --%
Mid-Cap Equity Fund 46.90% 53.10% 0.00% 100.00% 10.81% --%
Small Cap Equity Fund 16.78% 83.22% 0.00% 100.00% 38.00% --%
Small Cap Growth Stock Fund 0.00% 100.00% 0.00% 100.00% 11.73% --%
Sunbelt Equity Fund 71.61% 28.39% 0.00% 100.00% 0.00% --%
Tax Sensitive Growth Stock Fund 0.00% 100.00% 0.00% 100.00% 89.31% --%
Value Income Stock Fund 48.03% 51.97% 0.00% 100.00% 59.02% --%
</TABLE>
- -------------------------------------------------------------------------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distribution".
(2) Foreign tax credit pass through represents the amount eligible for the
foreign tax credit and is reflected as a percentage of "Ordinary Income
Distribution".
91
<PAGE>
NOTES
<PAGE>
INVESTMENT ADVISORS
STI Capital Management, N.A.
Trusco Capital Management, Inc.
SunTrust Bank, Atlanta
STI Classic Funds are not deposits,
are not insured or guaranteed by the
FDIC or any other government agency,
and are not endorsed by and do not
constitute obligations of SunTrust
Banks, Inc. or any other of its
affiliates. Investment in the Funds
involves risk, including the possible
loss of principal. There is no
guarantee that any STI Classic Fund
will achieve its investment objective.
The STI Classic Funds are advised by
affiliates of SunTrust Banks, Inc.
DISTRIBUTOR
SEI Investments Distribution Co.
This information must be preceded or accompanied by
a current prospectus for each Fund described.
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
PRIME QUALITY MONEY MARKET FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER (44.7%)
FINANCE (19.3%)
ABN-AMRO
4.880%, 10/18/99 $147,000 $144,230
AI Credit
4.900%, 06/01/99 50,000 50,000
Allstate
4.930%, 06/01/99 1,435 1,435
Associates
4.800%, 06/14/99 35,000 34,939
Bank of Montreal
4.810%, 07/19/99 75,000 74,519
BankAmerica
4.830%, 10/27/99 50,000 49,007
Credit Suisse First Boston
4.860%, 07/12/99 1,000 994
Den Norske Bank
4.900%, 07/07/99 800 796
4.860%, 08/10/99 20,000 19,811
Ford Motor Credit
4.750%, 11/03/99 25,000 24,489
General Electric Capital
4.800%, 06/11/99 80,000 79,889
4.800%, 06/14/99 2,000 1,997
4.820%, 07/16/99 3,600 3,578
4.730%, 08/19/99 20,000 19,792
4.740%, 12/01/99 25,000 24,398
General Motors Acceptance
4.670%, 10/20/99 55,000 53,994
Goldman Sachs
4.770%, 09/17/99 25,000 24,642
4.910%, 10/21/99 99,000 97,083
GTE Funding
4.830%, 06/02/99 21,560 21,557
4.800%, 06/03/99 3,200 3,199
J.P. Morgan
4.820%, 07/15/99 2,425 2,411
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Marsh & McClennan
4.900%, 06/03/99 $ 50,000 $ 49,986
Merrill Lynch
4.820%, 06/17/99 40,000 39,914
Paccar
4.850%, 06/23/99 325 324
Progress Capital
4.930%, 06/01/99 5,691 5,691
4.810%, 06/02/99 4,812 4,811
Sigma Finance
4.850%, 06/01/99 1,070 1,070
4.900%, 08/10/99 7,273 7,204
Sony Capital
4.930%, 06/03/99 41,025 41,014
Ubs Finance
4.980%, 10/05/99 17,130 16,831
4.890%, 12/13/99 8,815 8,582
4.780%, 12/20/99 25,000 24,329
--------
932,516
--------
INDUSTRIAL (24.4%)
Albertson's
4.800%, 06/07/99 18,200 18,185
Allied Signal
4.890%, 06/08/99 23,432 23,410
Allstate
4.830%, 07/22/99 25,000 24,829
Arco
4.840%, 06/11/99 20,000 19,973
4.820%, 06/29/99 8,200 8,169
4.810%, 07/21/99 25,000 24,833
AT&T
4.810%, 07/28/99 120,000 119,086
Becton Dickinson
4.870%, 07/19/99 504 501
Bp America
4.920%, 06/01/99 53,845 53,845
</TABLE>
5
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
PRIME QUALITY MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Caterpillar
4.810%, 07/13/99 $ 20,000 $ 19,888
4.900%, 09/09/99 28,100 27,718
Daimler Chrysler
4.720%, 07/15/99 35,000 34,798
Dupont (EI) de Nemour
4.800%, 11/16/99 25,000 24,440
Eastman Kodak
4.810%, 08/23/99 4,871 4,817
4.840%, 09/13/99 27,600 27,214
4.840%, 09/23/99 53,300 52,483
Edison International
4.820%, 08/02/99 50,000 49,585
4.850%, 08/16/99 85,000 84,130
Exxon Asset
4.910%, 06/02/99 80,000 79,989
Exxon Imperial
4.890%, 06/03/99 20,000 19,995
4.890%, 06/04/99 50,000 49,980
4.880%, 06/11/99 6,500 6,491
Ford Motor
4.950%, 06/03/99 3,400 3,399
4.850%, 07/26/99 1,525 1,514
4.850%, 07/27/99 2,800 2,779
General Electric
4.820%, 06/04/99 2,800 2,799
4.820%, 06/07/99 2,000 1,998
4.820%, 06/10/99 6,300 6,292
4.820%, 06/11/99 1,500 1,498
4.810%, 06/18/99 2,715 2,709
4.850%, 07/06/99 4,500 4,479
4.830%, 07/16/99 3,600 3,578
4.830%, 07/28/99 17,900 17,762
4.890%, 08/13/99 1,000 990
Golden Peanut
4.860%, 09/01/99 5,000 4,938
--------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
International Lease
4.900%, 06/01/99 $ 8,474 $ 8,474
J.C. Penney
4.930%, 06/11/99 3,200 3,196
5.040%, 07/29/99 20,000 19,841
New York Times
4.850%, 06/11/99 4,550 4,544
4.850%, 06/25/99 1,000 997
PPG Industries
4.850%, 06/11/99 400 399
Rio Tinto
4.840%, 06/14/99 23,400 23,359
4.850%, 06/16/99 5,919 5,907
4.850%, 06/17/99 11,700 11,675
4.810%, 07/06/99 20,000 19,906
4.810%, 07/16/99 5,700 5,666
4.850%, 08/17/99 38,085 37,690
Sara Lee
4.900%, 06/03/99 2,190 2,189
SmithKline Beecham
4.930%, 06/01/99 2,470 2,470
South Carolina
4.810%, 06/03/99 16,925 16,920
4.830%, 06/11/99 9,642 9,629
4.820%, 06/18/99 5,400 5,388
4.850%, 06/29/99 1,565 1,559
Southern California Edison
4.850%, 07/06/99 10,000 9,953
4.840%, 08/17/99 9,570 9,471
St. Paul
4.900%, 06/01/99 29,640 29,640
4.800%, 06/11/99 10,000 9,987
4.800%, 06/17/99 20,000 19,957
Toys "R" Us
4.820%, 06/01/99 14,273 14,273
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Unilever
4.910%, 06/01/99 $ 9,575 $ 9,575
Walt Disney
4.460%, 07/13/99 60,000 59,688
Xerox
4.920%, 06/01/99 3,158 3,158
4.850%, 06/24/99 494 492
---------
1,175,097
---------
UTILITIES (1.0%)
BellSouth
4.930%, 06/04/99 1,130 1,130
Consolidated Natural Gas
4.870%, 06/08/99 3,107 3,104
Georgia Power
4.810%, 07/19/99 39,300 39,048
GTE
4.910%, 06/02/99 3,032 3,032
Southwestern Pub
4.870%, 06/25/99 900 897
--------
47,211
--------
Total Commercial Paper
(Cost $2,154,824) 2,154,824
--------
CORPORATE OBLIGATIONS (24.7%)
FINANCE (21.5%)
American Express Centurion
Bank Note (C)
4.990%, 06/01/99 50,000 50,000
5.060%, 06/01/99 35,000 35,000
American Express Credit
8.500%, 06/15/99 1,500 1,502
American General
8.000%, 02/15/00 5,993 6,112
American General, MTN
6.350%, 10/29/99 5,000 5,026
6.190%, 11/08/99 5,000 5,024
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
American International
Group, MTN
6.050%, 11/01/99 $ 10,000 $ 10,040
Associates
6.625%, 07/15/99 7,350 7,364
7.250%, 09/01/99 350 352
8.250%, 12/01/99 3,000 3,045
Associates (C)
4.890%, 06/01/99 50,000 49,994
Associates, MTN
6.750%, 06/28/99 5,500 5,505
7.550%, 07/15/99 4,000 4,012
6.125%, 11/12/99 4,000 4,017
Bear Stearns, MTN
5.715%, 07/30/99 20,000 20,000
Bear Stearns, Ser B, MTN
5.300%, 03/09/00 20,000 20,000
Beneficial, MTN
6.650%, 10/11/99 3,300 3,318
8.100%, 11/09/99 1,600 1,621
7.180%, 12/20/99 2,500 2,528
Beneficial, MTN (C)
5.117%, 08/27/99 3,000 3,001
5.100%, 09/01/99 40,000 40,045
Beta Finance (A)
5.200%, 03/01/00 50,000 49,944
Beta Finance, MTN
6.250%, 02/18/00 631 634
Chrysler Financial
12.750%, 11/01/99 5,000 5,155
9.500%, 12/15/99 22,000 22,506
Chrysler Financial, MTN
6.280%, 06/21/99 8,280 8,286
6.280%, 06/23/99 5,000 5,004
6.160%, 07/28/99 1,000 1,001
6.375%, 01/28/00 17,000 17,137
</TABLE>
7
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
PRIME QUALITY MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Credit Suisse First Boston
International (C)
5.425%, 06/02/99 $ 25,000 $ 25,000
Credit Suisse First Boston
International Gue, MTN (A)
5.400%, 03/20/00 50,000 50,000
CS First Boston (A)
5.290%, 03/20/00 15,000 15,000
CS First Boston (C)
4.860%, 06/01/99 25,000 25,000
Export Development, MTN
8.625%, 03/24/00 3,000 3,075
First Union National Bank (C)
5.020%, 08/19/99 30,000 30,000
Ford Motor Credit
6.375%, 09/15/99 1,500 1,505
Ford Motor Credit, MTN
5.730%, 02/23/00 4,750 4,771
Ford Motor Credit, MTN (C)
5.220%, 08/01/99 6,000 6,007
General Motors Acceptance
7.125%, 06/01/99 5,000 5,000
8.625%, 06/15/99 480 481
8.400%, 10/15/99 5,000 5,058
7.000%, 03/01/00 1,500 1,520
General Motors Acceptance (A)
6.500%, 01/17/00 1,750 1,764
General Motors Acceptance, MTN
6.150%, 09/20/99 6,060 6,080
8.625%, 01/10/00 10,000 10,209
6.250%, 01/11/00 2,100 2,115
7.500%, 06/09/00 1,650 1,683
General Motors
Acceptance, MTN (C)
4.960%, 06/01/99 7,500 7,495
Goldman Sachs Group, MTN (A)
5.280%, 02/24/00 25,000 25,000
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Household Finance
7.625%, 06/15/99 $ 5,800 $ 5,805
Household Finance, MTN
7.280%, 07/22/99 2,500 2,507
Household International,
MTN (C)
5.080%, 07/22/99 15,000 15,004
IBM Credit
5.680%, 07/07/99 1,000 1,001
IBM Credit, MTN (C)
4.950%, 06/15/99 40,000 40,000
International Lease Finance
6.375%, 01/18/00 5,000 5,039
John Deere Capital, MTN
6.430%, 08/09/99 2,000 2,005
J.P. Morgan
5.700%, 02/15/00 2,000 2,004
J.P. Morgan (C)
4.990%, 06/24/99 60,000 59,997
J.p. Morgan, MTN (C)
5.060%, 06/01/99 80,000 80,000
Merrill Lynch (C)
5.090%, 06/01/99 60,000 60,000
Merrill Lynch, MTN (C)
4.990%, 08/05/99 5,000 4,999
5.450%, 08/16/99 10,000 10,019
National City Capital
6.750%, 06/01/99 30,050 30,050
Nationsbank, MTN (C)
5.030%, 06/02/99 28,000 28,006
5.060%, 06/03/99 13,000 13,004
5.066%, 06/03/99 10,000 10,000
NYNEX Capital Funding, MTN
7.640%, 07/19/99 2,000 2,006
Paccar Financial, MTN
6.110%, 12/15/99 5,000 5,027
6.570%, 12/15/99 5,000 5,039
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Pitney Bowes, MTN
6.540%, 07/15/99 $ 2,025 $ 2,028
PNC Bank, (C)
4.790%, 06/01/99 20,000 20,000
Teco Finance, MTN (A)
7.140%, 11/19/99 12,000 12,111
Texaco Capital
6.875%, 07/15/99 1,000 1,002
9.450%, 03/01/00 1,600 1,651
Transamerica Finance, MTN
8.750%, 10/01/99 1,000 1,012
5.970%, 12/06/99 1,500 1,506
7.570%, 12/09/99 1,000 1,012
Transamerica Finance, MTN (C)
5.250%, 07/22/99 750 750
---------
1,036,520
---------
INDUSTRIAL (2.6%)
American Home Products
7.700%, 02/15/00 10,520 10,707
Anheuser Busch
8.750%, 12/01/99 12,150 12,366
AT&T, MTN
8.250%, 01/11/00 5,000 5,090
Ford
9.250%, 03/01/00 7,000 7,203
General Mills
6.820%, 10/29/99 5,250 5,286
May Department Stores, MTN
9.560%, 12/01/99 1,000 1,022
Mobil Oil
9.170%, 02/29/00 3,833 3,907
Philip Morris
6.000%, 11/15/99 2,300 2,305
Philip Morris (C)
6.150%, 09/16/99 52,460 52,776
Shell Oil
6.625%, 07/01/99 630 631
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
United Technologies, MTN
8.300%, 12/15/99 $ 2,000 $ 2,034
Wal-Mart
6.125%, 10/01/99 660 662
5.650%, 02/01/00 22,000 22,073
--------
126,062
--------
UTILITIES (0.6%)
Duke Energy
8.000%, 11/01/99 5,330 5,392
GTE Southwest
5.820%, 12/01/99 5,900 5,922
Province of Quebec
9.125%, 03/01/00 12,500 12,859
Southern California Edison
6.750%, 01/15/00 2,000 2,019
8.250%, 02/01/00 3,500 3,571
--------
29,763
--------
Total Corporate Obligations
(Cost $1,192,345) 1,192,345
--------
ASSET BACKED SECURITIES (5.2%)
Americredit Auto Receivables Trust,
Ser 1998-B, Cl A1
5.199%, 11/12/99 8,644 8,645
Americredit Auto Receivables Trust,
Ser 1999-A Cl A1
4.980%, 03/12/00 11,259 11,259
Americredit Auto Receivables Trust,
Ser 1999-B, Cl A1
4.917%, 06/12/00 23,000 23,000
</TABLE>
9
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
PRIME QUALITY MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Arcadia Auto Receivables Trust,
Ser 1998-D, Cl A1
5.482%, 12/15/99 $ 383 $ 384
Arcadia Auto Receivables Trust,
Ser 1999-A, Cl A1
4.960%, 03/15/00 18,662 18,663
Case Equipment Loan Trust,
Ser 1998-C, Cl A1
5.420%, 12/15/99 4,017 4,018
First Security Auto Owner Trust,
Ser 1999-2, Cl A1
5.015%, 06/15/00 90,000 90,000
Honda Auto Receivables Owner
Trust, Ser 1999-1, Cl A1
4.974%, 02/15/00 14,188 14,188
Household Automobile Revolving
Trust, Ser 1998-1, Cl A1
5.330%, 12/17/99 9,073 9,073
Key Auto Finance Trust,
Ser 1999-1, Cl A1
4.960%, 04/15/00 12,040 12,041
Mmca Automobile Trust,
Ser 1999-1, Cl A1
5.066%, 01/15/00 12,065 12,065
Onyx Acceptance Auto Trust,
Ser 1999-B, Cl A1
4.930%, 05/15/00 17,000 17,000
Union Acceptance,
Ser 1999-A, Cl A1
4.980%, 03/08/00 8,659 8,659
Union Acceptance,
Ser 1999-B, Cl A1
4.960%, 06/08/00 22,000 22,000
--------
Total Asset Backed Securities
(Cost $250,995) 250,995
--------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANK NOTES (2.5%)
American Express Centurion (A) (C)
4.841%, 06/09/99 $ 5,000 $ 5,000
First Union Bank Note (C)
5.040%, 06/01/99 75,000 74,986
First USA
6.500%, 12/23/99 2,200 2,217
Inter-American Development
9.500%, 04/11/00 760 785
Nationsbank
4.880%, 10/18/99 35,000 35,000
--------
Total Bank Notes
(Cost $117,988) 117,988
--------
CERTIFICATES OF DEPOSIT (6.9%)
Bayerische Hypo
5.270%, 03/03/00 50,000 49,962
Bayerische Landesbank
4.830%, 06/21/99 100,000 100,000
Bear Stearns, MTN (C)
5.029%, 06/18/99 15,000 15,000
Branch Banking and Trust (C)
5.060%, 06/01/99 50,000 49,990
Canadian Imperial Bank
5.120%, 02/23/00 50,000 49,982
Commerzbank AG
5.160%, 02/25/00 22,000 21,991
PNC Bank N.A. (C)
4.779%, 06/03/99 15,000 14,998
Toronto Dominion Bank
5.270%, 03/03/00 30,000 29,977
--------
Total Certificates of Deposit
(Cost $331,900) 331,900
--------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE FUNDING AGREEMENTS (5.6%)
General American Life
Insurance, GIC (C) (F)
5.130% $160,000 $160,000
Integrity Life Insurance,
GIC (C) (F)
5.130% 110,000 110,000
--------
Total Insurance Funding Agreements
(Cost $270,000) 270,000
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS (1.7%)
FHLMC
4.935%, 06/04/99 15,000 14,994
FNMA
4.680%, 06/10/99 65,000 64,924
SLMA, Ser 1996-3, Cl A1 (C)
5.115%, 06/02/99 2,525 2,510
SLMA, Ser 1996-4, Cl A1 (C)
5.105%, 06/02/99 909 909
--------
Total U.S. Government Agency
Obligations
(Cost $83,337) 83,337
--------
REPURCHASE AGREEMENTS (9.7%)
Barclays
4.82%, dated 05/28/99, matures
06/01/99, repurchase price
$20,023,992 (collateralized
by FHLB, FHLMC and FNMA
obligations: total market
value $20,418,104) (B) 20,013 20,013
Deutsche Bank
4.82%, dated 05/28/99, matures
06/01/99, repurchase price
$75,060,980 (collateralized by
FHLMC obligation: total
market value $76,521,219) (B) 75,021 75,021
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Merrill Lynch
4.82%, dated 05/28/99, matures
06/01/99, repurchase price
$139,825,303 (collateralized by
various GNMA obligations:
total market value
$142,547,920) (B) $139,750 $139,750
J.P. Morgan
4.82%, dated 05/28/99, matures
06/01/99, repurchase price
$121,360,378 (collateralized
by various FNMA obligaions:
total market value
$123,721,327) (B) 121,295 121,295
Salomon Brothers 4.82%, dated 05/28/99,
matures 06/01/99, repurchase price
$90,056,124 (collateralized by
various FHLMC and FNMA
obligations: total market value
$91,908,156) (B) 90,008 90,008
Swiss
4.82%, dated 05/28/99, matures
06/01/99, repurchase price
$20,040,207 (collateralized by
FNMA obligation: total market
value $20,430,541) (B) 20,030 20,030
--------
Total Repurchase Agreements
(Cost $466,117) 466,117
--------
Total Investments (101.0%)
(Cost $4,867,506) 4,867,506
---------
OTHER ASSETS AND LIABILITIES, NET (-1.0%) (46,174)
--------
</TABLE>
11
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
PRIME QUALITY MONEY MARKET FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE (000)
- --------------------------------------------------------------------------------
<S> <C>
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par
value) based on 3,903,658,704
outstanding shares of beneficial interest $3,903,579
Fund shares of the Investor Class
(unlimited authorization -- no par
value) based on 918,111,878
outstanding shares of beneficial interest 918,144
Overdistributed net investment income (43)
Accumulated net realized loss
on investments (348)
------------
Total Net Assets 100.0% 4,821,332
------------
------------
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 31.
12
<PAGE>
TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (99.4%)
ALABAMA (1.9%)
Special Care Facilities, Montgomery
Hospital, RB, VRDN
(FGIC) (C) (D)
3.350%, 06/03/99 $ 1,120 $ 1,120
University of Alabama, Birmingham
Hospital, Ser A, RB, VRDN (C)
3.300%, 06/02/99 13,220 13,220
--------
14,340
--------
ALASKA (1.0%)
Alaska State Housing Finance
Authority, Ser C, GO (C)
3.350%, 06/02/99 7,870 7,870
--------
ARIZONA (1.0%)
City of Mesa, TECP
3.300%, 10/06/99 5,000 5,000
State, Educational Loan Marketing,
Ser A, RB, VRDN, AMT (C)
3.300%, 06/02/99 2,500 2,500
--------
7,500
--------
ARKANSAS (0.1%)
State, Development Financial
Authority, Potlatch Projects,
Ser A, RB, VRDN, AMT (C) (D) (E)
3.450%, 06/02/99 1,000 1,000
--------
CALIFORNIA (0.7%)
State, Higher Educational Loan
Authority, Student Loan
Revenue, Ser D-2, RB
3.650%, 04/01/00 5,000 5,000
--------
COLORADO (1.1%)
Cherry Creek, South Metropolitan
District Number 1, GO, VRDN (C)
3.250%, 06/03/99 1,350 1,350
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Lowry Economic, Redevelopment
Authority, Ser B, RB, VRDN (C)
3.250%, 06/02/99 $ 2,000 $ 2,000
Smith Creek, Metropolitan District,
RB, VRDN (C)
3.300%, 06/03/99 5,300 5,300
--------
8,650
--------
DELAWARE (0.2%)
State, Educational Development
Authority, RB, VRDN (C) (D) (E)
3.625%, 06/03/99 1,875 1,875
--------
DISTRICT OF COLUMBIA (0.1%)
Metropolitan Airports Authority,
Ser B, RB, AMT
4.000%, 10/01/99 1,000 1,002
--------
FLORIDA (7.6%)
Citrus Park, Community
Development, RB, VRDN
(C) (D) (E)
3.350%, 06/02/99 1,500 1,500
Dade County, Aviation Revenue,
Ser B, RB (AMBAC)
5.600%, 10/01/99 750 756
Dade County, Aviation Revenue,
Ser C, RB (MBIA)
5.000%, 10/01/99 5,160 5,194
Dade County, Water & Sewer
System, Ser 1994, RB, VRDN
(FGIC) (C) (D)
3.150%, 06/02/99 8,000 8,000
Hillsborough County, Industrial
Development Authority, Pollution
Control Revenue, Tampa Electric
Project, RB, VRDN, AMT (C)
3.500%, 06/01/99 1,100 1,100
</TABLE>
13
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
TAX-EXEMPT MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Jacksonville, TECP
2.950%, 06/10/99 $ 4,100 $ 4,100
Palm Beach County, Jewish
Community Campus Corporation,
VRDN, RB (AMBAC) (C) (E)
3.200%, 06/02/99 4,000 4,000
Palm Beach County, RB, VRDN (C)
3.300%, 06/03/99 1,000 1,000
State, Housing Financial Agency,
Heron Park Project, Ser U, RB,
VRDN, AMT (C) (E)
3.450%, 06/02/99 1,190 1,190
State, Local Government Pooled
Loan Program, TECP
3.050%, 06/08/99 4,810 4,810
3.000%, 06/10/99 4,000 4,000
State, RB, VRDN (C)
3.320%, 06/03/99 5,295 5,295
St. Lucie County, Pollution
Control, TECP
3.000%, 06/09/99 6,500 6,500
2.950%, 06/10/99 5,000 5,000
University of North Florida
Foundation, Parking System,
RB, VRDN (C)
3.300%, 06/03/99 6,000 6,000
--------
58,445
--------
GEORGIA (6.4%)
Conyers-Rockdale-Big Haynes,
Impoundment Authority
Revenue, RB, VRDN (C)
3.250%, 06/02/99 3,000 3,000
Fulton County, Industrial
Development Authority,
American Red Cross Project,
RB, VRDN (C) (D) (E)
3.300%, 06/03/99 1,200 1,200
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Gordon County, Development
Authority, Sara Lee Corporation, RB,
VRDN (C) (D)
3.300%, 06/03/99 $ 1,400 $ 1,400
Lafayette, Industrial Development
Authority, Blue-Bird Project,
Ser 1991, RB, VRDN (C) (D) (E)
3.300%, 06/03/99 1,000 1,000
Metropolitan Atlanta, Rapid Transit
Authority, Georgia Sales Tax
Revenue, RB, VRDN (C)
3.320%, 06/03/99 10,000 10,000
Monroe County, Industrial
Development Authority, Forsyth
Inns Project, RB,
VRDN (C) (D) (E)
3.350%, 06/02/99 2,425 2,425
Putnam County, Development
Authority, Pollution Control,
RB, VRDN (C)
3.350%, 06/01/99 1,700 1,700
State, RB, VRDN (C)
3.320%, 06/03/99 10,545 10,545
State, Ser E, GO
4.000%, 02/01/00 5,600 5,637
State, Municipal Electric Authority,
RB, VRDN (C) (D) (E)
3.300%, 06/02/99 4,000 4,000
State, Municipal Gas Authority,
Portfolio II Project, Ser A,
RB, VRDN (C)
3.150%, 06/02/99 6,625 6,625
Summerville, Development
Authority, Ser 1997, RB,
VRDN, AMT (C) (E)
3.350%, 06/10/99 2,000 2,000
--------
49,532
--------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
HAWAII (3.1%)
Hawaii State Highway, RB,
VRDN (C) (E)
3.320%, 06/03/99 $ 19,790 $ 19,790
State, GO, VRDN (MBIA) (C)
3.320%, 06/02/99 4,260 4,260
--------
24,050
--------
IDAHO (0.9%)
Nez Pierce County, Pollution
Control, Potlatch Project, RB,
VRDN (C) (D) (E)
3.350%, 06/02/99 2,000 2,000
3.350%, 06/03/99 1,000 1,000
State, TRAN
4.500%, 06/30/99 4,000 4,003
--------
7,003
--------
ILLINOIS (8.3%)
Bloomington, Airport Authority,
GO, VRDN (C) (D) (E)
3.300%, 06/02/99 1,300 1,300
Chicago, Airport Facilities,
Centerpoint O'Hare,
International Airport Project,
RB, VRDN, (C) (E)
3.400%, 06/02/99 3,500 3,500
Chicago, Industrial Development
Midwest Project, RB,
VRDN, (C) (E)
3.420%, 06/03/99 2,055 2,055
Chicago, O'Hare International
Airport, RB, VRDN (C) (D) (E)
3.350%, 07/01/99 1,840 1,840
Chicago, Single-Family Mortage,
RB, VRDN, AMT (B) (C)
3.100%, 09/01/99 5,595 5,595
Lockport, Industrial Development
Panduit Project, RB,
VRDN (C) (E)
3.350%, 06/02/99 2,000 2,000
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Savannah, Industrial Development
Authority, Metform Project,
Ser A, RB, VRDN (C) (D) (E)
3.400%, 06/02/99 $ 1,900 $ 1,900
State, Chicago Illinois Sales Tax,
RB (FGIC)
4.000%, 01/01/00 1,875 1,885
State, Development Financial Authority,
Derby Project, RB, VRDN,
AMT (C) (D) (E)
3.500%, 06/02/99 900 900
State, Development Financial
Authority, Pollution Control,
Illinois Power, Ser A, RB,
VRDN (C) (E)
3.400%, 06/02/99 5,000 5,000
State, Educational Facilities Authority,
Chicago Children's Museum, RB, VRDN
(C) (D) (E)
3.250%, 06/02/99 1,600 1,600
State, Educational Facilities
Authority, Museum of Science
and Industry, RB, VRDN (C) (E)
3.250%, 06/03/99 5,600 5,600
State, Educational Facilities
Authority, RB, VRDN, (C) (E)
3.370%, 06/03/99 9,900 9,903
State, Health Facilities Authority,
Advocate Healthcare, Ser B,
RB, VRDN (C) (D)
3.300%, 06/02/99 2,900 2,900
State, Health Facilities Authority,
Proctor Hospital Project,
RB, VRDN (C)
3.250%, 06/02/99 5,400 5,400
</TABLE>
15
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
TAX-EXEMPT MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
State, Health Facilities Authority,
Streeterville Corporation,
RB, VRDN (C) (D) (E)
3.250%, 06/02/99 $ 2,000 $ 2,000
State, Health Facilities Authority,
Streeterville Corporation,
Ser A, RB, VRDN (C) (E)
3.250%, 06/02/99 3,500 3,500
State, Health Facilities Authority,
University of Chicago Hospital
Project, Ser C, RB, VRDN
(MBIA) (C) (D)
3.200%, 06/02/99 4,000 4,000
Wheeling, Industrial Development
Circuit Service Project, RB,
VRDN (C) (E)
3.420%, 06/03/99 2,800 2,800
--------
63,678
--------
INDIANA (4.0%)
Elkhart County, Economic
Development, Godfrey Conveyor,
RB, VRDN, AMT (C)
3.500%, 06/02/99 1,900 1,900
Elkhart County, Economic Development,
Holly Park, RB, AMT, VRDN (C) (D) (E)
3.500%, 06/02/99 2,100 2,100
Fort Wayne, Economic Development
Authority, ND Tech Project,
RB, VRDN, AMT (C) (D) (E)
3.400%, 06/02/99 1,000 1,000
Indiana State, Educational Facilities
Authority, Indiana Wesleyan
Project, Ser B, RB, VRDN (C)
3.300%, 06/01/99 2,500 2,500
Indianapolis, Industrial Economic
Development Authority, Allied
Signal, RB, VRDN (C) (D)
3.400%, 06/02/99 3,500 3,500
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Indianapolis, Local Public
Improvements, Ser G, RB
3.500%, 08/15/99 $ 5,000 $ 5,005
Indianapolis, Local Public
Improvements, Ser B, RB (MBIA)
3.350%, 06/01/00 1,550 1,550
Indianapolis, Multi-Family Housing,
RB, VRDN, AMT (C) (D) (E)
3.500%, 06/02/99 2,700 2,700
Jasper, Economic Development,
Wabash Valley Produce Project,
RB, AMT, VRDN (C) (E)
3.420%, 06/03/99 2,000 2,000
La Porte County, Economic
Development Revenue, Pedcor
Investments-Woodland, RB,
VRDN, AMT (C)
3.350%, 06/03/99 2,000 2,000
Michigan City, Industrial Economic
Development, Performance
Packaging, RB, VRDN,
AMT (C) (D) (E)
3.550%, 06/02/99 800 800
State, Development Financial
Authority, Culver Educational
Facilities, RB, VRDN (C) (E)
3.250%, 06/02/99 2,000 2,000
State, Development Financial
Authority, Dekko International
Project, RB, VRDN (C) (D) (E)
3.420%, 06/02/99 430 430
State, Development Financial
Authority, Educational Facility,
Indiana Historical Society, RB,
VRDN (C) (E)
3.250%, 06/02/99 1,200 1,200
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
State, Health Facility Financing
Authority, Clarian Health Partners,
Ser B, RB, VRDN (C) (D)
3.200%, 06/02/99 $ 2,000 $ 2,000
--------
30,685
--------
IOWA (0.4%)
Davenport, Ser C, GO
4.375%, 06/01/99 465 465
West Des Moines, Commercial
Development, Greyhound Lines
Project, RB, VRDN (C) (D) (E)
3.300%, 06/02/99 2,500 2,500
--------
2,965
--------
KANSAS (0.1%)
Johnson County, School District
Number 229, Ser B, GO
4.250%, 09/01/99 1,000 1,003
--------
KENTUCKY (1.7%)
Clark County, Pollution Control,
RB, VRDN (C) (D) (E)
3.100%, 10/15/99 2,500 2,500
Jefferson County, Industrial Building,
Fisher-Klosterman Project, RB,
VRDN, AMT (C) (D) (E)
3.420%, 06/03/99 2,170 2,170
State, Asset/Liability Commission,
General Fund Revenue, TRAN
3.500%, 11/01/99 4,000 4,009
State, Higher Education Student
Loan, Ser B, RB, AMT
6.400%, 12/01/99 4,125 4,191
--------
12,870
--------
LOUISIANA (3.0%)
Calcasieu Parish, Industrial
Development Board, Hydroserve
Westlake, RB, AMT, VRDN (C) (E)
3.450%, 06/02/99 5,000 5,000
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Plaquemines, TECP
3.100%, 06/09/99 $ 5,500 $ 5,500
State, Eagle Trust
3.340%, 06/03/99 8,000 8,000
State, Offshore Terminal Authority,
Deepwater Port, First Stage
A-Loop Project, Ser A, RB,
VRDN (C) (D) (E)
3.200%,06/02/99 2,000 2,000
State, Public Facilites Authority,
Pollution Control, Ciba-Geigy
Project, RB, VRDN (C)
3.200%, 06/02/99 2,400 2,400
--------
22,900
--------
MARYLAND (2.1%)
Baltimore County, Allied Signal
Project, VRDN (C) (D) (E)
3.350%, 06/02/99 1,000 1,000
State, Community Development,
Department Housing &
Community, RB, AMT (FHA)
3.100%, 01/13/00 4,655 4,655
State, Department of Transportation,
RB, Prerefunded at 100.75
6.600%, 11/01/99 1,885 1,927
State, Department of Transportation,
RB, Prerefunded at 101
6.700%, 11/01/99 3,250 3,332
University of Maryland, Revolving
Equipment Loan Program,
Ser B, RB, VRDN (C) (E)
3.300%, 06/02/99 4,100 4,100
Washington Suburban, General
Construction, GO
Prerefunded at 102
6.750%, 12/01/99 1,400 1,453
--------
16,467
--------
</TABLE>
17
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
TAX-EXEMPT MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MICHIGAN (1.9%)
Oakland County, Economic
Development Authority, Moody
Family Limited Project, RB,
VRDN, AMT (C) (E)
3.500%, 06/02/99 $ 900 $ 900
State, Building Authority Revenue,
Facilities Program Ser I, RB
4.500%, 10/01/99 2,200 2,211
State, Housing Development
Authority, RB, VRDN, AMT
(C) (D) (E)
3.350%, 06/02/99 1,000 1,000
State, Industrial Development
Authority, RB, VRDN
(C) (D) (E)
3.300%, 06/01/99 3,000 3,000
State, Municipal Bond Authority,
School Loan, RB
3.500%, 12/01/99 2,000 2,006
State, Municipal Bond Authority,
Ser B-1, RB
4.500%, 07/02/99 1,000 1,001
State Recreation Program, GO
5.500%, 11/01/99 2,000 2,021
State, Strategic Fund, Consolidated
Industrial Project, RB, AMT,
VRDN (C) (E)
3.500%, 06/02/99 2,500 2,500
--------
14,639
--------
MISSISSIPPI (2.3%)
State, Business Finance, Solid Waste
Disposal Revenue, Choctaw
Generation, RB, VRDN (C)
3.350%, 06/02/99 3,000 3,000
State, Government Bond, Ser B, GO
4.250%, 08/01/99 4,515 4,519
State, Hospital Equipment &
Facilities, TECP
2.800%, 06/15/99 10,000 10,000
--------
17,519
--------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MISSOURI (0.9%)
Carthage, Industrial Development
Authority, Schrieber Project, RB,
VRDN, AMT (C) (D) (E)
3.400%, 06/02/99 $ 3,100 $ 3,100
Saint Charles County, Industrial
Development Authority, Casalon
Apartment Project, Ser 95, RB,
VRDN (C) (D) (E)
3.200%, 06/03/99 3,100 3,100
State, Environmental Improvement
& Energy Resource Authority,
Utilicorp United Project, RB,
VRDN, AMT (C) (D) (E)
3.400%, 06/02/99 700 700
--------
6,900
--------
NEBRASKA (0.3%)
American Public Energy Agency,
Gas Supply Revenue, Public Gas
Agency, Ser C, RB
3.350%, 09/01/99 655 655
Investment Finance Authority,
Single-Family Mortgage, Ser B,
RB, VRDN (FGIC) (C) (D)
3.000%, 07/15/99 1,825 1,825
--------
2,480
--------
NEVADA (3.1%)
Clark County, Airport Improvement
Authority, Ser A-1, RB,
VRDN (C) (D) (E)
3.150%, 06/02/99 4,200 4,200
Clark County, Industrial
Development, RB, VRDN, (C)
3.470%, 06/03/99 6,495 6,495
Clark County, Nevada Airport
Improvement Ser A-1, RB,
VRDN, AMT, (C) (E)
3.450%, 06/02/99 5,090 5,090
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Clark County, School District, RB,
VRDN (C)
3.340%, 06/03/99 $ 8,345 $ 8,345
--------
24,130
--------
NEW HAMPSHIRE (0.6%)
State, Housing Finance Authority,
Multi-Family Housing, Fairways
Project, RB, VRDN,
AMT (C) (D) (E)
3.450%, 06/02/99 5,000 5,000
--------
NEW JERSEY (0.4%)
Parsippany, Troy Hills
Township, GO
4.500%, 12/01/99 1,055 1,063
State, Ser D, GO (D)
5.100%, 08/15/99 2,000 2,029
--------
3,092
--------
NEW MEXICO (0.8%)
Farmington, Pollution
Control, RB, VRDN (C)
3.250%, 11/04/99 4,785 4,785
State, Mortgage Financial
Authority, Ser B, RB, VRDN (C)
3.000%, 07/01/99 1,700 1,700
--------
6,485
--------
NEW YORK (4.5%)
Long Island Power, TECP
2.800%, 08/12/99 3,000 3,000
New York, GO, VRDN, (C) (E)
3.400%, 06/01/99 7,000 7,000
New York, Industrial Development
Special Facility, Korean Airlines
Co. Project, Ser A , RB,
VRDN, (C) (E)
3.200%, 06/02/99 3,000 3,000
New York, Ser J, RB, GO
5.500%, 07/01/99 1,000 1,002
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Southeast Industrial Development,
Unilock Project, RB, VRDN,
AMT (C) (D) (E)
3.400%, 06/02/99 $ 2,200 $ 2,200
State, Urban Development
Corporation, Senior Lien, RB,
VRDN (C)
3.300%, 06/03/99 12,155 12,155
Suffolk County, Tax Anticipation
Notes, Ser I, RB
3.500%, 08/12/99 6,000 6,006
--------
34,363
--------
NORTH CAROLINA (2.5%)
Cleveland County, Family YMCA,
Recreational Facilities Revenue,
RB, VRDN (B) (C)
3.350%, 06/02/99 3,000 3,000
Mecklenburg County, Industrial
Facilities & Pollution Control,
Sterigenics International Project,
RB, VRDN, AMT (C) (D) (E)
3.400%, 06/02/99 1,800 1,800
Mecklenburg County, Ser C,
GO, VRDN (C)
3.200%, 06/02/99 5,000 5,000
State, Educational Facilities
Catawba College, RB,
VRDN (C) (E)
3.250%, 06/02/99 2,000 2,000
State, Educational Facilities,
Guilford College, RB,
VRDN (C) (D) (E)
3.300%, 06/02/99 2,200 2,200
State, GO, VRDN (C)
3.320%, 06/03/99 5,340 5,340
--------
19,340
--------
OHIO (3.6%)
Lorain County, Catholic
Healthcare, TECP
3.000%, 06/08/99 7,000 7,000
</TABLE>
19
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
TAX-EXEMPT MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
State, Air Quality Development
Authority, JMG Limited
Partnership, Ser A, RB, VRDN,
AMT (D) (E)
3.400%, 06/02/99 $ 3,000 $ 3,000
State, Air Quality Development
Authority, Edison Project, Ser A,
RB, VRDN (C) (D) (E)
2.950%, 06/07/99 8,000 8,000
State, GO
5.400%, 08/01/99 1,000 1,004
State, Pollution Control Authority,
Duquesne Project, RB, VRDN,
AMT (C) (D) (E)
3.350%, 06/02/99 3,000 3,000
Warrren County, Health Care
Facilities Revenue, RB,
VRDN (C)
3.250%, 06/02/99 5,700 5,700
--------
27,704
--------
OREGON (0.8%)
State, Ser 73, GO, VRDN (C) (E)
3.200%, 06/02/99 6,000 6,000
--------
PENNSYLVANIA (4.5%)
Beaver County, Industrial
Development Authority,
Duquesne Light Company
Project, Ser B, RB, VRDN (C) (D)
3.250%, 06/02/99 1,000 1,000
Cambria County, Industrial
Development Authority, Cambria
Cogeneration, Ser A-1, RB, AMT,
VRDN (C) (D) (E)
3.250%, 06/02/99 10,000 10,000
Geisinger Authority, Health System,
Penn State, RB
4.500%, 06/03/99 1,000 1,002
Philadelphia, School District, Tax &
Anticipation Notes, Ser A, RB
4.250%, 06/30/99 1,500 1,501
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Philadelphia, Tax & Anticipation
Notes, Ser A, GO
4.250%, 06/30/99 $ 5,000 $ 5,002
State, Intergovernmental
Cooperation Authority, Special
Tax Revenue, RB, VRDN (C)
2.900%, 06/15/99 9,630 9,630
State, Ser A, RB, VRDN (C) (D)
3.340%, 06/03/99 6,830 6,830
--------
34,965
--------
RHODE ISLAND (0.9%)
State, GO, VRDN (C)
3.320%, 06/03/99 6,635 6,635
--------
SOUTH CAROLINA (1.5%)
Piedmont, Municipal Power
Agency, Electrical Revenue,
Ser D, RB, VRDN (C)
3.200%, 06/02/99 3,100 3,100
State, Economic Development Authority,
Kiswire Project, RB, AMT,
VRDN (C) (D) (E)
3.500%, 06/03/99 3,000 3,000
State, Public Service Authority, TECP
3.150%, 06/17/99 4,000 4,000
State, Public Service Authority,
Ser A, RB
4.500%, 01/01/00 1,500 1,513
--------
11,613
--------
TENNESSEE (5.7%)
Covington, Industrial Development Board,
Charms Project, RB, VRDN, AMT (C)
(D) (E)
3.400%, 06/02/99 3,000 3,000
Hamilton County, Industrial
Development Board, Tennessee
Aquarium Project, RB,
VRDN (C) (D) (E)
3.250%, 06/03/99 3,000 3,000
Jackson County, TECP
2.900%, 06/10/99 10,000 10,000
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Jackson, Water & Sewer, RB,
Prerefunded @ 102
(AMBAC) (D) (E)
10.375%, 07/01/99 $ 1,500 $ 1,539
Lower County, River Authority,
TECP
2.850%, 06/08/99 5,000 5,000
Memphis-Shelby County, Industrial
Development Board, Ponderosa
Fibres American Project, RB,
AMT, VRDN (C) (D) (E)
3.350%, 06/03/99 1,200 1,200
Nashville & Davidson County,
Industrial Development Authority,
Multi-Family Mortgage,
Chimneytop II Project, RB,
VRDN (C) (D) (E)
3.400%, 06/02/99 1,325 1,325
Nashville & Davidson County,
Vanderbilt University, RB,
VRDN (C) (D)
3.100%, 07/15/99 7,000 7,000
State, Ser A, Anticipation Notes,
VRDN (C) (E)
3.150%, 06/02/99 8,000 8,000
State, Ser 108, GO
3.370%, 06/03/99 2,500 2,500
State, School Bond Authority, TECP
3.000%, 06/16/99 1,400 1,400
--------
43,964
--------
TEXAS (9.9%)
Austin, Convention Center Revenue,
Ser B, RB, Prerefunded @ 102 (D) (E)
8.250%, 11/15/99 4,100 4,277
Brazos, River Authority, TECP
2.800%, 06/10/99 6,000 6,000
Dallas, GO
5.500%, 02/15/00 2,105 2,140
Dallas, Rapid Transit, TECP
2.950%, 06/10/99 3,600 3,600
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Fort Worth, Water & Sewer,
Ser B, RB
5.875%, 02/15/00 $ 1,325 $ 1,351
Georgetown, Higher Education
Financing Authority, Southwestern
University Project, Ser 1984, RB,
VRDN (C) (D) (E)
3.250%, 06/02/99 2,000 2,000
Gulf Coast, Waste Disposal,
Texwater Pollution Control,
RB, VRDN (C) (D)
3.000%, 07/15/99 8,280 8,280
Harris County, Health Facilities
Authority, Memorial Hospital
Project, Ser B, RB, VRDN (C) (D)
3.150%, 06/02/99 2,600 2,600
Harris County, Industrial
Development Authority, Lubrizol
Project, RB, VRDN (C) (D)
3.150%, 06/02/99 1,600 1,600
Houston, Water & Sewer, RB,
VRDN (FGIC) (C) (E) (D)
3.050%, 06/01/99 8,835 8,835
Lone Star, Airport Improvement
Authority, RB, VRDN (C) (D) (E)
3.250%, 06/01/99 1,700 1,700
San Antonio, Electric & Gas,
RB (MBIA)
6.375%, 02/01/00 1,350 1,380
Southwest Higher Education
Authority, Southern Methodist
University Project B, RB,
VRDN (C) (E)
3.200%, 06/02/99 5,000 5,000
State, College Student Loan,
GO, AMT
5.100%, 08/01/99 1,000 1,003
</TABLE>
21
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
TAX-EXEMPT MONEY MARKET FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
State, Public Facilities, RB,
VRDN (C)
3.340%, 06/03/99 $ 7,180 $ 7,180
State, RB, VRDN (C) (D)
3.450%, 06/03/99 4,935 4,935
State, Public Finance Authority,
State Preservation Board,
Ser A, RB (AMBAC)
4.250%, 02/01/00 1,200 1,209
State, TRAN
4.500%, 08/31/99 10,000 10,039
University of Houston, RB
5.500%, 02/15/00 2,850 2,898
--------
76,027
--------
UTAH (2.8%)
State, Housing Finance Agency, RB,
VRDN, AMT (C)
3.100%, 07/01/99 8,600 8,600
State, Housing Finance Agency, RB,
VRDN (C) (D) (E)
3.100%, 07/01/99 11,135 11,135
Utah County, Utah Environmental
Impact, USX Corporate
Project, RB, VRDN (C)
3.000%, 06/01/99 2,000 2,000
--------
21,735
--------
VIRGINIA (3.3%)
Braxton County, Solid Waste
Disposal, Weyerhaeuser Co.
Project, RB, VRDN, AMT (C) (E)
3.300%, 06/02/99 7,650 7,650
Chesterfield County, Industrial
Development Authority, Allied
Signal Project, RB, VRDN (C)
3.400%, 06/02/99 3,000 3,000
Front Royal & Warren County,
Industrial Development Authority,
Pen Tab Industries Project, RB,
VRDN, AMT (C) (D) (E)
3.300%, 06/03/99 2,700 2,700
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Prince George County, Industrial
Development Authority, Industrial
Development Revenue,
RB, VRDN, AMT (C)
3.470%, 06/03/99 $ 5,000 $ 5,000
State, College Building Authority,
Educational Facilities,
Leasing program, RB
4.250%, 02/01/00 6,610 6,664
--------
25,014
--------
WASHINGTON (3.4%)
Pierce County, Washington Economic
Development, Weyerhaeuser
Real Estate Project, RB,
VRDN (C) (D) (E)
3.250%, 06/02/99 3,000 3,000
Port of Seattle, VRDN (C) (D)
3.350%, 06/02/99 1,200 1,200
Seattle, Water Systems Revenue,
RB, VRDN (C)
3.350%, 06/02/99 4,200 4,200
South Columbia Basin, RB
5.700%, 12/01/99 1,000 1,013
State, Public Power Supply System,
Nuclear Project No. 1, Ser 1A-3,
RB, VRDN (C) (D) (E)
3.200%, 06/02/99 3,300 3,300
State, Public Power Supply System,
Nuclear Project No. 1, Ser 1A-1,
RB, VRDN (C) (D) (E)
3.300%, 06/02/99 4,725 4,725
State, Public Power Supply System,
Nuclear Project No. 3, Ser 3A,
RB, VRDN (MBIA) (C) (D)
3.000%, 06/01/99 5,000 5,000
State, GO, VRDN (C) (D) (E)
3.200%, 12/09/99 3,335 3,335
--------
25,773
--------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
WEST VIRGINIA (0.5%)
Marshall County, Pollution Control
Authority, Allied Signal Project,
RB, VRDN (C) (D)
3.400%, 06/02/99 $ 2,000 $ 2,000
Marshall County, Pollution
Control Authority, PPG
Industries Project,
RB, VRDN (C) (D)
3.550%, 06/03/99 2,000 2,000
--------
4,000
--------
WISCONSIN (0.9%)
Appleton, Industrial Development
Revenue, Pro Lable Project, RB,
VRDN, AMT (C)
3.520%, 06/02/99 950 950
Germantown, Industrial Revenue,
Speaker Project, RB,
VRDN, AMT (C)
3.520%, 06/03/99 905 905
Holland, Industrial Development
Revenue, White Clover Dairy
Project, RB, VRDN, AMT (C)
3.420%, 06/02/99 1,500 1,500
Oconomowoc, Industrial
Development Revenue, Quest
Technologies Project, RB,
VRDN, AMT (C)
3.420%, 06/02/99 1,550 1,550
Wisconsin, Health Facilities, Saint
Lukes Medical Center, RB,
VRDN (C) (D) (E)
3.250%, 06/02/99 1,840 1,840
--------
6,745
--------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
WYOMING (0.6%)
Sweetwater, RB, VRDN (C)
3.200%, 06/01/99 $ 4,600 $ 4,600
--------
Total Municipal Bonds
(Cost $765,558) 765,558
--------
CASH EQUIVALENT (0.3%)
SEI Tax-Exempt Trust Institutional
Tax-Free Portfolio 2,227 2,227
--------
Total Cash Equivalent
(Cost $2,227) 2,227
--------
Total Investments (99.7%)
(Cost $767,785) 767,785
--------
OTHER ASSETS AND LIABILITIES, NET (0.3%) 2,709
--------
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par
value) based on 641,639,113
outstanding shares of beneficial interest 641,639
Fund shares of the Investor Class
(unlimited authorization -- no par
value) based on 128,859,463
outstanding shares of beneficial interest 128,860
Accumulated net realized loss
on investments (5)
--------
Total Net Assets 100.0% $770,494
--------
--------
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 31.
23
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (96.9%)
COLORADO (1.3%)
Denver, Public Facility Improvements,
Major League Baseball Stadium
Project, Ser A, RB (FGIC)
5.900%, 10/01/99 $ 3,500 $ 3,529
--------
DISTRICT OF COLUMBIA (2.7%)
District of Columbia, Healthcare
Facility, St. John's Child
Development Center, RB (C)
3.800%, 06/01/99 1,100 1,100
District of Columbia, RB (C) (E)
3.250%, 06/01/99 6,260 6,260
--------
7,360
--------
GEORGIA (2.9%)
State, COP (MBIA) (C)
3.320%, 06/03/99 8,000 8,000
--------
HAWAII (0.8%)
State, Housing Finance &
Development Authority, Single-
Family Housing, RB, AMT (C)
3.420%, 07/01/99 2,250 2,250
--------
ILLINOIS (6.2%)
Chicago, O'Hare International
Airport, RB, AMT (C)
3.390%, 06/03/99 5,000 5,000
Chicago, Public Improvements,
Ser C, GO (E)
3.050%, 10/31/99 5,000 5,000
State, Health Facility Authority,
Swedish Covenant Hospital
Project, RB (AMBAC) (C)
3.400%, 06/02/99 2,200 2,200
State, Toll Highway Authority,
RB (FSA) (C)
3.250%, 06/03/99 5,000 5,000
--------
17,200
--------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
KANSAS (0.9%)
Johnson County, School
Improvements, GO (AMBAC)
8.000%, 09/01/99 $ 2,525 $ 2,555
--------
LOUISIANA (2.8%)
Jefferson Parish, Home Mortgage,
RB (C)
3.390%, 06/03/99 7,720 7,720
--------
MARYLAND (4.2%)
Montgomery County, Housing
Opportunity Commission, Issue 1,
RB, AMT (C) (E)
3.500%, 06/03/99 10,000 10,000
State, Health & Higher Educational
Facilities Authority, Pooled Loan
Project, Ser D, RB (C) (E)
3.200%, 06/03/99 1,675 1,675
--------
11,675
--------
MICHIGAN (3.6%)
Detroit, Sewer Disposal, Ser B,
RB (MBIA) (C)
3.400%, 06/02/99 10,000 10,000
--------
NEW YORK (9.0%)
Long Island, Power Authority,
Electric System Project, RB (C)
3.430%, 06/03/99 4,000 4,000
New York City, GO (C)
3.340%, 06/03/99 11,960 11,960
New York City, Municipal Water
Financing Authority, RB (FSA) (C)
3.320%, 06/03/99 9,000 9,000
--------
24,960
--------
PENNSYLVANIA (11.1%)
Emmaus, General Authority,
RB (FSA) (C)
3.250%, 06/02/99 12,000 12,000
24
<PAGE>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Philadelphia, Gas Works, RB
(FSA) (C)
3.320%, 06/03/99 $ 3,635 $ 3,635
Philadelphia, Water & Wastewater,
RB (AMBAC) (C)
3.320%, 06/03/99 7,000 7,000
Pittsburgh, GO (C)
3.320%, 06/03/99 8,000 8,000
--------
30,635
--------
SOUTH CAROLINA (3.0%)
Florence County, McLeod Regional
Medical Center Project, Ser A,
RB (FGIC) (C) (E)
3.250%, 06/03/99 8,200 8,200
--------
TENNESSEE (1.8%)
Shelby County, Health, Educational
& Housing Facilities, Multi-Family
Housing, Ser A, RB, AMT (C) (E)
3.450%, 06/02/99 5,000 5,000
--------
TEXAS (7.6%)
Houston, Water & Sewer System,
RB (FGIC) (C)
3.320%, 06/03/99 5,000 5,000
Plano, TECP
2.950%, 06/16/99 7,000 7,000
San Antonio, Electric & Gas, RB,
Partially Prerefunded
02/01/07 @ 101 (C) (E)
3.320%, 06/03/99 9,000 9,000
--------
21,000
--------
VIRGINIA (35.4%)
Alexandria, Industrial Development,
Pooled Loan Project, Ser A,
RB (C) (E)
3.250%, 06/02/99 2,875 2,875
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Alexandria, Industrial Development,
Ser A, RB (C)
3.800%, 06/02/99 $ 3,500 $ 3,500
Almermarle County, Industrial
Development, Health Services,
RB (C)
3.250%, 06/02/99 4,400 4,400
Chesterfield, TECP
2.850%, 06/25/99 10,000 10,000
Fairfax County, Economic
Development, Flint Hill School
Project, RB (C) (E)
3.250%, 06/02/99 4,340 4,340
Fairfax County, Public Improvements,
GO (C)
3.320%, 06/03/99 6,300 6,300
Hampton Roads, Regional Jail
Authority, Ser B, RB (C) (E)
3.300%, 06/02/99 2,000 2,000
King George County, Industrial
Development, Birchwood Power
Partners, Ser B, RB (C) (E)
3.500%, 06/01/99 4,000 4,000
Louisa County, Industrial
Development, RB (C) (E)
3.250%, 06/03/99 1,900 1,900
Norfolk, Industrial Development,
Childrens Hospital Project,
RB (C) (E)
3.250%, 06/01/99 4,000 4,000
Pulaski County, Industrial
Development Authority, Pulaski
Furniture Project, Ser A, RB (C)
3.800%, 06/02/99 4,219 4,219
Pulaski County, Industrial
Development Authority, Pulaski
Furniture Project, Ser B, RB (C)
3.800%, 06/02/99 500 500
</TABLE>
25
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
TAX-FREE MONEY MARKET FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Richmond, BAN (C)
3.250%, 06/03/99 $ 570 $ 570
Richmond, Redevelopment &
Housing Authority, Multi-Family
Housing, RB (C)
3.420%, 06/03/99 13,000 13,000
Roanoke County, Industrial
Development, Roanoke Memorial
Hospital Project, Ser C, RB (C) (E)
3.200%, 06/02/99 2,000 2,000
State, College Building Authority,
Public Higher Education Financing,
Ser A, RB
3.150%, 09/01/99 1,850 1,850
State, Port Authority, RB, AMT
(MBIA) (C)
3.390%, 06/03/99 10,100 10,100
State, Public Building Authority, RB
5.100%, 08/01/99 7,115 7,139
State, University & Hospital &
Public Improvements, GO
5.000%, 06/02/99 2,000 2,035
Suffolk, Redevelopment & Housing
Authority, Multi-Family Housing,
Windsor Fieldstone Project, RB (C)
3.800%, 6/03/99 4,218 4,218
York County, TECP
2.800%, 06/25/99 8,800 8,800
--------
97,746
--------
WASHINGTON (3.6%)
Washington State, Public Power
Supply System, Nuclear Project
Number 1, RB,
Prerefunded @ 100
6.000%, 07/01/99 10,000 10,019
--------
Total Municipal Bonds
(Cost $267,849) 267,849
--------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CASH EQUIVALENTS (2.4%)
Financial Square Tax Free
Portfolio $ 6,003 $ 6,003
SEI Institutional Tax Free
Portfolio 644 644
--------
Total Cash Equivalents
(Cost $6,647) 6,647
--------
Total Investments (99.3% )
(Cost $274,496) 274,496
--------
OTHER ASSETS AND LIABILITIES, NET (0.7%) 1,890
--------
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no
par value) based on 270,461,831
outstanding shares of beneficial interest 270,439
Fund shares of the Investor Class
(unlimited authorization -- no
par value) based on 5,955,089
outstanding shares of beneficial interest 5,955
Overdistributed net investment income (1)
Accumulated net realized loss
on investments (7)
--------
Total Net Assets 100.0% $276,386
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $1.00
--------
--------
Net Asset Value, Offering 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 31.
26
<PAGE>
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATION (10 8%)
U.S. Treasury Note
5.500%, 02/29/00 $ 50,000 $ 50,256
--------
Total U.S. Treasury Obligation
(Cost $50,256) 50,256
--------
GOVERNMENT AGENCY OBLIGATIONS (14.1%)
Agency for International
Development, Ser 5A
7.750%, 11/15/99 50,000 50,637
Agency for International
Development (C)
4.756%, 11/15/99 15,000 14,976
--------
Total Government Agency Obligations
(Cost $65,613) 65,613
--------
REPURCHASE AGREEMENTS (75.3%)
Abn-Amro
4.80%, dated 05/28/99, matures
06/01/99, repurchse price
$14,007,466 (collateralized by
U.S. Treasury Note: total market
value $14,280,482) (B) 14,000 14,000
Barclays
4.80%, dated 05/28/99, matures
06/01/99, repurchase price
$19,044,181 (collateralized by
U.S. Treasury Note: total market
value $19,414,792) (B) 19,034 19,034
Deutsche Bank
4.80%, dated 05/28/99, matures
06/01/99, repurchase price
$19,968,414 (collateralized by
U.S. Treasury Note: total market
value $20,356,970) (B) 19,958 19,958
Greenwich
4.80%, dated 05/28/99, matures
06/01/99, repurchase price
$20,020,513 (collateralized by
U.S. Treasury Note: total market
value $20,412,490) (B) 20,010 20,010
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
J.P. Morgan
4.80%, dated 05/28/99, matures
06/01/99, repurchase price
$110,917,235 (collateralized by
a GNMA obligation: total
market value $113,075,273) (B) $110,858 $110,858
Merrill Lynch
4.80%, dated 05/28/99, matures
06/01/99, repurchase price
$20,031,391 (collateralized by
various GNMA obligations: total
market value $20,424,265) (B) 20,021 20,021
Morgan Stanley
4.80%, dated 05/28/99, matures
06/01/99, repurchase price
$109,997,946 (collateralized by
various GNMA obligations: total
market value $113,740,112) (B) 109,939 109,939
Salomon Brothers
4.80%, dated 05/28/99, matures
06/01/99, repurchase price
$17,099,617 (collateralized by
U.S. Treasury Note: total market
value $17,446,918) (B) 17,091 17,091
SBC Warburg
4.80%, dated 05/28/99, matures
06/01/99, repurchase price
$19,914,879 (collateralized by
U.S. Treasury Note: total market
value $20,306,494) (B) 19,904 19,904
--------
Total Repurchase Agreements
(Cost $350,815) 350,815
--------
Total Investments (100.2%)
(Cost $466,684) 466,684
--------
OTHER ASSETS AND LIABILITIES, NET (-0.2%) (753)
--------
</TABLE>
27
<PAGE>
STATEMENTS OFNETASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE (000)
- --------------------------------------------------------------------------------
<S> <C>
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par
value) based on 404,208,908
outstanding shares of beneficial interest $404,209
Fund shares of the Investor Class
(unlimited authorization -- no par
value) based on 61,445,158
outstanding shares of beneficial interest 61,445
Undistributed net investment income 86
Accumulated net realized gain
on investments 191
------------
Total Net Assets 100.0% $465,931
------------
------------
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 31.
28
<PAGE>
- --------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (28.3%)
U.S. Treasury Bills
4.190%, 06/03/99 $ 50,000 $ 49,989
4.250%, 06/17/99 50,000 49,912
U.S. Treasury Notes
6.750%, 06/30/99 15,000 15,014
5.625%, 11/30/99 15,000 15,067
5.625%, 12/31/99 15,000 15,080
5.875%, 02/15/00 15,000 15,100
5.500%, 03/31/00 25,000 25,102
6.375%, 05/15/00 30,000 30,372
--------
Total U.S. Treasury Obligations
(Cost $215,636) 215,636
--------
REPURCHASE AGREEMENTS (70.5%)
ABN-AMRO
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$34,046,305 (collateralized by
U.S. Treasury STRIPS: total
market value $34,709,165) (B) 34,028 34,028
Barclays
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$29,219,675 (collateralized by
U.S. Treasury Note: total market
value $29,788,780) (B) 29,204 29,204
Deutsche Bank
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$179,292,640 (collateralized by
various U.S. Treasury Bonds and
Notes: total market value
$182,782,325) (B) 179,198 179,198
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Greenwich Bank
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$179,851,869 (collateralized by
U.S. Treasury Note: total market
value $183,353,384) (B) $179,757 $179,757
Merrill Lynch
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$20,014,602 (collateralized by
U.S. Treasury STRIPS: total
market value $20,404,674) (B) 20,004 20,004
Morgan Stanley
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$22,425,774 (collateralized by
U.S. Treasury Note: total market
value $22,870,506) (B) 22,414 22,414
J.P. Morgan
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$20,789,780 (collateralized by
U.S. Treasury Note: total market
value $21,195,355) (B) 20,779 20,779
Salomon
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$23,408,760 (collateralized by
various U.S. Treasury Notes: total
market value $23,869,853) (B) 23,396 23,396
SBC Warburg
4.77%, dated 05/28/99, matures
06/01/99, repurchase price
$27,014,310 (collateralized by
U.S. Treasury Bond: total market
value $27,545,730) (B) 27,000 27,000
--------
Total Repurchase Agreements
(Cost $535,780) 535,780
--------
</TABLE>
29
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
U.S. TREASURY MONEY MARKET FUND--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE (000)
- --------------------------------------------------------------------------------
<S> <C>
Total Investments (98.8%)
(Cost $751,416) $751,416
--------
OTHER ASSETS AND LIABILITIES, NET (1.2%) 9,417
--------
NET ASSETS:
Fund shares of the Trust Class
(unlimited authorization -- no par
value) based on 760,916,765
outstanding shares of beneficial interest 760,833
--------
Total Net Assets 100.0% $760,833
--------
--------
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $1.00
--------
--------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 31.
30
<PAGE>
KEY TO ABBREVIATIONS USED IN
THE STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
AMBAC Security insured by the American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
Cl Class
COP Certificate of Participation
FGIC Security insured by the Financial Guaranty Insurance Company
FFCB Federal Farm Credit Bank
FHA Federal Housing Authority
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Security insured by Financial Securities Assurance
GIC Guaranteed Investment Contract
GNMA Government National Mortgage Association
GO General Obligation
MBIA Security insured by the Municipal Bond Insurance Association
MTN Medium Term Note
RB Revenue Bond
Ser Series
SLMA Student Loan Marketing Association
STRIPS Separately Traded Registered Interest and Principal Security
TECP Tax Exempt Commercial Paper
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
</TABLE>
(A) Private Placement Security
(B) Tri-Party Repurchase Agreement
(C) Adjustable Rate Security. The rate reported on the Statement of Net
Assets is the rate in effect on May 31, 1999. The date shown is the
next scheduled reset date.
(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) The contract has no stated maturity date, but may be terminated
unconditionally by the Fund at anytime upon at least 7 days notice
to the issuer.
31
<PAGE>
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD ENDED MAY 31, 1999 AND NOVEMBER 30, 1998
<TABLE>
<CAPTION>
TAX-EXEMPT TAX-FREE U.S. GOVERNMENT
PRIME QUALITY MONEY MONEY SECURITIES U.S. TREASURY
MONEY MARKET MARKET MARKET MONEY MARKET MONEY
FUND FUND FUND FUND MARKET FUND
--------- --------------------------------------------------- ---------------------
06/01/98- 06/01/98- 12/01/98 12/01/97 06/01/98- 12/01/98 12/01/97
05/31/99 05/31/99 05/31/99 11/30/98 05/31/99 05/31/99 11/30/98
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income $ 142,719 $ 24,519 $ 4,823 $ 8,624 $ 23,472 $ 18,000 $ 33,565
--------- --------- --------- --------- --------- --------- ---------
Expenses:
Investment Advisory Fees 17,531 4,122 607 963 2,992 1,486 2,412
Less: Investment Advisory
Fees Waived (4,356) (1,057) (3) -- (607) (21) --
Administrator Fees 2,093 584 222 361 359 550 927
Less: Administrator Fees Waived (250) -- -- -- (3) -- --
Transfer Agent Fees-- Trust Shares 18 14 73 121 13 183 309
Transfer Agent Fees-- Investor Shares 19 17 -- -- 33 -- --
Transfer Agent Out of Pocket Fees 291 77 1 -- 55 1 --
Printing Expenses 142 32 12 9 46 27 24
Custody Fees 73 15 56 95 11 143 230
Professional Fees 164 41 35 24 23 103 65
Trustee Fees 29 11 2 3 2 5 9
Registration Fees 414 49 7 21 6 27 68
Distribution Fees-- Trust Shares -- -- 213 349 -- 539 927
Less: Distribution Fees Waived --
Trust Shares -- -- (213) (349) -- (539) (927)
Distribution Fees-- Investor Shares 1,157 214 14 33 104 -- --
Less: Distribution Fees Waived --
Investor Shares (188) (58) (14) (33) (49) -- --
Insurance and Other Fees 39 4 5 3 -- 59 40
--------- --------- --------- --------- --------- --------- ---------
Total Expenses 17,176 4,065 1,017 1,600 2,985 2,563 4,084
--------- --------- --------- --------- --------- --------- ---------
Net Investment Income 125,543 20,454 3,806 7,024 20,487 15,437 29,481
--------- --------- --------- --------- --------- --------- ---------
Net Realized Gain (Loss) on
Securities Sold (19) (1) 2 (9) 191 -- --
--------- --------- --------- --------- --------- --------- ---------
Net Increase in Net Assets
from Operations $ 125,524 $ 20,453 $ 3,808 $ 7,015 $ 20,678 $ 15,437 $ 29,481
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD ENDED NOVEMBER 30, AND THE YEAR ENDED MAY 31,
<TABLE>
<CAPTION>
PRIME QUALITY TAX-EXEMPT TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
---------------------------------------------------------------------------------------
06/01/98- 06/01/97- 06/01/98- 06/01/97- 12/01/98- 12/01/97- 12/01/96-
05/31/99 05/31/98 05/31/99 05/31/98 05/31/99 11/30/98 11/30/97
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net Investment Income ................... $ 125,543 $ 95,132 $ 20,454 $ 17,568 $ 3,806 $ 7,024 $ 6,505
Net Realized Gain (Loss) on Investments (19) 50 (1) -- 2 (9) 3
----------- ----------- --------- ---------- --------- --------- ---------
Increase in Net Assets
from Operations ................. 125,524 95,182 20,453 17,568 3,808 7,015 6,508
----------- ----------- --------- ---------- --------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ........................ (99,427) (77,500 (16,665) (13,717) (3,739) (6,778) (6,352)
Investor Shares ..................... (26,132) (17,632) (3,788) (3,852) (91) (239) (161)
----------- ----------- --------- ---------- --------- --------- ---------
Total Distributions ............... (125,559) (95,132) (20,453) (17,569) (3,830) (7,017) (6,513)
----------- ----------- --------- ---------- --------- --------- ---------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ......... 4,698,805 3,915,486 984,432 1,039,352 246,896 369,536 393,449
Shares Issued in Connection with
Crestar Merger .................... 1,179,761 -- -- -- -- -- --
Reinvestment of Cash Distributions .. 4,306 3,699 -- -- -- -- --
Cost of Shares Redeemed ............. (3,859,828) (3,125,552) (790,815) (924,334) (247,343) (325,471) (348,927)
----------- ----------- --------- ---------- --------- --------- ---------
Increase (Decrease) in Net Assets From
Trust Share Transactions .......... 2,023,044 793,633 193,617 115,018 (447) 44,065 44,522
----------- ----------- --------- ---------- --------- --------- ---------
Investor Shares:
Proceeds from Shares Issued ......... 1,199,739 806,517 356,214 346,323 5,749 22,060 16,177
Shares Issued in Connection with
Crestar Merger .................... 187,089 -- -- -- -- -- --
Reinvestment of Cash Distributions .. 24,846 15,979 3,497 3,314 110 237 144
Cost of Shares Redeemed ............. (905,401) (694,228) (365,395) (317,112) (8,754) (21,081) (11,681)
----------- ----------- --------- ---------- --------- --------- ---------
Increase (Decrease) in Net Assets From
Investor Share Transactions ......... 506,273 128,268 (5,684) 32,525 (2,895) 1,216 4,640
----------- ----------- --------- ---------- --------- --------- ---------
Increase (Decrease) in Net Assets
From Share Transactions ........... 2,529,317 921,901 187,933 147,543 (3,342) 45,281 49,162
----------- ----------- --------- ---------- --------- --------- ---------
Total Increase (Decrease) in
Net Assets ...................... 2,529,282 921,951 187,933 147,542 (3,364) 45,279 49,157
----------- ----------- --------- ---------- --------- --------- ---------
Net Assets:
Beginning of Period ................... 2,292,050 1,370,099 582,561 435,019 279,750 234,471 185,314
----------- ----------- --------- ---------- --------- --------- ---------
End of Period ......................... $ 4,821,332 $ 2,292,050 $ 770,494 $ 582,561 $ 276,386 $ 279,750 $ 234,471
----------- ----------- --------- ---------- --------- --------- ---------
----------- ----------- --------- ---------- --------- --------- ---------
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued ....................... 4,698,805 3,915,486 984,432 1,039,352 246,896 369,536 393,449
Shares Issued in Connection with
Crestar Merger .................... 1,179,840 -- -- -- -- -- --
Shares Issued in Lieu of
Cash Distributions ................ 4,306 3,699 -- -- -- -- --
Shares Redeemed ..................... (3,859,828) (3,125,552) (790,815) (924,334) (247,343) (325,471) (348,927)
----------- ----------- --------- ---------- --------- --------- ---------
----------- ----------- --------- ---------- --------- --------- ---------
Net Trust Share Transactions ...... 2,023,123 793,633 193,617 115,018 (447) 44,065 44,522
----------- ----------- --------- ---------- --------- --------- ---------
Investor Shares:
Shares Issued ....................... 1,199,740 806,517 356,214 346,323 5,749 22,060 16,177
Shares Issued in Connection with
Crestar Merger .................... 187,089 -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions ............. 24,846 15,979 3,497 3,314 110 237 144
Shares Redeemed ..................... (905,433) (694,228) (365,395) (317,112) (8,754) (21,081) (11,681)
----------- ----------- --------- ---------- --------- --------- ---------
Net Investor Share Transactions ... 506,242 128,268 (5,684) 32,525 (2,895) 1,216 4,640
----------- ----------- --------- ---------- --------- --------- ---------
Net Change in Capital Shares ...... 2,529,365 921,901 187,933 32,525 (3,342) 45,281 49,162
----------- ----------- --------- ---------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. TREASURY
SECURITIES SECURITIES
MONEY MARKET FUND MONEY MARKET FUND
------------------------------------------------------------
06/01/98- 06/01/97- 12/01/98- 12/01/97- 12/01/96-
05/31/99 05/31/98 05/31/99 11/30/98 11/30/97
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations:
Net Investment Income ................... $ 20,487 $ 19,342 $ 15,437 $ 29,481 $ 24,451
Net Realized Gain (Loss) on Investments 191 146 -- -- --
--------- --------- --------- ----------- -----------
Increase in Net Assets
from Operations ................. 20,678 19,488 15,437 29,481 24,451
--------- --------- --------- ----------- -----------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ........................ (17,844) (16,621) (15,522) (29,476) (24,456)
Investor Shares ..................... (2,641) (2,723) -- -- --
--------- --------- --------- ----------- -----------
Total Distributions ............... (20,485) (19,344) (15,522) (29,476) (24,456)
--------- --------- --------- ----------- -----------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ......... 739,766 776,773 681,589 1,131,937 1,251,595
Shares Issued in Connection with
Crestar Merger .................... -- -- -- -- --
Reinvestment of Cash Distributions .. 1,170 380 1 4 146
Cost of Shares Redeemed ............. (714,135) (744,136) (620,595) (1,064,404) (1,008,406)
--------- --------- --------- ----------- -----------
Increase (Decrease) in Net Assets From
Trust Share Transactions .......... 26,801 33,017 60,995 67,537 243,335
--------- --------- --------- ----------- -----------
Investor Shares:
Proceeds from Shares Issued ......... 294,871 178,312 -- -- --
Shares Issued in Connection with
Crestar Merger .................... -- -- -- -- --
Reinvestment of Cash Distributions .. 2,578 2,600 -- -- --
Cost of Shares Redeemed ............. (294,755) (185,358) -- -- --
--------- --------- --------- ----------- -----------
Increase (Decrease) in Net Assets From
Investor Share Transactions ........ 2,694 (4,446) -- -- --
--------- --------- --------- ----------- -----------
Increase (Decrease) in Net Assets
From Share Transactions ........... 29,495 28,571 60,995 67,537 243,335
--------- --------- --------- ----------- -----------
Total Increase (Decrease) in
Net Assets ...................... 29,688 28,715 60,910 67,542 243,330
--------- --------- --------- ----------- -----------
Net Assets:
Beginning of Period ................... 436,243 407,528 699,923 632,381 389,051
--------- --------- --------- ----------- -----------
End of Period ......................... $ 465,931 $ 436,243 $ 760,833 $ 699,923 $ 632,381
--------- --------- --------- ----------- -----------
--------- --------- --------- ----------- -----------
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued ....................... 739,766 776,773 681,589 1,131,937 1,251,595
Shares Issued in Connection with
Crestar Merger .................... -- -- -- -- --
Shares Issued in Lieu of
Cash Distributions ................ 1,170 380 1 4 146
Shares Redeemed ..................... (714,135) (744,136) (620,595) (1,064,404) (1,008,406)
--------- --------- --------- ----------- -----------
Net Trust Share Transactions ...... 26,801 33,017 60,995 67,537 243,335
--------- --------- --------- ----------- -----------
Investor Shares:
Shares Issued ....................... 294,871 178,312 -- -- --
Shares Issued in Connection with
Crestar Merger .................... -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions ............. 2,578 2,600 -- -- --
Shares Redeemed ..................... (294,755) (185,358) -- -- --
--------- --------- --------- ----------- -----------
Net Investor Share Transactions ... 2,694 (4,446) 60,995 67,537 243,335
--------- --------- --------- ----------- -----------
Net Change in Capital Shares ...... 29,495 28,571 60,995 67,537 243,335
--------- --------- --------- ----------- -----------
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
33
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD FROM INCEPTION THROUGH MAY 31,
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET NET ASSET
NET ASSET VALUE INVESTMENT DISTRIBUTIONS FROM VALUE END TOTAL
BEGINNING OF PERIOD INCOME NET INVESTMENT INCOME OF PERIOD RETURN+
------------------ ---------- --------------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
PRIME QUALITY MONEY MARKET FUND
Trust Shares
1999 $ 1.00 $ 0.05 $ (0.05) $ 1.00 4.83%
1998 1.00 0.05 (0.05) 1.00 5.22%
1997 1.00 0.05 (0.05) 1.00 5.01%
1996 1.00 0.05 (0.05) 1.00 5.25%
1995 1.00 0.05 (0.05) 1.00 4.79%
Investor Shares
1999 $ 1.00 $ 0.05 $ (0.05) $ 1.00 4.66%
1998 1.00 0.05 (0.05) 1.00 5.04%
1997 1.00 0.05 (0.05) 1.00 4.84%
1996 1.00 0.05 (0.05) 1.00 5.08%
1995 1.00 0.05 (0.05) 1.00 4.62%
TAX EXEMPT MONEY MARKET FUND
Trust Shares
1999 $ 1.00 $ 0.03 $ (0.03) $ 1.00 2.81%
1998 1.00 0.03 (0.03) 1.00 3.21%
1997 1.00 0.03 (0.03) 1.00 3.09%
1996 1.00 0.03 (0.03) 1.00 3.28%
1995 1.00 0.03 (0.03) 1.00 3.10%
Investor Shares
1999 $ 1.00 $ 0.03 $ (0.03) $ 1.00 2.69%
1998 1.00 0.03 (0.03) 1.00 3.09%
1997 1.00 0.03 (0.03) 1.00 2.97%
1996 1.00 0.03 (0.03) 1.00 3.16%
1995 1.00 0.03 (0.03) 1.00 3.00%
TAX-FREE MONEY MARKET FUND (A)
Trust Shares
1999* $ 1.00 $ 0.01 $ (0.01) $ 1.00 1.27%
For the Year Ended November 30:
1998 1.00 0.03 (0.03) 1.00 2.97%
1997 1.00 0.03 (0.03) 1.00 3.06%
1996 1.00 0.03 (0.03) 1.00 3.14%
1995 1.00 0.03 (0.03) 1.00 3.26%
1994 1.00 0.02 (0.02) 1.00 2.07%
Investor Shares
1999* $ 1.00 $ 0.01 $ (0.01) $ 1.00 1.27%
For the Year Ended November 30:
1998 1.00 0.03 $ (0.03) 1.00 2.96%
1997 1.00 0.03 (0.03) 1.00 3.05%
1996 1.00 0.03 (0.03) 1.00 3.13%
1995 1.00 0.03 (0.03) 1.00 3.25%
1994 1.00 0.02 (0.02) 1.00 1.98%
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS RATIO OF
END OF EXPENSES TO
PERIOD (000) AVERAGE NET ASSETS
---------- ------------------
<C> <C>
<S> <C>
PRIME QUALITY MONEY MARKET FUND
Trust Shares
1999 $3,903,232 0.60%
1998 1,880,229 0.59%
1997 1,086,555 0.58%
1996 1,050,800 0.58%
1995 799,189 0.58%
Investor Shares
1999 $ 918,100 0.77%
1998 411,821 0.76%
1997 283,544 0.75%
1996 215,696 0.75%
1995 157,616 0.75%
TAX EXEMPT MONEY MARKET FUND
Trust Shares
1999 $ 641,640 0.52%
1998 448,023 0.51%
1997 333,006 0.50%
1996 273,613 0.50%
1995 215,413 0.45%
Investor Shares
1999 $ 128,854 0.64%
1998 134,538 0.62%
1997 102,013 0.62%
1996 95,223 0.62%
1995 87,647 0.55%
TAX-FREE MONEY MARKET FUND (A)
Trust Shares
1999* $ 270,431 0.67%
For the Year Ended November 30:
1998 270,899 0.66%
1997 226,837 0.66%
1996 182,320 0.66%
1995 202,333 0.66%
1994 157,602 0.67%
Investor Shares
1999* $ 5,955 0.67%
For the Year Ended November 30:
1998 8,851 0.67%
1997 7,634 0.68%
1996 2,994 0.67%
1995 1,627 0.67%
1994 757 0.76%
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO
NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS
INCOME TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS
AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS)
------------------ ------------------- -------------------
<S> <C> <C> <C> <C>
PRIME QUALITY MONEY MARKET FUND
Trust Shares
1999 4.69% 0.77% 4.52%
1998 5.10% 0.77% 4.92%
1997 4.90% 0.76% 4.72%
1996 5.11% 0.78% 4.91%
1995 4.77% 0.79% 4.56%
Investor Shares
1999 4.52% 0.97% 4.32%
1998 4.93% 0.98% 4.71%
1997 4.74% 0.97% 4.52%
1996 4.94% 1.00% 4.69%
1995 4.55% 1.01% 4.29%
TAX-EXEMPT MONEY MARKET FUND
Trust Shares
1999 2.75% 0.66% 2.61%
1998 3.14% 0.67% 2.98%
1997 3.04% 0.66% 2.88%
1996 3.23% 0.68% 3.05%
1995 3.12% 0.70% 2.87%
Investor Shares
1999 2.66% 0.82% 2.48%
1998 3.04% 0.83% 2.83%
1997 2.92% 0.83% 2.71%
1996 3.10% 0.85% 2.87%
1995 3.00% 0.87% 2.68%
TAX-FREE MONEY MARKET FUND (A)
Trust Shares
1999* 2.51% 0.82% 2.36%
For the Year Ended November 30:
1998 2.92% 0.81% 2.77%
1997 3.02% 0.81% 2.87%
1996 2.88% 0.81% 2.73%
1995 3.19% 0.81% 3.04%
1994 2.06% 0.67% 2.06%
Investor Shares
1999* 2.52% 1.06% 2.13%
For the Year Ended November 30:
1998 2.92% 1.07% 2.52%
1997 3.42% 1.08% 3.02%
1996 2.86% 1.07% 2.46%
1995 3.16% 1.07% 2.76%
1994 1.97% 1.44% 1.29%
</TABLE>
+ Total return is for the period indicated and has not been annualized.
* For the period December 1, 1998 to May 31, 1999. All ratios for the period
have been annualized.
(A) On May 24, 1999, the Crestar Tax-Free Money Fund exchanged all of its assets
and certain liabilities for shares of the Tax-Free Money Market Fund. The
Crestar Tax-Free Money Fund is the accounting survivor in this transaction, and
as a result, its basis of accounting for assets and liabilities and its
operating results for the periods prior to May 24, 1999 have been carried
forward in these financial highlights.
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
34 & 35
<PAGE>
FINANCIAL HIGHLIGHTS (concluded)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD FROM INCEPTION THROUGH MAY 31,
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET NET ASSET
NET ASSET VALUE INVESTMENT DISTRIBUTIONS FROM VALUE END
BEGINNING OF PERIOD INCOME NET INVESTMENT INCOME OF PERIOD
------------------- ---------- --------------------- ----------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
Trust Shares
1999 $1.00 $ 0.04 $(0.04) $1.00
1998 1.00 0.05 (0.05) 1.00
1997 1.00 0.05 (0.05) 1.00
1996 1.00 0.05 (0.05) 1.00
1995 1.00 0.05 (0.05) 1.00
Investor Shares
1999 $1.00 $ 0.04 $(0.04) $1.00
1998 1.00 0.05 (0.05) 1.00
1997 1.00 0.05 (0.05) 1.00
1996 1.00 0.05 (0.05) 1.00
1995 1.00 0.04 (0.04) 1.00
U.S. TREASURY MONEY MARKET FUND (A)
Trust Shares
1999** $1.00 $0.02 $(0.02) $1.00
For the Year Ended November 30:
1998 1.00 0.05 (0.05) 1.00
1997 1.00 0.05 (0.05) 1.00
1996 1.00 0.05 (0.05) 1.00
1995 1.00 0.05 (0.05) 1.00
Investor Shares (1)
For the Year Ended November 30:
1994 $1.00 $0.01 $(0.01) $1.00
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF EXPENSES TO
NET ASSETS RATIO OF NET INVESTMENT AVERAGE NET ASSETS
TOTAL END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS
RETURN+ PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS)
-------- ---------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
Trust Shares
1999 4.57% $ 404,459 0.63% 4.47% 0.76%
1998 5.04% 377,490 0.62% 4.92% 0.78%
1997 4.83% 344,350 0.61% 4.73% 0.76%
1996 5.14% 325,493 0.61% 5.02% 0.78%
1995 4.67% 434,111 0.61% 4.64% 0.80%
Investor Shares
1999 4.41% $ 61,472 0.77% 4.32% 0.98%
1998 4.90% 58,753 0.76% 4.79% 0.96%
1997 4.69% 63,178 0.75% 4.59% 0.96%
1996 4.99% 58,608 0.75% 4.88% 0.99%
1995 4.51% 46,639 0.75% 4.51% 1.02%
U.S. TREASURY MONEY MARKET FUND (A)
Trust Shares
1999** 2.08% $ 760,833 0.68% 4.10% 0.83%
For the Year Ended November 30:
1998 4.89% 699,923 0.66% 4.77% 0.81%
1997 4.91% 632,381 0.65% 4.82% 0.80%
1996 4.80% 389,051 0.66% 4.69% 0.81%
1995 5.29% 370,454 0.66% 5.16% 0.81%
Investor Shares (1)
For the Year Ended November 30:
1994 0.79% $ -- 0.92%* 2.31%* 29.16%*
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
EXPENSES TO
INCOME TO
AVERAGE NET ASSETS
(EXCLUDING WAIVERS
AND REIMBURSEMENTS)
------------------
<S> <C> <C>
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
Trust Shares
1999 4.34%
1998 4.76%
1997 4.58%
1996 4.85%
1995 4.45%
Investor Shares
1999 4.11%
1998 4.59%
1997 4.38%
1996 4.64%
1995 4.24%
U.S. TREASURY MONEY MARKET FUND (A)
Trust Shares
1999** 3.95%
For the Year Ended November 30:
1998 4.62%
1997 4.67%
1996 4.54%
1995 5.01%
Investor Shares (1)
For the Year Ended November 30:
1994 (25.93%)*
</TABLE>
(1) Ceased operations March 31, 1994.
* Annualized.
** For the period December 1, 1998 to May 31, 1999. All ratios for the period
have been annualized.
+ Total return is for the period indicated and has not been annualized.
(A) On May 24, 1999, the Crestar U.S. Treasury Money Fund exchanged all of its
assets and certain liabilities for shares of the U.S. Treasury Money Market
Fund. The Crestar U.S. Treasury Money Fund is the accounting survivor in this
transaction, and as a result, its basis of accounting for assets and liabilities
and its operating results for the periods prior to May 24, 1999 have been
carried forward in these financial highlights.
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
36 & 37
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
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 thirty-four portfolios as of May 31, 1999:
the Balanced Fund, the Capital Appreciation Fund (formerly Capital Growth Fund),
the Emerging Markets Equity Fund, the Growth and Income Fund, the International
Equity Fund, the International Equity Index Fund, the Life Vision Balanced
Portfolio, the Life Vision Growth and Income Portfolio, the Life Vision Maximum
Growth Portfolio, the Mid-Cap Equity Fund, the Small Cap Equity Fund, the Small
Cap Growth Stock Fund, the Sunbelt Equity Fund, the Tax Sensitive Growth Stock
Fund, the Value Income Stock Fund, (collectively the "Equity Funds"), the
Florida Tax-Exempt Bond Fund, the Georgia Tax-Exempt Bond Fund, Investment Grade
Bond Fund, the Investment Grade Tax-Exempt Bond Fund, the Limited-Term Federal
Mortgage Securities Fund, the Maryland Municipal Bond Fund, the Short-Term Bond
Fund, the Short-Term U.S. Treasury Securities Fund, and the U.S. Government
Securities Fund, the Virginia Intermediate Municipal Bond Fund, the Virginia
Municipal Bond Fund, (collectively the "Fixed Income Funds"), the Prime Quality
Money Market Fund, the Tax-Exempt Money Market Fund, the Tax-Free Money Market
Fund, the U.S. Government Securities, the U.S. Treasury Money Market Fund
(collectively the "Retail Money Market Funds" or the "Funds"), the Classic
Institutional Cash Management Money Market Fund, the Classic Institutional U.S.
Government Securities Money Market Fund and the Classic Institutional U.S.
Treasury Securities Money Market Fund, (collectively the "Institutional 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. The financial statements presented herein are those of the Retail
Money Market Funds. The financial statements of the Equity Funds, the Fixed
Income Funds and the Institutional Money Market Funds are not presented herein,
but are presented separately.
On February 17, 1999 and February 19, 1999, respectively, the Board of Trustees
of the STI Classic Funds and Board of Directors of the CrestFunds Inc.
("CrestFunds") approved an Agreement and Plan of Reorganization (the
"Reorganization Agreement") providing for the transfer of all assets and
liabilities of the CrestFunds in exchange for the issuance of shares in the
Trust in a tax-free reorganization (see Note 7).
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the
Trust:
BASIS OF PRESENTATION OF STATEMENTS -- As more fully described in Note 7,
the STI Classic Funds acquired certain Crestar Funds in a tax-free business
combination. While each Fund now exists as a STI Classic Fund, a number of
the surviving funds for accounting purposes are Crestar Funds. In
accordance with generally accepted accounting principles, the financial
statements presented herein represent those of accounting survivors.
Accordingly, the Statements of Operations, Statements of Changes in Net
Assets and Financial Highlights presented reflect periods beginning on the
first day of the accounting survivor's fiscal year.
SECURITY VALUATION -- Investment securities held by the Funds are stated at
amortized cost, which approximates market value.
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.
38
<PAGE>
- --------------------------------------------------------------------------------
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).
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 Funds are accreted and amortized ratably to maturity and are
included in interest income.
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.
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 Funds are declared on
each business day and paid to shareholders on a monthly basis. 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.
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. Transactions with Affiliates:
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 SEI Investments Mutual Funds Services ("the Administrator") are
parties to an Administration Agreement dated May 29, 1995, as amended November
19, 1997 and March 1, 1999,
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
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 Trust) of: .12% up to $1 billion, .09% on the next $4
billion, .07% on the next $3 billion, .065% on the next $2 billion and .06% for
over $10 billion.
Prior to May 24, 1999, administrative and accounting services were provided
to the CrestFunds by SEI Investments Mutual Funds Services who was entitled
to receive a fee at an annual rate of .15% of the average daily net assets of
the CrestFunds.
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.
5. Investment Advisory and Custodian Agreements:
The Trust and Trusco Capital Management, Inc. (the "Investment Advisor") have
entered into an advisory agreement dated July 15, 1993.
Under terms of the agreements, the Funds are charged the following annual fees
based upon average daily net assets:
<TABLE>
<CAPTION>
MAXIMUM
MAXIMUM TRUST INVESTOR INVESTOR
ANNUAL SHARE SHARE SHARE
ADVISORY MAXIMUM DISTRIBUTION MAXIMUM
FEE EXPENSE FEE EXPENSE
--------- ------- ------------ ---------
<S> <C> <C> <C> <C>
Prime Quality Money
Market Fund .65% .60% .20% .77%
Tax-Exempt Money
Market Fund .55 .62 .15 .74
Tax-Free Money
Market Fund .40 .51 .40 .67
U.S. Government
Securities Money
Market Fund .65 .63 .17 .77
U.S. Treasury Money
Market Fund .65 .63 -- --
</TABLE>
The Investment Advisor and the Administrator 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.
Prior to May 24, 1999 Crestar Asset Management Company ("CAMCO") provided
investment advisory services to the CrestFunds. CAMCO was paid for advisory
services to each CrestFund money market fund at an annual rate of .40% of each
CrestFund money market fund's average daily net assets for the first $500
million of net assets, .35% of each Fund's average daily net assets on the next
$500 million of net assets, .30% of each money market fund's average daily net
assets on all remaining net assets.
SunTrust Bank, Atlanta, formerly Trust Company Bank, acts as custodian for the
Funds. Fees of the Custodian are paid on the basis of the net assets of the
Funds. The Custodian plays no role in determining the investment policies of the
Trust or which securities are to be purchased or sold in the Funds.
6. Investment Transactions:
At May 31, 1999, the Prime Quality Money Market Fund and the Tax-Exempt Money
Market Fund had capital loss carryforwards for Federal tax purposes of $314,064
and $3,830, respectively, resulting from security sales. 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. The carryforward for the Prime Quality
Money Market Fund expires between May 2003 and May 2005 and the carryforward for
the Tax-Exempt Money Market Fund expires between May 2004 and May 2007.
40
<PAGE>
- --------------------------------------------------------------------------------
7. CrestFunds Merger:
The Board of Directors and shareholders of the CrestFunds approved a
reorganization of the CrestFunds into the STI Classic Funds which was effective
on May 17, 1999 for the Prime Quality Money Market Fund and May 24, 1999 for the
Tax-Free Money Market Fund and U.S. Treasury Money Market Fund.
The following table summarizes certain relevant information of the Funds prior
to and immediately after business combinations on May 17, 1999 and May 24, 1999
and is unaudited:
<TABLE>
<CAPTION>
SHARES
OUTSTANDING SHARES ISSUED NET ASSETS NAV
ON MERGER IN BUSINESS AFTER PER
CREST FUND DATE STICLASSIC FUND COMBINATION COMBINATION SHARE
------------ -------------- -------------------- ------------ -------------- --------
<S> <C> <C> <C> <C> <C>
Cash Reserve Prime Quality Money Market (2)
Trust Shares 1,179,840,320 Trust Shares 1,179,992,513 3,898,000,842 $1.00
Investor Class A 187,019,982 Investor Shares 187,134,402 897,327,829 1.00
Investors Class B (1) 68,609 Flex Shares n/a n/a n/a
U.S. Treasury Money Fund (2) U.S. Treasury Money Market
Trust Shares 278,919,943 Trust Shares 278,919,943 278,898,164 1.00
Investor Class A 5,967,857 Investor Shares 5,967,857 5,968,442 1.00
Tax Free Money Fund (2) Tax-Free Money Market
Trust Shares 732,825,211 Trust Shares 732,825,211 732,779,926 1.00
</TABLE>
(1) Investors Class B Shares of the CrestFunds Cash Reserve Fund were exchanged
for Investors Shares of the STI Classic Prime Quality Money Market Fund.
(2) Represents the accounting survivor in this business combination.
8. 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 Investment Advisor to be of comparable
quality. The Tax-Exempt Money Market and Tax-Free Money Market Funds invest 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
Investment Advisor to be of comparable quality. The U.S. Government Securities
Money Market and U.S. Treasury Money Market Funds invest 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.
41
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
To the Shareholders and Board of Trustees of
STI Classic Funds:
We have audited the accompanying statements of net assets of the Prime Quality
Money Market, Tax-Exempt Money Market, Tax-Free Money Market, U.S. Government
Securities Money Market, and U.S. Treasury Money Market Funds of STI Classic
Funds (the "Trust") as of May 31, 1999, 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. The statements of operations for the year ended November 30, 1998,
statements of changes for the years ended November 30, 1998 and November 30,
1997, and financial highlights for the periods presented prior to May 31, 1999,
for the Tax-Free Money Market and U.S. Treasury Money Market Funds were audited
by other auditors whose report dated January 15, 1999, expressed an unqualified
opinion on this information.
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 and financial highlights. Our procedures included confirmation of
securities owned as of May 31, 1999, 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
Prime Quality Money Market, Tax-Exempt Money Market, Tax-Free Money Market, U.S.
Government Securities Money Market, and U.S. Treasury Money Market Funds, of STI
Classic Funds as of May 31, 1999, the results of their operations, changes in
their net assets, and financial highlights for each of the periods described in
the first paragraph above, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
July 23, 1999
42
<PAGE>
NOTICE TO SHAREHOLDERS
- --------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 1999
For shareholders that do not have a May 31, 1999 tax year end, this notice is
for informational purposes only. For shareholders with a May 31, 1999 tax year
end, please consult your tax advisor as to the pertinence of this notice. For
the fiscal year ended May 31, 1999, each portfolio is designating the following
items with regard to distributions paid during the year:
<TABLE>
<CAPTION>
LONG TERM
(20% RATE) ORDINARY
CAPITAL GAINS INCOME TAX-EXEMPT TOTAL QUALIFYING
FUND DISTRIBUTIONS DISTRIBUTIONS INTEREST DISTRIBUTIONS DIVIDENDS (1)
------------------------ ------------- ------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Prime Quality Money Market Fund 0.00% 100.00% 0.00% 100.00% 0.00%
Tax-Exempt Money Market Fund 0.00% 0.02% 99.98% 100.00% 0.00%
Tax Free-Money Market Fund 0.00% 0.00% 100.00% 100.00% 0.00%
U.S. Government Securities
Money Market Fund 0.00% 100.00% 0.00% 100.00% 0.00%
U.S. Treasury Money Market Fund 0.00% 100.00% 0.00% 100.00% 0.00%
</TABLE>
- --------------------------------------------------------------------------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distribution".
43
<PAGE>
NOTES
<PAGE>
INVESTMENT ADVISOR
Trusco Capital Management, Inc.
STI Classic Funds are not deposits, are not
insured or guaranteed by the FDIC or any other
government agency, and are not endorsed by and
do not constitute obligations of SunTrust
Banks, Inc. or any other of its affiliates.
Investment in the Funds involves risk,
including the possible loss of principal. There
is no guarantee that any STI Classic Fund will
achieve its investment objective. The STI
Classic Funds are advised by affiliates of
SunTrust Banks, Inc.
DISTRIBUTOR
SEI Investments Distribution Co.
This information must be preceded or accompanied
by a current prospectus for each Fund
described.
