SEMI-ANNUAL
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FINANCIAL REPORT
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STI CLASSIC FUNDS
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A Family of Mutual Funds
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Classic Institutional Cash Management Money Market Fund
Classic Institutional U.S. Treasury Securities Money Market Fund
November 30, 1998
STI Classic Funds
<PAGE>
STATEMENT OF NET ASSETS
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STI CLASSIC FUNDS November 30, 1998 Unaudited
Classic Institutional Cash Management Money Market Fund
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Face
Amount(000) Value (000)
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Commercial Paper (28.9%)
Finance (20.3%)
American Express
4.950%, 12/18/98 $ 2,800 $ 2,793
Banc One Funding
5.150%, 12/08/98 1,979 1,977
5.130%, 01/28/99 6,623 6,568
5.280%, 01/28/99 9,000 8,923
Barclays U.S. Funding
5.180%, 01/07/99 15,000 14,920
Chrysler Financial
5.240%, 02/11/99 10,000 9,895
Dresdner U.S. Finance
5.190%, 01/08/99 10,000 9,945
GMAC
5.240%, 02/11/99 8,500 8,411
KFW International
5.000%, 12/04/98 1,100 1,100
5.300%, 12/07/98 600 599
4.950%, 12/07/98 500 500
5.250%, 12/08/98 300 300
Marsh & Mclennan
5.230%, 02/24/99 15,000 14,815
5.290%, 02/24/99 2,700 2,666
Metlife Funding
4.950%, 12/03/98 254 254
Morgan Stanley Dean Witter
5.200%, 01/21/99 10,000 9,926
Panasonic Finance
5.330%, 01/21/99 100 99
5.380%, 01/21/99 15,000 14,886
Republic New York
5.190%, 01/15/99 10,000 9,935
Royal Bank of Canada
5.450%, 01/15/99 1,000 993
--------
119,505
--------
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Face
Amount(000) Value (000)
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Industrial (8.6%)
Allied Signal
5.550%, 01/21/99 $14,050 $ 13,940
5.550%, 01/25/99 2,500 2,479
Archer Daniels
5.150%, 01/15/99 470 467
Eastman Kodak
5.400%, 12/02/98 2,600 2,600
Heinz
5.150%, 12/03/98 535 535
IBM
5.500%, 12/04/98 650 650
Motorola
4.950%, 12/08/98 900 899
JC Penney Funding
5.250%, 12/18/98 493 492
RTZ America
5.000%, 12/11/98 1,230 1,228
5.230%, 12/16/98 5,200 5,189
5.330%, 01/21/99 100 99
5.350%, 01/22/99 4,800 4,763
Sara Lee
5.000%, 12/09/98 5,000 4,994
Smithkline Beecham
5.000%, 12/02/98 300 300
4.950%, 12/11/98 10,900 10,885
Toys R Us
5.250%, 12/10/98 300 300
Walt Disney
5.550%, 12/04/98 515 515
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50,335
--------
Utilities (0.0%)
Bell Atlantic
5.000%, 12/11/98 100 100
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Total Commercial Paper
(Cost $169,940) 169,940
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1
<PAGE>
STATEMENT OF NET ASSETS
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STI CLASSIC FUNDS November 30, 1998
Classic Institutional Cash Management Money Market Fund--continued
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Face
Amount(000) Value(000)
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Corporate Obligations (16.8%)
Finance (14.7%)
Associates, MTN
5.650%, 12/01/98 $ 1,000 $ 1,000
Bankers Trust, New York (B) (C)
5.379%, 02/19/99 7,000 7,000
British Telecom Finance
9.375%, 02/15/99 1,000 1,007
Caterpillar Financial
Services, MTN (C)
5.160%, 05/09/99 5,000 5,000
Caterpillar Financial
Services, MTN
5.470%, 12/15/98 750 750
6.800%, 07/01/99 250 253
Dean Witter Discover
5.030%, 03/02/99 4,990 4,983
Deutsche Bank, New York (C)
5.120%, 04/14/99 5,000 4,999
FCC National Bank (A) (C)
5.120%, 04/09/99 5,000 4,999
Ford Motor Credit
8.000%, 01/15/99 1,000 1,003
6.375%, 09/15/99 500 506
General Motors Acceptance
7.750%, 01/15/99 500 501
GMAC, MTN
7.150%, 04/30/99 1,000 1,005
Household Finance (A)
4.780%, 03/15/99 3,000 2,992
IBM Credit (A)
5.450%, 09/15/99 10,000 10,000
International Lease Finance
5.750%, 01/15/99 752 752
6.700%, 04/30/99 300 302
International Lease Finance, MTN
5.960%, 07/07/99 500 500
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Face
Amount(000) Value (000)
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Finance--continuued
Nationsbank
8.500%, 03/01/99 $ 1,000 $ 1,006
Nationsbank (A)
5.190%, 08/06/99 10,000 10,010
PNC Bank (A)
5.116%, 08/03/99 10,000 9,996
Salomon Smith Barney, MTN
6.050%, 12/17/98 2,000 2,001
Transamerica Financial (A)
5.450%, 10/22/99 13,500 13,500
Transamerica, MTN (C)
5.427%, 02/18/99 1,500 1,500
Xerox Credit
10.000%, 04/01/99 780 790
--------
86,355
--------
Industrial (0.4%)
Fortune Brands
7.500%, 05/15/99 1,025 1,032
IBM, MTN
6.150%, 12/11/98 1,000 1,000
--------
2,032
--------
Utilities (1.7%)
Alabama Power
7.000%, 01/01/03 4,500 4,544
GTE Northwest
6.125%, 02/15/99 650 650
Hydro-Quebec Yankee, MTN
7.430%, 12/14/98 1,000 1,001
7.740%, 03/03/99 1,000 1,005
Pacific Gas & Electric
5.750%, 12/01/98 1,000 1,000
Southern California Edison
7.500%, 04/15/99 505 508
Virginia Electric & Power
8.875%, 06/01/99 450 457
2
<PAGE>
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Unaudited
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Face
Amount(000) Value(000)
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Utilities--continued
Virginia Electric & Power, MTN
9.650%, 01/25/99 $ 990 $ 995
--------
10,160
--------
Total Corporate Obligations
(Cost $98,547) 98,547
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Certificates of Deposit (9.0%)
Bayerische Landesbank,
New York (C)
5.108%, 04/21/99 10,000 9,998
Commerzbank (C)
5.130%, 04/14/99 10,000 9,999
Deutsche Bank, New York
5.640%, 03/23/99 4,000 3,999
Rabobank
5.750%, 04/27/99 8,000 7,998
Societe Generale, New York
5.580%, 02/10/99 2,000 2,000
5.800%, 04/28/99 9,000 8,996
SBC Warburg, New York
5.650%, 03/24/99 5,000 4,999
5.810%, 04/29/99 5,000 4,999
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Total Certificates of Deposit
(Cost $52,988) 52,988
--------
Asset-Backed Securities (10.6%)
Americredit Auto Recievables
Trust, Ser 1998-B Cl A1
5.629%, 06/12/99 1,441 1,441
5.638%, 09/12/99 2,886 2,886
5.199%, 11/12/99 8,000 8,000
Arcadia Auto Receivables
Trust, Ser 1998-B Cl A1
5.470%, 02/16/99 13,197 13,197
5.628%, 07/15/99 1,562 1,562
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Face
Amount(000) Value (000)
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Asset-Backed Securities--continuued
Case Equipment Loan Trust,
Ser 1998-C Cl A1
5.420%, 12/15/99 $10,400 $ 10,400
Chase Manhattan Auto Owner
Trust, Ser 1999-B Cl A1
5.578%, 05/10/99 778 778
Compass Auto Receivables Trust,
Ser 1998-A Cl A1
5.659%, 07/15/99 1,583 1,583
First Security Auto Owner Trust,
Ser 1998-1 Cl A1
5.248%, 11/15/99 2,344 2,344
Ford Credit Auto Owner Trust,
Ser 1998-B Cl A1
5.615%, 05/15/99 228 228
Household Automobile
Revolving Trust, Ser 1998-1,
Cl A1
5.330%, 12/17/99 18,000 18,000
Union Acceptance,
Ser 1998-C, Cl A1
5.527%, 10/08/99 1,685 1,685
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Total Asset-Backed Securities
(Cost $62,104) 62,104
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Bank Notes (8.2%)
American Express Centurion (A)
5.223%, 08/09/99 5,000 5,000
American Express Centurion (C)
5.169%, 03/24/99 5,000 5,000
First National Bank, Chicago (C)
5.110%, 04/19/99 10,000 9,998
Key Bank NA (A)
5.160%, 05/05/99 18,000 17,997
Northern Trust (C)
5.120%, 04/09/99 10,000 9,999
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Total Bank Notes
(Cost $47,994) 47,994
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3
<PAGE>
STATEMENT OF NET ASSETS/SCHEDULE OF INVESTMENTS
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STI CLASSIC FUNDS November 30, 1998
Classic Institutional Cash Management Money Market Fund--concluded
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Face
Amount(000) Value(000)
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U.S. Government Agency Obligations (4.9%)
Federal Farm Credit, MTN (C)
4.540%, 03/02/99 $ 10,000 $ 9,999
FHLB (A)
5.030%, 04/09/99 1,000 1,000
FHLMC REMIC, Ser 1314-JB
7.500%, 02/15/06 789 789
FNMA
7.050%, 12/10/98 110 110
SLMA, MTN (C)
5.000%, 04/01/99 5,000 4,999
SLMA (A)
4.780%, 08/02/99 12,000 11,975
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Total U.S. Government Agency
Obligations
(Cost $28,762) 28,872
--------
Foreign Government Agency
Obligation (0.4%)
Province of Quebec
9.375%, 04/01/99 2,200 2,228
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Total Foreign Government Agency
Obligation
(Cost $2,228) 2,228
--------
Repurchase Agreements (24.2%)
Barclays
5.390%, dated 11/30/98, matures
12/01/98, repurchase price
$68,701,936 (collateralized by
FHLB obligations: total market
value $70,065,881) (D) 68,692 68,692
Deutsche Bank
5.390%, dated 11/30/98, matures
12/01/98 repurchase price
$21,160,295 (collateralized by
FHLMC obligations: total
market value $21,580,434) (D) 21,157 21,157
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Face
Amount(000) Value (000)
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Repurchase Agreements--continued
Merrill Lynch
5.390%, dated 11/30/98, matures
12/01/98, repurchase price
$29,940,674 (collateralized
by FHLB and FNMA
obligations: total market
value $30,536,475) (D) $29,936 $ 29,936
Morgan Stanley
5.390%, dated 11/30/98, matures
12/01/98, repurchase price
$5,000,749 (collateralized by
FNMA obligation: total market
value $5,673,424) (D) 5,000 5,000
Salomon Brothers
5.390%, dated 11/30/98, matures
12/01/98, repurchase price
$17,458,044 (collateralized by
various FHLMC and FNMA
obligations: total market
value $17,907,861) (D) 17,455 17,455
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Total Repurchase Agreements
(Cost $142,240) 142,240
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Total Investments (103.0%)
(Cost $604,913) 604,913
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Other Assets and Liabilities, Net (-3.0%) (17,463)
--------
Net Assets:
Fund shares of the Institutional Class
(unlimited authorization -- no par value)
based on 587,451,388 outstanding shares
of beneficial interest 587,451
Overdistributed Net Investment Income (1)
--------
Total Net Assets 100.0% $587,450
========
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $ 1.00
========
The accompanying notes are an integral part of the financial statements.
For descriptions of abbreviations, please see page 6.
4
<PAGE>
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Unaudited
Classic Institutional U.S. Treasury Securities Money Market Fund
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Face
Amount(000) Value(000)
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U.S. Treasury Obligation (4.8%)
U.S. Treasury Note
6.375%, 05/15/99 $10,000 $ 10,031
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Total U.S. Treasury Obligation
(Cost $10,031) 10,031
--------
Cash Equivalent (3.8%)
AIM Management Institutional
Treasury Portfolio (C) 8,000 8,000
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Total Cash Equivalent
(Cost $8,000) 8,000
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Repurchase Agreements (68.1%)
Barclays
5.250%, dated 11/30/98, matures
12/01/98, repurchase price
$9,009,218 (collateralized by
U.S. Treasury Note: market
value $9,188,389) (D) 9,008 9,008
Duetsche Bank,
5.250%, dated 11/30/98, matures
12/01/98, repurchase price
$8,322,400 (collateralized by
U.S. Treasury Note: market
value $8,488,193) (D) 8,321 8,321
Greenwich
5.250%, dated 11/30/98, matures
12/01/98, repurchase price
$8,887,963 (collateralized by
U.S. Treasury STRIPS: market
value $9,065,706) (D) 8,887 8,887
Merrill Lynch
5.250%, dated 11/30/98, matures
12/01/98, repurchase price
$9,854,790 (collateralized by
U.S. Treasury STRIPS: market
value $10,051,323) (D) 9,853 9,853
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Face
Amount(000) Value (000)
- -------------------------------------------------------------
Morgan Stanley
5.250%, dated 11/30/98, matures
12/01/98, repurchase price
$9,832,471 (collateralized
by various U.S. Treasury
obligations: total market
value $10,051,963) (D) $ 9,831 $ 9,831
Salomon Brothers
5.250%, dated 11/30/98, matures
12/01/98, repurchase price
$47,878,234 (collateralized by
U.S. Treasury Note: market
value $48,833,273) (D) 47,871 47,871
SBC Warburg
5.250%, dated 11/30/98, matures
12/01/98, repurchase price
$49,031,289 (collateralized by
various U.S. Treasury
obligations: total market
value $50,008,204) (D) 49,024 49,024
--------
Total Repurchase Agreements
(Cost $142,795) 142,795
--------
Total Investments (76.7% of Net Assets)
(Cost $160,826) 160,826
--------
The accompanying notes are an integral part of the financial statements.
For descriptions of abbreviations, please see page 6.
5
<PAGE>
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Key to Abbreviations used in the
Statement of Net Assets/Schedule of Investments
Cl Class
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
Ser Series
SLMA Student Loan Marketing Association
STRIPS Separately Traded Registered Interest and
Principal Security
(A) Private Placement Security
(B) Securities are held in connection with a letter
of credit issued by a major bank.
(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
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (000)
- --------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FUNDS November 30, 1998 Unaudited
Classic Institutional
U.S. Treasury Securities
Money Market
Fund
------------------------
<S> <C>
Assets:
Investments at market value (Cost $160,826) .................................................. $160,826
Accrued income ............................................................................... 819
Receivables for investment securities sold ................................................... 49,685
Other assets ................................................................................. 13
--------
Total Assets.................................................................................. 211,343
--------
Liabilities:
Accrued expenses ............................................................................. (11)
Distribution payable ......................................................................... (801)
Other liabilities ............................................................................ (784)
--------
Total Liabilities ............................................................................ (1,596)
--------
Net Assets:
Fund Shares of the Institutional Class (unlimited authorization -- no par value)
based on 209,739,934 outstanding shares of beneficial interest ............................. 209,740
Accumulated net realized gain on investments ................................................. 7
--------
Total Net Assets ............................................................................. $209,747
========
Net Asset Value, Offering and Redemption Price Per Share -- Institutional Shares .............. $ 1.00
========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (000)
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STI CLASSIC FUNDS For The Period Ended November 30, 1998 Unaudited
Classic Classic
Institutional Institutional
Cash Management U.S. Treasury
Money Market Securities Money
Fund Market Fund
--------------- ----------------
06/01/98- 06/01/98-
11/30/98 11/30/98
---------- ---------
<S> <C> <C>
Income:
Interest Income ...................................................... $13,913 $5,410
------- ------
Expenses:
Investment Advisory Fees ............................................. 504 203
Investment Advisory Fees Waived ...................................... (217) (105)
Administrator Fees ................................................... 198 80
Administrator Fees Waived ............................................ (50) (20)
Transfer Agent Fees .................................................. 13 7
Transfer Agent Out of Pocket ......................................... 20 6
Printing Fees ........................................................ 11 8
Custody Fees ......................................................... 11 6
Professional Fees .................................................... 13 1
Trustee Fees ......................................................... -- --
Registration Fees .................................................... 3 8
Insurance and Other Fees ............................................. -- 11
Amortization of Deferred Organizational Costs ........................ (2) (2)
------- ------
Total Expenses ..................................................... 504 203
------- ------
Net Investment Income .............................................. 13,409 5,207
------- ------
Net Realized Gain on Securities Sold ............................... -- 4
------- ------
Increase in Net Assets Resulting from Operations ........................ $13,409 $5,211
======= ======
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS (000)
- -----------------------------------------------------------------------------------------------------------------------
STI CLASSIC FUNDS For The Period Ended November 30, 1998 Unaudited
Classic Classic
Institutional Institutional
Cash Management U.S. Treasury
Money Market Securities Money
Fund Market Fund
----------------------- ---------------------
06/01/98- 06/01/97- 06/01/98- 06/01/97-
11/30/98 05/31/98 11/30/98 05/31/98
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operations:
Net Investment Income ............................................ $ 13,409 $ 16,700 $ 5,207 $ 5,596
Net Realized Gain on Investments ................................. -- -- 4 4
--------- --------- --------- --------
Increase in Net Assets Resulting from Operations ............... 13,409 16,700 5,211 5,600
--------- --------- --------- --------
Distributions to Shareholders:
Net Investment Income ............................................ (13,410) (16,700) (5,207) (5,596)
--------- --------- --------- --------
Total Distributions ........................................... (13,410) (16,700) (5,207) (5,596)
--------- --------- --------- --------
Share Transactions:
Proceeds from Shares Issued .................................... 1,084,627 1,549,940 565,486 991,131
Reinvestments of Cash Distributions ............................ 11,720 11,287 3,716 4,231
Cost of Shares Redeemed ........................................ (883,698) (1,582,098) (499,793) (875,270)
--------- --------- --------- --------
Increase (Decrease) in Net Assets from Share Transactions .... 212,649 (20,871) 69,409 120,092
--------- --------- --------- --------
Total Increase (Decrease) in Net Assets ..................... 212,648 (20,871) 69,413 120,096
--------- --------- --------- --------
Net Assets:
Beginning of Period .............................................. 374,802 395,673 140,334 20,238
--------- --------- --------- --------
End of Period .................................................... $ 587,450 $ 374,802 $ 209,747 $ 140,334
========= ========= ========= =========
Shares Issued and Redeemed:
Shares Issued .................................................. 1,084,627 1,549,940 565,486 991,131
Shares Issued in Lieu of Cash Distributions .................... 11,720 11,287 3,716 4,231
Shares Redeemed ................................................ (883,698) (1,582,098) (499,793) (875,270)
--------- --------- --------- --------
Net Share Transactions ........................................... 212,649 (20,871) 69,409 120,092
========= ========= ========= ========
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
STI CLASSIC FUNDS For the Period Ended November 30 and the Years Ended May 31.
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Net Net Realized
Net Asset Value Investment Gains (Losses) Distributions from Distributions from
Beginning of Period Income on Investments Net Investment Income Realized Capital Gains
------------------- ---------- -------------- --------------------- ----------------------
Classic Institutional Cash Management Money Market Fund
Institutional Shares
<S> <C> <C> <C> <C> <C> <C>
1998** $1.00 $ 0.03 $ -- $(0.03) $ --
1998 1.00 0.05 -- (0.05) --
1997(A) 1.00 0.02 -- (0.02) --
</TABLE>
<TABLE>
<CAPTION>
Classic Institutional U.S. Treasury Securities Money Market Fund
Institutional Shares
<S> <C> <C> <C> <C> <C> <C>
1998** $1.00 $ 0.03 $ -- $(0.03) $ --
1998 1.00 0.05 -- (0.05) --
1997(A) 1.00 0.02 -- (0.02) --
</TABLE>
(A) Commenced operations on December 12, 1996.
* Total return is for the period indicated and has not been annualized.
** For the six month period ended November 30, 1998. All ratios have been
annualized.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Unaudited
Net Assets Net Assets Ratio of
Value End Total End of Expenses to
of Period Return Period (000) Average Net Assets
--------- ------ ------------ ------------------
<S> <C> <C> <C> <C> <C>
1998** $1.00 2.07%* $ 587,450 0.20%
1998 1.00 5.63 374,802 0.16
1997(A) 1.00 2.51* 395,673 0.06
1998** $1.00 2.61%* $ 209,747 0.20%
1998 1.00 5.50 140,334 0.18
1997(A) 1.00 2.46* 20,238 0.09
<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>
1998** 5.32% 0.31% 5.21%
1998 5.49 0.30 5.35
1997(A) 5.49 0.52 5.03
1998** 5.13% 0.32% 5.01%
1998 5.34 0.38 5.14
1997(A) 5.27 0.51 4.85
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
STI CLASSIC FUNDS November 30, 1998
1. Organization:
The STI Classic Funds (the "Trust") was organized as a Massachusetts business
trust under a Declaration of Trust dated January 15, 1992. The Trust is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company with twenty-three portfolios: the Balanced Fund,
the Capital Growth Fund, the Emerging Markets Equity Fund, the International
Equity Fund, the International Equity Index Fund, the Mid-Cap Equity Fund, the
Small Cap Equity Fund, the Small Cap Growth Stock Fund, the Sunbelt Equity Fund,
the Value Income Stock Fund, the Florida Tax-Exempt Bond Fund, the Georgia
Tax-Exempt Bond Fund, the Investment Grade Bond Fund, the Investment Grade
Tax-Exempt Bond Fund, the Limited-Term Federal Mortgage Securities Fund, the
Short-Term Bond Fund, the Short-Term U.S. Treasury Securities Fund, and the U.S.
Government Securities Fund, (collectively the "Non-Dollar Funds"), the Prime
Quality Money Market Fund, the Tax-Exempt Money Market Fund, the U.S. Government
Securities Money Market Fund, the Classic Institutional Cash Management Money
Market Fund and the Classic Institutional U.S. Treasury Securities Money Market
Fund, (collectively the "Money Market Funds"). The assets of each portfolio are
segregated, and a shareholder's interest is limited to the Fund in which shares
are held. Each Fund's prospectus provides a description of the Fund's investment
objectives, policies and strategies. The financial statements of the Classic
Institutional Cash Management Money Market Fund and the Classic Institutional
U.S. Treasury Securities Fund (collectively the "Funds") are included herein.
The financial statements of the remaining Funds are presented separately.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the
Trust:
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. 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.
12
<PAGE>
- --------------------------------------------------------------------------------
Unaudited
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.
Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that effect the reported
amount of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and reported amounts
of revenues and expenses during the reporting period. Actual amounts could
differ from these estimates.
3. Organization Costs and Transactions with Affiliates:
The Trust incurred organization costs of approximately $808,836 including
approximately $395,594 relating to state registration fees. These costs have
been deferred in the accounts of the Funds and are being amortized on a straight
line basis over a period of sixty months commencing with operations with the
exception of state registration fees, which are being amortized over a period of
twelve months. The costs include legal fees of approximately $60,383 for
organizational work performed by a law firm of which two officers of the Trust
are partners. On March 18, 1992, the Trust sold initial shares of beneficial
interest to SEI Investments Mutual Fund Services, (the "Administrator"). In the
event any of the initial shares of the Trust are redeemed by any holder thereof
during the period that the Trust is amortizing its organizational costs, the
redemption proceeds payable to the holder thereof will be reduced by the
unamortized organizational costs in the same ratio as the number of initial
shares being redeemed bears to the number of initial shares outstanding at the
time of redemption.
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 as discussed above. 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 and Transfer Agency Servicing Agreements:
The Trust and the Administrator are parties to an Administration Agreement dated
May 29, 1995, as amended November 19, 1997, 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
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
- -------------------------------------------------------------------------------
STI CLASSIC FUNDS November 30, 1998 Unaudited
STI Classic Variable Annuity 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.
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 respective agreements, the Funds are charged the following
annual fees based upon average daily net assets:
Maximum Institutional
Annual Share
Advisory Maximum
Fee Expense
-------- -----------
Classic Institutional
Cash Management
Money Market Fund .20% .20%
Classic Institutional
U.S. Treasury
Money Market Fund .20% .20%
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.
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. Concentration of Credit Risk:
The Classic Institutional Cash Management Money Market Fund invests in high
quality money market instruments issued by corporations and the U.S. Government
and rated by one or more nationally recognized statistical rating organizations,
or, if not rated determined by the Investment Advisor to be of comparable
quality. The Classic U.S. Treasury Securities Money Market Fund invests in U.S.
Treasury Obligations, 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.
7. Subsequent Event:
On July 20, 1998 it was announced that Crestar Financial Corporation
("Crestar"), the parent of Crestar Bank, and SunTrust Banks, Inc. ("SunTrust")
had signed a definitive agreement for the acquisition of Crestar by SunTrust.
The acquisition of Crestar by SunTrust was completed on December 31, 1998. It is
currently the intention of Crestar and SunTrust to file an exemptive application
with the Securities and Exchange Commission to permit the combination of certain
of the CrestFunds with certain of the STI Classic Funds (mutual funds that are
served by investment advisers that are subsidiaries of SunTrust). Any
combination of CrestFunds and STI Classic Funds would require the approval of
the board of directors and the shareholders of the CrestFunds.
14
<PAGE>
NOTES
<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.
